<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 28, 2000
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
REPEATER TECHNOLOGIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 3663 94-2933828
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
1150 MORSE AVENUE
SUNNYVALE, CALIFORNIA 94089
(408) 747-1900
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
KENNETH L. KENITZER
REPEATER TECHNOLOGIES, INC.
1150 MORSE AVENUE
SUNNYVALE, CALIFORNIA 94089
(408) 747-1900
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
ANDREI M. MANOLIU, ESQ. ALAN F. DENENBERG, ESQ.
DAVID T. EMERSON, ESQ. SHEARMAN & STERLING
COOLEY GODWARD LLP 1550 EL CAMINO REAL
FIVE PALO ALTO SQUARE SUITE 100
3000 EL CAMINO REAL MENLO PARK, CA 94025
PALO ALTO, CA 94306 (650) 330-2200
(650) 843-5000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effectiveness of this Registration Statement.
------------------------
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C>
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- ------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM
TITLE OF SECURITIES AGGREGATE AMOUNT OF
TO BE REGISTERED OFFERING PRICE(1) REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------
Common Stock, $0.001 par value...................... $65,000,000 $17,160
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</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(o).
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT
AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY
THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED FEBRUARY 28, 2000
PROSPECTUS
SHARES
[REPEATER TECHNOLOGIES LOGO]
COMMON STOCK
$ PER SHARE
------------------
We are selling shares of our common stock. The underwriters named
in this prospectus may purchase up to additional shares of common
stock from us to cover over-allotments.
This is an initial public offering of our common stock. We currently expect
the initial public offering price to be between $ and $ per share. We
have applied to have our common stock included for quotation on the Nasdaq
National Market under the symbol "RPTR."
------------------
INVESTING IN OUR COMMON STOCK INVOLVES CERTAIN RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 5.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
------------------
<TABLE>
<CAPTION>
PER SHARE TOTAL
-------------- --------------
<S> <C> <C>
Public Offering Price $ $
Underwriting Discount $ $
Proceeds to Repeater Technologies, Inc. (before expenses) $ $
</TABLE>
The underwriters are offering the shares subject to various conditions. The
underwriters expect to deliver the shares to purchasers on or about
, 2000.
------------------
SALOMON SMITH BARNEY
U.S. BANCORP PIPER JAFFRAY
SG COWEN
, 2000
<PAGE> 3
[Inside Cover Graphics]
Map of the World with symbols placed on the map where we have deployed
repeaters. (The map has no political boundaries and the symbols have no
identity to operator or countries).
Text Title: "Repeater Technologies has Deployed Network Repeaters with over 40
CDMA Operators on Five Continents".
Bottom of the page Text: Company Logo with Design, Name and Tagline (Perfecting
Wireless Coverage Worldwide)
Inside Cover Graphic [Gate Fold]
An artist's rendition of a map of the St. Cloud Minnesota area with an overlay
of a RepeaterHybrid Network.
Text Title: "World's First CDMA RepeaterHybrid(TM) Network, Lifecom PCS, St.
Cloud, MN, July 1998.
On the perimeter of the map are seven small pictures of products or services
that the company provides.
Picture 1 Graphic: A service man installing a Network Repeater on a pole.
Picture 1 Text: Network Repeater(TM)
Picture 2 Graphic: A white box.
Picture 2 Text: RepeaterPower(TM) battery back-up system
Picture 3 Graphic: A Computer Terminal with radio frequency prediction plots on
the screen and the wall.
Picture 3 Text: RepeaterCAD(TM) radio frequency network design and application
services
Picture 4 Graphic: Picture of OfficeCell (electronic equipment)
Picture 4 Text: OfficeCell(TM) fiber-optic distributed antenna system for
in-building coverage
Picture 5 Graphic: Picture of RepeaterNet (Computer rack)
Picture 5 Text: RepeaterNet(TM) network management system
Picture 6 Graphic: Picture of RepeaterStar antenna
Picture 6 Text: RepeaterStar(TM) Donor Antenna
Page 34
[NETWORK REPEATER CELL SITE GRAPHIC]
Inside Back Cover:
Title: "From Concept to Reality"
Graphics include 3 columns and 6 rows with text in the first column (describing
the illustrations and photographs to the immediate right) illustrations in the
second column which are artist renditions of concepts (concept), and photographs
and illustrations in the third column which are actual implementations of
repeaters (reality).
First Row.
Left (Concept) Picture: Drawing of a RepeaterHybrid Network
Middle Text: RepeaterHybrid Networks can reduce conventional base station
deployment. The Lifecom network uses 24 Network Repeaters and 6 base stations.
Right (Reality) Picture: A drawing of the Lifecom network showing the 24
repeaters and 6 base stations.
Second Row.
Left (Concept) Picture: Car driving through tunnel
Middle Text: Network Repeaters help fill gaps in coverage like in the Presidio
Tunnel in San Francisco, CA
Right (Reality) Picture: Actual photo of tunnel
Third Row.
Left (Concept) Picture: Car driving down downtown street
Middle Text: Five Network Repeaters provide coverage in urban canyons in the
financial district of San Francisco, CA.
Right (Reality) Picture: A photo of the financial district of San Francisco
Fourth Row.
Left (Concept) Picture: Car driving down rural highway
Middle Text: RepeaterHybrid Networks can extend the coverage of base stations
along a highway like this section of I-5 in California employing eight repeaters
and one base station.
Right (Reality) Picture: A map showing of I-5 showing where the eight repeaters
and one base station are placed along the highway.
Fifth Row.
Left (Concept) Picture: Repeater on the rooftop of building
Middle Text: Two Network Repeaters help provide the coverage in four department
stores and parking garages at the Mall of America in Minneapolis, MN.
Right (Reality) Picture: An aerial photograph of the Mall of America
Sixth Row.
Left (Concept) Picture: Man talking on wireless handset inside a building.
Middle Text: Repeater Technologies provides in-building coverage to the stadium
offices at Ericsson stadium in Charlotte, NC.
Right (Reality) Picture: Aerial photograph of Ericsson stadium.
<PAGE> 4
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE
HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT
MAKING AN OFFER OF THESE SECURITIES IN ANY STATE WHERE THE OFFER IS NOT
PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION PROVIDED BY THIS
PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE OF THIS PROSPECTUS.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.......................................... 1
Risk Factors................................................ 5
Special Note Regarding Forward-Looking Statements........... 13
Use of Proceeds............................................. 14
Dividend Policy............................................. 14
Capitalization.............................................. 15
Dilution.................................................... 16
Selected Financial Data..................................... 17
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 18
Business.................................................... 26
Management.................................................. 38
Principal Stockholders...................................... 47
Certain Transactions........................................ 49
Description of Capital Stock................................ 51
Shares Eligible for Future Sale............................. 54
United States Federal Income Tax Consequences to Non-U.S.
Holders................................................... 56
Underwriting................................................ 59
Legal Matters............................................... 61
Experts..................................................... 61
Change in Independent Accountants........................... 61
Additional Information...................................... 62
Index to Financial Statements............................... F-1
</TABLE>
Until , 2000, all dealers that buy, sell or trade the common
stock, whether or not participating in this offering, may be required to deliver
a prospectus. This is in addition to the dealers' obligation to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
i
<PAGE> 5
PROSPECTUS SUMMARY
This summary highlights certain information contained elsewhere in this
prospectus. This summary is not complete and does not contain all of the
information you should consider before investing in our common stock. You should
read the entire prospectus carefully, especially the risks of investing in our
common stock discussed under "Risk Factors."
REPEATER TECHNOLOGIES, INC.
We are a wireless infrastructure supplier that develops, markets and sells
coverage solutions primarily for CDMA-based cellular and PCS, or wireless,
communications networks. We provide cost-effective, high quality coverage
systems for use in suburban and rural areas, urban areas and inside office
buildings and other coverage-limited structures. Our coverage solutions have
been deployed with over 40 CDMA wireless service providers in ten countries.
Our coverage solutions are based on our Network Repeater technology that
expands the coverage area of a wireless network. Our Network Repeater receives,
amplifies and re-transmits voice and data signals between mobile handsets and
base stations and uses an operator's existing radio frequency, or RF, spectrum
to provide the necessary connection to the wireless network.
Our RepeaterHybrid Network outdoor coverage systems incorporate a number of
our products and services, including our family of Network Repeaters, antenna
systems, network management systems and network design optimization services.
These products are used in conjunction with third-party base stations to
increase coverage at significantly reduced cost by reducing the number of
required base stations, related communication links and other network
infrastructure equipment. We have deployed 20 RepeaterHybrid Networks with 12
service providers.
Our Distributed Antenna System provides in-building coverage using coaxial
cable and small antennas. Our OfficeCell distributed antenna system, currently
under development, will provide in-building coverage utilizing fiber-optic cable
to link distributed antennas for increased flexibility and broader coverage.
These systems can be used in a wide range of indoor coverage areas, including
office buildings, shopping malls, sports arenas and tunnels. Our in-building
coverage products offer low cost, ease of installation and remote monitoring via
our proprietary network management system. We have deployed our coaxial cable
Distributed Antenna System with 16 service providers in six countries.
OUR MARKET OPPORTUNITY
In recent years, there has been substantial growth in the number of
wireless subscribers. The Strategis Group, a communications industry research
group, estimates that the number of worldwide wireless subscribers will increase
from approximately 286 million in 1998 to 693 million in 2003, representing a
compound annual growth rate of 19.4%. The Strategis Group also estimates that
the number of wireless subscribers utilizing CDMA-based handsets worldwide will
grow from approximately 18 million in 1998 to approximately 143 million in 2003,
representing a compound annual growth rate of 51.6%. To meet the growing demand
for wireless services, wireless service providers are increasingly focusing on
expanding network coverage in order to increase the number of new subscribers
and reduce subscriber turnover, or "churn", resulting from coverage limitations.
Both existing wireless service providers and new entrants to the
competitive wireless markets face the challenge of rapidly expanding coverage
with limited capital and operating resources. CDMA base stations are designed to
support high capacity networks in densely populated urban centers and do not
scale well to low-density/low-utilization markets. In addition, the need for a
high capacity digital telephone connection, typically through a T-1 line, to the
network from each base station results in significant capital and
1
<PAGE> 6
operating expenses. In response to the challenges faced by wireless service
providers, we offer solutions with the following key benefits:
- Reduced capital costs;
- Lower operating costs;
- Network compatibility;
- Scalable capacity and coverage;
- High quality RF coverage; and
- High level of support.
OUR STRATEGY
Our goal is to be the leader in the development and deployment of CDMA
wireless coverage enhancement solutions. To achieve this goal, our strategy is
to:
- Continue to expand our installed base of Network Repeaters;
- Expand our in-building capabilities;
- Establish a market leadership position in 3G wireless networks;
- Focus on network design and customer support; and
- Pursue strategic acquisitions.
CORPORATE INFORMATION
We are incorporated in Delaware. Our principal executive offices are
located at 1150 Morse Avenue, Sunnyvale, California 94089 and our telephone
number is (408) 747-1900. Information contained on our web site does not
constitute part of this prospectus.
Repeater Technologies, Network Repeater, RepeaterHybrid Network,
OfficeCell, Distributed Antenna System, RepeaterPower, RepeaterStar,
RepeaterNet, RepeaterCAD and RepeaterMate are trademarks or trade names of
Repeater Technologies, Inc. Each trademark, trade name or service mark of any
other company that appears in this prospectus belongs to its holder.
2
<PAGE> 7
THE OFFERING
Common stock offered................ shares
Common stock outstanding after this
offering............................ shares
Use of proceeds..................... We intend to use the net proceeds from
this offering primarily for general
corporate purposes, including working
capital, research and development,
sales and marketing, network design
services, capital expenditures and
potential acquisitions.
Proposed Nasdaq National Market
symbol.............................. RPTR
------------------
Unless otherwise indicated, all information contained in this prospectus,
including the outstanding share information above, is based on the number of
shares outstanding as of December 24, 1999 and:
- assumes our reincorporation in the State of Delaware and filing of our
restated certificate of incorporation;
- includes 10,117,088 shares of common stock issuable upon conversion of
all outstanding shares of preferred stock into shares of common stock
upon the closing of this offering;
- includes 2,727,263 shares of common stock issuable at a conversion price
of $5.50 per share upon the conversion of outstanding convertible
subordinated debentures that will convert upon the closing of this
offering;
- includes 1,069,349 shares of common stock issuable upon the exercise of
outstanding warrants having a weighted average exercise price of $2.04
per share, which will expire if not exercised by 5:00 p.m. on the date of
the closing of this offering;
- excludes 3,044,176 shares of common stock issuable upon the exercise of
outstanding options having a weighted average exercise price of $1.42 per
share;
- excludes shares of common stock issuable upon exercise of options
granted from December 25, 1999 to February 15, 2000 at a weighted average
exercise price of $ per share.
- excludes 122,895 shares of common stock issuable upon the exercise of
outstanding warrants having a weighted average exercise price of $5.05
per share;
- assumes no exercise of the underwriters' option to purchase up to
additional shares of common stock to cover
over-allotments; and
- assumes an initial public offering price of $ per share, the
midpoint of the initial public offering price range.
3
<PAGE> 8
SUMMARY FINANCIAL DATA
The following table summarizes the financial data for our business during
the periods indicated. You should read this information together with our
financial statements, the notes to those statements beginning on page F-1 of
this prospectus, and the information under "Selected Financial Data,"
"Capitalization" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
<TABLE>
<CAPTION>
YEARS ENDED NINE MONTHS ENDED
--------------------------------------------------------- ---------------------------
MARCH 31, MARCH 31, MARCH 31, MARCH 27, MARCH 26, DECEMBER 25, DECEMBER 24,
1995 1996 1997 1998 1999 1998 1999
--------- --------- --------- --------- --------- ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF
OPERATIONS DATA:
Net revenues.......... $11,696 $ 10,302 $10,581 $ 7,770 $ 9,612 $ 7,688 $ 12,321
Gross profit (loss)... 4,612 732 1,226 (1,037) 749 692 3,939
Loss from
operations.......... (676) (5,808) (5,937) (12,707) (10,270) (7,393) (9,079)
Net loss.............. (886) (5,816) (5,973) (12,628) (10,570) (7,347) (10,183)
Net loss per common
share, basic and
diluted............. $(22.15) $(153.05) $ (3.16) $ (5.31) $ (4.46) $ (3.10) $ (4.15)
======= ======== ======= ======== ======== ======= ========
Shares used in net
loss per common
share
calculation -- basic
and diluted......... 40 38 1,893 2,376 2,367 2,367 2,453
======= ======== ======= ======== ======== ======= ========
Pro forma net loss per
common share --basic
and diluted
(unaudited)......... $ (0.78) $ (0.67)
======== ========
Shares used in pro
forma net loss per
common share
calculation -- basic
and diluted
(unaudited)......... 13,500 15,297
======== ========
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 24, 1999
-----------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
------- --------- -----------
(IN THOUSANDS, UNAUDITED)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.................................. $ 8,591 $ 10,772
Working capital............................................ 8,341 10,522
Total assets............................................... 21,700 23,881
Other long-term debt....................................... 3,710 3,710
Convertible subordinated debentures........................ 15,000 --
Total stockholders' equity (deficit)....................... (3,666) 13,515
</TABLE>
- ------------------------
Pro forma gives effect to the automatic conversion of all of our
outstanding shares of preferred stock into 10,117,088 shares of our common
stock, all of our convertible debentures into 2,727,263 shares of our common
stock and the exercise of outstanding warrants exercisable for 1,069,349 shares,
which will expire if not exercised by 5:00 p.m. on the date of the closing of
this offering.
Pro forma as adjusted gives effect to this offering and the automatic
conversion of all of our outstanding shares of preferred stock into 10,117,088
shares of our common stock, all of our convertible debentures into 2,727,263
shares of our common stock and the exercise of outstanding warrants exercisable
for 1,069,349 shares, which will expire if not exercised by 5:00 p.m. on the
date of the closing of this offering.
4
<PAGE> 9
RISK FACTORS
Investing in our common stock involves a high degree of risk, including
those described below. If any of these risks occur, the market price of our
common stock could decline and you could lose all or part of your investment.
WE HAVE INCURRED SIGNIFICANT LOSSES SINCE WE BEGAN DOING BUSINESS, ANTICIPATE
CONTINUING LOSSES, AND MAY NEVER ACHIEVE OR SUSTAIN PROFITABILITY.
We have accumulated losses of $51.0 million since we began doing business
in 1983 through December 24, 1999, and we may never achieve or sustain
profitability. We incurred a net loss of $6.0 million for the fiscal year ended
March 31, 1997, a net loss of $12.6 million for the fiscal year ended March 27,
1998, a net loss of $10.6 million for the fiscal year ended March 26, 1999, and
a net loss of $10.2 million for the nine months ended December 24, 1999. We will
need to generate significantly higher revenues to achieve and sustain
profitability and cannot be certain that we will realize sufficient revenues or
margins to sustain our business. We will continue to incur significant expenses,
particularly research and product development and sales and marketing expenses,
and we expect our expenses to increase as compared to prior periods. We
anticipate incurring net losses at least through the fiscal year ended March
2001.
OUR QUARTERLY REVENUES AND OPERATING RESULTS MAY FLUCTUATE SIGNIFICANTLY.
Our quarterly operating results have fluctuated significantly in the past
and are likely to do so in the future. Factors that could cause our quarterly
results to fluctuate include:
- the timing of orders from and shipments to major customers and possible
cancellation of orders;
- any delay in our introduction of new products or product enhancements;
- any delay in shipments caused by component shortages or other
manufacturing problems or regulatory issues;
- the concentration of customer orders at the end of a quarter which can
result in products shipping in the following quarter;
- the reduction in the selling price of our products;
- the loss of a major customer;
- customer responses to announcements of new products and product
enhancements by competitors and the entry of new competitors into our
markets; and
- general economic conditions in the markets served by our customers.
If our operating results do not meet the expectations of securities
analysts and investors, our stock price is likely to decline.
OUR LENGTHY AND VARIABLE SALES CYCLE MAKES IT DIFFICULT FOR US TO PREDICT IF AND
WHEN A SALE WILL BE MADE AND COULD LEAD TO OPERATING DIFFICULTIES AND CASH FLOW
PROBLEMS.
Our sales cycle, which is the period from the generation of a sales lead
until the recognition of revenues, ranges from nine to 24 months, making it
difficult to forecast revenues and operating results. Our inability to
accurately predict the timing and magnitude of sales of our products and
services could cause a number of problems:
- we may have difficulty meeting our customers' product delivery
requirements in the event many orders are received in a short period of
time, as we generally do not carry large amounts of finished goods in
inventory;
5
<PAGE> 10
- we may expend significant management efforts and incur substantial sales
and marketing expenses in a particular period that do not translate into
orders during that period, or at all;
- we may have difficulty in reducing planned expenditures if our
expectations of future sales are not met; and
- we may have difficulty meeting our cash flow requirements and obtaining
credit because of delays in receiving orders.
The problems resulting from our lengthy and variable sales cycle could
impede our growth, cause fluctuations in our operating results, adversely affect
our stock price and restrict our ability to take advantage of new opportunities.
WE DO NOT TYPICALLY HAVE A SIGNIFICANT SALES BACKLOG AND THEREFORE MAY INCUR
EXPENSES FOR EXCESS INVENTORY OR BE UNABLE TO MEET CUSTOMER PRODUCT
REQUIREMENTS.
We do not have a significant sales backlog because our customers typically
only give us purchase orders with short lead times. However, our contract
manufacturers require commitments from us so that they can allocate capacity and
be assured of having adequate components and supplies from third parties.
Failure by us to accurately estimate product demand could cause us to have
excess inventory or prohibit us from meeting customer product requirements. In
the past, we have publicly announced the signing of certain contracts or
purchase orders from major customers and their expected value or sales volume
for us. However, these contracts typically require no minimum purchase
commitment and the purchase orders are typically subject to cancellation in
significant part. While we continue to internally estimate specific customer
sales volumes for business planning purposes, none of our prior estimates should
be regarded as purchase commitments or indicative of our current estimates or
expectations. We do not plan to update or confirm any contract or purchase order
amounts previously announced.
A SMALL NUMBER OF CUSTOMERS ACCOUNT FOR A SUBSTANTIAL PORTION OF OUR REVENUES
AND THE LOSS OF ANY OF THESE CUSTOMERS COULD HARM OUR RESULTS AND CAUSE OUR
STOCK PRICE TO DECLINE.
Our customer base has been and may continue to be concentrated with a small
number of customers. The loss of any of these customers, or the delay, reduction
or cancellation of orders by or shipments to any of these customers, could hurt
our results and cause a decline in our stock price. In the fiscal year ended
March 1997, ten customers accounted for 76.1% of our net revenues, with Eriline
Telecom accounting for 38.4%. In the fiscal year ended March 1998, ten customers
accounted for 69.9% of our net revenues, with Eriline Telecom and Telus
accounting for 18.4% and 14.9%, respectively. In the fiscal year ended March
1999, ten customers accounted for 52.0% of our net revenues, with Clearnet PCS
accounting for 10.6%. In the nine months ended December 24, 1999, ten customers
accounted for 66.8% of our net revenues, with PrimeCo and Clearnet PCS
accounting for 14.8% and 12.4%, respectively. When our products have been fully
deployed in a customer's network or a customer's demands are otherwise
satisfied, we must replace that customer's sales with those of new customers in
order to maintain our sales volume.
In addition, we face increased credit risks, including slow payments or
non-payments, due to the concentration of our customer base. In March 1999, we
increased our allowance for doubtful accounts by $0.7 million due to the
bankruptcy of a customer.
IF WE ARE UNABLE TO OBTAIN OR MAINTAIN VENDOR QUALIFICATION WITH NATIONWIDE
WIRELESS NETWORK OPERATORS, OUR ABILITY TO SELL OUR PRODUCTS WOULD BE IMPAIRED
AND OUR REVENUES WOULD LIKELY DECLINE.
Many of our current and potential customers are large major network
operators or affiliates of nationwide wireless network operators. In order to
sell our products to these affiliates, our products must be authorized for
purchase by the network operator.
6
<PAGE> 11
INTENSE COMPETITION FROM LARGER, MORE ESTABLISHED COMPANIES WITH GREATER
RESOURCES COULD LEAD TO PRICE REDUCTIONS, LOSS OF REVENUES AND LOSS OF MARKET
SHARE AND COULD PREVENT US FROM ACHIEVING PROFITABILITY.
The market for base stations, repeaters and related products is highly
competitive. We compete with large infrastructure manufacturers, systems
integrators, repeater manufacturers and base station subsystem suppliers, as
well as new market entrants. Most of our current and potential competitors have
longer operating histories, larger installed customer bases, substantially
greater name recognition and more financial, technical, manufacturing,
marketing, sales, distribution and other resources than we do. We may not be
able to compete successfully against current and future competitors, including
companies that develop and market new wireless telecommunications products and
services. If we are forced to reduce the prices of our products and we are
unable to offset the price reductions by increasing our sales volumes,
introducing new products with higher prices or reducing manufacturing costs, our
revenues or gross margins will decline. These competitive pressures may also
result in longer sales cycles and loss of customers.
OUR DEPENDENCE ON A LIMITED NUMBER OF TURN-KEY CONTRACT MANUFACTURERS FOR MOST
OF OUR PRODUCTS MAY DIMINISH OUR ABILITY TO CONTROL THE QUALITY AND TIMING OF
DELIVERY OF OUR PRODUCTS.
We have recently transitioned the manufacture of our products from in-house
to three third-party turn-key contract manufacturers. There are risks associated
with our dependence on contract manufacturers, including the contract
manufacturers' control of capacity allocation, labor relations, production
quality and other aspects of the manufacturing process. While we have
established quality control processes with our contract manufacturers, we cannot
guarantee that these processes are adequate or that our contract manufacturers
comply with these procedures. Any resulting product quality problems may cause
us to lose customers.
Any one of our repeater products is generally produced by only one of our
contract manufacturers. We do not have long-term supply contracts with our
contract manufacturers, and they are not obligated to supply us with products
for any specific period, in any specific quantity or at any specific price,
except as may be provided in a particular purchase order. If we are unable to
obtain our products from our contract manufacturers on schedule, revenues from
the sale of those products may be delayed or lost, and our reputation,
relationships with customers and our business could be harmed. In addition, if
we must replace one of our contract manufacturers, we could incur significant
expenses and experience substantial disruption to our business.
OUR TURN-KEY CONTRACT MANUFACTURERS' RELIANCE ON A LIMITED NUMBER OF COMPONENT
SUPPLIERS COULD LEAD TO DELAYS, ADDITIONAL COSTS, PROBLEMS WITH OUR CUSTOMERS
AND POTENTIAL CUSTOMERS AND LOSS OF REVENUES.
Our turn-key contract manufacturers currently utilize one or a small number
of suppliers for each of the components of our products. In particular, there is
currently only one supplier of high power amplifiers, a critical component for a
Network Repeater, that meets our quality standards. Our contract manufacturers
have no long-term contracts or arrangements with the suppliers of components for
our products that guarantee the availability of these components. If for any
reason a supplier fails to meet quality or quantity requirements, or stops
selling components at commercially reasonable prices, we could experience
significant production delays from our contract manufacturers or cost increases.
From time to time, our contract manufacturers may be required to replace some of
the components of our products when the supplier of a particular component
discontinues production. While we do not generally maintain an inventory of
components, we may purchase a quantity of these discontinued components to
supply to our contract manufacturers until new suppliers or substitute
components can be found. We face the risk that we may deplete this inventory of
discontinued components before finding adequate substitutes, which could cause
the loss of significant sales opportunities. Alternatively, we may be left with
surplus quantities of these components, which could cause us to incur charges
for excess inventory. We cannot guarantee that alternative sources of components
can be secured on short notice or that components will be available from
alternative sources on satisfactory terms. Any of these problems could damage
relationships with current or
7
<PAGE> 12
prospective customers, seriously harm our operating results and revenues in a
given period and impair our ability to generate future sales.
DUE TO UNCERTAINTIES IN PRODUCTION FORECASTING, WE MAY EXPERIENCE UNEXPECTED
SURPLUSES OR SHORTAGES OF INVENTORY.
Our contracts with turn-key manufacturers require us to provide a rolling
six-month forecast for production each month. The forecast for the first two
months of the six-month forecast are considered firm purchase orders. If we fail
to accurately predict our customers' demand for our products, we may be subject
to shortages of certain products and surpluses of other products. If we fail to
have an adequate supply of inventory for our products, we may be subject to
cancellation of orders from our customers for these products. In addition, if we
have a surplus of certain products, we may incur charges for excess or obsolete
inventory.
Some of the components of our products may have lead times of as long as 12
to 20 weeks from the date a purchase order is placed with the supplier to the
date the components are delivered to our turn-key manufacturers. In order to
ensure an adequate supply of these components, we may be required to purchase
the components ourselves and then resell them to our turn-key manufacturers to
meet our forecasted requirements. If we fail to accurately predict the demand
for these components, we may face shortages and potentially lose sales, or
alternatively incur charges for excess or obsolete inventory.
OUR INABILITY TO PROVIDE LONG-TERM EQUIPMENT FINANCING FOR OUR CUSTOMERS IS A
COMPETITIVE DISADVANTAGE AND COULD RESULT IN A LOSS OF SALES.
Many of our current and potential customers require equipment financing to
purchase our products. We do not offer long-term equipment financing to our
customers. If we cannot assist in arranging long-term equipment financing for
our customers, we may lose sales and customers to competitors that provide such
financing. Additionally, if we decide to provide our customers with long-term
equipment financing in the future, we could face credit risks, including slow
payments or non-payments from customers.
WE PLAN TO EXPAND FURTHER INTO INTERNATIONAL MARKETS, WHICH WILL SUBJECT US TO
ADDITIONAL BUSINESS RISKS.
A significant portion of our sales efforts has been and will continue to be
targeted to international service providers. Conducting business internationally
subjects us to a number of risks and uncertainties, including:
- inadequate protection of intellectual property in foreign countries;
- increased difficulty in collecting accounts;
- dependence upon independent sales representatives and other indirect
resellers who may not be as effective and reliable as our employees;
- unexpected changes in regulatory requirements;
- delays and expenses associated with tariffs and other trade barriers;
- difficulties and costs associated with complying with a wide variety of
complex foreign laws and treaties;
- currency fluctuations, including a decrease in the value of foreign
currencies relative to the U.S. dollar which could make our products less
competitive against those of foreign competitors;
- difficulties and costs associated with staffing and managing
international operations;
- political and economic instability; and
- adverse tax consequences.
8
<PAGE> 13
Any of the factors described above could impair our ability to continue
expanding into international markets and could prevent us from increasing our
revenues and achieving profitability. We expect to establish turn-key contract
manufacturing operations in China and Brazil during our fiscal year ending March
2001 which could further subject us to the risks described above, particularly
the difficulty of protecting intellectual property rights.
WE HAVE DEVELOPED A PRODUCT LINE PRIMARILY BASED ON THE CDMA STANDARD AND WE MAY
NOT SUCCEED IF CDMA IS NOT WIDELY ACCEPTED.
We have concentrated our efforts on the development and sale of products
specific to CDMA technology. CDMA is the newest wireless communications
technology standard and has yet to achieve the market penetration of other more
established digital standards, including TDMA and GSM. If CDMA technology is not
widely accepted by wireless service providers, the demand for our products will
not be as large as we are anticipating. A decline in demand for our current
products could have a significant negative impact on our results of operations.
In addition, a decline in demand may require us to develop new products
compatible with other wireless technology standards, which would cause us to
experience significant production delays and cost increases with no assurance of
new product acceptance.
IF WE DO NOT DEVELOP NEW PRODUCTS AND PRODUCT FEATURES THAT ARE RESPONSIVE TO
CHANGING TECHNOLOGIES AND CUSTOMER DEMANDS, CUSTOMERS MAY NOT PURCHASE OUR
PRODUCTS.
The marketplace for our products is characterized by rapidly changing
technology, evolving wireless transmission standards, and frequent new product
introductions and enhancements. We need to continually develop new products and
product features in response to the evolving demands of the marketplace. The
development of new or enhanced products is a complex and uncertain process and
we may experience design, manufacturing, marketing and other difficulties in the
development of these products. If we are unable to successfully develop,
introduce or manage new products or product enhancements in a timely manner or
at all, market acceptance and sales of our products may decline.
BECAUSE OUR PRODUCTS ARE DEPLOYED IN COMPLEX NETWORKS, THEY MAY HAVE ERRORS OR
DEFECTS THAT WE FIND ONLY AFTER DEPLOYMENT, WHICH IF NOT REMEDIED, COULD HARM
OUR BUSINESS.
Our products are highly complex, designed to be deployed in complicated
networks and may contain undetected defects, errors or failures. Although our
products are tested during manufacturing prior to deployment, they can only be
fully tested when deployed in commercial networks. Consequently, our customers
may discover errors after the products have been deployed. The occurrence of any
defects, errors or failures could result in installation delays, product
returns, diversion of our resources, increased service and warranty costs, legal
actions by our customers, increased insurance costs and other losses to us or to
our customers or end users. Any of these occurrences could also result in the
loss of or delay in market acceptance of our products, which would harm our
business and adversely affect our operating results and financial condition.
WE MAY NOT BE ABLE TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY RIGHTS WHICH
COULD HARM OUR ABILITY TO COMPETE.
Although we attempt to protect our intellectual property rights through
patents, patent applications, trademarks, trade secrets, copyrights,
confidentiality and nondisclosure agreements and other measures, intellectual
property is difficult to protect and these measures may not provide adequate
protection for our proprietary rights and information. Competitors may
misappropriate our proprietary rights and information. Disputes as to ownership
of intellectual property may arise, and our proprietary rights and information
may otherwise become known or independently developed by competitors. Any
failure to adequately protect our intellectual property could significantly
impair our ability to compete and limit our growth and future revenues.
9
<PAGE> 14
WE MAY BE SUBJECT TO INTELLECTUAL PROPERTY RIGHTS DISPUTES.
Intellectual property rights held by third parties could render our
intellectual property less valuable, require us to license competing
technologies, redesign our products or discontinue sale of our products. In
addition, third party claims of infringement or indemnification may be asserted
or prosecuted against us. Even if none of these claims is valid or successful,
we could be forced to incur significant costs and divert management resources to
defend against them.
A SIGNIFICANT DECREASE IN THE COST OF COMMUNICATION LINKS AND, IN PARTICULAR T-1
PHONE LINES, WOULD DIMINISH ONE OF OUR COMPETITIVE ADVANTAGES.
Unlike our repeater products, current base stations require an expensive
communications link, usually through a T-1 phone line, to the wireline network.
Any significant decrease in the cost of communication links used to connect base
stations to the local telephone network, especially in less populated areas,
will diminish a cost saving that our customers experience from using our
product. If the cost of communication links decline, we may have to lower our
product prices or experience a decline in orders, either one of which could
result in decreased revenues and margins.
OUR INDUSTRY IS SUBJECT TO EXTENSIVE GOVERNMENT REGULATION THAT COULD CAUSE
SIGNIFICANT DELAYS AND EXPENSE.
The wireless telecommunications industry is subject to extensive government
regulation. For example, any failure of domestic and international regulatory
authorities to allocate suitable frequency spectrum could limit our growth
opportunities and our future revenues. In addition, our products require
regulatory compliance which could be expensive and may require time-consuming
and costly modifications. If we fail to conform our products to regulatory
requirements or experience any delays in obtaining regulatory approvals, we
could lose sales.
IF WE FAIL TO MANAGE OUR GROWTH EFFECTIVELY, OUR BUSINESS AND PROSPECTS COULD BE
SERIOUSLY HARMED.
The challenge of managing our growth will place a significant strain on our
planning and management capabilities. To manage our expected growth of
operations and personnel, we will need to:
- improve financial and operational controls, as well as our reporting
systems and procedures;
- install new management information systems; and
- hire, train, motivate and manage our sales and marketing, engineering,
technical, finance and customer service employees.
If we cannot effectively hire and manage new employees or monitor, manage
and control expanded operations, our business and prospects could be seriously
harmed.
IF WE LOSE KEY PERSONNEL OR ARE UNABLE TO HIRE ADDITIONAL QUALIFIED PERSONNEL,
WE MAY NOT BE SUCCESSFUL.
Our future success largely depends on our ability to attract and retain
qualified personnel, particularly highly-skilled engineers. The market for
qualified personnel is highly competitive and if we cannot attract and retain
these personnel, it would significantly limit our ability to compete and to grow
our business.
WE HAVE ENGAGED IN ACQUISITIONS AND MAY ENGAGE IN FUTURE ACQUISITIONS THAT MAY
SUBJECT US TO VARIOUS OPERATIONAL AND FINANCIAL RISKS.
We have in the past and expect in the future to acquire other businesses or
technologies that complement our products, expand the breadth of our product
offerings, enhance our technical capabilities,
10
<PAGE> 15
help secure critical sources of supply, or that may otherwise offer growth
opportunities. In connection with acquisitions, we may incur operational and
financial risks, including:
- difficulties in combining operations, personnel, technologies or
products;
- unanticipated costs;
- risks associated with entering markets in which we have no or limited
prior experience;
- diversion of management's attention from our core business;
- adverse effects on existing business relationships with suppliers and
customers;
- issuing stock that would dilute our current stockholders' percentage
ownership;
- incurring debt; and
- assumption of liabilities.
WE MAY NOT BE ABLE TO RAISE ADDITIONAL CAPITAL ON ACCEPTABLE TERMS, OR AT ALL.
We may require additional funding, which may not be available on terms that
are acceptable. If we issue equity securities, existing stockholders may
experience dilution or the new equity securities could have rights, preferences
and privileges senior to those of existing stockholders. If additional funds are
raised through the issuance of debt securities, such securities would have
rights, preferences and privileges senior to holders of common stock. If we
cannot raise funds on acceptable terms, we may not be able to develop or enhance
our products, take advantages of future opportunities or respond to competitive
pressures or unanticipated requirements.
IF WE OR OUR KEY SUPPLIERS OR CUSTOMERS FAIL TO BE YEAR 2000 COMPLIANT, WE MAY
INCUR SIGNIFICANT UNEXPECTED EXPENSES, EXPERIENCE BUSINESS INTERRUPTIONS AND
DELAYS, LOSE EXISTING OR POTENTIAL CUSTOMERS AND ORDERS AND EXPERIENCE OTHER
CONSEQUENCES THAT ARE HARMFUL TO OUR BUSINESS.
Even though we have not experienced any significant problems as a result of
entering the year 2000, we may have undiscovered problems in our computerized
management systems or our products that may cause our common stock to incur
significant time and expenditures to correct. Any failure in year 2000
compliance may cause us to lose customers, incur significant costs and result in
reduced revenues and increased losses, warranty claims and litigation. In
addition, if our customers or suppliers fail to be year 2000 compliant, it could
result in interruptions in supply, failure of our products to operate correctly
and delays in order fulfillment and payment. These potential year 2000-related
difficulties could adversely affect our results of operations.
THERE HAS BEEN NO PRIOR MARKET FOR OUR COMMON STOCK, AND OUR STOCK PRICE MAY
DECLINE AFTER THIS OFFERING.
There previously has been no public market for our common stock. We cannot
predict the extent to which investor interest in our common stock will lead to
the development of a liquid trading market. The initial public offering price
for the shares will be determined by negotiations between us and the
representatives of the underwriters and may not be indicative of prices that
will prevail in the trading market. The market price of our common stock could
be subject to wide fluctuations in response to the risk factors listed in this
section. In recent years the stock market has experienced significant price and
volume fluctuations. Our common stock may also experience volatility unrelated
to our operating performance, including:
- performance of comparable companies;
- news announcements and other developments with respect to our industry or
our competitors; and
- changes in general economic conditions.
11
<PAGE> 16
A NUMBER OF SHARES ARE OR WILL BE ELIGIBLE FOR FUTURE SALE WHICH MAY DEPRESS OUR
STOCK PRICE.
Sales of a large number of shares of our common stock in the market after
this offering, or the belief that these sales could occur, could cause a drop in
the market price of our common stock. Upon completion of this offering, we will
have outstanding shares of common stock. All of the shares sold
in this offering will be freely tradable without restriction or further
registration under the Securities Act of 1933, unless the shares are purchased
by our "affiliates," as that term is defined under the Securities Act. The
remaining 17,087,449 shares of common stock outstanding upon completion of this
offering will be "restricted securities," as that term is defined under Rule 144
of the Securities Act. Of these shares:
- shares will become eligible for resale beginning 180 days
after the date of this prospectus;
- shares will become freely tradeable after ,
2000; and
- shares will become freely tradeable after ,
2000.
See "Shares Eligible For Future Sale."
YOU WILL INCUR IMMEDIATE SUBSTANTIAL DILUTION OF THE BOOK VALUE OF OUR COMMON
STOCK THAT YOU PURCHASE IN THIS OFFERING.
The initial public offering price of our common stock is substantially more
than the pro forma net tangible book value per share of our common stock after
giving effect to conversion of all of our convertible preferred stock,
convertible debentures and the exercise of outstanding warrants for 1,069,349
shares. As a result, holders who purchase our common stock pursuant to this
offering will experience immediate and substantial dilution in the pro forma net
tangible book value per share of our common stock from the initial public
offering price. The pro forma net tangible book value dilution to new investors
in this offering will be $ per share at an assumed initial public
offering price of $ per share. The exercise of options and warrants
outstanding after this offering will result in further dilution to you.
OUR CERTIFICATE OF INCORPORATION AND BYLAWS, AS WELL AS PROVISIONS OF DELAWARE
LAW, COULD DISCOURAGE POTENTIAL ACQUISITIONS OF OUR COMPANY THAT STOCKHOLDERS
MAY CONSIDER FAVORABLE.
Certain provisions of our certificate of incorporation, our bylaws and
Delaware law may discourage, delay or prevent a merger or acquisition that
stockholders may consider favorable. This could have an adverse effect on the
market price of our common stock or prevent our stockholders from realizing a
premium over the market price for their shares of our common stock. See
"Description of Capital Stock" for a discussion of these anti-takeover
provisions.
CONTROL BY OUR EXISTING STOCKHOLDERS WILL LIMIT YOUR ABILITY TO INFLUENCE THE
OUTCOME OF MATTERS REQUIRING STOCKHOLDER APPROVAL AND COULD DISCOURAGE POTENTIAL
ACQUISITIONS OF OUR COMPANY BY THIRD PARTIES.
We anticipate that our executive officers, directors and entities
affiliated with them, along with the current holders of more than 5% of our
equity, will, in the aggregate, beneficially own approximately % of our
outstanding common stock following the completion of this offering. These
stockholders, if acting together, would be able to exert a significant degree of
influence over our management and affairs and over matters requiring approval by
our stockholders, including the election of our board of directors and the
approval of mergers or other business combination transactions. This
concentration of ownership could have the effect of delaying or preventing a
change in our control or otherwise discourage a potential acquiror from
attempting to obtain control of us, which in turn could have an adverse effect
on the market price of our common stock or prevent our stockholders from
realizing a premium over the market price for their shares of our common stock.
12
<PAGE> 17
WE MAY APPLY THE PROCEEDS OF THIS OFFERING TO USES THAT DO NOT IMPROVE OUR
OPERATING RESULTS OR MARKET VALUE.
We will have considerable discretion to use the net proceeds of this
offering for our business, and you will not have the opportunity as part of your
investment decision to assess whether the proceeds are being used appropriately.
The net proceeds may be used for corporate purposes that do not improve our
operating results or our market value. Pending application of the net proceeds,
they may be placed in investments that do not produce income or that lose value.
See "Use of Proceeds" for more information on our application of the net
proceeds.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that relate to future
events or our future financial performance. In some cases, you can identify
forward-looking statements by terminology such as "may," "will," "should,"
"expects," "plans," "anticipates," "believes," "estimates," "predicts,"
"intends," "potential" or "continue" or the negative of such terms or other
comparable terminology. These statements are only predictions. Although we
believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of various factors,
including the risks outlined in this "Risk Factors" section and elsewhere in
this prospectus.
13
<PAGE> 18
USE OF PROCEEDS
Our net proceeds from this offering, based on an assumed initial public
offering price of $ per share, are estimated to be $ million, or $
million if the underwriters' over-allotment option is exercised in full, after
deducting the estimated underwriting discount and estimated offering expenses.
We intend to use the net proceeds of this offering primarily for general
corporate purposes, including working capital, expansion of our engineering
organization, product development programs, sales and marketing capabilities,
network design services and general and administrative functions and capital
expenditures. We may also use a portion of the net proceeds to invest in
complementary businesses, license other technology or make potential
acquisitions.
The use of proceeds has not been specifically identified due to the
flexible nature of our planning process. The amounts we actually expend for
general corporate purposes will vary significantly depending on a number of
factors, including revenue growth, if any, and the amount of cash we generate
from operations. As a result, we will retain broad discretion in the allocation
and use of the net proceeds of this offering. Pending the uses described above,
we intend to invest the net proceeds from this offering in short-term,
investment grade, interest bearing securities.
DIVIDEND POLICY
We have never paid or declared dividends on our common stock, and we do not
expect to pay or declare any dividends on our common stock for the foreseeable
future. Any future determination to pay or declare dividends will be at the
discretion of our board of directors and will depend on our financial condition,
results of operations, capital requirements and other factors the board of
directors deems relevant.
14
<PAGE> 19
CAPITALIZATION
The following table set forth our capitalization at December 24, 1999:
- on an actual basis;
- on a pro forma basis after giving effect to:
- the conversion of all outstanding shares of preferred stock into
10,117,088 shares of common stock upon the closing of this offering;
- the conversion of outstanding convertible subordinated debentures into
2,727,263 shares of common stock upon the closing of this offering;
and
- the exercise of outstanding warrants for 1,069,349 shares of common
stock having a weighted average exercise price of $2.04 per share,
which will expire if not exercised by 5:00 p.m. on the date of the
closing of this offering;
- on a pro forma as adjusted basis, after giving effect to the sale of
shares of common stock offered by us at an assumed initial public
offering price of $ per share after deducting the underwriting
discount and estimated offering expenses payable by us, and the receipt
of net proceeds from this offering.
<TABLE>
<CAPTION>
DECEMBER 24, 1999
----------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
-------- --------- -----------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C>
Cash and cash equivalents................................... $ 8,591 $ 10,772 $
======== ======== =======
Current portion of notes payable............................ $ 1,348 $ 1,348 $
Current portion of capital lease obligations................ $ 515 $ 515 $
======== ======== =======
Notes payable, net of current portion....................... $ 3,200 $ 3,200 $
Capital lease obligations, net of current portion........... 510 510
Convertible subordinated debentures......................... 15,000 --
-------- -------- -------
Stockholders' equity:
Preferred stock, $0.001 par value:
Authorized 14,210,077 shares (actual); 5,000,000 shares
(pro forma and pro forma as adjusted); issued and
outstanding 9,874,711 shares (actual); no shares (pro
forma and pro forma as adjusted)..................... 10 --
Common stock; $0.001 par value:
Authorized 30,000,000 shares (actual); 70,000,000
shares (pro forma and pro forma as adjusted); issued
and outstanding 3,173,749 shares (actual); 17,087,449
shares (pro forma); shares (pro forma as
adjusted)............................................ 3 17
Additional paid-in capital................................ 54,181 71,358
Unearned stock-based compensation......................... (6,842) (6,842)
Accumulated deficit....................................... (51,018) (51,018)
-------- -------- -------
Total stockholders' equity (deficit)................... (3,666) 13,515
-------- -------- -------
Total capitalization................................. $ 15,044 $ 17,225 $
======== ======== =======
</TABLE>
Common stock excludes:
- 3,044,176 shares of common stock issuable upon the exercise of options
outstanding as of December 24, 1999 at a weighted average exercise price
of $1.42 per share;
- 122,895 shares of common stock issuable upon exercise of warrants
outstanding as of December 24, 1999 at a weighted average exercise price
of $5.05 per share;
- shares of common stock issuable upon exercise of options
granted from December 25, 1999 to February 15, 2000 at a weighted average
exercise price of $ per share.
In addition to the shares of common stock to be outstanding after this
offering, we may issue additional shares under our stock option plans, with
respect to which we will have reserved additional shares of our common
stock immediately following this offering.
15
<PAGE> 20
DILUTION
Our pro forma net tangible book value as of December 24, 1999 was $8.9
million or approximately $0.52 per share, assuming:
- the conversion of all outstanding shares of our convertible preferred
stock into 10,117,088 shares of common stock upon the closing of this
offering;
- the conversion of our outstanding convertible subordinated debentures
into 2,727,263 shares of common stock upon the closing of this offering;
and
- the exercise of outstanding warrants for 1,069,349 shares, having a
weighted average price of $2.04 per share, which will expire if not
exercised by 5:00 p.m. on the date of closing of this offering.
Pro forma net tangible book value per share is determined by dividing the
pro forma number of outstanding shares of our common stock into our pro forma
net tangible book value, which is our total tangible assets less total
liabilities. After giving effect to the receipt of the estimated net proceeds
from this offering, based upon an assumed initial public offering price of
$ per share and after deducting the estimated underwriting discounts and
commissions and our estimated offering expenses, our pro forma net tangible book
value as of December 24, 1999 would have been approximately $ million, or
$
per share. This represents an immediate increase in pro forma net tangible book
value of $ per share to existing stockholders and an immediate dilution in
net tangible book value of $ per share to new investors purchasing shares at
the initial public offering price. The following table illustrates the per share
dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $
Pro forma net tangible book value per share as of December
24, 1999............................................... $ 0.52
Increase in pro forma net tangible book value per share
attributable to new investors..........................
-------
Pro forma net tangible book value per share after this
offering..................................................
-------
Dilution in pro forma net tangible book value per share to
new investors............................................. $
=======
</TABLE>
The following table sets forth on a pro forma basis as of December 24,
1999, the number of shares of common stock purchased from us, the total
consideration paid and the average price per share paid by existing and new
stockholders, before deducting underwriting discounts and commissions and
offering expenses payable by us in connection with this offering.
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
--------------------- -------------------- PRICE PAID
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
Existing stockholders................... 17,087,449 % $ % $
New stockholders........................
---------- ----- ------- ------ ------
Total................................. 100.0% $ 100.0% $
========== ===== ======= ====== ======
</TABLE>
The foregoing discussion and table assumes no exercise of any stock options
outstanding or any warrants outstanding to purchase a total of 122,895 shares of
our common stock at a weighted average price of $5.05 per share. As of December
24, 1999, there were options outstanding to purchase a total of 3,044,176 shares
of our common stock at a weighted average exercise price of $1.42 per share.
Subsequent to December 24, 1999 and through February 15, 2000, we granted
options to purchase shares of our common stock under our 1990 Incentive
Stock Plan at a weighted average exercise price of $ per share. To the
extent that any options or warrants outstanding after the closing of this
offering are exercised, there will be further dilution to new public investors.
See "Capitalization," "Management -- Employee Benefit Plans," "Description of
Capital Stock," and notes 6 and 11 of the notes to our financial statements.
16
<PAGE> 21
SELECTED FINANCIAL DATA
The following selected financial data should be read together with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated financial statements, including the related
notes found elsewhere in this prospectus. The statement of operations data for
the fiscal years ended March 1997, 1998 and 1999 and the balance sheet data as
of March 1998 and 1999 are derived from the audited consolidated financial
statements of Repeater Technologies, Inc. included elsewhere in this prospectus,
which have been audited by PricewaterhouseCoopers LLP, independent accountants.
The statement of operations data for the fiscal years ended March 1995 and 1996
and the balance sheet data as of March 1995, 1996 and 1997 are derived from
unaudited consolidated financial statements not included in this prospectus. The
statement of operations data for the periods ended December 1998 and 1999 and
the balance sheet data as of December 1999 are unaudited. Results for the nine
months ended December 24, 1999 are not necessarily indicative of the results to
be expected for the full fiscal year. Our fiscal year ends on the last Friday in
March.
<TABLE>
<CAPTION>
YEARS ENDED NINE MONTHS ENDED
--------------------------------------------------------- ---------------------------
MARCH 31, MARCH 31, MARCH 31, MARCH 27, MARCH 26, DECEMBER 25, DECEMBER 24,
1995 1996 1997 1998 1999 1998 1999
--------- --------- --------- --------- --------- ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net revenues............... $11,696 $ 10,302 $10,581 $ 7,770 $ 9,612 $ 7,688 $ 12,321
Cost of revenues........... 7,084 9,570 9,355 8,807 8,863 6,996 8,382
------- -------- ------- -------- -------- ------- --------
Gross profit (loss)........ 4,612 732 1,226 (1,037) 749 692 3,939
------- -------- ------- -------- -------- ------- --------
Operating expenses:
Research and
development............ 2,172 2,628 3,135 6,214 4,166 3,127 3,108
Sales and marketing...... 2,283 2,770 2,829 3,936 4,431 3,217 4,424
General and
administrative......... 833 1,142 1,199 1,520 2,136 1,575 1,710
Stock-based
compensation........... -- -- -- -- 286 166 1,485
In-process research and
development............ -- -- -- -- -- -- 2,291
------- -------- ------- -------- -------- ------- --------
Total operating
expenses............. 5,288 6,540 7,163 11,670 11,019 8,085 13,018
------- -------- ------- -------- -------- ------- --------
Loss from operations....... (676) (5,808) (5,937) (12,707) (10,270) (7,393) (9,079)
Other income (expense),
net...................... (210) (8) (36) 79 (300) 46 (1,104)
------- -------- ------- -------- -------- ------- --------
Net loss................... $ (886) $ (5,816) $(5,973) $(12,628) $(10,570) $(7,347) $(10,183)
======= ======== ======= ======== ======== ======= ========
Net loss per common share--
basic and diluted........ $(22.15) $(153.05) $ (3.16) $ (5.31) $ (4.46) $ (3.10) $ (4.15)
======= ======== ======= ======== ======== ======= ========
Shares used in net loss per
common share
calculation -- basic and
diluted.................. 40 38 1,893 2,376 2,367 2,367 2,453
======= ======== ======= ======== ======== ======= ========
Pro forma net loss per
common share -- basic and
diluted (unaudited)...... $ (0.78) $ (0.67)
======== ========
Shares used in pro forma
net loss per common share
calculation -- basic and
diluted (unaudited)...... 13,500 15,297
======== ========
</TABLE>
<TABLE>
<CAPTION>
AS OF
------------------------------------------------------------------------
MARCH 31, MARCH 31, MARCH 31, MARCH 27, MARCH 26, DECEMBER 24,
1995 1996 1997 1998 1999 1999
--------- --------- --------- --------- --------- ------------
(IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............... $ 45 $ 577 $ 4,966 $ 8,102 $ 10,358 $ 8,591
Working capital......................... 2,781 3,113 5,712 7,673 11,874 8,341
Total assets............................ 7,466 6,941 12,242 13,787 17,202 21,700
Other long-term debt.................... 43 131 323 665 501 3,710
Convertible subordinated debentures..... -- -- -- -- 15,000 15,000
Total stockholders' equity (deficit).... 3,596 4,037 7,014 8,639 (1,643) (3,666)
</TABLE>
17
<PAGE> 22
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
You should read the following discussion and analysis in conjunction with
"Selected Financial Data" and our financial statements and notes included
elsewhere in this prospectus.
OVERVIEW
We are a wireless infrastructure supplier that develops, markets and sells
coverage solutions primarily for CDMA-based wireless communications networks. We
provide cost-effective, high-quality coverage systems for use in suburban and
rural areas, urban areas and inside office buildings and other coverage-limited
structures. Our coverage solutions have been deployed with over 40 CDMA wireless
service providers in ten countries.
From our inception in 1983 through our fiscal year ended March 1996, we
were primarily focused on providing microwave frequency repeaters for
long-distance telecommunications applications and cellular repeaters for
non-CDMA based wireless communications applications.
Starting in our fiscal year ended March 1997, we changed our strategic
focus and re-directed our resources to the development and marketing of
repeaters for wireless networks based on the CDMA digital standard. This
wireless standard offered us the opportunity to develop a new type of repeater,
which we call our Network Repeater, that in conjunction with CDMA base stations,
enables wireless service providers to deploy or extend CDMA wireless networks in
non-urban areas at a significantly reduced cost. Our Network Repeaters, along
with the associated network management system, are designed specifically to
operate as an integrated network element within a CDMA wireless network,
extending the coverage area of a CDMA base station without compromising the
quality of the wireless service. We shipped our first Network Repeaters for CDMA
wireless networks in May 1997. We have deployed over 900 Network Repeaters with
over 40 wireless service providers and 20 RepeaterHybrid Networks with 12
wireless service providers.
During the nine months ended December 24, 1999, we completed our transition
from manufacturing our products ourselves to having third-parties manufacture
our products for us. We believe that by contracting with third-party
manufacturers, we will benefit from their greater buying power and obtain more
favorable component pricing and also benefit from more efficient overhead
utilization. We also believe that third-party manufacturers can better
accommodate changes in volumes, allowing for a more rapid increase in
manufacturing capacity than we could accomplish on our own.
NET REVENUES
Our net revenues are derived primarily from two product lines based on the
CDMA standard, our Network Repeaters for the 850 MHz and 1900 MHz frequency
bands. In addition, we sell complementary equipment for these two product lines,
including battery back up systems, antennas and network management software. We
also provide design and implementation services to our customers on a fee for
service basis.
Revenue is recognized upon shipment or delivery to the customer, depending
upon the terms of the sale, where there is a purchase order or a sales agreement
and collectibility of the resulting receivable is probable. Training and
installation revenues are recognized when these services are performed.
We have experienced downward pressure on our selling prices as a result of
our entering into volume sale agreements with some customers and from general
competitive pressures. We expect that our selling prices will continue to
decline for the foreseeable future.
We have experienced and expect to continue to experience significant
fluctuations in our quarterly net revenues as a result of our long and variable
sales cycle. Historically, our sales cycle, which is the period
18
<PAGE> 23
from the time a sales lead is generated until the recognition of revenue from
that lead, has averaged nine to 24 months. The variability and length of our
sales cycle is influenced by a number of factors, including:
- our customers' deployment schedules;
- our customers' access to financing for the purchase of our products;
- the need to design networks to incorporate our products;
- the need to demonstrate our products before purchase;
- the manufacturing lead times for our products; and
- our inventory levels for the specific product configuration ordered by
our customers.
COST OF REVENUES
Our cost of revenues consists of the costs of the various components used
to assemble our products, the third-party charges to assemble and test the
products, the overhead cost of the operations departments, the direct costs of
network design services we sell to our customers and the cost of providing
customer service, including warranty and repair charges. Our components are
currently obtained from a small number of suppliers and contract manufacturers.
A few of these suppliers are either single-source or sole-source suppliers,
which could limit our ability to achieve lower prices from these suppliers and
could lead to delays and interruption in supply.
GROSS PROFIT
Our gross profit is affected by the level of demand for our products and
services, new product introductions by us and our competitors, the downward
pressure on prices from volume sales agreements with certain of our customers
and from competitive pressures and the costs of the various components and
production services provided by our vendors.
OPERATING EXPENSES
Research and development expenses consist primarily of expenses incurred in
the design and development of our products and our proprietary technology. These
expenses include the salaries and associated overhead expenditures for our
engineers and technicians, materials for the production of prototypes and
expenses for various consultants. We expect research and product development
expenses to increase as we continue to develop our technology and broaden our
product lines to serve new markets and applications. In particular, we expect to
incur significant expenses in the development of our next generation of products
to serve the emerging high-speed wireless markets, including 3G.
Sales and marketing expenses consist primarily of salaries, commissions,
consulting fees, trade show expenses, travel expenses, advertising, direct
marketing expenses and associated overhead expenses. We intend to increase our
expenditures for sales and marketing. We plan to increase our direct sales and
sales support personnel in the U.S. and internationally and our marketing
personnel, advertising and other marketing programs. In particular, we plan on
increasing our expenditures related to promoting and selling our products for
in-building coverage and our next generation of products for 3G wireless
services.
General and administrative expenses consist primarily of expenses for
finance, corporate management, general office administration, insurance, legal,
accounting, amortization of goodwill and other professional fees. We expect that
general and administrative expenses will increase as our business grows and we
expand our staff, increase our infrastructure and incur costs associated with
being a public company.
Stock-based compensation consists of the difference between the deemed fair
market value of incentive stock options and the exercise price of these grants.
This difference is being amortized over the vesting period of the grants,
generally four years. Assuming all employees with outstanding options remain
employed by us through the vesting period, the total unearned stock-based
compensation recorded for all option grants through December 24, 1999 will be
amortized as follows: $1.0 million for the remainder of
19
<PAGE> 24
the year ending March 31, 2000; $3.2 million for the year ending March 31, 2001;
$1.7 million for the year ending March 31, 2002, $0.8 million for the year
ending March 31, 2003 and $0.2 million thereafter.
LOSS FROM OPERATIONS
We have incurred substantial losses since our inception and, as of December
24, 1999, had an accumulated deficit of approximately $51.0 million. We expect
to continue to incur substantial operating losses and we may never achieve or
sustain profitability.
During our past three fiscal years, we have not achieved profitability on a
quarterly or annual basis. Because we need to continue to invest significant
financial resources into expanding our sales and marketing efforts, developing
our products and new technology and hiring the necessary personnel to support
our anticipated growth, we expect to continue to incur losses at least through
the fiscal year ended March 2001. We will need to generate significantly higher
revenues in order to support expected increases in operating expenses and to
achieve and maintain profitability.
RESULTS OF OPERATIONS
The following table sets forth certain operating data as a percentage of
net revenues for the periods indicated:
<TABLE>
<CAPTION>
YEARS ENDED NINE MONTHS ENDED
--------------------------------- ---------------------------
MARCH 31, MARCH 27, MARCH 26, DECEMBER 25, DECEMBER 24,
1997 1998 1999 1998 1999
--------- --------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenues............................... 88.4 113.3 92.2 91.0 68.0
------- -------- -------- ------- -------
Gross margin................................... 11.6 (13.3) 7.8 9.0 32.0
------- -------- -------- ------- -------
Operating expenses:
Research and development..................... 29.6 80.0 43.3 40.7 25.2
Sales and marketing.......................... 26.7 50.7 46.1 41.8 35.9
General and administrative................... 11.3 19.5 22.2 20.5 13.9
Stock-based compensation..................... -- -- 3.0 2.2 12.1
In-process research and development.......... -- -- -- -- 18.6
------- -------- -------- ------- -------
Total operating expenses................... 67.6 150.2 114.6 105.2 105.7
------- -------- -------- ------- -------
Loss from operations........................... (56.0) (163.5) (106.8) (96.2) (73.7)
Other income (expense), net.................... (.3) 1.0 (3.1) .6 (9.0)
------- -------- -------- ------- -------
Net loss....................................... (56.3)% (162.5)% (109.9)% (95.6)% (82.7)%
======= ======== ======== ======= =======
</TABLE>
NINE MONTHS ENDED DECEMBER 25, 1998 COMPARED TO NINE MONTHS ENDED DECEMBER 24,
1999
Net Revenues. Net revenues increased $4.6 million, or 60.3%, from $7.7
million for the nine months ended December 25, 1998 to $12.3 million for the
nine months ended December 24, 1999. This increase is primarily due to increased
shipments of our CDMA-based repeaters to new and existing customers. During the
nine months ended December 24, 1999, approximately 66.8% of our net revenues
were derived from ten customers with sales to two customers, PrimeCo and
Clearnet, comprising 14.8% and 12.4%, respectively. International sales
accounted for 28.1% of net revenues during the nine months ended December 24,
1999.
Cost of Revenues and Gross Margin. Cost of revenues increased $1.4 million,
or 19.8%, from $7.0 million for the nine months ended December 25, 1998 to $8.4
million for the nine months ended December 24, 1999. This increase was primarily
due to the increase in unit sales. The gross profit margin improved to 32.0% for
the nine months ended December 24, 1999 from 9.0% for the nine months ended
December 25, 1998. The improvement in gross profit margin was attributable to
the improved utilization of overhead costs associated with the increase in net
revenues and the outsourcing of product manufacturing during the period.
20
<PAGE> 25
Research and Development. Research and development expenses approximated
$3.1 million for the nine months ended December 25, 1998 and December 24, 1999.
Sales and Marketing. Sales and marketing expenses increased $1.2 million,
or 37.5%, from $3.2 million for the nine months ended December 25, 1998 to $4.4
million for the nine months ended December 24, 1999. This increase was primarily
attributable to the additional sales personnel we hired to support our
international and domestic sales efforts.
General and Administrative. General and administrative expenses increased
approximately $0.1 million, or 8.5%, from $1.6 million for the nine months ended
December 25, 1998 to $1.7 million for the nine months ended December 24, 1999,
primarily due to expenses related to year 2000 compliance.
Stock-Based Compensation. Stock-based compensation was $1.5 million for the
nine months ended December 24, 1999. We recorded $0.2 million of stock-based
compensation during the nine months ended December 25, 1998.
In-Process Research and Development. In-process research and development
was $2.3 million for the nine months ended December 24, 1999, which related to
the acquisition of all of the assets of The Gwydion Company LLC.
Other Income (Expense), Net. Other income was approximately $0.2 million
and $0.3 million for the nine months ended December 25, 1998 and December 24,
1999, respectively. Other expenses increased $1.3 million from $0.1 million for
the nine months ended December 25, 1998 to $1.4 million for the nine months
ended December 24, 1999. This increase was primarily attributable to the
increased level of borrowings during the nine months ended December 24, 1999,
including $15.0 million of Series DD convertible subordinated debentures and
$5.0 million of notes payable.
YEAR ENDED MARCH 27, 1998 COMPARED TO YEAR ENDED MARCH 26, 1999
Net Revenues. Net revenues increased $1.8 million, or 23.7%, from $7.8
million for the year ended March 27, 1998 to $9.6 million for the year ended
March 26, 1999. This increase was primarily due to increased unit sales of our
CDMA repeaters to new and existing customers. During the year ended March 26,
1999, approximately 52.0% of our net revenues were derived from ten customers
with sales to Clearnet comprising 10.0%. International sales accounted for 41.8%
of net revenues during the year ended March 26, 1999.
Cost of Revenues and Gross Margin. Cost of revenues increased $0.1 million,
or 0.6%, from $8.8 million for the year ended March 27, 1998 to $8.9 million for
the year ended March 26, 1999. The increase in costs associated with the
increase in the number of units shipped was offset in part by decreases in cost
per unit. The gross profit margin improved to 7.8% for the year ended March 26,
1999 from a loss of 13.3% for the year ended March 27, 1998. The improvement in
gross profit margin was attributable to the improved utilization of overhead
costs associated with the increase in net revenues for the period and the
reduction in direct product costs per unit.
Research and Development. Research and development expenses decreased $2.0
million, or 33.0%, from $6.2 million for the year ended March 27, 1998 to $4.2
million for the year ended March 26, 1999. This decrease was primarily
attributed to the cancellation of development projects focused on non-CDMA-
based products.
Sales and Marketing. Sales and marketing expenses increased $0.5 million,
or 12.6%, from $3.9 million for the year ended March 27, 1998 to $4.4 million
for the year ended March 26, 1999. This increase was primarily attributable to
sales referral expenses to third parties.
General and Administrative. General and administrative expenses increased
$0.6 million, or 40.5%, from $1.5 million for the year ended March 27, 1998 to
$2.1 million for the year ended March 26, 1999. This increase was primarily due
to expenses related to the hiring of additional personnel and legal fees
associated with contracts.
21
<PAGE> 26
Stock-Based Compensation. Stock-based compensation was $0.3 million for the
year ended March 26, 1999. There was no stock-based compensation in the year
ended March 27, 1998.
Other Income (Expense), Net. Other income was approximately $0.2 million
and $0.3 million for the years ended March 27, 1998 and March 26, 1999,
respectively. This increase is primarily attributable to higher balances in the
Company's interest bearing accounts. Other expenses increased $0.4 million, or
251.5%, from $0.2 million for the year ended March 27, 1998 to $0.6 million for
the year ended March 26, 1999. This increase was primarily attributable to
interest expense on the Series DD convertible subordinated debentures.
YEAR ENDED MARCH 31, 1997 COMPARED TO YEAR ENDED MARCH 27, 1998
Net Revenues. Net revenues decreased $2.8 million, or 26.6%, from $10.6
million for the year ended March 31, 1997 to $7.8 million for the year ended
March 27, 1998. This decrease was primarily attributable to the change in our
focus to CDMA-based repeaters and a de-emphasizing of our non-CDMA based
products. During the year ended March 27, 1998, 69.9% of our net revenues were
derived from ten customers with sales to two customers, Eriline Telecom and
Telus, comprising 18.4% and 14.9%, respectively. International sales accounted
for 61.0% of net revenues during the year ended March 27, 1998.
Cost of Revenues and Gross Margin. Cost of revenues decreased $0.5 million,
or 5.9%, from $9.4 million for the year ended March 31, 1997 to $8.8 million for
year ended March 27, 1998. The decrease was primarily due to a reduction in unit
sales in the 1998 period offset by a $1.1 million charge during the 1998 period
related to inventory reserves associated with our non-CDMA products. The gross
margin declined to a loss of 13.3% for the year ended March 27, 1998 from a
profit of 11.6% for the year ended March 31, 1997. The decline in gross margin
was primarily attributable to the decrease in net revenues for the period and
the costs associated with increasing inventory reserves.
Research and Development. Research and development expenses increased $3.1
million, or 98.2%, from $3.1 million in the year ended March 31, 1997 to $6.2
million for the year ended March 27, 1998. This increase in expenses was
primarily attributable to the development of our new CDMA-based products and a
non-CDMA-based custom repeater for the Japanese market.
Sales and Marketing. Sales and marketing expenses increased $1.1 million,
or 39.1%, from $2.8 million for the year ended March 31, 1997 to $3.9 million
for the year ended March 27, 1998. This increase was primarily attributable to
the additional sales and marketing personnel we hired to support our
international and domestic sales efforts, including resources to support
pre-sales activities, such as network design assistance.
General and Administrative. General and administrative expenses increased
$0.3 million, or 26.8%, from $1.2 million for the year ended March 31, 1997 to
$1.5 million for the year ended March 27, 1998. This increase was primarily due
to expenses associated with the hiring of additional personnel.
Other Income (Expense), Net. Other income was approximately $0.2 million
for the year ended March 27, 1998. Other income for the year ended March 31,
1997 was insignificant. This increase was primarily due to higher average
balances in our interest bearing accounts. Other expenses increased $0.1
million, or 129.2%, from approximately $70,000 for the year ended March 31, 1997
to $0.2 million for the year ended March 27, 1998. This increase was primarily
due to increased borrowings under capital lease lines.
22
<PAGE> 27
QUARTERLY RESULTS
The following table sets forth unaudited quarterly financial data for the
four quarters in our fiscal year ended March 26, 1999 and the first three
quarters in the fiscal year ending March 31, 2000, and such information
expressed as a percentage of our net revenues. This unaudited quarterly
information has been prepared on the same basis as the audited financial
information presented elsewhere herein and, in our opinion, includes all
adjustments, consisting only of normal recurring adjustments, that we consider
necessary for a fair presentation of the information for the quarters presented.
The market for wireless communications infrastructure has been, and we
believe will continue to be, seasonal in nature. During the months of December,
January and February, demand for wireless equipment infrastructure from wireless
service providers in the northern hemisphere declines due to generally poor
weather conditions.
<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------------------------------------------------
JUNE 26, SEPTEMBER 25, DECEMBER 25, MARCH 26, JUNE 25, SEPTEMBER 24, DECEMBER 24,
1998 1998 1998 1999 1999 1999 1999
-------- ------------- ------------ --------- -------- ------------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenues...................... $ 3,032 $ 2,497 $ 2,159 $ 1,924 $ 3,003 $ 4,026 $ 5,292
Cost of revenues.................. 2,475 2,289 2,232 1,867 2,181 2,916 3,285
------- ------- ------- ------- ------- ------- -------
Gross profit (loss)............... 557 208 (73) 57 822 1,110 2,007
------- ------- ------- ------- ------- ------- -------
Operating expenses:
Research and development........ 1,149 1,082 896 1,039 1,003 943 1,162
Sales and marketing............. 907 1,181 1,129 1,214 1,267 1,422 1,735
General and administrative...... 400 572 603 561 479 585 646
Stock-based compensation........ 59 31 76 120 148 439 898
In-process research and
development................... -- -- -- -- -- -- 2,291
------- ------- ------- ------- ------- ------- -------
Total operating
expenses................ 2,515 2,866 2,704 2,934 2,897 3,389 6,732
------- ------- ------- ------- ------- ------- -------
Loss from operations.............. (1,958) (2,658) (2,777) (2,877) (2,075) (2,279) (4,725)
Other income (expense), net....... 36 (7) 17 (346) (243) (407) (454)
------- ------- ------- ------- ------- ------- -------
Net loss.......................... $(1,922) $(2,665) $(2,760) $(3,223) $(2,318) $(2,686) $(5,179)
======= ======= ======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------------------------------------------------
JUNE 26, SEPTEMBER 25, DECEMBER 25, MARCH 26, JUNE 25, SEPTEMBER 24, DECEMBER 24,
1998 1998 1998 1999 1999 1999 1999
-------- ------------- ------------ --------- -------- ------------- ------------
(AS A PERCENTAGE OF NET REVENUES)
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenues...................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenues.................. 81.6 91.7 103.4 97.0 72.6 72.4 62.1
------- ------- ------- ------- ------- ------- -------
Gross margin...................... 18.4 8.3 (3.4) 3.0 27.4 27.6 37.9
------- ------- ------- ------- ------- ------- -------
Operating expenses:
Research and development........ 37.9 43.3 41.5 54.0 33.4 23.5 22.0
Sales and marketing............. 29.9 47.3 52.3 63.1 42.2 35.3 32.8
General and administrative...... 13.2 22.9 27.9 29.2 16.0 14.5 12.2
Stock-based compensation........ 1.9 1.2 3.5 6.2 4.9 10.9 17.0
In-process research and
development................... 0.0 0.0 0.0 0.0 0.0 0.0 43.3
------- ------- ------- ------- ------- ------- -------
Total operating
expenses:............... 82.9 114.7 125.2 152.5 96.5 84.2 127.3
------- ------- ------- ------- ------- ------- -------
Loss from operations.............. (64.5) (106.4) (128.6) (149.5) (69.1) (56.6) (89.4)
Other income (expense), net....... 1.2 (0.3) 0.8 (18.0) (8.1) (10.1) (8.6)
------- ------- ------- ------- ------- ------- -------
Net loss.......................... (63.3)% (106.7)% (127.8)% (167.5)% (77.2)% (66.7)% (98.0)%
======= ======= ======= ======= ======= ======= =======
</TABLE>
We have experienced and expect to continue to experience significant
fluctuations in quarterly operating results as a result of many factors. We
believe that period-to-period comparisons of our operating results should not be
relied upon as any indication of future performance.
LIQUIDITY AND CAPITAL RESOURCES
Since our inception, we have financed our operations primarily through the
private sales of equity and convertible debentures, which have provided
aggregate net proceeds of approximately $53.9 million through
23
<PAGE> 28
December 24, 1999. In addition, we have borrowed approximately $5.0 million
through promissory notes, due in monthly installments through August 2002, and
$1.7 million against equipment lease lines that mature through 2003. At December
24, 1999 we had approximately $8.6 million in cash and cash equivalents. We have
no additional credit facilities.
Cash used in operating activities was approximately $4.4 million, $9.9
million and $10.9 million for the fiscal years ended March 31, 1997, March 27,
1998 and March 26, 1999, respectively, and $5.4 million for the nine months
ended December 24, 1999. The significant use of cash in operating activities
resulted from our net losses during all reported periods together with the
increase in our accounts receivable during the nine months ended December 24,
1999 due to the increase in product sales to our customers. As sales increase,
we have a corresponding requirement to increase our investment in working
capital. At December 24, 1999 our accounts receivable balance was approximately
$3.7 million.
Cash used for investing activities of approximately $0.5 million, $0.1
million, $0.6 million and $0.1 million for the fiscal years ended March 31,
1997, March 27, 1998, March 26, 1999 and for the nine months ended December 24,
1999, respectively, was primarily used for capital expenditures. These capital
expenditures were primarily investments in computerized test equipment to test
our products and computer equipment to support our business.
We anticipate an increase in capital expenditures for product testing and
additional computer equipment. In addition, from time to time, we replace aging
or obsolete computer equipment. Our capital expenditures are expected to
approximate $1.0 million, $1.5 million and $2.0 million for our fiscal years
ending March 31, 2000, 2001 and 2002, respectively. We have financed our capital
equipment purchases through the use of lease lines and we anticipate continuing
to do so.
Cash provided from financing activities was approximately $9.3 million in
the year ended March 31, 1997, $13.1 million in the year ended March 27, 1998,
$13.7 million during the year ended March 26, 1999 and $3.7 million during the
nine months ended December 24, 1999.
We believe that our available cash reserves, combined with the net proceeds
of this offering, will be sufficient to fund operations and to meet our working
capital needs and anticipated capital expenditures for at least the next twelve
months. We may also use a portion of the net proceeds to invest in complementary
products, to license other technology or to make potential acquisitions.
Thereafter, we may need to raise additional funds to fund more rapid expansion
of our business, fund unexpected expenditures or operating losses, respond to
competitive pressures, continue to develop new products and enhancements to our
current products, or acquire technologies or businesses. If additional funds are
raised through the issuance of equity securities, the percentage ownership of
our stockholders will be reduced, stockholders may experience additional
dilution, or such equity securities may have rights, preferences or privileges
senior to those of the holders of our common stock. If we raise additional funds
through the issuance of debt securities, those securities would have rights,
preferences and privileges senior to those of holders of our common stock, and
the terms of these debt securities could impose restrictions on our operations.
Additional financing may not be available when needed, on favorable terms, or at
all.
YEAR 2000 COMPLIANCE
We engaged in a year 2000 compliance program during 1999. We performed a
significant amount of testing on our products and our internal computerized
systems considered essential to our operations. Where required, we took
corrective or preventive measures designed to ensure our products and internal
computerized systems would function properly after the year 2000 date change.
Even though we have not experienced any significant problems as a result of
entering the year 2000, we may have undiscovered problems in our computerized
management systems or our products that may cause us to incur significant time
and expenditures to correct. Any failure in year 2000 compliance may cause us to
lose customers, incur significant costs and result in reduced revenues and
increased losses, warranty claims and litigation. In addition, if our customers
or suppliers fail to be year 2000 compliant, it could result in interruptions in
supply, failure of our products to operate correctly and delays in order
fulfillment and payment. Any of
24
<PAGE> 29
these potential year 2000-related difficulties could adversely affect our
results of operations. In aggregate, we incurred approximately $0.3 million in
expenses related to year 2000 compliance.
RECENT ACCOUNTING PRONOUNCEMENTS
In March 1998, the Accounting Standards Executive Committee ("AcSEC")
issued Statement of Position No. 98-1, or SOP 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use" which provides
guidance on accounting for the cost of computer software developed or obtained
for internal use. SOP 98-1 is effective for financial statements for fiscal
years beginning after December 15, 1998. Adoption of SOP 98-1 did not have a
material impact on our results of operations.
In April 1998, the Accounting Standards Executive Committee issued
Statement of Position 98-5, or SOP 98-5, "Reporting on the Costs of Start-Up
Activities." This standard requires companies to expense the costs of start-up
activities and organization costs as incurred. In general, SOP 98-5 is effective
for fiscal years beginning after December 15, 1998. Adoption of SOP 98-5 did not
have a material impact on our results of operations.
In June 1998, the Financial Accounting Standards Board issued SFAS 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS 133
establishes new standards of accounting and reporting for derivative instruments
and hedging activities. SFAS 133 requires that all derivatives be recognized at
fair value in the statement of financial position, and that the corresponding
gains or losses be reported either in the statement of operations or as a
component of comprehensive income, depending on the type of hedging relationship
that exists. SFAS 133 will be effective for fiscal years beginning after June
15, 2000. We do not currently hold derivative instruments or engage in hedging
activities.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We believe we do not have any significant exposures to quantitative and
qualitative market risks. For the periods ended March 27, 1998, March 26, 1999
and December 24, 1999, we did not have any derivative financial instruments or
any derivative commodity instruments. Our other financial instruments include
trade accounts receivable, trade accounts payable, convertible subordinated
debentures and a term note. Our accounts receivable and accounts payable are
relatively short term in duration and as a consequence, are not exposed to
significant interest rate changes and consequent fair value adjustments. Our
cash equivalents are invested in interest bearing accounts, generally money
market accounts of less than seven days average maturity, and as a result are
not subject to significant valuation adjustments due to interest rate changes.
We also have convertible subordinated debentures and a term loan, both of which
bear interest at fixed rates. As a result, the payments due under these
debentures and term loan are not subject to adjustment due to interest rate
changes. Our financial market risk includes risks associated with international
operations and related foreign currencies. We anticipate that international
sales will continue to account for a significant portion of our consolidated
revenues. Our international sales are in U.S. dollars and, therefore, are not
subject to foreign currency exchange rate risk. Expenses of our international
operations are denominated in each country's local currency, however, and are
therefore subject to foreign currency exchange risk. Despite this, through
December 24, 1999, we have not experienced any significant negative impact on
our operations as a result of fluctuations in foreign currency exchange rates.
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BUSINESS
Repeater Technologies, Inc. is a wireless infrastructure supplier that
develops, markets and sells coverage solutions primarily for CDMA-based wireless
communications networks. We provide cost-effective, high quality coverage
systems for use in suburban and rural areas, urban areas and inside office
buildings and other coverage-limited structures. Our coverage solutions have
been deployed with over 40 CDMA wireless service providers in ten countries.
Our coverage solutions are based on our Network Repeater technology that
expands the coverage area of a wireless network. Our Network Repeater receives,
amplifies and retransmits voice and data signals between mobile handsets and
base stations and uses an operator's existing radio frequency, or RF, spectrum
to provide the necessary connection to the wireless network.
Our RepeaterHybrid Network outdoor coverage systems incorporate a number of
our products and services, including our family of Network Repeaters, antenna
systems, network management systems and network design optimization services.
These products are used in conjunction with third-party base stations to
increase coverage at significantly reduced capital and operating cost by
reducing the number of required base stations, related communication links and
other network infrastructure equipment. We have deployed 20 RepeaterHybrid
Network systems with 12 service providers.
Our Distributed Antenna System provides in-building coverage using coaxial
cable and small antennas. Our OfficeCell distributed antenna system, currently
under development, will provide in-building coverage utilizing fiber-optic cable
to link distributed antennas for increased flexibility and broader coverage.
These systems can be used in a wide range of indoor coverage areas including
office buildings, shopping malls, sports arenas, and tunnels. Our in-building
coverage products offer low cost, ease of installation, and remote monitoring
via our proprietary network management system. We have deployed our coaxial
cable Distributed Antenna System with 16 service providers in six countries.
INDUSTRY BACKGROUND
WIRELESS MARKET GROWTH
In recent years, there has been substantial growth in the number of
wireless subscribers. The Strategis Group estimates that the number of worldwide
wireless subscribers will increase from approximately 286 million in 1998 to 693
million in 2003, representing a compound annual growth rate of 19.4%. A number
of factors are driving worldwide wireless subscriber growth, including the
expansion of wireless coverage outside of urban areas, the rapid price decline
of wireless usage cost per minute and the proliferation of new wireless
applications such as high-speed data services. These factors, alongside
increasing use of wireless handsets as a substitute for wireline communications,
are also driving a substantial increase in wireless minutes of use. To meet the
growing demand for wireless services, wireless service providers are
increasingly focusing on expanding network coverage in order to increase the
number of new subscribers and reduce subscriber turnover, or "churn" resulting
from coverage limitations.
WIRELESS STANDARDS
A number of analog and digital standards are available to wireless service
providers in the deployment of wireless networks, including GSM, or Global
System for Mobile Communication, TDMA, or Time Division Multiple Access, and
CDMA, or Code Division Multiple Access. CDMA is the newest and fastest growing
of these standards. The first commercial deployment of a CDMA wireless network
took place in 1995 in Hong Kong and, since then, CDMA wireless networks have
been deployed in Korea, the United States, Canada, India, Japan, Australia,
Brazil and 19 other countries.
The Strategis Group estimates that the number of wireless subscribers
utilizing CDMA-based handsets worldwide will grow from approximately 18 million
in 1998 to approximately 143 million in 2003, representing a compound annual
growth rate of 51.6%. The Strategis Group also estimates that the percentage of
CDMA subscribers will increase from 9.4% of digital subscribers worldwide in
1998 to 22.6%
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in 2003. CDMA is expected to continue its rapid growth as a result of the
significant advantages it provides, including:
- Increased Capacity. Unlike competing standards, CDMA does not assign a
specific frequency to each user. Instead, conversations and other
information are encoded in random digital sequence for transport across
the full available spectrum. By allowing multiple subscribers to share
the same frequency, CDMA equipment can provide over three times the
capacity of analog and other digital standards over the same amount of
spectrum.
- Improved Quality of Service. CDMA combines multiple signals and improves
signal strength for a reduction of interference and fading. Additionally,
the method of passing calls between cells in a CDMA network sharply
reduces the risk of disruption or dropped calls.
- Better Support for Data. CDMA offers a powerful platform for
next-generation wireless technologies and enables subscribers to use a
wide range of new services including voice recognition, short messaging
services and Internet connections.
The recent approval of CDMA-based third generation standards, or "3G", by
the wireless community will allow wireless service providers who upgrade to 3G
to provide very high speed data access and transmission to their subscribers and
to increase the capacity of their networks. The availability of these advanced
services should further increase the demand for wireless coverage. It is
anticipated that new spectrum for 3G networks will be allocated in the United
States, Europe, Latin America and Asia. We believe the build-out of 3G networks
by new licensees and upgrades of existing networks should drive significant
expenditures for 3G compatible network equipment.
DEPLOYMENT
The traditional method for increasing wireless coverage has been to deploy
a base station, which consists of a RF transmitter, which transmits a signal,
and receiver assembly, which receives incoming signals from wireless handsets.
The receiver assembly is linked to a base station controller through a high
capacity digital telephone line, typically a T-1 line. The base station
controllers are then linked to mobile switching centers, which connect to the
local telephone network. Figure 1 depicts a basic wireless network.
[GENERAL WIRELESS NETWORK GRAPHIC]
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The rapid growth in demand for wireless service has caused a corresponding
increase in the demand for widespread coverage in the following four market
segments:
- Low-Density/Low-Utilization Markets. These markets are typically suburbs
and small towns in which capacity requirements are low because of low
user density. However, the need for coverage remains high as wireless
subscribers expect to have service throughout these areas. Wireless
service providers have been slow to deploy wireless networks in these
areas because the high infrastructure costs required cannot be spread
over a large enough subscriber base.
- Traffic Corridors. These markets are typically major highways that
connect population centers and are characterized by low-density
utilization along a narrow geographic corridor. Wireless service
providers must offer complete coverage along these corridors so that
subscriber calls are not "dropped" in these areas. However, in these
markets, as in low-density/low-utilization markets, wireless service
providers find the deployment of base stations costly and inefficient.
- High-Density/High-Utilization Markets. These markets are typically urban
areas in which service is provided by a large number of closely-spaced
base stations which provide both the capacity for a large number of
subscribers and coverage for a given geographic area. However, in spite
of the large number of base stations, gaps in coverage commonly occur as
the result of blockage of RF signals by buildings, tunnels and other
obstructions.
- In-Building Markets. These markets are characterized by high utilization
throughout a concentrated geographical area. Although base stations can
provide the necessary capacity, the materials used in building
construction can inhibit and interfere with the transmission of RF
signals to and from the building interior.
Both existing wireless service providers and new entrants to the
competitive wireless markets face the challenge of rapidly expanding coverage
with limited capital and operating resources. Addressing these coverage
challenges has become a critical differentiator as service providers attempt to
expand their existing subscriber base and minimize subscriber churn resulting
from coverage limitations. Because CDMA base stations are designed to support
high capacity networks in densely populated urban centers, they do not scale
well to low-density/low-utilization markets. In addition, the need for a high
capacity digital telephone connection, typically through a T-1 line, to the
network from each base station results in significant capital and operating
expenses. As a result of growing capacity and coverage requirements and
increasing competitive pressures, wireless service providers are demanding
wireless infrastructure solutions that provide:
- Rapid expansion of coverage;
- Reduced capital and operating costs;
- Ease of and flexibility in deployment;
- High quality RF coverage;
- High levels of technical support; and
- Fast time-to-market for 3G coverage.
REPEATER TECHNOLOGIES' SOLUTION
Our RepeaterHybrid Network solutions integrate our Network Repeaters with
CDMA base stations, enabling wireless service providers to quickly expand
coverage at significantly reduced cost. While base stations provide the overall
capacity and initial coverage for a wireless network, our Network Repeaters
redirect, focus or spread the concentrated capacity of a base station to expand
coverage to desired coverage areas. In low-density/low-utilization markets and
traffic corridors, our RepeaterHybrid Network solutions allow network operators
to cost-effectively utilize their network capacity to expand coverage. In high-
density/high-utilization markets, our Network Repeaters fill the coverage gaps
that occur as a result of blockage of RF signals. For the in-building market,
Network Repeaters, when coupled with our coaxial
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cable distributed antenna system, can provide RF coverage in smaller buildings.
To provide coverage for larger buildings and campus environments, we will offer
our new OfficeCell fiber-optic distributed antenna system, which is currently
under development. Our solutions offer the following key benefits:
REDUCED CAPITAL COSTS
RepeaterHybrid Networks provide expansion of coverage with significantly
lower capital costs than required in the deployment of base station only
networks. Network Repeaters are significantly less expensive than CDMA base
stations. In addition, wireless network operators who use base stations to
increase coverage must incur increased capital costs both as a result of the
need for more communications links and in the deployment of larger base station
controllers and mobile switching centers to support these sites. Our Network
Repeaters require no communications link to base station controllers or mobile
switching centers and, as such, reduce the overall capital cost of the network.
In addition, our Network Repeaters are significantly smaller than base stations,
making them less costly to site and install. Our existing RepeaterHybrid
Networks customer base has been able to reduce the number of base stations in
their systems by 15% to 75% and replace them with Network Repeaters for a given
coverage area. For example, in one of our more successful deployments, utilizing
a RepeaterHybrid Network, one of our customers was able to design a network
using 24 Network Repeaters and six base stations, as opposed to a base
station-only network of 24 base stations.
LOWER OPERATING COSTS
Our RepeaterHybrid Network results in substantially lower operating costs
than a base station only network. By replacing a number of the base stations
with our Network Repeaters, the wireless service provider saves the substantial
monthly charges associated with the high capacity digital telephone connection
required to link to the base station controller.
NETWORK COMPATIBILITY
Because our Network Repeaters receive, amplify and transmit the same
signals received and transmitted by a network's base stations, we believe our
Network Repeaters are compatible with CDMA base stations operating in the 850
MHz and 1900 MHz bands. Our Network Repeaters have been successfully deployed in
wireless networks with most major manufacturers' base stations including
Ericsson, Inc., Lucent Technologies, Inc., Motorola, Inc. and Nortel Networks
Corp.
SCALABLE CAPACITY AND COVERAGE
Our RepeaterHybrid Network solutions provide a mix of base stations for
capacity and initial coverage and Network Repeaters for wide-area coverage. As
demand grows, network operators are able to incrementally add Network Repeaters
for increased coverage and base stations for increased capacity.
HIGH QUALITY RF COVERAGE
Our RepeaterHybrid Network is able to meet the following established
industry standards for a high quality CDMA network, including:
- frame error rate of 2% or less, which is a measure of the quality of the
signal;
- network-wide dropped call rate of 2% or less, which is a measure as to
how often a mobile subscriber is disconnected after the call has been
connected; and
- a network-wide call establishment rate of 95% or more, which is a measure
as to how often a mobile subscriber should be able to originate and
connect to the calling party.
This high quality of coverage is achieved by our patent-pending receive
diversity technology employed in our Network Repeaters. Our receive diversity
technology combines multiple signals from subscribers' handsets for high quality
transmission back to the base station.
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HIGH LEVEL OF SUPPORT
Our service organization offers full customer support through all phases of
implementation, including RF design, installation and optimization services. In
addition, we provide customer support 24 hours a day, seven days a week. When
needed, we also utilize field service engineers for on-site assistance. Our
proprietary network management system is designed to monitor, control and
support our Network Repeaters and other products from a central network
operations center through a comprehensive graphical user interface.
STRATEGY
Our goal is to be the leader in the development and deployment of CDMA
wireless coverage enhancement solutions. To achieve this goal, our strategy is
to:
CONTINUE TO EXPAND OUR INSTALLED BASE OF NETWORK REPEATERS
We will continue to focus on providing RepeaterHybrid Network solutions to
wireless service providers who are deploying new CDMA networks or expanding
existing CDMA networks. We also plan to target more established CDMA service
providers who intend to expand their wireless networks to include low-
density/low-utilization areas as they expand coverage. We expect the use of
repeaters to become increasingly important as CDMA-based wireless service
providers attempt to maintain parity with their competitors and meet the minimum
coverage required by their spectrum licenses. We are also focusing on expanding
our marketing efforts in international markets, such as Australia, China, Mexico
and South America.
EXPAND OUR IN-BUILDING CAPABILITIES
We believe that the wireless in-building market will represent a
significant market opportunity as wireless subscribers become increasingly
dependent on their wireless service and require more complete in-building
coverage. We intend to continue to develop cost effective solutions for
in-building coverage. Our Distributed Antenna System provides in-building
coverage using coaxial cable and small antennas. Our OfficeCell distributed
antenna system, currently under development, will provide in-building coverage
utilizing fiber-optic cable. Fiber-optic cable provides more efficient
transmission of RF signals throughout structures for broader coverage.
Additionally, the OfficeCell distributed antenna system provides uniform RF
coverage which allows for flexible antenna placement. Since our OfficeCell
supports all existing digital standards, we will be able to further expand our
market opportunity to include GSM and TDMA wireless networks.
ESTABLISH A MARKET LEADERSHIP POSITION IN 3G WIRELESS NETWORKS
We intend to capitalize on the low-cost and flexibility of our Network
Repeaters to speed service providers' transition to 3G wireless technologies. We
have developed significant expertise in CDMA technology which will allow us to
rapidly bring 3G products to market. Our Network Repeaters currently meet phase
one of the 3G standard known as cdma2000. We intend to further develop our
technology to meet the balance of the 3G CDMA standards and penetrate new
markets, including Europe, China and Japan, as new licensees in these markets
develop 3G wireless networks.
FOCUS ON NETWORK DESIGN AND CUSTOMER SUPPORT
Our high-quality service offerings, installation support teams and
commitment to addressing customer needs, have enabled us to develop important
relationships with customers and a reputation for providing high-quality
solutions. We have developed a unique knowledge of network design incorporating
repeaters and base stations in order to facilitate our customers' assessment and
implementation of our RepeaterHybrid Networks. Our network design services allow
wireless service providers to modify network design prior to deployment to
better suit coverage and capacity demands. We believe our extensive
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network design capabilities and comprehensive customer support have been
significant factors in our ability to attract and retain customers.
PURSUE STRATEGIC ACQUISITIONS
We have in the past and intend in the future to make acquisitions of
complementary technologies and businesses. In November 1999, we completed the
acquisition of substantially all of the assets of The Gwydion Company LLC in
order to enhance our in-building capabilities. We may from time to time make
other strategic acquisitions that may complement our products, expand the
breadth of our product offerings, enhance our technical capabilities, help
secure critical sources of supply or that may otherwise offer growth
opportunities.
WIRELESS SYSTEM TECHNOLOGY
Wireless networks operate by dividing the geographic service area territory
into a number of areas called cells. A base station is the equipment that
transmits and receives the RF signal to and from the wireless handsets in the
cell site's coverage area. The coverage provided by a base station is limited by
the base station's RF output power, the frequency of the RF signals and the
amount of clutter, such as buildings, hillsides and other physical obstructions,
in the path of the signals. The higher the RF signal's frequency, the shorter
the distance it can travel for a given output power. For example, a 1900 MHz RF
signal travels approximately half the distance of an 850 MHz cellular signal
with equal output power. Therefore a 1900 MHz RF network may require three to
four times the number of base stations to provide the same coverage as a 850 MHz
RF network. PCS networks tend to utilize 1900 MHz RF while cellular networks
usually utilize 850 MHz RF.
The base station also communicates with the base station controller through
a high capacity digital telephone connection, typically a T-1 line. The base
station controller processes the call and communicates with the mobile switching
center. The mobile switching center then routes calls to and from the public
switched telephone network or the base station network. Figure 2 illustrates a
traditional wireless network constructed with only base stations.
[BASE STATION - ONLY WIRELESS NETWORK GRAPHIC]
A wireless service provider can also deploy a RepeaterHybrid Network which
uses a combination of base stations and our Network Repeaters. Our
RepeaterHybrid Network reduces the number of base stations required to achieve
an equivalent coverage area and significantly lowers the cost of the network.
Figure 3 illustrates our RepeaterHybrid Network.
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[REPEATER HYBRID NETWORK GRAPHIC]
RECEIVE DIVERSITY IN BASE STATIONS
A base station typically has one send and two receive antennas. When radio
signals travel through the air they bounce off of building surfaces and other
objects. Since a mobile subscriber is normally moving, radio signals travel
different paths to the receiving antennas. A base station's two receiving
antennas are spaced several feet apart and are designed to receive and select
the stronger of the two radio signals. This selection process, known as receive
diversity, provides for a higher quality RF signal and fewer dropped calls.
RECEIVE DIVERSITY IN NETWORK REPEATERS
Since a repeater only has one wireless path to the base station, repeaters
are typically unable to provide dual paths to the base station for receive
diversity. We have developed a technology that allows the information from two
receiving antennas at the repeater site for diversity to be combined into one
path for transmission back to the base station. As a result, we are able to
provide the receive diversity typically only provided in base stations for
higher quality RF coverage. We have filed for patents on this technology in the
United States and some foreign countries.
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PRODUCTS AND SERVICES
We offer a variety of products and services to our customers. Illustrated
in Figure 4 below is our Network Repeater utilizing receive diversity and
operating in conjunction with our RepeaterStar serving antenna and RepeaterPower
battery backup power system. The system illustrated below is supported by our
RepeaterNet network management system.
[NETWORK REPEATER CELL SITE GRAPHIC]
Network Repeater. Our Network Repeater receives, filters, amplifies and
re-transmits RF signals between wireless subscribers and base stations in CDMA
wireless networks. Our Network Repeater features our patent-pending receive
diversity technology, which provides high quality voice and data transmission,
while reducing the necessary amount of handset power. Receive diversity
technology allows operators to deploy RepeaterHybrid Networks with comparable
performance and quality to a base station only network.
RepeaterStar. Our RepeaterStar antenna sends and receives signals between
the serving base station and our Network Repeater. Our RepeaterStar antenna
possesses performance characteristics that are optimized for use within our
RepeaterHybrid Network. In addition, our antenna is lighter and smaller than
most competitive products, allowing for easier installation.
RepeaterPower. Our RepeaterPower battery back-up power system provides
auxiliary power for the Network Repeaters in the event of a commercial power
outage.
RepeaterNet. RepeaterNet is our proprietary network management system
designed to monitor and control our Network Repeaters and other products from a
central network operations center. RepeaterNet provides a comprehensive
graphical user interface allowing maintenance personnel to monitor up to 5,000
Network Repeaters, together with their backup power sources and related
equipment.
RepeaterCAD. RepeaterCAD RF design and application engineering services
provide network design for optimal implementation of our Network Repeaters. Our
RF design services include preparation of coverage maps and issuance of search
rings for site locations for base stations and Network Repeaters. Our RF
engineers also optimize the implementation of our Network Repeaters with base
stations and perform testing to verify the coverage and quality of the
RepeaterHybrid Network. Additionally, we provide in-building design services for
application of our Distributed Antenna Systems.
OfficeCell. We are currently completing development of our OfficeCell
product, a fiber-optic Distributed Antenna System that will allow us to better
address the market for wireless coverage in larger
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buildings and campuses. Coaxial-based systems, which are designed for smaller
buildings and structures, are unable to cost-effectively serve these markets.
OfficeCell communicates with base stations, microcells and repeaters using RF
signals. The hub unit of the OfficeCell converts RF signals into lightwaves and
communicates with up to 16 OfficeCell remote units using fiber-optic cable. The
remote units convert the lightwaves back to RF signals to communicate with
wireless handsets. The use of fiber-optic cable allows OfficeCell to provide
increased flexibility and broader coverage than in coaxial-based systems. Our
OfficeCell will support all digital wireless standards, allowing us to further
expand our market opportunity to include GSM and TDMA networks.
CUSTOMERS
The following is a list of customers that have purchased at least $500,000
of our products and services since March 31, 1997.
<TABLE>
<CAPTION>
UNITED STATES BRAZIL CANADA ISRAEL
------------- ------ ------ ------
<S> <C> <C> <C>
Airtouch Eriline Telecom Telus Motorola
Blackfoot Communications Clearnet PCS
Via Wireless
GTE Wireless
Intelos/Virginia PCS
Northern PCS Services
PrimeCo
</TABLE>
In our fiscal year ended March 26, 1999, ten customers accounted for 52.0%
of our net revenues, with Clearnet PCS accounting for 10.6%. In the nine months
ended December 24, 1999, ten customers accounted for 66.8% of our net revenues,
with PrimeCo and Clearnet PCS accounting for 14.8% and 12.4%, respectively.
SALES AND MARKETING
We offer our products and services in the United States and Canada through
our direct sales force. Our international sales efforts are conducted through a
network of agents and distributors, all of which are assisted by our direct
sales force. Export sales accounted for 70%, 61%, 42% and 28% of our net
revenues during our fiscal years ended March 31, 1997, March 27, 1998, March 26,
1999 and the nine-month period ended December 24, 1999, respectively.
Our direct sales force works in conjunction with our support personnel to
assist current and potential customers in identifying capacity and coverage
goals. In addition, our sales force assists customers in preparing a pro forma
business analysis comparing the customer's initial deployment costs and
operating expenses using traditional wireless infrastructures against those
associated with using our products and services. Outside of our corporate
headquarters, we currently have direct sales offices in Montreal, New York,
Atlanta, Denver and Chicago. We have international sales and technical support
offices in Sao Paulo, Sydney and Beijing. We also have established relationships
with agents and distributors located in Australia, Argentina, Brazil, Chile,
China, Colombia, Israel, Mexico, Uruguay and Venezuela. As of December 24, 1999,
14 of our 81 employees were engaged in sales and marketing.
In support of our sales efforts, we have established a marketing
organization that is responsible for the branding and marketing of our products
and services. Our marketing efforts include participation in trade shows and
trade congresses, the sponsorship of a web site, advertising in trade journals
and publication of a semi-annual newsletter.
CUSTOMER SERVICE AND SUPPORT
We provide a full range of customer support during all phases of product
implementation. Our implementation services include preparation of coverage maps
and issuance of search rings for site locations for base stations and Network
Repeaters. Our application engineers optimize the implementation
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<PAGE> 39
of our Network Repeaters with base stations and perform testing to verify the
coverage and quality of the RepeaterHybrid Network. In addition to our support
during the implementation period, we provide ongoing support services, which
include:
- Rapid resolution of problems through a 24-hour hotline service;
- Project management services;
- Field service inventory to support our exchange policy; and
- On-site field service engineer support.
MANUFACTURING
We have recently transitioned the manufacture of our products from in-house
to three third-party turn-key contract manufacturers. Our third party
manufacturers are Sanmina Corporation, ACT-GSS/ Array Technology and PEMSTAR,
INC. These manufacturers test our sub-assemblies for functionality prior to
assembly into finished products. In addition, our contract manufacturers have
recently implemented our proprietary automated test system, known as
RepeaterMATE, for final product testing. The use of RepeaterMATE by our contract
manufacturers will allow us to achieve a level of quality control comparable to
that achieved internally. This will enable us to ship finished products directly
from our contract manufacturers to our customers. As a result, we will be able
to reduce finished goods inventory and decrease our time-to-market. During the
RepeaterMATE testing process, the final product goes through a full system test
while cycling through extreme temperature conditions. We believe that our three
third-party turn-key contract manufacturers have the capability to support our
growth for the foreseeable future. We plan to establish turn-key contract
manufacturing capabilities in China in calendar year 2001 and Brazil in the
future to better serve these markets.
RESEARCH AND PRODUCT DEVELOPMENT
We plan to continue to develop and extend our product offerings for the
current CDMA market and future generations of CDMA wireless standards, including
3G. In addition, we are developing products and services for the TDMA and GSM
markets, primarily for in-building applications. Products under development
include:
- RepeaterCell, our next generation of CDMA repeater for the 850 MHz
cellular and 1900 MHz PCS bands to handle multiple CDMA carriers with
higher output power. In addition, we are developing the capability to
extend RepeaterCell to the requirements of emerging 3G CDMA standards,
including the 2100 MHz band.
- RoomCell, a lower power version of our OfficeCell product to provide RF
coverage for a single room. Applications for this technology may include
restaurants, small retail stores and lobbies.
- RepeaterLink, a fiber-optic communication link between our Network
Repeaters and base stations. RepeaterLink converts RF signals to
lightwaves and back to RF, allowing a Network Repeater to operate up to
12 miles away from a base station. RepeaterLink is advantageous when
line-of-site for wireless communication between our Network Repeater and
a base station is not feasible.
As of December 24, 1999, 27 of our 81 employees were engaged in research
and product development including hardware and software engineering. Our
research and development expenditures totaled approximately $3.1 million, $6.2
million, $4.2 million and $3.1 million in the fiscal years ended March 31, 1997,
March 27, 1998, March 26, 1999 and the nine months ended December 24, 1999,
respectively.
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COMPETITION
The wireless telecommunications infrastructure market is highly
competitive. The market for products that enhance wireless coverage is
characterized by rapidly changing technology, evolving wireless industry
standards and frequent new product introductions and enhancements. Our ability
to compete depends on many factors, including:
- continued new product development;
- comprehensive service and support;
- competitive pricing; and
- reliability.
Current and potential competitors consist primarily of major domestic and
international companies, who offer coverage enhancement solutions based on their
own network repeaters or base stations. Most of these companies have longer
operating histories, larger installed customer bases, substantially greater name
recognition and greater financial, technical, manufacturing, marketing, sales
and distribution resources than we do. Our current and potential competitors can
be divided into two groups: base station manufacturers, such as Fujitsu Network
Communication, Inc., Hyundai Electronics Industries Co., Ltd., LG Information &
Communications, Ltd., Ericsson, Inc., Lucent Technologies, Inc., Motorola, Inc.,
NEC Corporation, Nokia Corporation, Nortel Networks Corp., and Samsung
Electronics Co., Ltd.; and wireless repeater manufacturers, such as Allen
Telecom Inc., Allgon AB, and Andrew Corporation. We face actual and potential
competition not only from these established companies, but also from new
companies that may develop and market new wireless telecommunications products
and services.
INTELLECTUAL PROPERTY
We consider our technologies proprietary and seek to protect our
intellectual property rights. As of December 24, 1999, we had three patents
granted and two patent applications pending. In addition, we are seeking patent
protection of our inventions in foreign countries. Our pending patent
application is based upon proprietary rights originally obtained from Matthew P.
Fuerter, one of our stockholders and our Vice President of Engineering. We also
have a technology license agreement with Mr. Fuerter. For further information
regarding this technology license agreement, please see "Certain Transactions."
While we believe that our patents will render it more difficult for
competitors to develop and market similar products, our patents may be
invalidated, circumvented, or challenged. In addition, any pending or future
patent applications may not be issued with the scope we seek or at all.
We also rely on copyright and trade secret laws for the protection of our
proprietary software. Source code for our proprietary software is protected as
unpublished copyright works and trade secrets. In addition, we generally enter
into confidentiality or licensing agreements with employees, consultants,
vendors, customers and licensees, and generally limit access to the details of
proprietary designs, software, documentation, and other confidential
information.
Notwithstanding our efforts to protect our rights, it may be possible for a
third party to copy or to obtain and use our intellectual property without our
authorization. We may have to pursue litigation in the future to enforce our
intellectual property rights or to defend against claims of infringement. Such
litigation could result in substantial costs and diversion of resources and
could seriously harm our business, operating results, and financial condition.
We are not engaged in any legal proceedings concerning matters of patent
infringement or enforcement. In addition, others may develop technologies
superior to our technology, duplicate our technology, or design around our
patents.
GOVERNMENT REGULATION
In order for our products to be used in certain jurisdictions, regulatory
approval may be necessary. The delays inherent in this regulatory approval
process may cause the rescheduling, postponement or
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<PAGE> 41
cancellation of fulfillment of our orders for products which, in turn, may cause
our customers to reschedule, postpone or cancel orders for those products.
EMPLOYEES
As of December 24, 1999, we employed 81 persons, including 27 in research
and product development, 18 in operations, 11 in customer service and post-sales
support, 14 in sales and marketing and 11 in finance and administration. We also
use contract personnel, primarily for information technology support and product
development.
None of our employees are represented by a labor union and we believe our
relations with our employees are good.
FACILITIES
Our headquarters consist of approximately 40,000 square feet of space
leased through December 31, 2003, located in Sunnyvale, California. The primary
manufacturing of our products takes place at our contract manufacturers'
facilities located in San Jose, California and Calgary, Alberta, Canada. The
primary research and development operation is located at our headquarters in
Sunnyvale, California with an additional product development center located in
Anaheim, California. The Anaheim facility consists of approximately 3,800 square
feet and is leased through January 31, 2004. In addition, we lease office suites
for our direct sales force in the United States, Canada and Brazil. We believe
these facilities will be adequate to meet our requirements for the foreseeable
future.
LEGAL PROCEEDINGS
We are not currently involved in any material legal proceedings.
In July 1999, we entered into an engagement letter with CIBC World Markets
Corp., or CIBC, under which we retained them to provide financial advisory
services. The engagement letter provides for CIBC to have, and CIBC has informed
us that we are obligated to offer them, the right of first refusal to be the
lead underwriter of this offering. We do not believe we have such an obligation.
However, in the event that a dispute arises between CIBC and us, and CIBC
prevails, we could be required to make a payment to them. There can be no
assurance as to the outcome of this potential dispute.
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<PAGE> 42
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information concerning our executive
officers and directors:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Kenneth L. Kenitzer......... 56 President, Chief Executive Officer and Director
Edward R. Johnson........... 52 Executive Vice President, Chief Technology Officer and Secretary
David A. Bolan.............. 48 Vice President of Marketing
Matthew P. Fuerter.......... 35 Vice President of Engineering
Timothy A. Marcotte......... 42 Vice President and Chief Financial Officer
Frank E. Martens............ 46 Vice President of Operations
Chris L. Branscum(1)(2)..... 51 Chairman
John Bosch(1)(2)............ 65 Director
Bandel Carano............... 38 Director
Richard G. Grey(2).......... 70 Director
Perry LaForge(1)............ 41 Director
Alessandro Piol............. 43 Director
</TABLE>
- ------------------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
Kenneth L. Kenitzer has served as our President & Chief Executive Officer
since September 1996. He served as our Chief Operating Officer from February
1996 to September 1996. Mr. Kenitzer joined Repeater Technologies in 1994 as our
Vice President of Operations and Engineering. From 1984 to 1994, Mr. Kenitzer
served in several management positions at Compression Labs, Inc. a video
conferencing company, including Senior Vice President of Operations and
Manufacturing. Mr. Kenitzer holds a B.E.S. (EE) from Brigham Young University.
Edward R. Johnson has served as our Executive Vice President and Chief
Technology Officer since September 1991. Mr. Johnson served as Vice President of
Engineering from October 1983 to September 1991 and was a co-founder of our
company. He has also served as our Corporate Secretary since October 1983. Mr.
Johnson holds a B.S.E.E. from Newark College of Engineering.
David A. Bolan has served as our Vice President of Marketing since
September 1996. From May 1994 to September 1996, Mr. Bolan served as Vice
President of OEM Sales and Marketing for Spectrian Corporation, a wireless base
station power amplifier manufacturer. Mr. Bolan holds a B.E.E. from Cleveland
State University and an M.B.A. from Xavier University, Cincinnati, Ohio.
Matthew P. Fuerter has served as our Vice President of Engineering since
October 1999. From April 1997 to October 1999, Mr. Fuerter was our Director of
Systems and Applications Engineering. From August 1995 to May 1997, Mr. Fuerter
worked for Sprint Spectrum L.P. as an RF Design Manager. From September 1989 to
June 1995, Mr. Fuerter worked for GTE Mobilnet as an RF Engineering Supervisor.
Mr. Fuerter studied Electrical Engineering at the University of Buffalo.
Timothy A. Marcotte has been our Vice President and Chief Financial Officer
since November 1999. From March 1999 to November 1999, Mr. Marcotte was an
independent financial consultant. From August 1997 to March 1999, Mr. Marcotte
served as Vice President of Finance and Chief Financial Officer at Sunrise
Technologies International, Inc., a laser medical device manufacturer. From
December 1996 to August 1997, Mr. Marcotte served as Vice President and Chief
Financial Officer for InfoGain Corporation, an information technology consulting
firm. From June 1996 to December 1996, Mr. Marcotte was the Vice President and
Chief Financial Officer for IRIDEX Corporation, a laser medical device
manufacturer. From April 1993 to June 1996, Mr. Marcotte served as Executive
Vice President and Chief
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<PAGE> 43
Financial Officer for Now Software, Inc., a software development company. Mr.
Marcotte holds a B.S. Anthropology/Zoology and an M.B.A. from the University of
Michigan.
Frank E. Martens has served as our Vice President of Operations since July
1999. From March 1999 to July 1999, Mr. Martens served as a consultant for ADI
Communications, Inc., which develops equipment for wireless local loop networks.
From November 1996 to February 1999, Mr. Martens served as Vice President of
Customer Advocacy for Telco Systems, Inc., a telecommunications equipment
manufacturer. From October 1990 to November 1996, Mr. Martens served as Vice
President of Service and Support and Director of Business Operations for
Compression Labs, Inc., a video conferencing equipment manufacturer. Mr. Martens
holds a B.S. in Accounting from State University of New York at Albany. Mr.
Martens received his C.P.A. certification in 1981. Mr. Martens also holds an
M.B.A. from Long Island University.
Chris L. Branscum has served as a Director since 1990 and as Chairman since
1993. Mr. Branscum has been a General Partner of Hallador Venture Partners since
1990 and a Managing Director of Hallador Venture Partners, LLC since 1997. From
1985 through 1989, Mr. Branscum was with Arthur Young & Company, where he was a
partner. Prior to 1985, Mr. Branscum was in the private practice of law. Mr.
Branscum holds a J.D. from the University of Pacific, McGeorge School of Law and
a B.S. in Business Administration from California State University, Sacramento.
Mr. Branscum currently serves on the board of directors of Roseville
Communications Company.
John Bosch has served as a Director since May 1990. Since 1981, Mr. Bosch
has been a general partner of Bay Partners, a venture capital firm. In 1976, he
co-founded Cronus Precision Products, Inc., a digital timing company and served
as its President and Chief Executive Officer until 1981. In 1970, Mr. Bosch
co-founded Anixter, Bosch and Russell, a consulting firm specializing in
marketing and sales consulting for high technology companies. Mr. Bosch holds a
B.S. in mechanical engineering and an M.B.A. in marketing from the University of
Southern California. Mr. Bosch currently serves on the board of directors of
NetManage, Inc.
Bandel Carano has served as a Director since 1995. Mr. Carano has been with
Oak Investment Partners Venture Capital since 1985. From 1983 to 1985, Mr.
Carano served as an associate for the Morgan Stanley Venture Capital Group. Mr.
Carano holds a B.S. and M.S. in Electrical Engineering from Stanford University.
He currently serves on the Investment Advisory Board of the Stanford University
Engineering Venture Fund.
Richard G. Grey has served as a Director since 1990. From 1995 to present,
Mr. Grey has served as General Partner, for HMS Hawaii Management Partners. From
1984 to present, Mr. Grey has also served as General Partner of HMS Group, which
manages venture capital funds for investments in the communications industry.
Previously, Mr. Grey served as a Director from 1982 to 1987 for HMS Capital
Limited. From 1979 to 1987, Mr. Grey was in the private practice of law. Mr.
Grey holds a J.D. from the University of San Francisco, an M.B.A. and a B.S.
from the University of California, Los Angeles.
Perry LaForge has served as a Director since September 1999. Mr. LaForge
serves as a Vice President and Partner of Pittiglio, Rabin, Todd and McGrath, an
international management consulting firm and has been employed there since 1984.
Mr. LaForge also founded the CDMA Development Group, a non-profit trade
organization, and has served as the Executive Director and Chairman since
December 1994. Mr. LaForge also founded and serves as the President and Chairman
of inOvate Communications Group, a venture capital firm. Mr. LaForge holds a
B.E. from Santa Clara University and an M.B.A. from the Amos Tuck School at
Dartmouth College.
Alessandro Piol has served as a Director since January 1998. Since 1995,
Mr. Piol has served as Managing Director of Invesco Private Capital (formerly
Chancellor Capital Management), a venture capital and investment management
firm. From 1993 to 1995, Mr. Piol was a General Partner of AT&T Ventures, the
venture capital arm of AT&T, which he co-founded. Prior to AT&T Ventures, Mr.
Piol spent six years in various operational positions at AT&T and co-founded
Pixel Machines. Mr. Piol holds a
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<PAGE> 44
B.S. and M.S. in Computer Science from the Columbia University School of
Engineering and an M.B.A. from the Harvard Business School.
BOARD OF DIRECTORS COMMITTEES
The audit committee consists of Messrs. Branscum, Bosch and Grey. The audit
committee reviews our records and affairs to determine our financial condition,
oversees the adequacy of the systems of internal control and monitors our
adherence in accounting and financial reporting to generally accepted accounting
principles.
The compensation committee consists of Messrs. Branscum, Bosch and LaForge.
The compensation committee determines compensation for our officers and
administers our 1990 Incentive Stock Plan, Key Executives Stock Option Plan,
2000 Equity Incentive Plan and 2000 Employee Stock Purchase Plan. However, our
board of directors must approve all awards granted under these plans to
directors and employees who are subject to Section 16 of the Securities Exchange
Act of 1934, as amended. No officer serving on our board of directors or the
compensation committee has or will participate in decisions awarding
compensation or granting stock options to himself.
DIRECTOR COMPENSATION
Non-employee directors are entitled to receive option grants under the 1990
Incentive Stock Option Plan and the 2000 Equity Incentive Plan, the amount of
which is determined by the board of directors in its sole discretion. These
director options will have an exercise price equal to the fair market value of
our common stock when granted and will vest 50% upon grant and the balance in
two annual installments of 25% each. All directors will be reimbursed for
expenses incurred in attending meetings of the board of directors and its
committees. In our fiscal year ended March 26, 1999, no options grants were made
to our non-employee directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the compensation committee of our board is
currently, or has been at any time since our formation, one of our officers or
employees. During our fiscal year ended March 26, 1999, none of our executive
officers served as a member of the board of directors or compensation committee
of any entity that has one or more officers serving as a member of our board of
directors or compensation committee. Chris L. Branscum, a member of the
compensation committee during our fiscal year ended March 26, 1999, is
affiliated with Hallador Venture Fund II, a California limited partnership,
which invested $99,541 in our Series DD convertible subordinated debentures in
November 1998.
TERM OF EXECUTIVE OFFICERS AND DIRECTORS
Our directors currently serve terms until the next annual meeting of
stockholders and the election of their successors. Upon the effectiveness of
this offering, the board of directors will be divided into three classes, with
two directors in each of Class I and Class II and three directors in Class III.
Messrs. Grey and Bosch will be Class I directors, Messrs. Piol and Carano will
be Class II directors, and Messrs. Branscum, LaForge and Kenitzer will be Class
III directors. Initially, the Class I directors will be nominated for election
for a term of three years, the Class II directors will be nominated for election
for a term of two years, and the Class III directors will be nominated for
election for a term of one year. Upon the expiration of these initial terms,
each director in each class will be elected for a term of three years. Directors
will hold office until the annual meeting of stockholders in the year in which
the term of their class expires and until their successors have been duly
elected and qualified. Executive officers are appointed by, and serve at the
discretion of, the board.
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<PAGE> 45
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth certain information concerning the
compensation paid during the fiscal year ended March 26, 1999 to the Chief
Executive Officer and the other most highly compensated executive officers whose
compensation exceeded $100,000, based on salary earned in fiscal year 1999, who
were executive officers on March 26, 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG-TERM COMPENSATION
COMPENSATION ----------------------------
------------ RESTRICTED ALL OTHER
NAME AND PRINCIPAL OCCUPATION SALARY STOCK AWARDS COMPENSATION
----------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
Kenneth L. Kenitzer
President and Chief Executive Officer............ $155,000 -- $ 384(1)
David A. Bolan
Vice President, Marketing........................ 129,250 -- 384(1)
Matthew P. Fuerter
Vice President, Engineering...................... 106,375 $2,045(2) 62,459(3)
Mark A. Hoffman
Vice President, Operations(4).................... 100,767 -- 384(1)
Edward R. Johnson
Executive Vice President and Chief Technology
Officer....................................... 152,942 -- 384(1)
Todd B. Schull
Vice President and Chief Financial Officer(5).... 134,250 -- 384(1)
</TABLE>
- ------------------
(1) Represents term life insurance premiums paid by us.
(2) Represents the fair market value, when issued, of 805 shares granted
pursuant to a technology licensing agreement.
(3) Represents $62,075 in royalties paid in cash pursuant to a technology
licensing agreement and $384 in term life insurance premiums paid by us.
(4) Mr. Hoffman resigned as an executive officer in March 1999 and is no longer
employed by us.
(5) Mr. Schull resigned as an executive officer in June 1999 and is no longer
employed by us.
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<PAGE> 46
OPTION GRANTS IN LAST FISCAL YEAR
We did not grant any stock options to any of the executive officers named
in the Summary Compensation Table during our fiscal year ended March 26, 1999.
OPTION EXERCISES IN LAST FISCAL YEAR AND OPTION VALUES AT FISCAL YEAR END
There were no option exercises by any of the executive officers named in
the Summary Compensation Table during our fiscal year ended March 26, 1999. The
following table provides information concerning the number and value of
unexercised stock options held as of March 26, 1999 by the executive officers
named in the Summary Compensation Table. The values for in-the-money options
represent the positive spread between the respective exercise prices of
outstanding stock options and $3.00, or the fair market value of the underlying
common stock as of March 26, 1999, as determined in good faith by the board of
directors.
OPTION EXERCISES IN LAST FISCAL YEAR AND OPTION VALUES AT FISCAL YEAR END
<TABLE>
<CAPTION>
NUMBER OF SHARES
SUBJECT TO UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
FISCAL YEAR-END AT FISCAL YEAR-END
MARCH 26, 1999 MARCH 26, 1999($)(*)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Kenneth L. Kenitzer....................... 524,500 -- $1,405,250 --
David A. Bolan............................ 180,000 -- 486,000 --
Matthew P. Fuerter........................ 80,000 -- 216,000 --
Mark A. Hoffman(1)........................ 25,000 -- 67,500 --
Edward R. Johnson......................... 323,250 -- 842,125 --
Todd B. Schull(2)......................... 180,000 -- 486,000 --
</TABLE>
- ------------------
(1) Mr. Hoffman resigned as an executive officer in March 1999 and is no longer
employed by us.
(2) Mr. Schull resigned as an executive officer in June 1999 and is no longer
employed by us.
(*) Based on a fair market value of $3.00 at March 26, 1999, as determined by
our board of directors.
BENEFIT PLANS
1990 Incentive Stock Plan. Our board of directors adopted our 1990
Incentive Stock Plan on May 18, 1990 and our shareholders approved it on May 10,
1991. On January 29, 1997, the board reserved an additional 167,394 shares for
option grants under the 1990 Plan, which the shareholders approved. On October
2, 1997 the board reserved an additional 500,000 shares for option grants under
the 1990 Plan, which the shareholders approved. On March 13, 1998, the board
reserved an additional 739,967 shares for option grants under the 1990 Plan,
which the shareholders approved. On September 16, 1999, the board reserved an
additional 1,000,000 shares for option grants under the 1990 Plan. We have
reserved a total of 2,716,910 shares of our common stock for issuance under the
1990 Plan. As of December 24, 1999, 124,065 shares have been issued upon
exercise, net of repurchase, of options granted under the 1990 Plan and options
to purchase 1,879,822 shares were outstanding, with 713,023 shares reserved for
future grants or purchases under the 1990 Plan. Options currently outstanding
under the 1990 Plan will continue in full force and effect under the terms of
the 1990 Plan until these outstanding options are exercised or terminated in
accordance with their terms.
The 1990 Plan provides for grants of incentive stock options that qualify
under Section 422A of the Internal Revenue Code of 1986, nonstatutory stock
options and common stock awards to employees, directors and consultants.
Incentive stock options may be granted only to employees, including officers.
Directors are not eligible to receive benefits under the 1990 Plan unless
expressly declared eligible to participate by a majority of disinterested
directors or a committee comprised solely of disinterested directors.
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<PAGE> 47
The 1990 Plan is administered by our board through the compensation
committee, which determines who will be granted awards under the 1990 Plan, when
and how the awards will be granted, the type and terms of awards granted,
including the exercise period, and the number of shares subject to the award.
The exercise price of incentive stock options granted under the 1990 Plan must
be at least equal to 100% of the fair market value of our common stock on the
date of grant. However, for any employee holding more than 10% of the voting
power of all classes of our stock, the exercise price of incentive stock options
must be at least 110% of the fair market value on the date of grant and the term
of the option may not exceed five years. The exercise price of nonstatutory
stock options and common stock awards is set by the board when granted, but must
be at least 85% of the fair market value upon the date of grant. The maximum
term of any options granted under the 1990 Plan is ten years.
An optionee whose relationship as an employee, director or consultant with
us or any related corporation ceases for any reason, other than death or
permanent and total disability, may exercise options for up to three months
following the cessation, unless those options specifically provide for
termination at an earlier or later time. The three-month period is generally
extended to twelve months from termination due to permanent and total
disability, and eighteen months or such other period as is set forth in the
optionee's option agreement for termination due to death. Generally, the
optionee may not transfer a stock option other than by will or the laws of
descent or distribution.
In the event of a merger or a consolidation in which we are not the
surviving corporation or a merger in which our securities are converted into
shares or property of another entity, then all outstanding options under the
1990 Plan shall be assumed, continued or substituted for similar options by the
surviving entity. If the surviving entity refuses to assume or continue these
options or substitute similar options, or in the event of a dissolution or
liquidation of our business, then these outstanding options will terminate upon
completion of that transaction.
Our board may accelerate the vesting of any outstanding option. Our board
may suspend or terminate the 1990 Plan at any time. Unless terminated earlier,
the 1990 Plan will terminate on May 18, 2000.
Key Executives Stock Option Plan. Our board of directors adopted our Key
Executives Stock Option Plan on May 21, 1993, and our stockholders approved it
on July 26, 1993. Our board amended the Key Executives Plan on October 14, 1994
and on May 25, 1995. On January 29, 1997, our board reserved an additional
900,000 shares for option grants under the Key Executives Plan, which the
stockholders approved on October 2, 1997. We have reserved a total of 1,351,544
shares for issuance under the Key Executives Plan. As of December 24, 1999,
159,690 shares had been issued upon the exercise, net of repurchase, of options
granted under the Key Executives Plan and options to purchase 1,164,354 shares
were outstanding, with 27,500 shares reserved for future grants or purchases
under the Key Executives Plan. Options currently outstanding under the Key
Executives Plan will continue in full force and effect under the terms of the
Key Executives Plan until such outstanding options are exercised or terminated
in accordance with their terms.
The Key Executives Plan provides for grants of incentive stock options that
qualify under Section 422 of the Internal Revenue Code of 1986, and nonstatutory
stock options to any persons, including officers and directors, employed in
senior management or key technical positions, as determined by the board.
The Key Executives Plan is administered by our board through the
compensation committee, which determines who will be granted options under the
Key Executives Plan, when and how the options will be granted, the type and
terms of each option granted, including the exercise period, and the number of
shares subject to the option. The exercise price of incentive stock options
granted under the Key Executives Plan must be at least equal to the fair market
value of our common stock on the date of grant. However, for any person holding
more than 10% of the voting power of all classes of our stock, the exercise
price of incentive stock options must be not less than 110% of the fair market
value and the term of the option may not exceed five years. The exercise price
of nonstatutory stock options must be equal to at least 85% of the fair market
value of our common stock on the date of the grant. The maximum term of any
options granted under the Key Executives Plan is ten years.
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<PAGE> 48
An optionee whose relationship as an employee or director with us or any
related corporation ceases for any reason, other than for death or total and
permanent disability, may exercise options for up to three months following the
cessation, or, if earlier, prior to the expiration date set forth in the option
agreement with that optionee. The three-month period is extended to twelve
months or any shorter period set forth in the optionee's option agreement for
any termination due to total and permanent disability, and eighteen months or
any shorter period set forth in the optionee's option agreement for termination
due to death. Generally, the optionee may not transfer a stock option other than
by will or the laws of descent or distribution.
In the event of a dissolution or liquidation of our business or a merger in
which we are not the surviving corporation or in which our securities are
converted into shares or property of another entity, then all outstanding
options shall be assumed or substituted for similar options by the surviving
entity. If the surviving entity refuses to assume or continue these options or
substitute similar options, then the vesting of these outstanding options will
be accelerated and the options will terminate upon completion of that
transaction.
Our board may accelerate the vesting of any outstanding option.
The Key Executives Plan will terminate on April 30, 2003, unless terminated
sooner by our board.
2000 Equity Incentive Plan. Our board adopted the 2000 Equity Incentive
Plan on February 15, 2000. An aggregate of three million shares of common stock,
subject to stockholder approval, have been authorized for issuance under the
2000 Incentive Plan, all of which are available for future grants. Beginning on
January 1, 2002, the number of shares of common stock reserved for issuance
under the 2000 Incentive Plan will automatically be increased each January 1 by
4% of the total number of shares of our common stock then outstanding or, if
less, by one million shares.
The 2000 Incentive Plan provides for the grant of incentive stock options
within the meaning of Section 422 of the Internal Revenue Code of 1986,
nonstatutory stock options, restricted stock purchase rights and stock bonuses
to our employees, consultants and directors. Incentive stock options may be
granted only to employees.
The 2000 Incentive Plan is administered by our board of directors or a
committee appointed by the board, which determines who will be granted awards,
when and how the awards will be granted, the type and terms of awards granted,
including the exercise period, and the number of shares of common stock subject
to the award. The exercise price of incentive stock options granted under the
2000 Incentive Plan must be at least equal to the fair market value of our
common stock on the date of grant. However, for any employee holding more than
10% of the voting power of all classes of our stock, the exercise price of
incentive stock options will be no less than 110% of the fair market value and
the term may not exceed five years. The exercise price of nonstatutory stock
options can be no less than 85% of the fair market value. The maximum term of
options granted under the 2000 Incentive Plan is ten years.
Unless otherwise provided in an option agreement, an optionee whose
relationship as an employee, director or consultant with us or any related
corporation ceases for any reason, other than for death or total and permanent
disability, may exercise options in the three-month period following such
cessation, unless those options specifically provide a longer or shorter period,
or, if earlier, the expiration of the option set forth in the option agreement
with that optionee. The three-month period is extended to twelve months for
terminations due to total and permanent disability, and to eighteen months for
terminations due to death. Generally, the optionee may not transfer a stock
option other than by will or the laws of descent or distribution, unless the
optionee holds a nonstatutory stock option that provides for transfer in the
option agreement. However, an optionee may designate a beneficiary who may
exercise the option following the optionee's death.
When we become subject to Section 162(m) of the Internal Revenue Code, no
person may be granted options under the 2000 Incentive Plan covering more than
two million shares of common stock in any calendar year. Among other things,
Section 162(m) denies a deduction to publicly-held corporations
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<PAGE> 49
for certain compensation paid to specified employees in a taxable year to the
extent that the compensation exceeds $1,000,000.
Restricted stock purchase awards granted under the 2000 Incentive Plan may
be granted pursuant to a repurchase option in favor of Repeater Technologies in
accordance with a vesting schedule determined by the board. The price of a
restricted stock purchase award under the 2000 Incentive Plan cannot be less
than 85% of the fair market value of the stock subject to the award on the date
of grant. Stock bonuses may be awarded in consideration of past services without
a purchase payment. Unless otherwise specified, rights under a stock bonus or
restricted stock bonus agreement generally may not be transferred other than by
will or the laws of descent and distribution during such period as the stock
awarded pursuant to that agreement remains subject to the agreement.
A change in control of Repeater Technologies is defined in the 2000
Incentive Plan as the sale of substantially all of our assets or merger with or
into another corporation. If a change in control occurs, any outstanding awards
held by persons then performing services for us as an employee, director or
consultant may either be assumed or continued or an equivalent award may be
substituted by the surviving entity. If the surviving entity refuses to assume
or substitute the outstanding awards, the vesting of these awards will be
accelerated and will terminate upon completion of the change of control.
Subject to stockholder approval, as necessary, our board of directors may
amend the Incentive Plan at any time. Unless sooner terminated by our board, the
2000 Incentive Plan will terminate on the day before the 10th anniversary of its
adoption by the board.
Non-Employee Director Stock Option Grants. The 2000 Incentive Plan provides
for automatic stock option grants to non-employee directors on our board. Each
person who is not an employee and is elected or appointed to our board after the
closing of this offering will be granted, on the date of that person's election
or appointment, an initial stock option to purchase 25,000 shares of our common
stock at the fair market value of our common stock on that grant date. On the
closing date of this offering, non-employee directors who have not previously
been granted options to purchase our common stock will receive initial stock
option grants as if they were first elected or appointed to the board
immediately after the closing of the offering.
In addition to these initial stock option grants, the 2000 Incentive Plan
provides that each non-employee director serving on the day after each annual
stockholders' meeting, shall, on that date, be granted an annual stock option
grant to purchase 6,500 shares of our common stock at the fair market value of
our common stock on that grant date. For non-employee directors that have not
served on the board for the entire period preceding the annual stockholders'
meeting, the amount of shares subject to this annual stock option grant shall be
reduced, pro-rata, for each full quarter that person did not serve on the board.
The non-employee director stock options will have a maximum term of ten
years and generally must be exercised within the periods described above
following cessation of service on the board. The non-employee directors become
vested in each initial stock option grant and annual stock option grant one-half
after each year of service on the board following the stock option grant date so
that the directors will become vested fully after two years of service on the
board after the grant. If there is a change of control as described above, each
non-employee director will become fully vested in the unvested portion of these
stock options and will be entitled to exercise the options for up to 12 months
following the termination of that director's service on the board or, if
shorter, the original term of the stock options. The stock options shall not be
transferable except as otherwise provided in a stock option agreement to the
extent permitted by federal securities laws and regulations.
2000 Employee Stock Purchase Plan. On February 15, 2000, our board of
directors adopted the 2000 Employee Stock Purchase Plan. A total of 500,000
shares of common stock, subject to stockholder approval, have been reserved for
issuance under the purchase plan. Each January 1, beginning in 2002 and ending
in 2010, the number of shares of common stock reserved for issuance under the
purchase plan will automatically be increased by 1.0% of the total number of
shares of common stock then outstanding or, if
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<PAGE> 50
less, by 250,000 shares. The purchase plan is intended to qualify as an employee
stock purchase plan within the meaning of Section 423 of the Code.
The purchase plan provides a means by which employees may purchase shares
of our common stock through payroll deductions. The purchase plan is implemented
by offerings of rights to eligible employees. Our board will determine the terms
of each offering, including eligibility, purchase price and the duration of the
offering, which may not exceed 27 months. The first offering will begin on the
closing date of this offering and terminate on April 30, 2002. Purchase dates
will occur on October 31, 2000, April 30, 2001, October 31, 2001 and April 30,
2002 under the initial offering.
Employees who participate in an offering may have up to 15% of their
earnings withheld pursuant to the purchase plan. The price of common stock
purchased under the purchase plan will not be less than 85% of the lower of the
fair market value of the common stock at the commencement date of each offering
period or the relevant purchase dates established by our board. Employees may
end their participation in an offering at any time during such offering except
during the 10 day period immediately prior to a purchase date. Employees'
participation in all offerings will end automatically and immediately on
termination of their employment with us or one of our subsidiaries.
Unless otherwise determined by our board of directors, employees are
eligible to participate in the purchase plan only if they have been continuously
employed by us or one of our subsidiaries designated by the board of directors
for at least 20 hours per week and five months per calendar year. No employee
shall be eligible for the grant of any rights under the purchase plan if,
immediately after the rights are granted, that employee would own 5% or more of
the total combined voting power or value of all classes of our then outstanding
capital stock. Eligible employees may be granted rights only if those rights,
together with any other rights granted under employee stock purchase plans, do
not permit that employee's rights to purchase shares of our common stock to
accrue at a rate which exceeds $25,000 of fair market value of our common stock
for each calendar year in which those rights are outstanding.
In the event of a dissolution or liquidation of our business, a sale of all
or substantially all of our assets or a merger in which we are not the surviving
corporation or in which our securities are converted into shares or property or
another entity, then all outstanding rights to purchase our common stock may be
assumed or substituted for similar rights by the surviving entity. If the
surviving or acquiring entity does not assume these rights or substitute similar
rights for these rights, then our board has the discretion to provide that all
sums collected by payroll deductions may be applied to purchase shares
immediately prior to that transaction.
Our board may amend or terminate the purchase plan at any time without
stockholder approval, except to the extent that stockholder approval is required
under Section 423 of the Code, Rule 16b-3 under the Exchange Act or any
applicable Nasdaq listing requirements. No amendment or termination may impair
any outstanding rights and obligations without the consent of the person
affected, except as necessary to comply with any laws or regulations or to
comply with Section 423 of the Code.
401(k) Plan. We have established an employee savings and retirement plan,
the 401(k) Plan, for eligible employees. Eligible employees may elect to defer a
percentage of their pre-tax gross compensation in the 401(k) Plan, subject to
the statutorily prescribed annual limit. We may make matching contributions on
behalf of all participants in the 401(k) Plan in an amount determined by our
board of directors. We may also make additional discretionary profit-sharing
contributions in such amounts as determined by our board, subject to statutory
limitations. Matching and profit-sharing contributions, if any, are subject to a
vesting schedule; all other contributions are at all times fully vested. We
intend the 401(k) Plan, and the accompanying trust, to qualify under Sections
401(k) and 501 of the Internal Revenue Code so that contributions by employees
or by us, and income earned (if any) on plan contributions, are not taxable to
employees until withdrawn from the 401(k) Plan, and so that we will be able to
deduct our contributions, if any, when made. The trustee under the 401(k) Plan,
at the direction of each participant, invests the assets of the 401(k) Plan in
any of a number of investment options.
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<PAGE> 51
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of January 31, 2000, certain information
with respect to our common stock owned beneficially by each director, by the
executive officers, by all executive officers and directors as a group and by
each beneficial owner of more than 5% of our outstanding common stock.
Beneficial ownership is determined in accordance with the rules of the SEC and
generally includes voting or investment power with respect to the securities.
Except as noted in the footnotes, each of the persons listed has sole investment
and voting power with respect to the shares of common stock included in the
table.
Percentage of beneficial ownership is based on 17,087,449 shares of common
stock as of January 31, 2000 and shares of common stock
outstanding after completion of this offering.
Shares of common stock subject to options and warrants that are exercisable
within 60 days of January 31, 2000 are deemed to be outstanding and to be
beneficially owned by the person holding the options or warrants for the purpose
of computing that person's percentage ownership, but are not treated as
outstanding for the purpose of computing the percentage ownership of any other
person. Where a person is deemed to beneficially own common stock that is
subject to our right to repurchase pursuant to the Company's 1990 Incentive
Stock Plan and 1993 Key Executives Stock Option Plan, we have indicated the
number of shares that are subject to our right of repurchase at the end of 60
days after January 31, 2000.
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF STOCK SUBJECT TO PERCENT OF OWNERSHIP
COMMON STOCK REPURCHASE --------------------
BENEFICIALLY AFTER BEFORE AFTER
STOCKHOLDER OWNED MARCH 31, 2000 OFFERING OFFERING
----------- ------------ -------------------- -------- --------
<S> <C> <C> <C> <C>
Funds Affiliated with Oak Associates VI,
LLC(1)................................. 2,958,009 %
Bandel Carano(1)......................... 2,958,009 %
Funds Affiliated with Charter Growth
Capital(2)............................. 2,072,825 %
Funds Affiliated with INVESCO Private
Capital Inc. and INVESCO (NY),
Inc.(3)................................ 1,939,659 %
Alessandro Piol(3)....................... 1,939,659 %
TransCapital SDN BHD..................... 1,778,326 %
Nazem & Company IV, L.P.................. 1,570,533 %
Hallador Venture Fund II, L.P.(4)........ 885,394
Chris L. Branscum(4)..................... 885,394 %
Funds Affiliated with HMS Capital
Partners(5)............................ 881,777
Richard G. Grey(5)....................... 881,777 %
Funds Affiliated with Bay Partners IV and
California BPIV, L.P.(6)............... 737,145
John Bosch(6)............................ 737,145 %
Kenneth L. Kenitzer...................... 627,017 234,998 %
David A. Bolan........................... 230,000 120,000 %
Matthew P. Fuerter....................... 120,000 80,000
Edward R. Johnson........................ 365,000 67,500 %
Timothy A. Marcotte...................... 180,000 180,000 %
Frank E. Martens......................... 150,000 150,000
Perry LaForge............................ 40,000 40,000
All executive officers and directors as a
group (12 persons)..................... 9,114,011 872,498 %
Executive officers and directors as a
group, excluding stock subject to
repurchase after March 31, 2000........ 8,241,513 %
</TABLE>
- ------------------
* Less than 1% of the outstanding common stock.
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<PAGE> 52
(1) Includes 2,895,754 shares held by Oak Investment Partners VI, Limited
Partnership and 62,255 shares held by Oak VI Affiliates Fund. Mr. Carano, a
director of the Company, is a managing member of Oak Associates VI, LLC,
which is the general partner of Oak Investment Partners VI, Limited
Partnership and Oak VI Affiliates Fund. Mr. Carano disclaims beneficial
ownership of the shares held by the funds affiliated with Oak Associates VI,
LLC, except to the extent of his pecuniary interest therein.
(2) Includes 1,431,818 shares held by Charter Growth Capital Co-Investment Fund,
L.P., 363,636 shares held by Charter Growth Capital, L.P. and 277,370 shares
held by CGC Investors, L.P.
(3) Includes 1,123,451 shares held by Citiventure 96 Partnership, L.P. 499,656
shares held by Chancellor LGT Private Capital Offshore Partners II, 277,370
shares held by Chancellor LGT Private Capital Partners III and 39,179 shares
held by Chancellor LGT Private Capital Offshore Partners I. Mr. Piol, a
director of the Company, is Managing Director of INVESCO Private Capital,
Inc., which is the general partner of the general partners of Chancellor LGT
Private Capital Offshore Partners II, Chancellor LGT Private Capital
Partners III and Chancellor LGT Private Capital Offshore Partners I. Mr.
Piol is also the managing director of INVESCO (NY), Inc., which is an
investment advisor to Citiventure 96 Partnership, L.P. Mr. Piol disclaims
beneficial ownership of the shares held by the funds affiliated with INVESCO
Private Capital, Inc. and INVESCO (NY), Inc., except to the extent of his
pecuniary interest therein.
(4) Includes 885,393 shares held by Hallador Venture Fund II, L.P. Mr. Branscum,
a director of the Company, is a general partner of Hallador Venture
Partners, LLC, which is the manager of Hallador Venture Fund II, L.P. Mr.
Branscum disclaims beneficial ownership of the shares held by the funds
affiliated with Hallador Venture Partners, LLC, except to the extent of his
pecuniary interest therein.
(5) Includes 660,073 shares held by HMS Capital Partners, 163,844 shares held by
HMS Capital Partners (Annex), 37,015 shares held by HMS Group and 20,845
shares held by HMS (Overseas) Partners. Mr. Grey, a director of the Company,
is a general partner of HMS Management, which is a general partner of HMS
Capital Partners, HMS Capital Partners (Annex), HMS Group and HMS (Overseas)
Partners. Mr. Grey disclaims beneficial ownership of the shares held by the
funds affiliated with HMS Hawaii Management Partners, except to the extent
of his pecuniary interest therein.
(6) Includes 678,191 shares held by Bay Partners IV and 58,964 shares held by
California BPIV, L.P. Mr. Bosch, a director of the Company, is a general
partner of Bay Partners, which is a general partner of Bay Partners IV and
California BPIV, L.P. Mr. Bosch disclaims beneficial ownership of the shares
held by the funds affiliated with Bay Partners, except to the extent of his
pecuniary interest therein.
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<PAGE> 53
CERTAIN TRANSACTIONS
CONVERTIBLE DEBENTURES AND PREFERRED STOCK FINANCINGS
From September 1996 through August 1997, we raised approximately $11.2
million in gross proceeds from the sale of Series BB convertible preferred stock
and the sale of bridge notes that were converted into Series BB convertible
preferred stock to a total of 30 investors. We issued a total of 4,246,316
shares of Series BB convertible preferred stock in these transactions. In
addition, we issued warrants to purchase up to 816,412 shares of our Series BB
convertible preferred stock to 17 of the investors. The Series BB convertible
preferred stock is convertible into common stock at a conversion ratio of
1-for-1, subject to adjustment and will automatically convert to common stock
upon the completion of this offering.
In November and December 1997, we raised approximately $12.1 million in
gross proceeds from the sale of our Series CC convertible preferred stock to 25
investors. We issued a total of 4,402,907 shares of Series CC convertible
preferred stock in this transaction. The Series CC convertible preferred stock
is convertible into common stock at a conversion ratio of 1-for-1, subject to
adjustment and will automatically convert to common stock upon the completion of
this offering.
In November 1998, we raised approximately $15.0 million in gross proceeds
from the sale of our Series DD convertible subordinated debentures to 19
investors. These convertible subordinated debentures bear interest at the rate
of eight percent (8%) per annum, payable quarterly, and mature on November 25,
2003. These debentures are convertible into Series DD convertible preferred
stock at any time prior to the maturity date at the option of the holder. The
conversion price for the Series DD convertible subordinated debentures is $5.50
per share, subject to adjustment. Upon the closing of this offering, we have the
right to convert the debentures into fully paid and nonassessable shares of
Series DD convertible stock which will automatically convert into common stock
at a conversion ration of 1-for-1, subject to adjustment.
The following table lists the members of our Board of Directors who,
through their affiliation with certain venture capital funds, participated in
the above transactions in excess of $60,000:
<TABLE>
<CAPTION>
WARRANTS
EXERCISABLE
FOR # OF
SERIES BB SHARES OF SERIES CC SERIES DD
CONVERTIBLE SERIES BB CONVERTIBLE CONVERTIBLE
PREFERRED CONVERTIBLE PREFERRED DEBENTURES
STOCK # OF PREFERRED STOCK # OF DOLLAR AMOUNT
DIRECTOR AFFILIATED VENTURE CAPITAL FUND SHARES STOCK SHARES INVESTED
-------- --------------------------------------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Alessandro Piol Chancellor LGT Private Capital 36,727 $ 95,541
Partners I, C.V.
Chancellor LGT Private Capital 486,364 13,492
Partners II, L.P.
Chancellor LGT Private Capital 260,000 172,112
Partners III, L.P.
Citiventure 96 Partnership 1,053,091 386,986
Fund, L.P.
Chris L. Branscum Hallador Venture Fund II, A 314,783 45,895 73,000 99,996
California Limited Partnership
Bandel Carano Oak Investment Partners VI, 779,154 277,614 1,066,037 1,249,996
Limited Partnership
Oak VI Affiliates Fund 18,179 6,477 24,872 --
</TABLE>
CHANGE OF CONTROL AGREEMENTS
In November 1999, we entered into a Change of Control Agreement with
Timothy A. Marcotte, our Vice President and Chief Financial Officer. Under the
terms of this agreement, immediately upon a change of control, Mr. Marcotte's
stock options will vest in full. Furthermore, if Mr. Marcotte's employment is
involuntarily terminated without just cause within one year after the change of
control, he
49
<PAGE> 54
will be entitled to six months of severance pay and employee benefits. In
addition, Mr. Marcotte's options will be exercisable for a period of nine months
from the date of termination.
LICENSE AGREEMENT
In May 1998, we entered into a license agreement with Matthew P. Fuerter,
our Vice President of Engineering, for commercial and intellectual property
rights, including patent rights, in receive diversity technology. We have
incorporated this technology into some of our repeaters, as described under the
headings "Wireless System Technology" and "Products and Services" in the
"Business" section of this prospectus. Under this license agreement, we have
paid Mr. Fuerter a bonus of $50,000 and we have agreed to pay Mr. Fuerter an
additional $50,000 within 30 days of the patent being issued for this
technology. We have also agreed to make quarterly royalty payments to Mr.
Fuerter equal to the greater of 3% of our quarterly net revenues derived from
the sale of products incorporating the licensed technology or $75 for each
product sold incorporating the licensed technology. We have also agreed to issue
Mr. Fuerter five shares of our common stock for each unit we sell in the prior
quarter incorporating the licensed technology. These royalties will be paid over
the life of the patent, if issued, but will cease once we have shipped 10,000
product units incorporating the licensed technology. Our obligation to pay
royalties will also cease if the patent application for this invention is
rejected, or if a patent is issued, but subsequently is determined to be
unenforceable. The royalties paid under this license agreement are
non-refundable. In addition, a portion of the patent application embodying
additional technology will be subject to a separate royalty agreement, if we
pursue the completion and commercial development of this additional technology.
50
<PAGE> 55
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock will, upon the closing of this offering,
consist of 70,000,000 shares of common stock, $0.001 par value, and 5,000,000
shares of undesignated preferred stock, $0.001 par value. No other class of
capital stock will be authorized. The following information relates only to our
Certificate of Incorporation, which will be adopted prior to the closing of this
offering.
COMMON STOCK
Upon the closing of this offering we expect to have shares of our
common stock issued and outstanding.
The holders of common stock are entitled to one vote per share on all
matters submitted to a vote of stockholders, including the election of
directors. Our common stock does not have cumulative voting rights, which means
that the holders of a majority of the outstanding common stock voting for the
election of directors can elect all directors then being elected. The holders of
common stock are entitled to receive dividends when, as and if declared by the
board of directors out of legally available funds. Upon liquidation or
dissolution, the holders of common stock will be entitled to share ratably in
the assets legally available for the distribution to stockholders after payment
of liabilities and subject to the prior rights of any holders of preferred stock
then outstanding. The holders of common stock have no conversion, sinking fund,
redemption, preemptive or subscription rights. The rights, preferences and
privileges of holders of common stock are subject to the rights of the holders
of shares of any series of preferred stock which we may issue in the future.
PREFERRED STOCK
Upon the closing of the offering, no shares of preferred stock will be
issued and outstanding.
Our board of directors may, without further action by our stockholders,
from time to time designate and direct the issuance of preferred stock in one or
more series. Our board may also, at the time of issuance, fix the dividend
rights, dividend rates, any conversion rights or right of exchange, any voting
rights, rights and terms of redemption (including sinking fund provisions), the
redemption price or prices, the liquidation preferences, and any other rights,
preferences, privileges, and restrictions of any series of preferred stock and
the number of shares constituting such series and the designation thereof. We
have no present plans to issue any shares of preferred stock.
It is not possible to state the actual effect of the issuances of any
shares of preferred stock upon the rights of holders of the common stock until
our board of directors determines the specific rights of the holders of the
preferred stock. However, these effects might include:
- restricting dividends on the common stock;
- diluting the voting power of the common stock;
- impairing the liquidation rights of the common stock; and
- delaying or preventing a change in control of our company without further
action by the stockholders.
WARRANTS
In November 1995 and March 1997, in connection with our Series E
convertible preferred stock financing, we issued warrants to purchase up to
256,323 shares of our common stock at an exercise price of $0.10 per share. As
of December 24, 1999, warrants for 3,386 shares have been exercised. The
remaining 252,937 of these warrants expire after 5:00 p.m. on the earlier of:
- November 6, 2000;
- the closing date of this offering; or
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<PAGE> 56
- the closing date of a merger or consolidation of Repeater Technologies,
in which the holders of our voting power immediately prior to the merger
or consolidation do not hold a majority of the voting power of the
surviving entity.
In July 1997, in connection with an equipment lease agreement with
Lighthouse Capital Partners II, L.P., we issued warrants to purchase up to
18,940 shares of our Series BB convertible preferred stock at an exercise price
of $2.64 per share. Each warrant contains provisions for the adjustment of the
exercise price and the aggregate number of shares issuable upon the exercise of
the warrant in the event of stock dividends, stock splits, reorganizations,
reclassifications and consolidations. Upon the closing of this offering, the
warrants will become exercisable for common stock at the rate of one share of
common stock for each share of Series BB convertible preferred stock underlying
the warrants. These warrants expire at the close of business on July 31, 2004.
In August 1997, in connection with our Series BB convertible preferred
stock financing, we issued warrants to purchase up to 816,412 shares of our
Series BB convertible preferred stock at an exercise price of $2.64 per share.
Each warrant contains provisions for the adjustment of the exercise price and
the aggregate number of shares issuable upon the exercise of the warrant in the
event of stock dividends, stock splits, reorganizations, reclassifications and
consolidations. These warrants expire after 5:00 p.m. on the earlier of:
- August 21, 2002;
- the closing date of this offering; or
- the closing date of a merger or consolidation of Repeater Technologies,
in which the holders of our voting power immediately prior to the merger
or consolidation do not hold a majority of the voting power of the
surviving entity.
In January 1999, in connection with a senior lease and security agreement
with Phoenix Leasing Incorporated, we issued warrants to purchase up to 3,955
shares of our Series DD convertible preferred stock at an exercise price of
$5.50 per share. Each warrant contains provisions for the adjustment of the
exercise price and the aggregate number of shares issuable upon the exercise of
the warrant in the event of stock dividends, stock splits, reorganizations,
reclassifications and consolidations. Upon the closing of this offering, the
warrants will become exercisable for common stock at the rate of one share of
common stock for each share of Series DD convertible preferred stock underlying
the warrants. These warrants expire at the close of business on January 25, 2009
or five years after the close of this offering.
In July 1999, in connection with a loan and security agreement with
Transamerica Business Credit Corporation, we issued warrants to purchase up to
100,000 shares of our Series DD convertible preferred stock at an exercise price
of $5.50 per share. Each warrant contains provisions for the adjustment of the
exercise price and the aggregate number of shares issuable upon the exercise of
the warrant in the event of stock dividends, stock splits, reorganizations,
reclassifications and consolidations. Upon the closing of this offering, the
warrants will become exercisable for common stock at the rate of one share of
common stock for each share of Series DD convertible preferred stock underlying
the warrants. These warrants expire on July 8, 2006.
REGISTRATION RIGHTS
Following this offering, holders of shares of common stock and
of warrants exercisable for 122,895 shares of common stock will have certain
rights relating to the registration of these shares under state and federal
securities laws. These rights, which are assignable, are outlined in an
agreement between us and these holders. The holders of at least 35% of the
common stock subject to these rights may generally require that we register such
stock for public resale provided that the proposed aggregate selling offering
price would exceed $10.0 million. If we register any of our common stock either
for our own account or for the account of other security holders, these holders
may also include their common stock subject to these rights in the registration,
subject to the ability of the underwriters to limit the number of shares
included in the offering. The holders of shares of our common stock that were
issued upon
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<PAGE> 57
conversion of our Series A, B, C, D and E preferred stock and are issuable or
were issued upon conversion of our Series AA, BB, CC and DD preferred stock may
also require us to register all or a portion of their common stock subject to
these rights on Form S-3, when use of this form becomes available; provided that
among other limitations, the proposed aggregate offering price would be at least
$3.0 million. The registration rights of a holder terminate when the holder can
offer and sell all of his or her registrable securities pursuant to Rule 144.
ANTI-TAKEOVER EFFECTS OF PROVISIONS OF DELAWARE LAW AND OUR CERTIFICATE OF
INCORPORATION AND BYLAWS
Prior to the consummation of this offering, we will file our certificate of
incorporation with the Secretary of State of the State of Delaware. Some
provisions of our amended and restated certificate of incorporation, our bylaws
and Delaware law could have the effect of discouraging, delaying or preventing a
merger or acquisition by a third party, even if a merger or acquisition would be
of benefit to our stockholders.
Classified Board of Directors. Our certificate of incorporation provides
for the board of directors to be divided into three classes of directors serving
staggered three-year terms. As a result, approximately one-third of the board of
directors will be elected each year. Holders of a majority of the outstanding
shares of capital stock entitled to vote in an election of directors will be
able to remove directors only for cause. Vacancies on the board of directors may
be filled by the remaining directors.
Advance Notice Requirements for Stockholder Proposals and Director
Nominations. Our bylaws establish an advance notice procedure for the
nomination, other than by or at the direction of our board of directors or one
of its committees, of candidates for election as director as well as for other
stockholder proposals to be considered at stockholders' meetings. Notice of
stockholder proposals and director nominations must be given timely and in
writing to our secretary prior to the meeting during which the matters are to be
acted upon or the directors are to be elected, and must contain certain
information specified in the bylaws. For notice to be timely, we must receive it
at our principal executive offices not more than 120 days nor less than 90 days
prior to the anniversary date of the immediately preceding annual meeting of
stockholders.
Blank Check Preferred. Our board of directors is authorized to issue up to
5,000,000 shares of preferred stock and to determine the preferences, rights and
privileges of those shares without any further vote or action by our
stockholders. The rights of the holders and the market value of our common stock
may be adversely affected by the rights of the holders of any series of
preferred stock that may be issued in the future. Furthermore, our board could,
without stockholder approval, use our preferred stock to adopt a "poison pill"
takeover defense mechanism.
Delaware Anti-Takeover Statute. Upon the listing of our common stock on the
Nasdaq National Market, we will be subject to Section 203 of the Delaware
General Corporation Law, an anti-takeover statute. In general, Section 203
prohibits a publicly-held Delaware corporation from engaging in a "business
combination" with an "interested stockholder" for a period of three years
following the date the person became an interested stockholder, unless, with
certain exceptions, the "business combination" or the transaction in which the
person became an interested stockholder is approved in a prescribed matter.
Generally, a "business combination" includes a merger, asset or stock sale, or
other transaction resulting in a financial benefit to the interested
stockholder. Generally, an "interested stockholder" is a person who, together
with affiliates and associates, owns, or has, within three years prior to the
determination of interested stockholder status, owned 15% or more of a
corporation's voting stock. The existence of this provision could have an
anti-takeover effect with respect to transactions not approved in advance by our
board of directors, including discouraging takeover attempts that might result
in you receiving a premium over the market price for your shares of common
stock.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common stock is U.S. Stock
Transfer Corporation. Their telephone number is (818) 502-1404.
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<PAGE> 58
SHARES ELIGIBLE FOR FUTURE SALE
Immediately prior to this offering, there was no public market for our
common stock. Future sales of substantial amounts of our common stock in the
public market following this offering could adversely affect the market price of
our common stock. As described below, no shares currently outstanding will be
available for sale immediately after this offering because of contractual
restrictions on resale. Sales of substantial amounts of our common stock in the
public market after the restrictions lapse, or are released, could adversely
affect the prevailing market price and impair our ability to raise equity
capital in the future.
Upon completion of this offering, we will have outstanding an aggregate of
shares of common stock, or shares if the underwriter's
over-allotment option is exercised in full, in each case assuming no exercise of
outstanding options or warrants after January 31, 2000. All of the shares sold
in this offering will be freely tradable without restrictions or further
registration under the Securities Act, except for any shares purchased by our
"affiliates," as that term is defined in Rule 144 under the Securities Act.
Shares purchased by our affiliates may generally only be sold pursuant to an
effective registration statement under the Securities Act or in compliance with
limitations of Rule 144 as described below.
The remaining 17,087,449 shares of common stock held by existing
stockholders are restricted securities within the meaning of Rule 144 and were
issued and sold by us in reliance on exemptions from the registration
requirements of the Securities Act. These restricted securities represent
approximately %, or % if the underwriters' over-allotment option is
exercised in full, of the total shares of our common stock outstanding
immediately following this offering, and may be sold in the public market only
if registered or if they qualify for an exemption from registration under Rule
144, 144(k) or 701 promulgated under the Securities Act, which are summarized
below.
Our officers, directors, employees, and other stockholders, who
collectively hold substantially all of our existing shares, and Salomon Smith
Barney Inc. have entered into lock-up agreements in connection with this
offering. These lock-up agreements provide that the directors, employees, and
stockholders may not to offer, sell, contract to sell, pledge or otherwise
dispose of any of the shares of common stock owned by them for a period of 180
days after the date of this offering. Notwithstanding possible earlier
eligibility for sale under the provisions of Rules 144, 144(k) and 701, shares
subject to lock-up agreements will not be saleable until such agreements expire
or are waived by Salomon Smith Barney Inc.
RULE 144
In general, under Rule 144 as currently in effect, a person, or persons
whose shares must be aggregated, who has beneficially owned restricted shares
for at least one year, including persons who are affiliates, would be entitled
to sell within any three-month period a number of shares that does not exceed
the greater of:
- one percent of the then outstanding shares of our common stock,
approximately shares immediately after this offering; or
- the reported average weekly trading volume of our common stock during the
four calendar weeks preceding a sale by such person.
Sales under Rule 144 are also subject to certain manner-of-sale provisions,
notice requirements, and the availability of current public information about
us.
RULE 144(K)
Under Rule 144(k), a person who has beneficially held restricted shares for
a minimum of two years and who is not, and for three months prior to the sale of
those shares has not been, one of our affiliates is free to sell those shares
immediately following this offering without complying with the volume, manner-
of-sale, public notice and other limitations contained in Rule 144. However, our
transfer agent may require
54
<PAGE> 59
an opinion of counsel that a proposed sale of shares comes within the terms of
Rule 144 of the Securities Act prior to effecting a transfer of the shares. Upon
completion of this offering, holders of shares will be eligible to
freely sell their shares under Rule 144(k), substantially all of which are
subject to a 180 day lock-up agreement with Salomon Smith Barney.
RULE 701
In general, under Rule 701, any of our employees, directors, officers, or
consultants who purchase shares from us in connection with a compensatory stock
or option plan or other written agreement before the effective date of this
offering is entitled to sell these shares 180 days after the effective date of
this offering in reliance on Rule 144. Rule 701 provides that affiliates may
sell their Rule 701 shares under Rule 144 without having to comply with the
holding period and notice filing requirements of Rule 144 and that
non-affiliates may sell these shares in reliance on Rule 144 without having to
comply with the holding period, public information, volume limitation or notice
filing requirements of Rule 144.
REGISTRATION RIGHTS
Subject to the 180 day lock-up restrictions described above, the holders of
shares of common stock, including shares held by
affiliates, and of warrants exercisable for 122,895 shares of common stock have
rights to require us to register their shares for sale under the Securities Act,
as described in this prospectus under the heading "Description of Capital
Stock -- Registration Rights."
OPTIONS
As of February 15, 2000, options to acquire 3,327,506 shares of our common
stock are outstanding. Immediately after the completion of this offering, we
intend to file a registration statement on Form S-8 under the Securities Act to
register all of the shares of common stock issued or reserved for future
issuance under our 1990 Incentive Stock Plan, Key Executives Stock Option Plan,
2000 Equity Incentive Plan and 2000 Employee Stock Purchase Plan. Based upon the
number of shares subject to outstanding options as of February 15, 2000 and
currently reserved for issuance under these stock option and purchase plans,
this registration statement would cover approximately 7,177,745 shares, in
addition to the annual increases in the number of shares available under the
2000 Equity Incentive Plan and 2000 Employee Stock Purchase Plan pursuant to the
terms of those plans. After the effective date of the registration statement on
Form S-8 and, if applicable, the expiration of the 180 day lock-up period
related to this offering, shares purchased upon exercise of options granted
pursuant to the 1990 Incentive Stock Plan, the Key Executives Incentive Plan,
the 2000 Equity Incentive Plan and the 2000 Employee Stock Purchase Plan
generally will be available for resale in the public market by non-affiliates
without restriction. Sales by our affiliates of shares registered on this
registration statement will be subject to all of the Rule 144 restrictions,
except for the one-year holding period requirement.
55
<PAGE> 60
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES TO NON-U.S. HOLDERS
The following is a general discussion of the material U.S. federal income
tax consequences of the purchase, ownership and disposition of our common stock
to a non-U.S. Holder. For the purpose of this discussion, a non-U.S. Holder is
any holder that for U.S. federal income tax purposes is not a U.S. person. For
purposes of this discussion, the term U.S. person means:
- a citizen or resident of the U.S.;
- a corporation or other entity taxable as a corporation and created or
organized in the U.S. or under the laws of the U.S. or any political
subdivision thereof;
- an estate whose income is included in gross income for U.S. federal
income tax purposes regardless of its source; or
- a trust whose administration is subject to the primary supervision of a
U.S. court and which has one or more U.S. persons who have the authority
to control all substantial decisions of the trust.
Additionally, this discussion does not address U.S. federal income tax
consequences to non-U.S. Holders subject to special treatment under U.S. federal
income tax law, such as:
- U.S. expatriates:
- financial institutions;
- dealers in securities;
- insurance companies;
- tax-exempt entities;
- holders who acquire our common stock pursuant to the exercise of any
employee stock option or right or otherwise as compensation;
- holders who hold our common stock as qualified small business stock for
purposes of Section 1202 of the Internal Revenue Code of 1986, as
amended;
- holders who do not hold our common stock as a capital asset; or
- holders who hold our common stock as part of a hedge, straddle,
conversion or other risk reduction transaction.
Nor does this discussion address any tax consequences arising under the
laws of any state, local or non-U.S. taxing jurisdiction. Furthermore, the
following discussion is based on current provisions of the Internal Revenue
Code, the Treasury Regulations promulgated thereunder, and administrative and
judicial interpretations thereof, all as in effect on the date hereof, and all
of which are subject to change, possibly with retroactive effect. We have not
requested a ruling from the Internal Revenue Service ("IRS") or an opinion of
counsel with respect to the federal income tax consequences of the purchase,
ownership and disposition of our common stock to a non-U.S. Holder under the
Internal Revenue Code. ACCORDINGLY, EACH NON-U.S. HOLDER SHOULD CONSULT A TAX
ADVISOR REGARDING THE U.S. FEDERAL, STATE, LOCAL AND NON-U.S. INCOME AND OTHER
TAX CONSEQUENCES OF ACQUIRING, HOLDING AND DISPOSING OF SHARES OF OUR COMMON
STOCK.
DIVIDENDS
We have never paid dividends on our common stock and do not expect to pay
any cash dividends on our common stock for the foreseeable future. In the event,
however, that we do pay dividends on our common stock, any dividend paid to a
non-U.S. Holder of common stock generally will be subject to U.S. withholding
tax either at a rate of 30% of the gross amount of the dividend or such lower
rate as may be specified by an applicable tax treaty. Dividends received by a
non-U.S. Holder that are effectively
56
<PAGE> 61
connected with a U.S. trade or business conducted by the non-U.S. Holder are
exempt from such withholding tax. However, those effectively connected
dividends, net of certain deductions and credits, are taxed at the same
graduated rates applicable to U.S. persons.
In addition to the graduated tax described above, dividends received by a
corporate non-U.S. Holder that are effectively connected with a U.S. trade or
business of the corporate non-U.S. Holder may also be subject to a branch
profits tax at a rate of 30% or such lower rate as may be specified by an
applicable tax treaty.
A non-U.S. Holder of common stock that is eligible for a reduced rate of
withholding tax pursuant to a tax treaty may obtain a refund of any excess
amounts currently withheld by filing an appropriate claim for refund with the
IRS.
GAIN ON DISPOSITION OF COMMON STOCK
A non-U.S. Holder generally will not be subject to U.S. federal income tax
on any gain realized upon the sale or other disposition of our common stock
unless:
- the gain is effectively connected with a U.S. trade or business of the
non-U.S. Holder (which gain, in the case of a corporate non-U.S. Holder,
must also be taken into account for branch profits tax purposes);
- the non-U.S. Holder is an individual who holds his or her common stock as
a capital asset (generally, an asset held for investment purposes) and
who is present in the U.S. for a period or periods aggregating 183 days
or more during the calendar year in which the sale or disposition occurs
and certain other conditions are met; or
- we are or have been a "United States real property holding corporation"
for U.S. federal income tax purposes at any time within the shorter of
the five-year period preceding the disposition or the holder's holding
period for our common stock. We have determined that we are not and do
not believe that we will become a "United States real property holding
corporation" for U.S. federal income tax purposes.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Generally, we must report annually to the IRS the amount of dividends paid,
the name and address of the recipient, and the amount, if any, of tax withheld.
A similar report is sent to the holder. Pursuant to tax treaties or other
agreements, the IRS may make its reports available to tax authorities in the
recipient's country of residence.
Dividends paid to a non-U.S. Holder at an address within the U.S. may be
subject to backup withholding at a rate of 31% if the non-U.S. Holder fails to
establish that it is entitled to an exemption or to provide a correct taxpayer
identification number and other information to the payer. Backup withholding
generally will not apply to dividends paid to non-U.S. Holders at an address
outside the U.S. on or prior to December 31, 2000 unless the payer has knowledge
that the payee is a U.S. person. Under recently finalized Treasury Regulations
regarding withholding and information reporting, payment of dividends to
non-U.S. Holders at an address outside the U.S. after December 31, 2000 may be
subject to backup withholding at a rate of 31% unless such non-U.S. Holder
satisfies various certification requirements.
Under current Treasury Regulations, the payment of the proceeds of the
disposition of common stock to or through the U.S. office of a broker is subject
to information reporting and backup withholding at a rate of 31% unless the
holder certifies its non-U.S. status under penalties of perjury or otherwise
establishes an exemption. Generally, the payment of the proceeds of the
disposition by a non-U.S. Holder
57
<PAGE> 62
of common stock outside the U.S. to or through a foreign office of a broker will
not be subject to backup withholding but will be subject to information
reporting requirements if the broker is:
- a U.S. person;
- a "controlled foreign corporation" for U.S. federal income tax purposes;
or
- a foreign person 50% or more of whose gross income for certain periods is
from the conduct of a U.S. trade or business
unless the broker has documentary evidence in its files of the holder's non-U.S.
status and certain other conditions are met, or the holder otherwise establishes
an exemption. Neither backup withholding nor information reporting generally
will apply to a payment of the proceeds of a disposition of common stock by or
through a foreign office of a foreign broker not subject to the preceding
sentence.
In general, the recently promulgated final Treasury Regulations, described
above, do not significantly alter the substantive withholding and information
reporting requirements but would alter the procedures for claiming benefits of
an income tax treaty and change the certifications procedures relating to the
receipt by intermediaries of payments on behalf of the beneficial owner of
shares of common stock. Non-U.S. Holders should consult their tax advisors
regarding the effect, if any, of those final Treasury Regulations on an
investment in our common stock. Those final Treasury Regulations generally are
effective for payments made after December 31, 2000.
Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained, provided that the required information is furnished to the IRS.
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<PAGE> 63
UNDERWRITING
Subject to the terms and conditions stated in the underwriting agreement to
be dated the date of the final prospectus, each of the underwriters named below
has severally agreed to purchase, and we have agreed to sell to the
underwriters, the number of shares set forth opposite the name of each
underwriter below:
<TABLE>
<CAPTION>
NUMBER
NAME OF SHARES
---- ---------
<S> <C>
Salomon Smith Barney Inc. ..................................
U.S. Bancorp Piper Jaffray Inc. ............................
SG Cowen Securities Corporation.............................
--------
Total.............................................
========
</TABLE>
The underwriting agreement provides that the obligations of the several
underwriters to purchase the shares included in this offering are subject to
approval of particular legal matters by counsel and to other conditions. The
underwriters are obligated to purchase all of the shares, other than those
covered by their over-allotment option described below, if they purchase any of
the shares.
The underwriters, for whom Salomon Smith Barney Inc., U.S. Bancorp Piper
Jaffray Inc. and SG Cowen Securities Corporation are acting as representatives,
propose to offer some of the shares directly to the public at the public
offering price set forth on the cover page of this prospectus and some of the
shares to various dealers at the public offering price less a concession not
exceeding $ per share. The underwriters may allow, and these dealers may
reallow, a discount not exceeding $ per share on sales to various other
dealers. If all the shares are not sold at the initial offering price, the
underwriters may change the public offering price and other selling terms. The
representatives have advised us that the underwriters do not intend to confirm
any sales to any accounts over which they exercise discretionary authority.
We have granted to the underwriters an option, exercisable for 30 days from
the date of this prospectus, to purchase up to additional shares of our
common stock at the public offering price less the underwriting discount. The
underwriters may exercise this option solely for the purpose of covering
over-allotments, if any, in connection with this offering. To the extent this
option is exercised, each underwriter will be obligated, subject to some
conditions, to purchase a number of additional shares approximately
proportionate to each underwriter's initial purchase commitment.
At our request, the underwriters will reserve up to shares of our
common stock to be sold, at the initial public offering price, to our directors,
officers and employees, as well as to some of our customers and suppliers and
other persons associated with us. This directed share program will be
administered by Salomon Smith Barney Inc. The number of shares of common stock
available for sale to the general public will be reduced to the extent these
individuals purchase reserved shares. Any reserved shares which are not so
purchased will be offered by the underwriters to the general public on the same
basis as the other shares offered by this prospectus. We have agreed to
indemnify the underwriters against certain liabilities and expenses, including
liabilities under the Securities Act of 1933, in connection with sales of the
directed shares.
We, our officers and directors and holders of substantially all of our
existing shares have agreed that, for a period of 180 days from the date of this
prospectus, they will not, without the prior written consent of Salomon Smith
Barney Inc., dispose of or hedge any shares of our common stock or any
securities convertible into, or exercisable or exchangeable for, our common
stock. Salomon Smith Barney Inc., in its sole discretion, may release any of the
securities subject to these lock-up agreements at any time without notice.
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<PAGE> 64
Prior to this offering, there has been no public market for our common
stock. Consequently, the initial offering price for the shares was determined by
negotiation among us and the representatives. Among the factors considered in
determining the initial public offering price were:
- our record of operation;
- our current financial condition;
- our future prospects;
- our markets;
- the economic conditions in and future prospects for the industry in which
we compete;
- our management; and
- currently prevailing general conditions in the equity securities markets,
including current market valuations of publicly traded companies
considered comparable to us.
The prices at which the shares will sell in the public market after this
offering may, however, be lower than the price at which they are sold by the
underwriters. Additionally, an active trading market in our common stock may not
develop and continue after this offering.
The following table shows the underwriting discount that we will pay to the
underwriters in connection with this offering. These amounts are shown assuming
both no exercise and full exercise of the underwriters' option to purchase
additional shares of common stock.
<TABLE>
<CAPTION>
NO EXERCISE FULL EXERCISE
----------- -------------
<S> <C> <C>
Per share........................................... $ $
Total............................................... $ $
</TABLE>
We estimate that our total expenses for this offering, excluding the
underwriting discount, will be $ .
In July 1999, we entered into an engagement letter with CIBC World Markets
Corp., or CIBC, under which we retained them to provide financial advisory
services. The engagement letter provides for CIBC to have, and CIBC has informed
us that we are obligated to offer them, the right of first refusal to be the
lead underwriter of this offering. We do not believe we have such an obligation.
However, in the event that a dispute arises between CIBC and us, and CIBC
prevails, we could be required to make a payment to them. There can be no
assurance as to the outcome of this potential dispute.
In connection with this offering, Salomon Smith Barney Inc., on behalf of
the underwriters, may purchase and sell shares of common stock in the open
market. These transactions may include over-allotment, syndicate covering
transactions and stabilizing transactions. Over-allotment involves syndicate
sales of common stock in excess of the number of shares to be purchased by the
underwriters in this offering, which creates a syndicate short position.
Syndicate covering transactions involve purchases of our common stock in the
open market after the distribution has been completed in order to cover
syndicate short positions. Stabilizing transactions consist of certain bids for
or purchases of common stock made to prevent or retard a decline in the market
price of the common stock while this offering is in progress.
The underwriters may also impose a penalty bid. Penalty bids permit the
underwriters to reclaim a selling concession from a syndicate member when
Salomon Smith Barney Inc., in covering syndicate short positions or making
stabilizing purchases, repurchases common stock originally sold by that
syndicate member.
Any of these activities may cause the price of our common stock to be
higher than it would otherwise be in the open market in the absence of such
transactions. Salomon Smith Barney Inc. may effect these transactions on the
Nasdaq National Market or in the over-the-counter market, or otherwise and may
discontinue them at any time.
60
<PAGE> 65
The representatives or their respective affiliates may in the future
perform various investment banking and advisory services for us from time to
time, for which they will receive customary fees. The representatives may, from
time to time, engage in transactions with and perform services for us in the
ordinary course of business.
We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act of 1933, or to contribute to
payments the underwriters may be required to make with respect to any of those
liabilities.
LEGAL MATTERS
The validity of our common stock related to this offering will be passed
upon for us by Cooley Godward LLP, Palo Alto, California and will be passed upon
for the underwriters by Shearman & Sterling, Menlo Park, California. An
investment partnership of Cooley Godward attorneys and specialists beneficially
own an aggregate of 17,850 shares of our common stock.
EXPERTS
The financial statements of Repeater Technologies, Inc. as of March 27,
1998 and March 26, 1999 and for each of the three years in the period ended
March 26, 1999 included in this Prospectus have been so included in reliance on
the report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
CHANGE IN INDEPENDENT ACCOUNTANTS
On January 12, 2000, we engaged PricewaterhouseCoopers LLP as our
independent accountants to replace Ernst & Young LLP, who we dismissed as our
independent accountants effective January 10, 2000. The decision to change
accountants was approved by our Board of Directors upon the recommendation of
the audit committee.
The reports of Ernst & Young on our financial statements for the 1997, 1998
and 1999 fiscal years, which are not included herein and are not made part of
the registration statement, did not contain any adverse opinion or disclaimer of
opinion and were not qualified or modified as to uncertainty, audit scope or
accounting principles. In connection with the audits of our financial statements
for the fiscal years ended March 31, 1997, March 31, 1998 and March 31, 1999 and
in the subsequent interim period preceding the dismissal of Ernst & Young, there
were no disagreements with Ernst & Young on any matters of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure
which, if not resolved to the satisfaction of Ernst & Young would have caused
Ernst & Young to make a reference to the matter in their report. During the two
most recent fiscal years and subsequent interim period preceding the dismissal
of Ernst & Young, we have not been advised of any matters described in
Regulation S-K, Item 304(a)(1)(v) of the Securities Act. We requested that Ernst
& Young furnish us with a letter addressed to the SEC stating whether or not
they agree with the above statements. A copy of such letter is filed as an
exhibit to the registration statement which includes this prospectus.
Prior to engaging PricewaterhouseCoopers LLP as our new independent
accountants:
- we did not request any advice from PricewaterhouseCoopers LLP regarding
any matter related to accounting practice or accounting principles; and
- we did not consult with PricewaterhouseCoopers LLP regarding the type of
audit opinion that might be rendered by them or items that were or should
have been subject to the AICPA's Statement on Auditing Standards No. 50,
"Reports on the Application of Accounting Principles."
We have requested that PricewaterhouseCoopers LLP review the above
disclosures regarding our change in accountants and have given them the
opportunity to furnish us with a letter addressed to the SEC in which
PricewaterhouseCoopers LLP may include new information, clarify our statements
on the
61
<PAGE> 66
change in accountants or disclose the respects in which they disagree with the
statements made by us in this prospectus regarding our change in accountants. If
PricewaterhouseCoopers LLP elects to submit such a letter to the SEC, we will
file the letter as an exhibit to the registration statement when received.
ADDITIONAL INFORMATION
We have filed a registration statement on Form S-1 with the SEC under the
Securities Act with respect to the shares offered in this offering. This
prospectus, which constitutes a part of the registration statement, does not
contain all the information set forth in the registration statement, parts of
which are omitted as permitted by the rules and regulations of the Commission.
Statements contained in this prospectus as to the contents of any contract,
agreement or other document referred to are not necessarily complete. For
further information pertaining to us and our common stock, we refer you to our
registration statement and the exhibits and schedules thereto, copies of which
may be inspected without charge at the public reference section of the
Securities and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C.
20549. You may obtain information on the operation of the public reference room
by calling the SEC at 1 800 SEC-0330. Copies of all or any portion of the
registration statement may be obtained from the SEC at prescribed rates. In
addition, the SEC maintains a web site that contains reports and other
information that is filed through the Commission's EDGAR System. The web site
can be accessed at http://www.sec.gov.
We intend to furnish our stockholders with annual reports containing
audited financial statements and an opinion thereon expressed by independent
certified public accountants. We also intend to furnish other reports as we may
determine or as required by law.
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<PAGE> 67
REPEATER TECHNOLOGIES, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants........................... F-2
Balance Sheets.............................................. F-3
Statements of Operations.................................... F-4
Statement of Stockholders' Equity (Deficit)................. F-5
Statements of Cash Flows.................................... F-6
Notes to Financial Statements............................... F-7
</TABLE>
F-1
<PAGE> 68
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
of Repeater Technologies, Inc.
In our opinion, the accompanying balance sheets and the related statements
of operations, of cash flows and of changes in stockholders' equity (deficit)
present fairly, in all material respects, the financial position of Repeater
Technologies, Inc. at March 27, 1998 and March 26, 1999, and the results of its
operations and its cash flows for each of the three years in the period ended
March 26, 1999, in conformity with accounting principles generally accepted in
the United States. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
San Jose, California
February 18, 2000
The foregoing report is in the form that will be signed upon the completion of
the reincorporation described in Note 12 to the financial statements.
San Jose, California
February 25, 2000
F-2
<PAGE> 69
REPEATER TECHNOLOGIES, INC.
BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
ASSETS
<TABLE>
<CAPTION>
PRO FORMA
MARCH 27, MARCH 26, DECEMBER 24, DECEMBER 24,
1998 1999 1999 1999
--------- --------- ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents....................... $ 8,102 $ 10,358 $ 8,591 $ 10,772
Accounts receivable, net of allowance for
doubtful accounts of $178, $820 and $225 at
March 27, 1998, March 26, 1999 and December
24, 1999, respectively....................... 885 1,822 3,685 3,685
Inventories, net................................ 3,087 2,935 2,517 2,517
Other current assets............................ 82 103 204 204
-------- -------- -------- --------
Total current assets.................... 12,156 15,218 14,997 17,178
Property and equipment, net....................... 1,571 1,848 1,976 1,976
Intangible assets, net............................ -- -- 4,571 4,571
Other assets...................................... 60 136 156 156
-------- -------- -------- --------
Total assets............................ $ 13,787 $ 17,202 $ 21,700 $ 23,881
======== ======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Bank line of credit............................. $ 234 $ -- $ -- $ --
Accounts payable................................ 2,123 1,422 3,069 3,069
Accrued compensation............................ 483 537 664 664
Other accrued liabilities....................... 714 934 1,060 1,060
Current portion of notes payable................ 645 140 1,348 1,348
Current portion of capital lease obligations.... 284 311 515 515
-------- -------- -------- --------
Total current liabilities............... 4,483 3,344 6,656 6,656
Notes payable, net of current portion............. 214 -- 3,200 3,200
Capital lease obligations, net of current
portion......................................... 451 501 510 510
Convertible subordinated debentures............... -- 15,000 15,000 --
-------- -------- -------- --------
Total liabilities....................... 5,148 18,845 25,366 10,366
-------- -------- -------- --------
Commitments (note 4)
Stockholders' equity (deficit):
Convertible preferred stock, $0.001 par value;
10,910,077 shares authorized at March 27,
1998 and 14,210,077 shares authorized at
March 26, 1999 and December 24, 1999;
9,874,691, issued and outstanding............ 10 10 10 --
Common Stock, $0.001 par value; 30,000,000
shares authorized; 2,404,058, 2,407,063 and
3,173,749 shares issued and outstanding at
March 27, 1998, March 26, 1999, and December
24, 1999, respectively; and 17,087,449 pro
forma........................................ 2 2 3 17
Additional paid in capital...................... 38,892 39,935 54,181 71,358
Unearned stock-based compensation............... -- (755) (6,842) (6,842)
Accumulated deficit............................. (30,265) (40,835) (51,018) (51,018)
-------- -------- -------- --------
Total stockholders' equity (deficit).... 8,639 (1,643) (3,666) 13,515
-------- -------- -------- --------
Total liabilities and stockholders'
equity (deficit)...................... $ 13,787 $ 17,202 $ 21,700 $ 23,881
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 70
REPEATER TECHNOLOGIES, INC.
STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED NINE MONTHS ENDED
--------------------------------- ---------------------------
MARCH 31, MARCH 27, MARCH 26, DECEMBER 25, DECEMBER 24,
1997 1998 1999 1998 1999
--------- --------- --------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net revenues............................. $10,581 $ 7,770 $ 9,612 $ 7,688 $ 12,321
Cost of revenues......................... 9,355 8,807 8,863 6,996 8,382
------- -------- -------- ------- --------
Gross profit (loss)...................... 1,226 (1,037) 749 692 3,939
------- -------- -------- ------- --------
Operating expenses:
Research and development............... 3,135 6,214 4,166 3,127 3,108
Sales and marketing.................... 2,829 3,936 4,431 3,217 4,424
General and administrative............. 1,199 1,520 2,136 1,575 1,710
Stock-based compensation............... -- -- 286 166 1,485
In-process research and development.... -- -- -- -- 2,291
------- -------- -------- ------- --------
Total operating expenses....... 7,163 11,670 11,019 8,085 13,018
------- -------- -------- ------- --------
Loss from operations..................... (5,937) (12,707) (10,270) (7,393) (9,079)
Other income (expense), net.............. (36) 79 (300) 46 (1,104)
------- -------- -------- ------- --------
Net loss................................. $(5,973) $(12,628) $(10,570) $(7,347) $(10,183)
======= ======== ======== ======= ========
Net loss per common share -- basic and
diluted................................ $ (3.16) $ (5.31) $ (4.46) $ (3.10) $ (4.15)
======= ======== ======== ======= ========
Shares used in net loss per common share
calculation -- basic and diluted....... 1,893 2,376 2,367 2,367 2,453
======= ======== ======== ======= ========
Pro forma net loss per common
share -- basic and diluted
(unaudited)(note 11)................... $ (0.78) $ (0.67)
======== ========
Shares used in pro forma net loss per
common share calculation -- basic and
diluted (unaudited)(note 11)........... 13,500 15,297
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 71
REPEATER TECHNOLOGIES, INC.
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED MARCH 31, 1997, MARCH 27, 1998, MARCH 26, 1999 AND
NINE MONTHS ENDED DECEMBER 24, 1999
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
CONVERTIBLE TOTAL
PREFERRED STOCK COMMON STOCK ADDITIONAL UNEARNED STOCKHOLDERS'
-------------------- ------------------ PAID-IN STOCK-BASED ACCUMULATED EQUITY
SHARES AMOUNT SHARES AMOUNT CAPITAL COMPENSATION DEFICIT (DEFICIT)
---------- ------- --------- ------ ---------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at April 1, 1996... 3,500,283 $ 4 151,250 $ -- $15,697 $ -- $(11,664) $ 4,037
Issuance of Series BB
convertible preferred
stock, less issuance costs
of $49.................... 3,085,978 3 -- -- 8,097 -- -- 8,100
Conversion of bridge notes
into Series BB convertible
preferred stock........... 321,970 -- -- -- 849 -- -- 849
Conversion of Series A, B, C
and D convertible
preferred stock to common
stock..................... (2,274,815) (2) 2,274,815 2 -- -- -- --
Exercise of stock options,
net of repurchases........ -- -- 157 -- -- -- -- --
Issuance of common stock
from exercise of
warrants.................. -- -- 2,764 -- -- -- -- --
Net loss.................... -- -- -- -- -- -- (5,973) (5,973)
---------- ------- --------- ------ ------- ------- -------- --------
Balances at March 31,
1997...................... 4,633,416 5 2,428,986 2 24,643 -- (17,637) 7,013
Issuance of Series BB
convertible preferred
stock, less issuance costs
of $17.................... 838,368 1 -- -- 2,195 -- -- 2,196
Issuance of Series CC
convertible preferred
stock, less issuance costs
of $37.................... 4,402,907 4 -- -- 12,067 -- -- 12,071
Repurchase of common stock
under stock option plan,
net of exercise of stock
options................... -- -- (25,384) -- (13) -- -- (13)
Issuance of common stock
from exercise of
warrants.................. -- -- 456 -- -- -- -- --
Net loss.................... -- -- -- -- -- -- (12,628) (12,628)
---------- ------- --------- ------ ------- ------- -------- --------
Balances at March 27,
1998...................... 9,874,691 10 2,404,058 2 38,892 -- (30,265) 8,639
Exercise of stock options... -- -- 2,430 -- 1 -- -- 1
Issuance of common stock
under license agreement... -- -- 575 -- 1 -- -- 1
Unearned stock-based
compensation.............. -- -- -- -- 1,041 (1,041) -- --
Amortization of unearned
stock-based
compensation.............. -- -- -- -- -- 286 -- 286
Net loss.................... -- -- -- -- -- (10,570) (10,570)
---------- ------- --------- ------ ------- ------- -------- --------
Balances at March 26,
1999...................... 9,874,691 10 2,407,063 2 39,935 (755) (40,835) (1,643)
Exercise of stock options,
net of repurchases........ -- -- 193,352 -- 61 -- -- 61
Issuance of common stock for
acquisition............... -- -- 573,334 1 6,071 -- -- 6,072
Issuance of warrants in
connection with line of
credit.................... -- -- -- -- 542 -- -- 542
Unearned stock-based
compensation.............. -- -- -- -- 7,572 (7,572) -- --
Amortization of unearned
stock-based
compensation.............. -- -- -- -- -- 1,485 -- 1,485
Net loss.................... -- -- -- -- -- -- (10,183) (10,183)
---------- ------- --------- ------ ------- ------- -------- --------
Balances at December 24,
1999 (unaudited).......... 9,874,691 $ 10 3,173,749 $ 3 $54,181 $(6,842) $(51,018) $ (3,666)
========== ======= ========= ====== ======= ======= ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 72
REPEATER TECHNOLOGIES, INC.
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED NINE MONTHS ENDED
----------------------------------- ----------------------------
MARCH 31, MARCH 27, MARCH 26, DECEMBER 25, DECEMBER 24,
1997 1998 1999 1998 1999
--------- --------- --------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................................. $(5,973) $(12,628) $(10,570) $(7,347) $(10,183)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization........................... 416 582 728 517 708
Provision for losses on accounts receivable............. -- 179 654 178 541
Provision for writedowns on inventories................. 523 1,083 770 976 324
Issuance of equity instruments under license
agreement............................................. -- -- 1 -- --
Amortization of unearned stock-based compensation....... -- -- 286 166 1,485
Amortization of debt issuance costs..................... -- -- -- -- 12
Amortization of debt discount........................... -- -- -- 90
In process research and development..................... -- -- -- -- 2,291
Changes in operating assets and liabilities, net of
acquisitions:
Accounts receivable................................... (971) 1,567 (1,591) (988) (2,404)
Inventories........................................... 124 (1,269) 618 (335) 94
Other current assets.................................. (16) 37 (21) 8 (101)
Other assets.......................................... (9) (8) (76) (58) (32)
Accounts payable...................................... 1,063 150 (701) (810) 1,549
Accrued compensation.................................. 70 10 54 67 127
Other accrued liabilities............................. 399 445 220 (102) 126
------- -------- -------- ------- --------
Net cash used in operating activities............. (4,374) (9,852) (10,864) (7,728) (5,373)
------- -------- -------- ------- --------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchase of property and equipment...................... (509) (105) (554) (431) (118)
------- -------- -------- ------- --------
Net cash used in investing activities............. (509) (105) (554) (431) (118)
------- -------- -------- ------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from bank line of credit....................... 1,100 405 1,151 1,151 --
Principal payments on bank line of credit............... (600) (1,171) (1,386) (1,386) --
Proceeds from notes payable............................. -- -- -- -- 5,000
Principal payments on notes payable..................... -- (136) (564) (503) (140)
Proceeds from bridge notes.............................. 849 -- -- -- --
Payments on capital lease obligations................... (177) (259) (528) (355) (443)
Proceeds from convertible subordinated debentures....... -- -- 15,000 15,000 --
Proceeds from issuance of convertible preferred stock
and warrants, less issuance costs..................... 8,100 14,267 -- -- --
Payment for acquired business........................... -- -- -- -- (754)
Net issuances (repurchase) of common stock.............. -- (13) 1 1 61
------- -------- -------- ------- --------
Net cash provided by financing activities......... 9,272 13,093 13,674 13,908 3,724
------- -------- -------- ------- --------
Net increase/(decrease) in cash and cash equivalents...... 4,389 3,136 2,256 5,749 (1,767)
Cash and cash equivalents at beginning of the year........ 577 4,966 8,102 8,102 10,358
------- -------- -------- ------- --------
Cash and cash equivalents at end of the year.............. $ 4,966 $ 8,102 $ 10,358 $13,851 $ 8,591
======= ======== ======== ======= ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest................ $ 104 $ 158 $ 579 $ -- $ --
Taxes paid.............................................. $ -- $ -- $ -- $ -- $ --
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES:
Equipment purchased under capital lease obligations..... $ 468 $ 475 $ 465 $ 340 $ 579
Conversion of accrued liabilities and accounts payable
to notes payable...................................... $ -- $ 995 $ -- $ -- $ --
Conversion of Series A, B, C and D convertible preferred
stock to common stock................................. $ 8,843 $ -- $ -- $ -- $ --
Conversion of bridge notes to Series BB convertible
preferred stock....................................... $ 849 $ -- $ -- $ -- $ --
Issuance of shares for acquired business................ $ -- $ -- $ -- $ -- $ 6,072
Issuance of warrants with notes payable................. $ -- $ -- $ -- $ -- $ 542
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE> 73
REPEATER TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 -- THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION AND BASIS OF PRESENTATION
Repeater Technologies, Inc. (the "Company"), formerly Peninsula Wireless
Communications, was formed in October 1983. The Company's name was changed to
Repeater Technologies, Inc. in January 1997. The Company's principal activity is
the development, marketing and selling of coverage solutions primarily for
CDMA-based wireless communications networks.
UNAUDITED INTERIM RESULTS
The accompanying balance sheet as of December 24, 1999, the statements of
operations and of cash flows for the nine months ended December 25, 1998 and
December 24, 1999 and the statement of stockholder's equity for the nine months
ended December 24, 1999 are unaudited. The unaudited interim financial
statements have been prepared on the same basis as the annual financial
statements and, in the opinion of management, reflect all adjustments, which
include only normal recurring adjustments, necessary to present fairly the
Company's financial position and its results of operations and its cash flows
for the nine months ended December 25, 1998 and December 24, 1999. The financial
data and other information disclosed in these notes to financial statements
related to these periods are unaudited. The results for the nine months ended
December 24, 1999 are not necessarily indicative of the results to be expected
for the year ending March 31, 2000.
FISCAL YEAR
The Company ends its fiscal year on the last Friday in March.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
CONCENTRATION OF CREDIT RISK
The Company's cash and cash equivalents are maintained at a major US
financial institution. Deposits in this institution may exceed the amount of
insurance provided on such deposits.
The Company's customers are providers of wireless communications services.
The Company performs periodic credit evaluations of these customers and
generally does not require collateral for its domestic customers. For
international customers, the Company requires letters of credit prior to
shipment or obtains credit insurance for sales on open accounts. The Company
maintains reserves for potential credit losses and such losses have historically
been within management's expectations.
During the year ended March 31, 1997 one customer accounted for 38% of net
revenues. During the year ended March 27, 1998 two customers accounted for 18%
and 15% of net revenues, respectively. During the year ended March 26, 1999 one
customer accounted for 11% of net revenues. During the period ended December 25,
1998 two customers each accounted for 10% of net revenues. During the period
ended December 24, 1999 two customers accounted for 15% and 12% of net revenues,
respectively.
As of March 27, 1998 two customers accounted for 47% and 15% of total
receivables, respectively. As of March 26, 1999 one customer accounted for 25%
of total receivables. As of December 24, 1999 three customers accounted for 20%,
10% and 10% of total receivables, respectively.
F-7
<PAGE> 74
REPEATER TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
IMPAIRMENT OF LONG-LIVED ASSETS
In accordance with Statement of Financial Accounting Standards ("SFAS") No.
121; Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of; the Company regularly evaluates its long-lived assets for
indicators of possible impairment by comparison of the carrying amounts to
undiscounted estimated cash flows to be generated by such assets. Should an
impairment exist, the impairment loss would be measured based on the excess
carrying value of the asset over the asset's fair value or discounted estimates
of future cash flows. The Company has not identified any such impairment losses
to date.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of financial instruments, including accounts receivable and
accounts payable, approximate their carrying value due to their relatively short
maturities. The fair values of equipment financing notes payable and convertible
subordinate debentures were estimated using discounted cash flow analysis, based
on the Company's current incremental borrowing rate for similar types of
borrowing arrangements and approximate their carrying values.
OTHER COMPREHENSIVE INCOME
The Company has adopted the provisions of SFAS 130, "Reporting
Comprehensive Income". The Company has no items of other comprehensive income in
the years presented and therefore net loss equals total comprehensive income.
SEGMENTS
The Company follows SFAS 131, "Disclosures about Segments of an Enterprise
and Related Information." The Company operates in one segment, using one
measurement of profitability to manage its business. All long-lived assets are
maintained in the United States.
Export sales accounted for 70%, 61%, 42%, 43% and 28% of net revenues
during the years ended March 31, 1997, March 27, 1998 and March 26, 1999 and
nine month periods ended December 25, 1998 and December 24, 1999, respectively.
Sales to customers in Asia, South America and Canada as a percentage of net
revenues are as follows:
<TABLE>
<CAPTION>
YEARS ENDED NINE MONTHS ENDED
----------------------------------- ----------------------------
MARCH 31, MARCH 27, MARCH 26, DECEMBER 25, DECEMBER 24,
1997 1998 1999 1998 1999
--------- --------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Asia.............................. 14% 17% 16% 19% 3%
South America..................... 38% 24% 6% 4% 0%
Canada............................ 13% 18% 12% 15% 18%
</TABLE>
ACCOUNTING FOR STOCK-BASED COMPENSATION
The Company accounts for stock-based employee compensation arrangements in
accordance with provisions of Accounting Principles Board Opinion No. 25,
"Accounting for Stock issued to Employees" ("APB 25") and Financial Accounting
Standards Board Interpretation No. 28, "Accounting for Stock Appreciation Rights
and Other Variable Stock Option or Award Plan" ("FIN 28") and complies with the
disclosure provisions of SFAS 123, "Accounting for Stock-Based Compensation".
Under APB 25, compensation expense for grants to employees is based on the
difference, if any, on the date of the grant, between the fair value of the
Company's stock and the exercise price. SFAS 123 defines a "fair value" based
method of accounting for an employee stock option or similar equity
F-8
<PAGE> 75
REPEATER TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
investment. The pro forma disclosures of the difference between compensation
expense included in net loss and the related cost measured by the fair value
method are presented in Note 6.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with an original
maturity of three months or less at the time of purchase to be cash equivalents.
INVENTORIES
Inventories are stated at the lower of cost or market, with cost determined
using the FIFO (first-in, first-out) method. Appropriate allowances are made to
reduce the value of inventories to net realizable value, where this is below
cost. This may occur where the Company determines that inventories may be slow
moving or obsolete.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation and amortization is
computed using the straight-line method over the shorter of the estimated useful
lives of the assets, generally three to five years, or the lease term. Gains and
losses upon asset disposal are taken into income in the year of disposition.
Maintenance and repairs are charged to operations as incurred.
INTANGIBLE ASSETS
Intangible assets primarily consist of goodwill related to the acquisition
of the assets of The Gwydion Company LLC and are amortized on a straight-line
basis to operations as follows:
<TABLE>
<CAPTION>
NUMBER OF YEARS
---------------
<S> <C>
Goodwill.................................................... 7
Acquired workforce.......................................... 3
</TABLE>
REVENUE RECOGNITION
Revenue is recognized upon shipment or delivery to the customer, depending
upon the terms of the sale, where there is a purchase order or a sales agreement
and collectibility of the resulting receivable is probable. Training and
installation revenues are recognized when these services are performed. At the
time of sale, the Company provides for the estimated costs of meeting product
warranty obligations.
RESEARCH AND DEVELOPMENT EXPENSES
Research and development costs are expensed as incurred.
INCOME TAXES
The Company accounts for income taxes under the asset and liability method.
Deferred tax assets and liabilities are recognized for the tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases, and operating
loss carryforwards. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in the tax rates is
recognized in income in the period that includes the enactment date. A valuation
allowance is recorded for loss carryforwards and other deferred tax assets where
it is more likely than not that such loss carryforwards and deferred tax assets
will not be realized.
F-9
<PAGE> 76
REPEATER TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NET LOSS PER COMMON SHARE
Basic net loss per share is computed by dividing net loss available to
common stockholders by the weighted average number of vested common shares
outstanding for the period. Diluted net loss per share is computed giving effect
to all dilutive potential common shares, including options, warrants,
convertible subordinated debentures and convertible preferred stock. Options,
warrants, convertible subordinated debentures and convertible preferred stock
were not included in the computation of diluted net loss per share for the years
ended March 31, 1997, March 27, 1998 and March 26, 1999 and for the nine months
ended December 25, 1998 and December 24, 1999 because the effect would be
antidilutive. A reconciliation of the numerator and denominator used in the
calculation of historical basic and diluted net loss per share follows (in
thousands, except per share data):
<TABLE>
<CAPTION>
YEARS ENDED NINE MONTHS ENDED
----------------------------------- ----------------------------
MARCH 31, MARCH 27, MARCH 26, DECEMBER 25, DECEMBER 24,
1997 1998 1999 1998 1999
--------- --------- --------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Numerator:
Net loss....................... $(5,973) $(12,628) $(10,570) $(7,347) $(10,183)
======= ======== ======== ======= ========
Denominator:
Weighted average common shares
outstanding................. 1,931 2,431 2,405 2,405 2,489
Weighted average unvested
common shares subject to
repurchase.................. (38) (55) (38) (38) (36)
------- -------- -------- ------- --------
Denominator for basic and diluted
calculation.................... 1,893 2,376 2,367 2,367 2,453
======= ======== ======== ======= ========
Net loss per common share-basic
and diluted.................... $ (3.16) $ (5.31) $ (4.46) $ (3.10) $ (4.15)
======= ======== ======== ======= ========
</TABLE>
ANTIDILUTIVE SECURITIES
The following securities have not been included in the computation of
diluted net loss per share as they are antidilutive:
<TABLE>
<CAPTION>
YEARS ENDED NINE MONTHS ENDED
-------------------------------------- ---------------------------
MARCH 31, MARCH 27, MARCH 26, DECEMBER 25, DECEMBER 24,
1997 1998 1999 1998 1999
---------- ----------- ----------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Convertible preferred stock
(after effect of antidilutive
provision)..................... 4,633,436 10,117,088 10,117,088 10,117,088 10,117,088
Options outstanding to purchase
common stock................... 1,187,993 2,392,436 2,702,367 2,585,437 3,044,176
Warrants outstanding to purchase
common stock................... 253,390 252,937 252,937 252,937 252,937
Warrants outstanding to purchase
Series BB convertible preferred
stock.......................... -- 835,352 835,352 835,352 835,352
Warrants outstanding to purchase
Series DD convertible preferred
stock.......................... -- -- 3,955 -- 103,955
</TABLE>
RECENT ACCOUNTING PRONOUNCEMENTS
In March 1998, the Accounting Standards Executive Committee ("AcSEC")
issued Statement of Position No. 98-1, or SOP 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained
F-10
<PAGE> 77
REPEATER TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
for Internal Use" which provides guidance on accounting for the cost of computer
software developed or obtained for internal use. SOP 98-1 is effective for
financial statements for fiscal years beginning after December 15, 1998.
Adoption of SOP 98-1 did not have a material impact on its results of
operations.
In April 1998, the Accounting Standards Executive Committee issued
Statement of Position 98-5, or SOP 98-5, "Reporting on the Costs of Start-Up
Activities." This standard requires companies to expense the costs of start-up
activities and organization costs as incurred. In general, SOP 98-5 is effective
for fiscal years beginning after December 15, 1998. Adoption of SOP 98-5 did not
have a material impact on its results of operations.
In June 1998, the Financial Accounting Standards Board issued SFAS 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS 133
establishes new standards of accounting and reporting for derivative instruments
and hedging activities. SFAS 133 requires that all derivatives be recognized at
fair value in the statement of financial position, and that the corresponding
gains or losses be reported either in the statement of operations or as a
component of comprehensive income, depending on the type of hedging relationship
that exists. SFAS 133 will be effective for fiscal years beginning after June
15, 2000. The Company does not currently hold derivative instruments or engage
in hedging activities.
NOTE 2 -- BALANCE SHEET COMPONENTS (IN THOUSANDS):
Inventories consisted of the following:
<TABLE>
<CAPTION>
MARCH 27, MARCH 26, DECEMBER 24,
1998 1999 1999
--------- --------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Raw materials..................................... $ 4,968 $ 3,282 $ 3,321
Work in process................................... 1,203 546 517
Finished goods.................................... 966 1,266 1,154
------- ------- -------
7,137 5,094 4,992
Less: allowance................................... (4,050) (2,159) (2,475)
------- ------- -------
$ 3,087 $ 2,935 $ 2,517
======= ======= =======
</TABLE>
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
MARCH 27, MARCH 26, DECEMBER 24,
1998 1999 1999
--------- --------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Computer equipment................................ $ 1,165 $ 1,643 $ 1,902
Manufacturing equipment........................... 2,787 3,279 3,667
Furniture and fixtures............................ 406 440 518
Leasehold improvements............................ 79 79 79
------- ------- -------
4,437 5,441 6,166
Less: accumulated depreciation and amortization... (2,866) (3,593) (4,190)
------- ------- -------
$ 1,571 $ 1,848 $ 1,976
======= ======= =======
</TABLE>
Depreciation and amortization expense was $416,000, $582,000, $728,000,
$517,000, and $596,000 for the years ended March 31, 1997, March 27, 1998 and
March 26, 1999 and nine months ended December 25, 1998 and December 24, 1999,
respectively.
F-11
<PAGE> 78
REPEATER TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Included as part of the property and equipment balances above:
<TABLE>
<CAPTION>
MARCH 27, MARCH 26, DECEMBER 24,
1998 1999 1999
--------- --------------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Capital leased equipment...................... $ 1,671 $ 1,106 $ 1,686
Less: Accumulated depreciation and
amortization................................ (724) (828) (1,272)
------- ------- -------
$ 947 $ 278 $ 414
======= ======= =======
</TABLE>
Intangible assets consisted of the following:
<TABLE>
<CAPTION>
MARCH 27, MARCH 26, DECEMBER 24,
1998 1999 1999
--------- --------------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Goodwill...................................... $ -- $ -- $ 4,595
Acquired workforce............................ -- -- 88
------- ------- -------
-- -- 4,683
Accumulated amortization...................... -- -- (112)
------- ------- -------
$ -- $ -- $ 4,571
======= ======= =======
</TABLE>
NOTE 3 -- BANK LINE OF CREDIT:
In March 1998, the bank extended for six months its line-of-credit
agreement with the Company. Under the agreement, the Company was able to borrow
the lesser of 70% of certain accounts receivable, as defined in the agreement,
or $2,000,000. Borrowings bore interest at 3/4 of 1% above the bank's prime rate
(9.25% at March 27, 1998). Borrowings were secured by all assets of the Company,
subject to permitted liens. The Company paid all amounts due under this line of
credit during fiscal 1999, and consequently, as of March 26, 1999, there were no
amounts outstanding. The line of credit was closed when paid.
NOTE 4 -- COMMITMENTS:
The Company has entered into capital lease arrangements for computer and
manufacturing equipment and furniture. The Company also leases its
administrative and manufacturing facility under an operating lease which expires
in 2004, as well as certain equipment under non-cancellable operating leases
which expire in 2001. Future minimum lease payments under non-cancelled capital
and operating leases for years ending March 31 are as follows:
<TABLE>
<CAPTION>
NON-CANCELLABLE
CAPITAL LEASES OPERATING LEASES
-------------- ----------------
(IN THOUSANDS)
<S> <C> <C>
2000.................................................... $377 $ 676
2001.................................................... 295 624
2002.................................................... 216 635
2003.................................................... 42 646
2004.................................................... -- 485
---- ------
Total minimum lease payments.................. 930 $3,066
======
Less: amount representing interest...................... 118
----
Present value of minimum lease payments................. 812
Less: current portion................................... 311
----
Long-term portion....................................... $501
====
</TABLE>
F-12
<PAGE> 79
REPEATER TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Rent expense under operating leases for the years ended March 31, 1997,
March 27, 1998 and March 26, 1999 and nine months ended December 25, 1998 and
December 24, 1999 was approximately $418,000, $406,000, $476,000, $325,000 and
$525,000, respectively.
NOTE 5 -- CONVERTIBLE SUBORDINATED DEBENTURES:
The Company issued $15,000,000 in five-year convertible subordinated
debentures in November 1998. The debentures accrue interest at 8.0% per year,
payable quarterly in arrears, and mature November 25, 2003. The debentures are
convertible into Series DD convertible preferred stock at any time prior to the
maturity date at the option of the holder. In addition, the Company has the
right to convert the debentures into fully paid and nonassessable shares of
Series DD convertible preferred stock in the event that it completes a qualified
public offering at which time Series DD convertible preferred stock will
automatically convert into common stock. The conversion price for the Series DD
preferred stock in either case is $5.50 per share.
NOTE 6 -- STOCKHOLDERS' EQUITY:
CONVERTIBLE PREFERRED STOCK
Convertible preferred stock is issuable in series. At March 26, 1999,
preferred stock was designated, issued and outstanding as follows:
<TABLE>
<CAPTION>
PROCEEDS,
SHARES NET OF
------------------------- ISSUANCE LIQUIDATION
AUTHORIZED OUTSTANDING COSTS PREFERENCE
---------- ----------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Series AA............................. 1,228,409 1,225,468 $ 6,200 $ 6,250
Series BB............................. 5,081,668 4,246,316 11,145 11,210
Series CC............................. 4,600,000 4,402,907 12,071 12,108
Series DD............................. 3,300,000 -- -- --
---------- --------- ------- -------
14,210,077 9,874,691 $29,416 $29,568
========== ========= ======= =======
</TABLE>
In June 1996, the Board of Directors authorized the conversion of each
outstanding share of Series A, Series B, Series C and Series D convertible
preferred stock into one share of common stock. Additionally, the Board
authorized a 10-for-1 reverse split of all outstanding shares of common stock
(including those issued upon conversion of the preferred stock) and reset the
authorized number of shares of common stock to 10,000,000. All share data in the
accompanying financial statements have been adjusted retroactively to give
effect to the reverse stock split.
In June 1996, the Board of Directors authorized the conversion of every ten
shares of Series E convertible preferred stock into one outstanding share of a
new series of preferred stock designated "Series AA convertible preferred
stock." Additionally, the Board authorized and issued 3,407,948 shares of a new
series of preferred stock designated "Series BB convertible preferred stock."
Participation in this financing was completed in three closings. As part of the
initial closing, the Company issued 6.84% convertible promissory notes totaling
$849,000. The notes automatically converted into Series BB convertible preferred
stock in the subsequent closings. In August 1997, the Board of Directors
authorized the issuance of approximately 838,368 additional shares of Series BB
convertible preferred stock at a price of $2.64 per share.
In November and December 1997, the Board of Directors authorized and issued
approximately 4,402,907 shares of a new series of convertible preferred stock
designated as "Series CC convertible preferred stock" at a price of $2.75 per
share. In connection with this Series CC convertible preferred
F-13
<PAGE> 80
REPEATER TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
stock issuance, the Board of Directors approved an amendment to the Company's
Articles of Incorporation to increase the number of shares of convertible
preferred and common stock authorized for issuance to 10,910,077 and 18,000,000
shares, respectively.
In connection with the designation of 3,300,000 shares of Series DD
convertible preferred stock, to be issued upon conversion of the convertible
subordinated debentures, in October 1998, the Board of Directors approved an
amendment to the Company's Articles of Incorporation to increase the number of
preferred and common stock authorized for issuance to 14,210,077 and 30,000,000
shares, respectively.
CONVERSION
Each share of Series AA, BB, CC and DD convertible preferred stock is
convertible into shares of common stock, at the option of the holder, according
to a conversion ratio, subject to adjustments in accordance with antidilution
provisions contained in the Company's Articles of Incorporation.
As of March 26, 1999, the conversion ratio in effect is one share of common
stock for each share of Series BB, CC and DD convertible preferred stock, and
1.1978 shares of common stock for each share of Series AA convertible preferred
stock.
Each share of Series AA, BB, CC and DD convertible preferred stock
automatically converts into the number of shares of common Stock into which such
shares are convertible at the then effective conversion ratio upon the
affirmative vote of at least 2/3 majority of the shares of preferred
stockholders by class or upon the closing of a public sale of common stock at a
per share price of not less than $10 and aggregate gross proceeds of not less
than $10,000,000.
DIVIDENDS
The preferred stockholders are entitled to receive non-cumulative
dividends, prior and in preference to any payment of any dividend on common
stock, when and if declared by the Board of Directors, in the amount of $0.51,
$0.26, $0.28, and $0.55 per share for Series AA, Series BB, Series CC, and
Series DD convertible preferred stock, respectively. The holders of Series AA,
BB, CC and DD convertible preferred stock will also be entitled to participate
in dividends on common stock, when and if declared by the Board of Directors,
based on the number of shares of common stock held on an as-if converted basis.
No dividends have been declared to date.
LIQUIDATION
In the event of liquidation and to the extent assets are available, the
Series AA, Series BB, Series CC, and Series DD convertible preferred
stockholders are entitled to a liquidation preference distribution of $5.10,
$2.64, $2.75, and $5.50 per share, respectively, plus declared but unpaid
dividends, before any liquidation distributions are made to common stockholders.
Additionally, the Series CC and Series DD convertible preferred stock will share
the remaining proceeds pro rata, on an as-converted to common stock basis, with
the holders of common stock.
VOTING
Each share of Series AA, BB, CC and DD convertible preferred stock has
voting rights equal to an equivalent number of shares of common stock into which
it is convertible and votes together as one class with the common stock.
As long as at least 1,187,500 shares of Series AA and Series BB, 1,500,000
shares of Series CC, and 900,000 shares of Series DD convertible preferred stock
remain outstanding, the Company must obtain approval from a majority of the
convertible preferred stockholders by class in order to alter the Articles of
F-14
<PAGE> 81
REPEATER TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Incorporation as related to convertible preferred stock, change the authorized
number of shares of common or convertible preferred stock, redeem or repurchase
any shares of common Stock other than shares subject to the right of repurchase
by the Company, authorize a dividend for any class or series of stock, authorize
or issue any equity security having a preference over, or being in parity with,
the Series AA, BB, CC and DD convertible preferred stock, or effect a
liquidation, merger, consolidation or sale of assets of the Company that results
in a transfer of 50% or more of the voting control of the Company.
Holders of Series AA, BB, CC and DD convertible preferred stock shall be
entitled to elect, one member, two members, one member and two members of the
Board of Directors, respectively. Holders of Series AA, BB, CC and DD
convertible preferred stock, voting together as a single class with the holders
of common stock, shall be entitled to elect the balance of directors, if any.
WARRANTS
In connection with the issuance of Series E convertible preferred stock, in
November 1995 and March 1997, the Company issued warrants to purchase 255,710
and 613 shares of common stock respectively at $0.10 per share. The warrants
expire in November 2000 or upon the closing of a public offering by the Company
or merger of the Company with another entity, whichever is earlier. As of March
26, 1999, warrants for 3,386 shares have been exercised and warrants for 252,937
shares remained outstanding.
In connection with the issuance of Series BB convertible preferred stock,
in August 1997, the Company issued warrants to investors for the purchase of
816,412 shares of Series BB convertible preferred stock at $2.64 per share. The
warrants expire in 2002, or upon the closing of a public offering by the Company
or merger of the Company with another entity, whichever is earlier. As of March
26, 1999, all of these warrants remained outstanding.
In July 1997, in connection with a capital lease, the Company issued
warrants to a leasing company for the purchase of 18,940 shares of Series BB
convertible preferred stock at $2.64 per share. The warrants expire in 2004. As
of March 26, 1999, all of these warrants remained outstanding
In connection with an equipment lease line of credit, the Company issued in
January 1999 warrants to purchase 3,955 shares of Series DD convertible
preferred stock at $5.50 per share. The warrants expire in 2009. As of March 26,
1999, all warrants remained outstanding.
Using the Black-Scholes method, the fair market values of the warrants
issued in conjunction with the lease were determined to be insignificant.
COMMON STOCK
Share information for all periods has been retroactively adjusted to
reflect a 10-for-1 reverse common stock split effected in June 1996.
FAIR VALUE OF COMMON STOCK
In the absence of a public trading market for the Company's common stock,
alternative means for determining the fair value were used by the Board of
Directors. Factors considered included the consideration received from the third
parties for the issuance of Series AA, BB, CC, and DD convertible preferred
stock of the Company, the significant liquidation, participation and other
preferences of the holders of these preferred stocks, the financial condition of
the Company, including milestones in the development of the Company's business
and the market conditions.
F-15
<PAGE> 82
REPEATER TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
RESERVED SHARES
The Company has reserved shares of common stock for future issuance as
follows:
<TABLE>
<CAPTION>
MARCH 26, DECEMBER 24,
1999 1999
---------- ------------
(UNAUDITED)
<S> <C> <C>
Conversion of preferred stock outstanding (after effect of
antidilution provisions)................................. 10,117,088 10,117,088
Conversion of Series DD convertible preferred stock
issuable upon conversion of convertible subordinated
debentures............................................... 2,727,263 2,727,263
Shares available for stock option grants................... 275,684 740,523
Stock options outstanding.................................. 2,702,367 3,044,176
Warrants outstanding to purchase common stock.............. 252,937 252,937
Conversion of Series BB convertible preferred stock
issuable upon exercise of outstanding warrants........... 835,352 835,352
Conversion of Series DD convertible preferred stock
issuable upon exercise of outstanding warrants........... 3,955 103,955
---------- ----------
16,914,646 17,821,294
========== ==========
</TABLE>
STOCK PLANS
In May 1990, the Company adopted the 1990 Incentive Stock Plan under which
shares of common stock are reserved for exercise of options to be granted to key
employees, members of the Board of Directors and consultants to the Company. As
of March 26, 1999, a total of 1,716,910 shares have been reserved for option
grants under this Plan.
In May 1993, the Company adopted the Key Executives Stock Option Plan under
which shares of common stock are reserved for exercise of options to be granted
to certain key executive employees of the Company. A total of 1,351,544 shares
have been reserved for option grants under this Plan.
The Plans permit the Company to (i) grant incentive options at 100% of fair
value at the date of grant; (ii) grant nonqualified options at 85% or greater of
fair value; and (iii) sell common stock at 85% of fair value subject to stock
purchase agreements giving the Company repurchase rights in the event of
termination. Options become exercisable immediately when granted, subject to a
repurchase right held by the Company, which lapses over a maximum period of five
years at such times and under such conditions as determined by the Board of
Directors. To date, options granted generally vest over four years. The term of
the Plans is ten years. Options granted to 10% stockholders shall have a maximum
term of five years.
F-16
<PAGE> 83
REPEATER TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
PRO FORMA STOCK-BASED COMPENSATION
The Company has adopted the disclosure-only provisions of SFAS 123,
"Accounting for Stock-Based Compensation". Had compensation costs been
determined based on the fair value method prescribed by that statement, the
Company's net loss would have been as follows (in thousands, except per share
amounts):
<TABLE>
<CAPTION>
YEARS ENDED NINE MONTHS ENDED
----------------------------------- ----------------------------
MARCH 31, MARCH 27, MARCH 26, DECEMBER 25, DECEMBER 24,
1997 1998 1999 1998 1999
--------- --------- --------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net loss attributed to common
stockholders -- as reported.... $(5,973) $(12,628) $(10,570) $(7,347) $(10,183)
Net loss attributed to common
stockholders -- pro forma...... $(5,984) $(12,672) $(10,707) $(7,380) $(10,703)
Net loss per common
share -- basic and diluted as
reported....................... $ (3.16) $ (5.31) $ (4.46) $ (3.10) $ (4.15)
Net loss per common
share -- basic and diluted pro
forma.......................... $ (3.16) $ (5.33) $ (4.52) $ (3.12) $ (4.36)
</TABLE>
Such pro forma disclosures may not be representative of future compensation
cost because options vest over several years and additional grants are made each
year. The fair value of each option grant is estimated on the date of grant
using the minimum value method with the following assumptions used for grants:
<TABLE>
<CAPTION>
YEARS ENDED NINE MONTHS ENDED
----------------------------------- ----------------------------
MARCH 31, MARCH 27, MARCH 26, DECEMBER 25, DECEMBER 24,
1997 1998 1999 1998 1999
--------- --------- --------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Weighted average risk-free
interest rate................... 6.10% 5.50% 5.18% 5.35% 5.00%
Expected life..................... 5 years 5 years 5 years 5 years 5 years
Expected dividends................ 0% 0% 0% 0% 0%
</TABLE>
Based on the above assumptions, the weighted average minimum values per
share of options granted were approximately $0.08, $0.07, $3.90, $3.30 and $8.14
for the years ended March 31, 1997, March 27, 1998 and March 26, 1999 and the
nine month ended December 25, 1998 and December 24, 1999, respectively.
F-17
<PAGE> 84
REPEATER TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The following table summarizes stock option activity:
<TABLE>
<CAPTION>
WEIGHTED-
SHARES AVERAGE
AVAILABLE SHARES EXERCISE PRICE
FOR GRANT OUTSTANDING PER SHARE
---------- ------------- --------------
<S> <C> <C> <C>
Balance at March 31, 1996.................... 404,385 243,508 $0.50
Additional shares reserved................... 1,067,394 -- --
Shares repurchased........................... 2,208 -- $0.50
Granted...................................... (946,850) 946,850 $0.30
Exercised.................................... -- (2,365) $0.36
Canceled..................................... -- -- --
---------- --------- -----
Balance at March 31, 1997.................... 527,137 1,187,993 $0.34
Additional shares reserved................... 1,239,967 -- --
Shares repurchased........................... 30,039 -- $0.50
Granted...................................... (1,216,600) 1,216,600 $0.30
Exercised.................................... -- (4,655) $0.34
Canceled..................................... 7,502 (7,502) $0.40
---------- --------- -----
Balance at March 27, 1998.................... 588,045 2,392,436 $0.32
Additional shares reserved................... -- -- --
Granted...................................... (489,320) 489,320 $2.18
Exercised.................................... -- (2,430) $0.42
Canceled..................................... 176,959 (176,959) $0.57
---------- --------- -----
Balance at March 26, 1999.................... 275,684 2,702,367 $0.64
Additional shares reserved................... 1,000,000 -- --
Granted...................................... (1,060,900) 1,060,900 $3.00
Exercised.................................... -- (193,352) $0.32
Canceled..................................... 525,739 (525,739) $1.01
---------- --------- -----
Balance at December 24, 1999 (unaudited)..... 740,523 3,044,176 $1.42
========== ========= =====
</TABLE>
The following table summarizes information relating to stock options
outstanding as of March 26, 1999:
<TABLE>
<CAPTION>
WEIGHTED-
AVERAGE
OPTIONS REMAINING
OUTSTANDING AND CONTRACTUAL
EXERCISE PRICE EXERCISABLE LIFE
-------------- ---------------- -----------
<S> <C> <C>
$0.30..................................................... 2,043,350 8.35
$0.50..................................................... 232,397 5.48
$1.00..................................................... 86,500 9.46
$2.00..................................................... 102,000 9.46
$3.00..................................................... 238,120 9.86
- ----- -------------- --------
$0.64 (weighted average).................................. 2,702,367 8.31
===== ============== ========
</TABLE>
F-18
<PAGE> 85
REPEATER TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The following table summarizes information relating to stock options
outstanding at December 24, 1999 (unaudited):
<TABLE>
<CAPTION>
WEIGHTED-
AVERAGE
OPTIONS REMAINING
OUTSTANDING AND CONTRACTUAL
OPTION EXERCISE PRICE EXERCISABLE LIFE (IN YEARS)
--------------------- --------------- ---------------
<S> <C> <C>
$0.30................................................... 1,492,825 7.59
$0.50................................................... 216,371 4.84
$1.00................................................... 68,500 8.72
$2.00................................................... 100,000 8.72
$3.00................................................... 1,166,480 9.71
- ----- ------------- ----------
$1.42 (weighted average)................................ 3,044,176 8.25
===== ============= ==========
</TABLE>
As of March 26, 1999, approximately 1,001,852 options outstanding were
vested, and approximately 37,914 unvested options had been exercised and were
subject to the Company's repurchase rights.
STOCK-BASED COMPENSATION
During the year ended March 26, 1999 and the nine months ended December 24,
1999, the Company recorded $1,041,000 and $7,572,000 of unearned stock-based
compensation for the excess of the deemed fair market value over the exercise
price at the date of grant. The compensation expense is being recognized over
the option vesting period of four years, using the method prescribed by FIN 28.
Under the FIN 28 method, each vested tranche of options is accounted for as a
separate option grant awarded for past services. Accordingly, the compensation
expense is recognized over the period during which the services have been
provided. This method results in a front-loading of the compensation expense.
For the year ended March 26, 1999 and the nine months ended December 24, 1999,
the Company recorded $286,000 and $1,485,000 of stock-based compensation expense
in connection with options granted to employees and consultants.
Assuming all employees with outstanding options remain employed by the
Company through the vesting period, the total unearned stock-based compensation
recorded for all option grants through December 24, 1999 will be amortized as
follows: $1 million for the remainder of the year ending March 31, 2000; $3.2
million for the year ending March 31, 2001; $1.7 million for the year ending
March 31, 2002, $0.8 million for the year ending March 31, 2003 and $0.2 million
thereafter.
NOTE 7 -- 401(K) PLAN:
The Company has a 401(k) plan under which matching and discretionary
contributions may be made. The Company did not make any contributions under this
plan for any of the periods presented.
NOTE 8 -- RESEARCH AND DEVELOPMENT CONTRACT:
In January 1997, the Company entered into an agreement with a corporation
for the joint development of a new product line. The agreement provided for
funding of the Company's development efforts for the product. Under this
agreement, approximately $900,000 and $225,000 was received by the Company in
fiscal 1997 and 1998, respectively. Approximately half of these amounts were
subject to refund if final acceptance of the product was not obtained and as of
March 31, 1997 $450,000 was deferred. The Company incurred costs of
approximately $280,000 and $1,400,000 in fiscal 1997 and 1998, respectively,
under this agreement. Costs incurred by the Company under this agreement, offset
by funding received which is not subject to refund, have been included in
research and development expenses. This
F-19
<PAGE> 86
REPEATER TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
agreement was discontinued in fiscal 1998 and amounts previously deferred have
been subsequently repaid by the Company based on a note payable entered into
between the parties (see Note 9).
NOTE 9 -- NOTES PAYABLE:
In October 1997, the Company entered into an agreement for the conversion
of certain amounts due to a customer into an unsecured promissory note. The
$425,000 note bore interest at 11.50% per annum and was payable in monthly
installments from January through December 1998. At March 31, 1999, all amounts
due under this note have been paid.
In March 1998, in conjunction with a settlement of the research and
development contract described in Note 8, the Company entered into an unsecured
promissory note with the other party to this contract for the repayment of
amounts advanced to the Company. The $570,000 note bears interest at 9% per
annum and is payable in quarterly installments of principal and accrued interest
through October 1999.
NOTE 10 -- INCOME TAXES:
Net deferred tax assets are as follows (in thousands):
<TABLE>
<CAPTION>
YEARS ENDED NINE MONTHS
--------------------------------- ENDED
MARCH 31, MARCH 27, MARCH 26, DECEMBER 24,
1997 1998 1999 1999
--------- --------- --------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Deferred tax assets:
Net operating loss carryforwards.................. $ 4,694 $ 9,027 $ 13,075 $ 15,644
Research and other credits........................ 429 751 985 1,003
Inventory reserve................................. 1,202 1,613 860 986
Intangible assets................................. -- -- -- 916
Depreciation and amortization..................... 325 564 888 983
Other accruals and reserves not currently
deductible for tax purposes.................... 576 328 657 401
------- -------- -------- --------
Total deferred tax assets................. 7,226 12,283 16,465 19,933
Valuation allowance for deferred taxes............ (7,226) (12,283) (16,465) (19,933)
------- -------- -------- --------
Net deferred taxes........................ $ -- $ -- $ -- $ --
======= ======== ======== ========
</TABLE>
Management believes that, based on a number of factors, it is more likely
than not that the deferred tax assets will not be utilized, such that a full
valuation allowance has been recorded.
At March 26, 1999, the Company had federal and state net operating loss
carryforwards of approximately $36,721,000 and $10,197,000, respectively,
available to offset future taxable income. The Company also had federal and
state research and development tax credits of approximately $700,000 and
$432,000. The net operating loss and tax credit carryforwards will expire at
various dates from 2002 through 2019, if not utilized.
At December 24, 1999, the Company had federal and state net operating loss
carryforwards of approximately $43,407,000 and $15,743,000 respectively,
available to offset future taxable income. The Company also had federal and
state research and development tax credits of approximately $714,000 and
$443,000. The net operating loss and tax credit carryforwards will expire at
various dates from 2000 to 2019, if not utilized.
Utilization of the net operating losses and credits may be subject to a
substantial annual limitation due to the "change in ownership" provisions of the
Internal Revenue Code of 1986 and similar state
F-20
<PAGE> 87
REPEATER TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
provisions. The annual limitation may result in the expiration of net operating
losses and credits before utilization.
NOTE 11 -- UNAUDITED PRO FORMA NET LOSS PER COMMON SHARE AND PRO FORMA
STOCKHOLDERS' EQUITY:
Upon the closing of the Company's initial public offering, all outstanding
Series AA, BB, CC, and DD convertible preferred stock (See Note 12) will be
converted automatically into common stock. The pro forma effect of this
conversion has been presented as a separate column in the Company's balance
sheet.
Pro forma basic and diluted net loss per share have been computed to give
effect to common equivalent shares from convertible preferred stock that will
automatically convert upon the closing of the Company's initial public offering
(using the as-if-converted method) for the year ended March 26, 1999 and the
nine months ended December 24, 1999.
In addition, there are outstanding warrants to purchase 252,937 shares of
common stock and 816,412 shares of convertible preferred stock which will
automatically convert into common stock and will expire upon the closing of the
offering, if not exercised earlier. The Company has received indications from
the warrant holders that they intend to exercise their warrants. The Company has
reflected the exercise of warrants in the unaudited pro forma stockholder's
equity.
A reconciliation of the numerator and denominator used in the calculation
of pro forma basic and diluted net loss per common share follows (in thousands,
except per share data):
<TABLE>
<CAPTION>
YEAR NINE MONTHS
ENDED ENDED
MARCH 26, DECEMBER 24,
1999 1999
--------- ------------
<S> <C> <C>
Numerator:
Net loss.................................................. $(10,570) $(10,183)
======== ========
Denominator
Shares used in computing basic and diluted net loss per
share.................................................. 2,367 2,453
Adjusted to reflect the effect of the assumed conversion
of convertible preferred stock from the date of
issuance:
Series AA convertible preferred stock................ 1,468 1,468
Series BB convertible preferred stock................ 4,246 4,246
Series CC convertible preferred stock................ 4,403 4,403
Series DD convertible preferred stock (including
convertible subordinated debentures)................ 1,016 2,727
-------- --------
Weighted average shares used in computing pro forma basic
and diluted net loss per share............................ 13,500 15,297
======== ========
Pro forma basic and diluted net loss per share.............. $ (0.78) $ (0.67)
======== ========
</TABLE>
NOTE 12 -- SUBSEQUENT EVENTS (UNAUDITED):
BRAZILIAN SUBSIDIARY
In April 1999, the Company incorporated Repeater Technologies-America do
Sul S/C LTDA, a majority-owned subsidiary in Brazil. Repeater
Technologies-America do Sul's principal activity is sales and sales support for
the Brazilian market.
F-21
<PAGE> 88
REPEATER TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE PAYABLE
In July 1999, the Company entered into a note agreement with a financial
institution. Borrowings made pursuant to this agreement will not exceed
$5,000,000 in the aggregate and will be secured by all assets of the Company,
subject to permitted liens. Pursuant to this agreement, the Company has issued,
in July 1999 and September 1999, two promissory notes for $3,000,000 and
$2,000,000, respectively, bearing interest at 13.47% and 13.68%, respectively.
The Company will make monthly interest-only payments through February 2000,
followed by 30 monthly installments of $118,335 and $79,090 for the $3,000,000
and the $2,000,000 promissory notes, respectively.
In connection with these notes, the Company issued warrants to purchase
100,000 shares of Series DD convertible preferred stock at $5.50 per share. The
warrants expire in 2006. As of December 24, 1999, all warrants remained
outstanding. These warrants were valued using the Black-Scholes method using the
same assumptions for SFAS 123 disclosures (note 6) plus a volatility factor of
50% and were recorded as debt discount. The debt discount ($542,000) is being
amortized over the term of the note.
UNASSERTED CLAIM
In July 1999, the Company entered into an engagement letter with CIBC World
Markets Corp. ("CIBC"), under which CIBC was retained to provide financial
advisory services. The engagement letter provides for CIBC to have, and in
January 2000 CIBC informed the Company that the Company is obligated to offer
CIBC, the right of first refusal to be the lead underwriter of any public
offering. The Company does not believe that it has such an obligation. However,
in the event that a dispute arises between CIBC and the Company and CIBC
prevails, the Company could be required to make a payment to CIBC. There can be
no assurance as to the outcome of this potential dispute.
1990 INCENTIVE STOCK PLAN
In September 1999, the Board of Directors increased the number of shares
reserved for issuance under the 1990 Incentive Stock Plan by 1,000,000.
ACQUISITION
On November 4, 1999, the Company acquired substantially all of the assets
of The Gwydion Company LLC ("Gwydion"), a development stage company engaged in
design and development of radio frequency and microwave fiber-optic equipment
for cellular and PCS (personal communication services), satellite communications
and related markets. The purchase consideration consisted of $754,000 cash and
573,334 shares of the Company's common stock valued at $10.59 per share.
The transaction was recorded using the purchase method of accounting and
the results of Gwydion have been included in the Company's financial statements
subsequent to November 4, 1999. The allocation of the purchase price to the
tangible and identifiable intangible assets acquired in connection with this
acquisition was based on estimated fair values as determined by management as
follows (in thousands):
<TABLE>
<S> <C>
Goodwill.................................................... $ 4,595
Computer equipment.......................................... 27
Assumed liabilities......................................... (175)
Acquired workforce.......................................... 88
Acquired in-process research and development................ 3,207
Deferred income taxes....................................... (916)
--------
Total purchase consideration................................ $ 6,826
========
</TABLE>
F-22
<PAGE> 89
REPEATER TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The amortization of goodwill and acquired workforce is being computed over
seven and three years respectively on the straight-line basis. The Company also
recognized a pre-tax charge to operations of $2.3 million for the purchase of
acquired in-process research and development. This charge was computed using the
excess earnings method of the income approach, discounting the future debt free
cashflows at 30% to reflect the weighted average cost of capital and the
specific ratios associated with each in-process product.
REINCORPORATION
On February 15, 2000 the Board of Directors authorized the reincorporation
of the Company in the State of Delaware.
Following the reincorporation, the Company will be authorized to issue
70,000,000 shares of $0.001 par value common stock and 5,000,000 shares of
$0.001 par value preferred stock.
INITIAL PUBLIC OFFERING
On February 15, 2000, the Board of Directors authorized the filing of a
registration statement for an underwritten public offering of the Company's
Common Stock.
2000 EQUITY INCENTIVE PLAN
On February 15, 2000, the Board of Directors approved the 2000 Equity
Incentive Plan under which 3,000,000 shares were reserved for grants to
employees, directors and consultants. The plan will be effective upon the
closing of an underwritten public offering of the Company's Common Stock.
2000 EMPLOYEE STOCK PURCHASE PLAN
On February 15, 2000, the Board of Directors approved the 2000 Employee
Stock Purchase Plan under which 500,000 shares were reserved. The plan will be
effective upon the closing of an underwritten public offering of the Company's
Common Stock.
F-23
<PAGE> 90
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHARES
REPEATER TECHNOLOGIES, INC.
COMMON STOCK
[REPEATER TECHNOLOGIES LOGO]
------------
PROSPECTUS
, 2000
------------
SALOMON SMITH BARNEY
U.S. BANCORP PIPER JAFFRAY
SG COWEN
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 91
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following sets forth the estimated expenses and costs (other than
underwriting discounts and commissions) expected to be incurred in connection
with the issuance and distribution of our common stock registered hereby:
<TABLE>
<S> <C>
SEC registration fee........................................ $17,160
NASD fee.................................................... $ 7,000
Printing and engraving expenses.............................
Accounting fees and expenses................................
Legal fees and expenses.....................................
Blue Sky fees and expenses..................................
Nasdaq/NMS application fee..................................
Transfer agent fees and expenses............................
Miscellaneous...............................................
Total............................................. $
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Our officers and directors are covered by provisions of the Delaware
General Corporation Law and our certificate of incorporation and bylaws, which
serve to limit, and, in some instances, to indemnify them against, liabilities
which they may incur in their respective capacities. Our certificate of
incorporation limits the liability of our directors to the fullest extent
permitted by Delaware law. Specifically, the directors of the Company will not
be personally liable for monetary damages for breach of a director's fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Company or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) for unlawful payments of dividends or unlawful stock repurchases
or redemptions, or (iv) for any transaction from which the director derived an
improper personal benefit.
Our bylaws provide for the indemnification of our directors and officers
(as well as certain other persons) if the person acted in good faith and in a
manner reasonably believed to be in or not opposed to our best interests, and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe the conduct was unlawful. In an action by or in the right of the
Company, no indemnification may be made if the person shall have been adjudged
to be liable to the Company unless the court in which the action was brought
determines upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, the person is fairly and reasonably
entitled to indemnity for the expenses which the court deems proper. Our bylaws
also provide that any indemnification (unless ordered by a court) may be made by
the Company only as authorized in the specific case upon a determination that
indemnification is proper in the circumstances because the person has met the
applicable standard of conduct. This determination must be made (i) by the board
of directors by a majority vote of a quorum consisting of directors who were not
parties to the action, (ii) if a quorum is not obtainable, or, even if
obtainable, a quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, or (iii) by the stockholders of the Company. If an
indemnified person has been successful on the merits or otherwise in defense of
any action described above, or in the defense of any matter in the action, the
person will be indemnified against expenses (including attorneys' fees) incurred
in connection with the action, without the necessity of authorization in the
specific case. Expenses incurred in defending or investigating a threatened or
pending action may be paid by us in advance of the final disposition of the
action upon receipt of an undertaking by the person to repay the amount if it is
ultimately determined that indemnification is not proper. The indemnification
and advancement of expenses provided by or granted
II-1
<PAGE> 92
under our bylaws are not exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any bylaw,
agreement, contract, vote of stockholders or disinterested directors or
otherwise, it being our policy that indemnification of the persons specified in
the bylaws shall be made to the fullest extent permitted by law. The
indemnification and advancement of expenses provided by our bylaws, unless
otherwise provided when authorized or ratified, continue as to a person who has
ceased to be a director or officer and inure to the benefit of the heirs,
executors and administrators of that person.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Since January 31, 1997, we have sold and issued the following unregistered
securities:
(1) On January 31, 1997, we sold an aggregate of 3,407,948 shares of
Series BB convertible preferred stock to 25 investors at a purchase price
per share of $2.64 for an aggregate purchase price of $8,996,983.
(2) In March 1997, in connection with the issuance of Series E
convertible preferred stock, we issued warrants to purchase 613 shares of
our common stock to an investor at a purchase price per share of $0.10.
(3) On April 25, 1997, we sold an aggregate of 21,956 shares of Series
BB convertible preferred stock to 5 investors at a purchase price per share
of $2.64 for an aggregate purchase price of $57,964.
(4) In July 1997, in connection with an equipment lease agreement with
Lighthouse Capital Partners II, L.P., we issued warrants to purchase up to
18,940 shares of our Series BB convertible preferred stock at an exercise
price of $2.64 per share. Upon the closing of this offering, the warrants
will become exercisable for common stock at the rate of one share of common
stock for each share of Series BB convertible preferred stock underlying
the warrants.
(5) In August 1997, in connection with our Series BB convertible
preferred stock financing, we issued warrants to purchase up to 816,412
shares of our Series BB convertible preferred stock at an exercise price of
$2.64 per share. These warrants will expire if not exercised by 5:00 p.m.
on the date of the closing of this offering.
(6) On November 16, 1997, we sold an aggregate of 4,031,271 shares of
Series CC convertible preferred stock to 23 investors at a purchase price
per share of $2.75 for an aggregate purchase price of $11,085,995.
(7) On December 16, 1997, we sold an aggregate of 371,636 shares of
Series CC convertible preferred stock to 2 investors at a purchase price
per share of $2.75 for an aggregate purchase price of $1,020,999.
(8) In November 1998, we issued Series DD convertible subordinated
debentures to 19 investors in an aggregate principal amount of $14,995,503.
Upon the closing of this offering, we have the right to convert these
debentures into fully paid and nonassessable shares of Series DD
convertible preferred stock, which will convert automatically into shares
of our common stock, at a conversion price of $5.50 per share.
(9) In January 1999, in connection with a senior lease and security
agreement with Phoenix Leasing Incorporated, we issued warrants to purchase
up to 3,955 shares of our Series DD preferred stock at an exercise price of
$5.50 per share. Upon the closing of this offering, the warrants will
become exercisable for common stock at the rate of one share of common
stock for each share of Series DD preferred stock underlying the warrants.
(10) In July 1999, in connection with a loan and security agreement
with Transamerica Business Credit Corporation, we issued warrants to
purchase up to 100,000 shares of our Series DD convertible preferred stock
at an exercise price of $5.50 per share. Upon the closing of this offering,
the warrants
II-2
<PAGE> 93
will become exercisable for common stock at the rate of one share of common
stock for each share of Series DD convertible preferred stock underlying
the warrants.
(11) From January 31, 1997 until February 15, 2000, 37 employees,
directors and consultants exercised options to purchase an aggregate of
168,994 shares of common stock under our 1990 Incentive Stock Plan, for an
aggregate purchase price of $58,438.
(12) From January 31, 1997 until February 15, 2000, 3 employees
exercised options to purchase an aggregate of 136,250 shares of common
stock under our Key Executives Incentive Plan, for an aggregate purchase of
$40,875.
(13) In December 1999, in connection with the purchase of
substantially all of the assets of the assets of The Gwydion Company LLC, a
California limited liability company, we issued a total of 573,334 shares
of our common stock to Gwydion. There are only two members of The Gwydion
Company and the shares issued in the purchase of the assets are subject to
an eighteen month escrow to cover certain contingencies, including breaches
of Gwydion's representations and warranties or indemnification requirements
under the asset purchase agreement.
Except where otherwise provided above, none of these unregistered sales
transactions involved any underwriters, underwriting discounts or commissions,
or any public offering. We believe that each transaction was exempt from the
registration requirements of the Securities Act by virtue of Section 4(2) of the
Securities Act, Regulation D promulgated under Section 4(2) or Rule 701 pursuant
to compensatory benefit plans and contracts relating to compensation as provided
under Rule 701. The recipients in these transactions represented their intention
to acquire the securities for investment only and not with a view to or for sale
in connection with any distribution of the securities, and appropriate legends
were affixed to the share certificates and instruments issued in the
transactions. All recipients had adequate access, through their relationships
with us, to information about us.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
NUMBER DESCRIPTION OF DOCUMENT
- ------ -----------------------
<C> <S>
1.1* Form of Underwriting Agreement.
3.1 Certificate of Incorporation of the Registrant.
3.2 Form of Amended and Restated Certificate of Incorporation of
the Registrant to be filed upon the closing of the offering
made pursuant to this Registration Statement.
3.3 Bylaws of the Registrant, as currently in effect.
4.1 Specimen Common Stock Certificate.
4.2 Amended and Restated Preferred Stock Purchase Warrant, dated
August 6, 1997, issued to Lighthouse Capital Partners II,
L.P.
4.3 Warrant to Purchase Shares of Series DD Preferred Stock of
Repeater Technologies, Inc., dated January 25, 1999, issued
to Phoenix Leasing Incorporated.
4.4 Stock Subscription Warrant to Purchase Series DD Preferred
Stock of Repeater Technologies, Inc., dated July 8, 1999,
issued to TBCC Funding Trust II.
4.5 Sixth Amended and Restated Investor Rights Agreement, dated
November 25, 1998, as amended by Amendment No. 1 to the
Sixth Amended and Restated Investor Rights Agreement, dated
July 8, 1999.
5.1* Opinion of Cooley Godward LLP.
10.1 Form of Indemnity Agreement between the Registrant and its
directors and executive officers.
10.2 1990 Incentive Stock Plan and forms of offering documents.
10.3 Key Executives Stock Option Plan and forms of offering
documents.
10.4 2000 Equity Incentive Plan and forms of offering documents.
10.5 2000 Employee Stock Purchase Plan and form of offering
document.
10.6 Lease, dated August 7, 1992, between Repeater Technologies,
Inc. and The Sobrato 1979 Trust, as amended by the First
Amendment to Lease, dated October 16, 1998, between Repeater
Technologies, Inc. and Sobrato Interests II.
</TABLE>
II-3
<PAGE> 94
<TABLE>
<CAPTION>
NUMBER DESCRIPTION OF DOCUMENT
- ------ -----------------------
<C> <S>
10.7 Change of Control Agreement, dated November 3, 1999, between
Repeater Technologies, Inc. and Timothy A. Marcotte.
10.8 License Agreement, dated May 12, 1998, between Repeater
Technologies, Inc. and Matthew Fuerter.
10.9 Convertible Debenture Purchase Agreement, dated November 25,
1998.
16.1 Letter from Ernst & Young LLP regarding change in
independent accountants.
23.1 Consent of PricewaterhouseCoopers LLP, independent
accountants.
23.2* Consent of Cooley Godward LLP (included in Exhibit 5.1).
24.1 Power of Attorney (see signature pages).
27.1* Financial Data Schedule.
</TABLE>
- ---------------
* To be filed by amendment.
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of Prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and this offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreements, certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
II-4
<PAGE> 95
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Registrant has
duly caused this Registration Statement to be signed on its behalf, by the
undersigned, thereunto duly authorized, in the City of Sunnyvale, County of
Santa Clara, State of California, on February 28, 2000.
REPEATER TECHNOLOGIES, INC.
By: /s/ KENNETH L. KENITZER
------------------------------------
Kenneth L. Kenitzer
President and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Kenneth L. Kenitzer and Timothy A. Marcotte, and
each of them, his attorneys-in-fact, each with the power of substitution, for
him in any and all capacities, to sign any and all amendments to this
Registration Statement (including post-effective amendments), and to sign any
registration statement for the same offering covered by this Registration
Statement that is to be effective upon filing pursuant to Rule 462(b)
promulgated under the Securities Act of 1933, and all post-effective amendments
thereto, and to file the same, with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that such
attorneys-in-fact, or his or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof. This Power of Attorney may be signed in
several counterparts.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-1 has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ KENNETH L. KENITZER President and Chief February 28, 2000
- ----------------------------------------------------- Executive Officer
Kenneth L. Kenitzer
/s/ TIMOTHY A. MARCOTTE Vice President and Chief February 28, 2000
- ----------------------------------------------------- Financial Officer
Timothy A. Marcotte
/s/ JOHN BOSCH Director February 28, 2000
- -----------------------------------------------------
John Bosch
/s/ CHRIS L. BRANSCUM Director February 28, 2000
- -----------------------------------------------------
Chris L. Branscum
/s/ BANDEL CARANO Director February 28, 2000
- -----------------------------------------------------
Bandel Carano
/s/ RICHARD G. GREY Director February 28, 2000
- -----------------------------------------------------
Richard G. Grey
/s/ PERRY LAFORGE Director February 28, 2000
- -----------------------------------------------------
Perry LaForge
/s/ ALESSANDRO PIOL Director February 28, 2000
- -----------------------------------------------------
Alessandro Piol
</TABLE>
II-5
<PAGE> 96
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------
<C> <S>
1.1* Form of Underwriting Agreement.
3.1 Certificate of Incorporation of the Registrant.
3.2 Form of Amended and Restated Certificate of Incorporation of
the Registrant to be filed upon the closing of the offering
made pursuant to this Registration Statement.
3.3 Bylaws of the Registrant, as currently in effect.
4.1 Specimen Common Stock Certificate.
4.2 Amended and Restated Preferred Stock Purchase Warrant, dated
August 6, 1997, issued to Lighthouse Capital Partners II,
L.P.
4.3 Warrant to Purchase Shares of Series DD Preferred Stock of
Repeater Technologies, Inc., dated January 25, 1999, issued
to Phoenix Leasing Incorporated.
4.4 Stock Subscription Warrant to Purchase Series DD Preferred
Stock of Repeater Technologies, Inc., dated July 8, 1999,
issued to TBCC Funding Trust II.
4.5 Sixth Amended and Restated Investor Rights Agreement, dated
November 25, 1998, as amended by Amendment No. 1 to the
Sixth Amended and Restated Investor Rights Agreement, dated
July 8, 1999.
5.1* Opinion of Cooley Godward LLP.
10.1 Form of Indemnity Agreement between the Registrant and its
directors and executive officers.
10.2 1990 Incentive Stock Plan and forms of offering documents.
10.3 Key Executives Stock Option Plan and forms of offering
documents.
10.4 2000 Equity Incentive Plan and forms of offering documents.
10.5 2000 Employee Stock Purchase Plan and form of offering
document.
10.6 Lease, dated August 7, 1992, between Repeater Technologies,
Inc. and The Sobrato 1979 Trust, as amended by the First
Amendment to Lease, dated October 16, 1998, between Repeater
Technologies, Inc. and Sobrato Interests II.
10.7 Change of Control Agreement, dated November 3, 1999, between
Repeater Technologies, Inc. and Timothy A. Marcotte.
10.8 License Agreement, dated May 12, 1998, between Repeater
Technologies, Inc. and Matthew Fuerter.
10.9 Convertible Debenture Purchase Agreement, dated November 25,
1998.
16.1 Letter from Ernst & Young LLP regarding change in
independent accountants.
23.1 Consent of PricewaterhouseCoopers LLP, independent
accountants.
23.2* Consent of Cooley Godward LLP (included in Exhibit 5.1).
24.1 Power of Attorney (see signature pages).
27.1* Financial Data Schedule.
</TABLE>
- ---------------
* To be filed by amendment.
<PAGE> 1
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
REPEATER TECHNOLOGIES, INC.
The undersigned, a natural person (the "Sole Incorporator"), for the
purpose of organizing a corporation to conduct the business and promote the
purposes hereinafter stated, under the provisions and subject to the
requirements of the laws of the State of Delaware hereby certifies that:
I.
The name of this corporation is Repeater Technologies, Inc.
II.
The address of the registered office of the corporation in the State of
Delaware is 9 East Lockerman Street, City of Dover, County of Kent, and the name
of the registered agent of the corporation in the State of Delaware at such
address is National Registered Agents, Inc.
III.
The purpose of this corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of the State of Delaware.
IV.
A. The total number of shares of all classes of stock which the
corporation shall have authority to issue is eighty-four million two hundred ten
thousand seventy-seven (84,210,077) shares, consisting of seventy million
(70,000,000) shares of Common Stock (the "Common") and fourteen million two
hundred ten thousand seventy-seven (14,210,077) shares of Convertible Preferred
Stock (the "Preferred"). The Preferred shall have a par value of one-tenth of
one cent ($.001) per share and the Common shall have a par value of one-tenth of
one cent ($.001) per share.
B. The Preferred may be issued from time to time in one or more series.
Except as provided in this Article IV, the Board of Directors is hereby
authorized, within the limitations and restrictions stated in these Articles, to
fix or alter the dividend rights, dividend rate, conversion rights, voting
rights, rights and terms of redemption (including sinking fund provisions), the
redemption price or prices, the liquidation preferences of any wholly unissued
series of Preferred other than the Series DD Preferred (as defined herein), and
the number of shares constituting any such series and the designation thereof,
or any of them; and to increase or decrease the number of shares of any series
subsequent to the issue of shares of that series, but not below the number of
shares of such series then outstanding. In case the number of shares of any
series shall be so decreased, the shares constituting such decrease shall resume
the status which they had prior to the adoption of the resolution originally
fixing the number of shares of such series. One million two hundred twenty-eight
thousand four hundred nine (1,228,409) of
<PAGE> 2
the authorized shares of the Preferred are hereby designated "Series AA
Preferred" (the "Series AA Preferred"); five million eighty-one thousand six
hundred sixty-eight (5,081,668) of the authorized shares of the Preferred are
hereby designated "Series BB Preferred" (the "Series BB Preferred"); four
million six hundred thousand (4,600,000) of the authorized shares of the
Preferred are hereby designated "Series CC Preferred" (the "Series CC
Preferred") and three million three hundred thousand (3,300,000) of the
authorized shares of the Preferred are hereby designated "Series DD Preferred"
(the "Series DD Preferred").
C. The relative rights, preferences, privileges and restrictions granted
to or imposed upon the corporation's Common, Series AA Preferred, Series BB
Preferred, Series CC Preferred and Series DD Preferred are as follows:
SECTION 1.GENERAL DEFINITIONS. For purposes of these Articles of
Incorporation, the following definitions shall apply:
(a) "PREFERRED" shall refer collectively to the Series AA
Preferred, Series BB Preferred, Series CC Preferred and Series DD Preferred.
(b) "COMMON" shall mean all Common Stock.
(c) "BOARD" or "BOARD OF DIRECTORS" shall mean the Board of
Directors of the corporation.
SECTION 2. DIVIDEND RIGHTS OF PREFERRED. The holders of the Preferred
shall be entitled to receive pari passu, out of any funds legally available
therefor, dividends, when, if and as declared by the Board of Directors, at the
rate of $0.51 per annum on each outstanding share of Series AA Preferred
(appropriately adjusted for any combinations, consolidations, stock
distributions, stock dividends or similar events with respect to such shares
after the date hereof (a "Recapitalization")), $0.264 per annum on each
outstanding share of Series BB Preferred (appropriately adjusted for any
Recapitalization), $0.275 per annum on each outstanding share of Series CC
Preferred (appropriately adjusted for any Recapitalization) and $0.55 per annum
on each outstanding share of Series DD Preferred (appropriately adjusted for any
Recapitalization), payable in preference and priority to any payment of any
dividend on Common, when and as declared by the Board of Directors. After
payment of such dividends, any additional dividends declared shall be
distributed among all holders of Preferred and all holders of Common in
proportion to the number of shares of Common which would be held by each such
holder if all shares of Preferred were converted into Common at the then
effective Conversion Price (as defined in Section 4(a) below). The right to such
dividends on the Preferred shall not be cumulative, and no right shall accrue to
holders of Preferred by reason of the fact that dividends on such shares are not
declared or paid in any prior year.
In the event that the corporation shall have declared but unpaid
dividends outstanding immediately prior to, and in the event of, a conversion of
Preferred (as provided in Section 4 hereof), the corporation shall, at the
option of the holder, pay in cash to the holder(s) of Preferred subject to
conversion the full amount of any such dividends or allow such dividends to be
converted into Common in accordance with, and pursuant to the terms specified
in, Section 4 hereof.
1.
<PAGE> 3
SECTION 3. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up of
the corporation, either voluntary or involuntary, and until all preferential
amounts owed to them under this Section 3(a) have been paid, the holders of the
Preferred shall be entitled to receive pari passu, prior and in preference to
any distribution of any asset or property of the corporation to the holders of
Common by reason of their ownership thereof, an amount per share equal to $5.10
(Five Dollars and Ten Cents), $2.64 (Two Dollars and Sixty-Four Cents), $2.75
(Two Dollars and Seventy-Five Cents) and $5.50 (Five Dollars and Fifty Cents)
for each share of Series AA Preferred, Series BB Preferred, Series CC Preferred
and Series DD Preferred then held by them, respectively, plus an amount equal to
all declared but unpaid dividends on the Series AA Preferred, Series BB
Preferred, Series CC Preferred and Series DD Preferred as of the liquidation
date (each as adjusted for stock splits, combinations and similar events with
respect to the Series AA Preferred, Series BB Preferred, Series CC Preferred or
Series DD Preferred). If upon the occurrence of such an event, the assets and
funds thus distributed among the holders of the Preferred shall be insufficient
to permit the payment to such holders of the full aforesaid preferential amount,
then all of the assets and funds of the corporation legally available for
distribution shall be distributed among the holders of the Preferred in
proportion to the liquidation preference of the shares of Preferred then held by
them.
(b) After the payment of the full liquidation preference of the
Preferred as set forth in Section 3(a) above, the entire remaining assets of the
corporation legally available for distribution, if any, shall be distributed
ratably to the holders of the Common, Series CC Preferred and Series DD
Preferred (on an as-if-converted to Common basis).
(c) For purposes of this Section 3, a liquidation, dissolution or
winding up of the corporation shall be deemed to be occasioned by, and to
include, the corporation's sale of all or substantially all of its assets or the
acquisition of the corporation by another entity by means of merger or
consolidation (other than a consolidation or merger in which the holders of
voting securities of the corporation immediately before the consolidation or
merger own (immediately after the consolidation or merger) voting securities of
the surviving or acquiring corporation, or of a parent party of such surviving
or acquiring corporation, possessing more than fifty percent (50%) of the voting
power of the surviving or acquiring corporation or parent party) resulting in
the exchange of the outstanding shares of the corporation for securities or
consideration issued, or caused to be issued, by the acquiring corporation or
its subsidiary or its parent.
SECTION 4. CONVERSION. THE HOLDERS OF THE PREFERRED SHALL HAVE
CONVERSION RIGHTS AS FOLLOWS (THE "CONVERSION RIGHTS"):
(a) RIGHT TO CONVERT. Each share of Preferred shall be
convertible, at the option of the holder thereof, at any time into such number
of fully paid and nonassessable shares of Common as is determined by dividing,
with respect to the Series AA Preferred, $5.10, with respect to the Series BB
Preferred, $2.64, with respect to the Series CC Preferred, $2.75, and with
respect to the Series DD Preferred, $5.50, by each series' respective Conversion
Price in effect as of the time of conversion. The conversion price for the
Series AA Preferred (the "Series AA Conversion Price") shall initially be $4.26,
the conversion price for the Series BB Preferred (the "Series BB Conversion
Price") shall initially be $2.64, the conversion price for the
2.
<PAGE> 4
Series CC Preferred (the "Series CC Conversion Price") shall initially be $2.75
and the conversion price for the Series DD Preferred (the "Series DD Conversion
Price") shall initially be $5.50 (collectively with the Series AA Conversion
Price, Series BB Conversion Price, Series CC Conversion Price and the Series DD
Conversion Price, the "Conversion Prices"). Such initial Conversion Prices shall
be subject to adjustment as hereinafter provided.
(b) AUTOMATIC CONVERSION. Each share of Series AA Preferred,
Series BB Preferred, Series CC Preferred and Series DD Preferred shall
automatically be converted into shares of Common at the then effective
conversion rate and taking into account declared but unpaid dividends, upon the
affirmative vote of the holders of (i) a majority of the shares of the Series AA
Preferred (with respect to the conversion of the Series AA Preferred), (ii) a
majority of the shares of the Series BB Preferred (with respect to the
conversion of the Series BB Preferred), (iii) at least 66-2/3% of the shares of
the Series CC Preferred (with respect to the conversion of the Series CC
Preferred) or (iv) a majority of the authorized shares of the Series DD
Preferred (with respect to the conversion of the Series DD Preferred), or
immediately upon the closing of a firm commitment underwritten public offering
of shares of Common pursuant to an effective registration statement under the
Securities Act of 1933, as amended, covering the offer and sale of Common of the
corporation for the account of the corporation to the public for an aggregate
offering price of not less than $10,000,000 (before deduction for underwriter
commissions and expenses relating to the issuance) and at a public offering
price per share of at least $10.00 (as adjusted for any Recapitalization).
(c) MECHANICS OF CONVERSION. Before any holder of Preferred shall
be entitled to convert the same into full shares of Common, he shall surrender
the certificate or certificates therefor, duly endorsed, at the office of the
corporation or of any transfer agent for the Preferred, and shall give written
notice to the corporation at such office that he elects to convert the same.
Such notice shall also state whether the holder elects, pursuant to Section 2
hereof, to receive declared but unpaid dividends on the Preferred proposed to be
converted in cash, or to convert such dividends into shares of Common at their
fair market value as determined by the Board. The corporation shall, as soon as
practicable thereafter, issue and deliver at such office to such holder of
Preferred, a certificate or certificates for the number of shares of Common to
which he shall be entitled as aforesaid and a check payable to the holder in the
amount of any cash amounts payable as the result of a conversion into a
fractional share of Common, and any declared but unpaid dividends on the
converted Preferred which the holder elected to receive in cash. Such conversion
shall be deemed to have been made immediately prior to the close of business on
the date of such surrender of the shares of Preferred to be converted, and the
person or persons entitled to receive the shares of Common issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such shares of Common on such date. If the conversion is in connection with an
underwritten public offering of securities registered pursuant to the Securities
Act of 1933, as amended, the conversion shall be conditioned upon the closing of
such public offering, and the person(s) entitled to receive the Common issuable
upon such conversion of the Preferred shall not be deemed to have converted such
Preferred until immediately prior to such closing.
3.
<PAGE> 5
(d) ADJUSTMENTS TO SERIES AA, SERIES BB, SERIES CC AND SERIES DD
CONVERSION PRICE FOR DILUTING ISSUES.
(1) SPECIAL DEFINITIONS. For purposes of this Section 4(d),
the following definitions shall apply:
(a) "OPTIONS" shall mean rights, options, or warrants
to subscribe for, purchase or otherwise acquire either Common or Convertible
Securities.
(b) "ORIGINAL ISSUE DATE" shall mean, with respect to a
series of Preferred, the date on which a share of Series AA Preferred, Series BB
Preferred, Series CC Preferred and Series DD Preferred was first issued, which,
in the case of the Series DD Preferred, shall be deemed to be the date on which
a security convertible into Series DD Preferred was issued.
(c) "CONVERTIBLE SECURITIES" shall mean any evidences
of indebtedness, shares (other than Series AA Preferred, Series BB Preferred,
Series CC Preferred or Series DD Preferred) or other securities convertible into
or exchangeable for Common.
(d) "ADDITIONAL SHARES OF COMMON" shall mean all shares
of Common issued (or, pursuant to Section 4(d)(3), deemed to be issued) by the
corporation after the Original Issue Date, other than shares of Series BB
Preferred and securities convertible into Series BB Preferred which have been
issued as of the date hereof, and other shares of Common issued or issuable:
(i) upon conversion of outstanding shares of
Series AA Preferred, Series BB Preferred, Series CC Preferred and Series DD
Preferred;
(ii) up to 4,025,000 shares issuable to officers,
directors or employees of, or consultants to, the corporation pursuant to stock
option or stock purchase plans approved by the Board of Directors;
(iii) as a dividend or distribution on any of the
Series AA Preferred, Series BB Preferred , Series CC Preferred or Series DD
Preferred;
(iv) for which adjustment of the Conversion Price
is made pursuant to Section 4(e)(1);
(v) in connection with warrants issued as part of
any debt or lease financing transaction approved by the Board of Directors of
the corporation;
(vi) in connection with the exercise of
outstanding warrants; or
(vii) by way of dividend or other distribution on
shares excluded from the definition of Additional Shares of Common by the
foregoing clauses (i), (ii), (iii), (iv), (v), (vi) or this clause (vii);
4.
<PAGE> 6
(2) NO ADJUSTMENT OF CONVERSION PRICE. No adjustment in the
Series AA Conversion Price, Series BB Conversion Price, Series CC Conversion
Price or Series DD Conversion Price of a particular share of Series AA
Preferred, Series BB Preferred, Series CC Preferred or Series DD Preferred,
respectively, shall be made in respect of the issuance of Additional Shares of
Common unless the consideration per share for an Additional Share of Common
issued or deemed to be issued by the corporation is less than the Series AA
Conversion Price, Series BB Conversion Price, Series CC Conversion Price or
Series DD Conversion Price, as the case may be, in effect on the date of, and
immediately prior to such issue, for such share of Series AA Preferred, Series
BB Preferred, Series CC Preferred or Series DD Preferred.
(3) DEEMED ISSUE OF ADDITIONAL SHARES OF COMMON. In the
event the corporation at any time or from time to time after the Original Issue
Date shall issue any Options or Convertible Securities or shall fix a record
date for the determination of holders of any class of securities then entitled
to receive any such Options or Convertible Securities, then the maximum number
of Additional Shares of Common (as set forth in the instrument relating thereto
without regard to any provisions contained therein designed to protect against
dilution) issuable upon the exercise of such Options or, in the case of
Convertible Securities and Options therefor, the conversion or exchange of such
Convertible Securities, shall be deemed to be Additional Shares of Common issued
as of the time of such issue or, in case such a record date shall have been
fixed, as of the close of business on such record date, provided that Additional
Shares of Common shall not be deemed to have been issued unless the
consideration per share (determined pursuant to Section 4(d)(5) hereof) of such
Additional Shares of Common would be less than the Series AA Conversion Price,
Series BB Conversion Price, Series CC Conversion Price or Series DD Conversion
Price, as the case may be, in effect on the date of and immediately prior to
such issue, or such record date, as the case may be, and provided further that
in any such case in which Additional Shares of Common are deemed to be issued:
(a) no further adjustments in the Series AA Conversion
Price, Series BB Conversion Price, Series CC Conversion Price or Series DD
Conversion Price shall be made upon the subsequent issue of Convertible
Securities or shares of Common upon the exercise of such Options or conversion
or exchange of such Convertible Securities;
(b) if such Options or Convertible Securities by their
terms provide, with the passage of time or otherwise, for any increase in the
consideration payable to the corporation, or decrease in the number of shares of
Common issuable, upon the exercise, conversion or exchange thereof, the Series
AA Conversion Price, Series BB Conversion Price, Series CC Conversion Price or
Series DD Conversion Price computed upon the original issue thereof (or upon the
occurrence of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon any such increase or decrease becoming
effective, be recomputed to reflect such increase or decrease insofar as it
affects such Options or the rights of conversion or exchange under such
Convertible Securities (provided, however, that no such adjustment of the Series
AA Conversion Price, Series BB Conversion Price, Series CC Conversion Price or
Series DD Conversion Price shall affect Common previously issued upon conversion
of the Preferred);
(c) upon the expiration of any such Options or any
rights of conversion or exchange under such Convertible Securities which shall
not have been exercised,
5.
<PAGE> 7
the Series AA Conversion Price, Series BB Conversion Price, Series CC Conversion
Price or Series DD Conversion Price computed upon the original issue thereof (or
upon the occurrence of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon such expiration, be recomputed as if:
(i) in the case of Convertible Securities or
Options for Common the only Additional Shares of Common issued were the shares
of Common, if any, actually issued upon the exercise of such Options or the
conversion or exchange of such Convertible Securities and the consideration
received therefor was the consideration actually received by the corporation for
the issue of all such Options, whether or not exercised, plus the consideration
actually received by the corporation upon such exercise, or for the issue of all
such Convertible Securities which were actually converted or exchanged, plus the
additional consideration, if any, actually received by the corporation upon such
conversion or exchange, and
(ii) in the case of Options for Convertible
Securities, only the Convertible Securities, if any, actually issued upon the
exercise thereof were issued at the time of issue of such Options and the
consideration received by the corporation for the Additional Shares of Common
deemed to have been then issued was the consideration actually received by the
corporation for the issue of all such Options, whether or not exercised, plus
the consideration deemed to have been received by the corporation (determined
pursuant to Section 4(d)(5)) upon the issue of the Convertible Securities with
respect to which such Options were actually exercised;
(d) no readjustment pursuant to clauses (b) or (c)
above shall have the effect of increasing the Series AA Conversion Price, Series
BB Conversion Price, Series CC Conversion Price or Series DD Conversion Price to
an amount which exceeds the lower of (i) such Conversion Price, as the case may
be, on the original adjustment date, or (ii) such Conversion Price, as the case
may be, that would have resulted from any issuance of Additional Shares of
Common between the original adjustment date and such readjustment date;
(e) in the case of any Options which expire by their
terms not more than 30 days after the date of issue thereof, no adjustment of
the Series AA Conversion Priced, Series BB Conversion Price, Series CC
Conversion Price or Series DD Conversion Price shall be made, except as to
shares of Preferred converted in such period, until the expiration or exercise
of all such Options, whereupon such adjustment shall be made in the same manner
provided in clause (c) above; and
(f) if any such record date shall have been fixed and
such Options or Convertible Securities are not issued on the date fixed thereof,
the adjustment previously made in the Series AA Conversion Price, Series BB
Conversion Price, Series CC Conversion Price or Series DD Conversion Price which
became effective on such record date shall be canceled as of the close of
business on such record date, and shall instead be made on the actual date of
issuance, if any.
(4) ADJUSTMENT OF CONVERSION PRICE UPON ISSUANCE OF
ADDITIONAL SHARES OF COMMON. In the event the corporation shall issue Additional
Shares of Common
6.
<PAGE> 8
(including Additional Shares of Common deemed to be issued pursuant to Section
4(d)(3)) without consideration or for a consideration per share less than the
Series AA Conversion Price, Series BB Conversion Price, Series CC Conversion
Price or Series DD Conversion Price in effect on the date of and immediately
prior to such issue, then and in such event, such Series AA Conversion Price,
Series BB Conversion Price, Series CC Conversion Price or Series DD Conversion
Price, as the case may be, shall be reduced, concurrently with such issue, to a
price (calculated to the nearest cent) determined by multiplying such Series AA
Conversion Price, Series BB Conversion Price, Series CC Conversion Price or
Series DD Conversion Price, as the case may be, by a fraction, the numerator of
which shall be the number of shares of Common outstanding immediately prior to
such issuance (including for this purpose the number of shares of Common
issuable upon conversion of the shares of Preferred outstanding immediately
prior to such issue) plus the number of shares of Common which the aggregate
consideration received by the corporation for the total number of Additional
Shares of Common so issued would purchase at such Series AA Conversion Price,
Series BB Conversion Price, Series CC Conversion Price or Series DD Conversion
Price, as the case may be, and the denominator of which shall be the number of
shares of Common outstanding immediately prior to such issuance (including for
this purpose the number of shares of Common issuable upon conversion of the
shares of Preferred outstanding immediately prior to such issue) plus the number
of such Additional Shares of Common so issued; provided, however, that prior to
18 months after the Original Issue Date of the Series CC Preferred or Series DD
Preferred, as applicable, any such reduction of the Series CC Conversion Price
or Series DD Conversion Price shall instead be to the price per share of such
Additional Shares of Common issued or deemed issued.
(5) DETERMINATION OF CONSIDERATION. For purposes of this
Section 4(d), the consideration received by the corporation for the issue of any
Additional Shares of Common shall be computed as follows:
(a) CASH AND PROPERTY. Such consideration shall:
(i) insofar as it consists of cash, be computed at
the aggregate amount of cash paid therefor, prior to deducting any discounts,
commissions or other expenses allowed, paid or incurred by the corporation but
excluding any amounts paid or payable for accrued interest or accrued dividends;
(ii) insofar as it consists of property other than
cash, be computed at the fair value thereof at the time of such issue, as
determined in good faith by the Board of Directors; and
(iii) in the event Additional Shares of Common are
issued together with other shares or securities or other assets of the
corporation for consideration which covers both, be the proportion of such
consideration so received, computed as provided in clauses (i) and (ii) above,
as determined in good faith by the Board of Directors.
(b) OPTIONS AND CONVERTIBLE SECURITIES. The
consideration per share received by the corporation for Additional Shares of
Common deemed to have been issued pursuant to Section 4(d)(3), relating to
Options and Convertible Securities, shall be determined by dividing:
7.
<PAGE> 9
(i) the total amount, if any, received or
receivable by the corporation as consideration for the issue of such Options or
Convertible Securities, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating thereto, without regard
to any provision contained therein designed to protect against dilution) payable
to the corporation upon the exercise of such Options or the conversion or
exchange of such Convertible Securities, or in the case of Options for
Convertible Securities, the exercise of such Options for Convertible Securities
and the conversion or exchange of such Convertible Securities by
(ii) the maximum number of shares of Common (as
set forth in the instruments relating thereto, without regard to any provision
contained therein designed to protect against dilution) issuable upon the
exercise of such Options or the conversion or exchange of such Convertible
Securities.
(e) CONVERSION PRICE ADJUSTMENTS OF PREFERRED. The Series AA
Conversion Price, Series BB Conversion Price, Series CC Conversion Price and
Series DD Conversion Price shall be subject to adjustment from time to time as
follows:
(1) ADJUSTMENTS FOR COMBINATIONS OR SUBDIVISIONS OF COMMON.
In the event the corporation at any time or from time to time after the Original
Issue Date shall declare or pay any dividend on the Common payable in Common or
in any right to acquire Common, or shall effect a subdivision of the outstanding
shares of Common into a greater number of shares of Common (by stock split,
reclassification or otherwise), or in the event the outstanding shares of Common
shall be combined or consolidated, by reclassification or otherwise, into a
lesser number of shares of Common, then the Conversion Prices of the Preferred
in effect immediately prior to such event shall, concurrently with the
effectiveness of such event, be proportionately decreased or increased, as
appropriate.
(2) OTHER DISTRIBUTIONS. In the event the corporation shall
at any time or from time to time after the Original Issue Date make or issue, or
fix a record date for the determination of holders of Common entitled to
receive, a dividend or other distribution payable in securities of the
corporation or any of it subsidiaries other than Additional Shares of Common,
then in each such event provision shall be made so that the holders of Preferred
shall receive, upon the conversion thereof, the securities of the corporation
which they would have received had their stock been converted into Common on the
date of such event.
(3) ADJUSTMENTS. After the Original Issuance Date, in case
of any reorganization or any reclassification of the capital stock of the
corporation, or, subject to Section 3(c) above, which shall control in the
circumstances specified therein, any consolidation or merger of the corporation
with or into another corporation or corporations, or the conveyance of all or
substantially all of the assets of the corporation to another corporation, each
share of Preferred shall thereafter be convertible into the number of shares of
stock or other securities or property (including cash) to which a holder of the
number of shares of Common deliverable upon conversion of such share of
Preferred would have been entitled upon the record date of (or date of, if no
record date is fixed) such reorganization, reclassification, consolidation,
merger or conveyance; and, in any case, appropriate adjustment (as determined by
the Board of Directors) shall be made in the application of the provisions
herein set forth with respect to the rights and
8.
<PAGE> 10
interests thereafter of the holders of such Preferred, to the end that the
provisions set forth herein shall thereafter be applicable, as nearly as
equivalent as is practicable, in relation to any shares of stock or the
securities or property (including cash) thereafter deliverable upon the
conversion of the shares of such Preferred.
(f) NO IMPAIRMENT. The corporation will not, by amendment of its
Articles of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the corporation, but will at
all times in good faith assist in the carrying out of all the provisions of this
Section 4 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Preferred against impairment.
(g) CERTIFICATES AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the Series AA Conversion Price, Series BB
Conversion Price, Series CC Conversion Price or Series DD Conversion Price
pursuant to this Section 4, the corporation at its expense shall promptly
compute such adjustment or readjustment in accordance with the terms hereof and
furnish to each holder of Preferred a certificate setting forth such adjustment
or readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The corporation shall, upon the written request at any
time of any holder of Preferred, furnish or cause to be furnished to such holder
a like certificate setting forth (i) such adjustments and readjustments, (ii)
the applicable Conversion Price at the time in effect and (iii) the number of
shares of Common and the amount, if any, of other property which at the time
would be received upon the conversion of Preferred.
(h) NOTICES OF RECORD DATE. In the event that the corporation
shall propose at any time:
(1) to declare any Common dividend or distribution, whether
in cash, property, stock or other securities, whether or not a regular cash
dividend and whether or not out of earnings or earned surplus;
(2) to offer for subscription pro rata to the holders of any
class or series of its stock any additional shares of stock of any class or
series or other rights;
(3) to effect any reclassification or recapitalization of
outstanding shares of its Common which involve a change in the Common; or
(4) to merge or consolidate with or into any other
corporation, or sell, lease or convey all or substantially all its property or
business, or to liquidate, dissolve or wind up; then, in connection with each
such event, the corporation shall send to the holders of the Preferred:
(a) at least 20 days' prior written notice of the
record date for such dividend, distribution or subscription rights (and
specifying the date on which the holders of shares of Common shall be entitled
thereto) or for determining rights to vote in respect of the matters referred to
in subsections 4(h)(iii) and (iv) above; and
9.
<PAGE> 11
(b) in the case of the matters referred to in
subsections 4(h)(iii) and (iv) above, at least 20 days' prior written notice of
the date when the same shall take place (and specifying the date on which the
holders of shares of Common shall be entitled to exchange their shares of Common
for securities or other property deliverable upon the occurrence of such event).
Each such written notice shall be given by first class mail, postage
prepaid, addressed to the holders of Preferred at the address for each such
holder as shown on the books of the corporation.
(i) ISSUE TAXES. The corporation shall pay any and all issue and
other taxes, excluding federal, state or local income taxes, that may be payable
in respect of any issue or delivery of shares of Common on conversion of shares
of Preferred pursuant hereto; provided, however, that the corporation shall not
be obligated to pay any transfer taxes resulting from any transfer requested by
any holder in connection with any such conversion.
(j) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The
corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common, solely for the purpose of effecting the
conversion of the shares of the Preferred, such number of its shares of Common
as shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Preferred, and if at any time the number of authorized
but unissued shares of Common shall not be sufficient to effect the conversion
of all then outstanding shares of the Preferred, the corporation will take such
corporate action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Common to such number of shares as shall
be sufficient for such purpose, including, without limitation, engaging in best
efforts to obtain the requisite stockholder approval of any necessary amendment
to these Articles.
(k) FRACTIONAL SHARES. No fractional share shall be issued upon
the conversion of any share or shares of the Preferred. All shares of Common
(including fractions thereof) issuable upon conversion of more than one share of
Series AA Preferred, Series BB Preferred, Series CC Preferred and Series DD
Preferred by a holder thereof shall be aggregated for purposes of determining
whether the conversion would result in the issuance of any fractional share. If,
after the aforementioned aggregation, the conversion would result in the
issuance of a fraction of a share of Common, the corporation shall, in lieu of
issuing any fractional share, pay the holder otherwise entitled to such fraction
a sum in cash equal to the fair market value of such fraction on the date of
conversion (as determined in good faith by the Board of Directors of the
corporation).
(l) NOTICES. Any notice required by the provisions of this
Section 4 to be given to the holders of shares of Preferred shall be deemed
given if deposited in the United States mail, postage prepaid, and addressed to
each holder of record at its address appearing on the books of the corporation.
10.
<PAGE> 12
SECTION 5. VOTING RIGHTS AND DIRECTORS.
(a) VOTE OTHER THAN FOR DIRECTORS. Except as otherwise required
by law and as provided in section (b) below with respect to the election of
directors, the holders of Preferred and the holders of Common shall be entitled
to notice of any stockholders' meetings and to vote as a single class upon any
matter submitted to the stockholders for a vote, as follows:
(1) the holders of Preferred shall have one vote for each
full share of Common into which their respective shares of Preferred would be
convertible on the record date for the vote; and
(2) the holders of Common have one vote per share of Common.
(b) VOTING FOR DIRECTORS. The members of the Board of Directors
shall be elected as follows: (i) holders of the Series AA Preferred shall be
entitled to elect one member of the Board of Directors at or pursuant to each
meeting or consent of the corporation's stockholders for the election of
directors, and to remove from office such director and to fill any vacancy
caused by the resignation, death or removal of such director; (ii) holders of
the Series BB Preferred shall be entitled to elect two members of the Board of
Directors at or pursuant to each meeting or consent of the corporation's
stockholders for the election of directors, and to remove from office such
directors and to fill any vacancy caused by the resignation, death or removal of
such directors; (iii) holders of the Series CC Preferred shall be entitled to
elect one member of the Board of Directors at or pursuant to each meeting or
consent of the corporation's stockholders for the election of directors, and to
remove from office such director and to fill any vacancy caused by the
resignation, death or removal of such director, (iv) holders of the Common shall
be entitled to elect two members of the Board of Directors at or pursuant to
each meeting or consent of the corporation's stockholders for the election of
directors, and to remove from office such directors and to fill any vacancy
caused by the resignation, death or removal of such directors; and (iv) holders
of the Common, Series AA Preferred, Series BB Preferred, Series CC Preferred and
Series DD Preferred, voting together, shall be entitled to elect the balance of
directors, if any, at or pursuant to each meeting or consent of the
corporation's stockholders for the election of directors, and to remove from
office such directors and to fill any vacancy caused by the resignation, death
or removal of such directors.
SECTION 6. COVENANTS.
(a) In addition to any other rights provided by law, (i) so long
as an aggregate of at least 1,187,500 shares of Series AA Preferred and Series
BB Preferred remain outstanding (appropriately adjusted for any
Recapitalization) the corporation shall not, without first obtaining the
affirmative vote or written consent of the holders of not less than a majority
of such outstanding shares of Series AA Preferred and Series BB Preferred,
voting together as a class, (ii) so long as an aggregate of at least 1,500,000
shares of Series CC Preferred remain outstanding (appropriately adjusted for any
Recapitalization), the corporation shall not, without first obtaining the
affirmative vote or written consent of the holders of not less than 55% of such
outstanding shares of Series CC Preferred, and (iii) so long as an aggregate of
at least 900,000 shares of Series DD Preferred remain outstanding (appropriately
adjusted for any
11.
<PAGE> 13
Recapitalization), the corporation shall not, without first obtaining the
affirmative vote or written consent of the holders of not less than 50% of such
outstanding shares of Series DD Preferred:
(1) Any amendment, alteration, or repeal of any provision of
the Articles of Incorporation or the Bylaws of the corporation (including any
filing of a Certificate of Designation), that affects adversely the voting
powers, preferences, or other special rights or privileges, qualifications,
limitations, or restrictions of the Preferred;
(2) Any increase or decrease (other than by redemption or
conversion) in the authorized number of shares of Common or Preferred;
(3) Any authorization or any designation, whether by
reclassification or otherwise, of any new class or series of stock or any other
securities convertible into equity securities of the corporation ranking on a
parity with or senior to the Preferred in right of redemption, liquidation
preference, voting or dividends or any increase in the authorized or designated
number of any such new class or series;
(4) Any redemption, repurchase, payment of dividends or
other distributions with respect to Common or Preferred (except for acquisitions
of Common by the corporation pursuant to agreements which permit the company to
repurchase such shares upon termination of services to the corporation or in
exercise of the corporation's right of first refusal upon a proposed transfer);
(5) Any action that results in the payment or declaration of
a dividend on any shares of Common or Preferred; or
(6) Any voluntary dissolution or liquidation of (or so
deemed pursuant to Section 3(c) above) the corporation.
SECTION 7. STATUS OF CONVERTED STOCK. In the event any shares of
Preferred shall be converted pursuant to Section 4 hereof, the shares so
converted shall be canceled and shall not be issuable by the corporation.
SECTION 8. RESIDUAL RIGHTS. All rights accruing to the outstanding
shares of the corporation not expressly provided for to the contrary herein
shall be vested in the Common.
SECTION 9. CONSENT FOR CERTAIN REPURCHASES OF COMMON DEEMED TO BE
DISTRIBUTIONS. Each holder of Preferred shall be deemed to have consented, for
purposes of Section 502, 503 and 506 of the California Corporations Code, to
distributions made by the corporation in connection with the repurchase of
shares of Common issued to or held by employees or consultants upon termination
of their employment or services or pursuant to agreements providing for the
right of said repurchase between the corporation and such persons.
V.
For the management of the business and for the conduct of the affairs of
the corporation, and in further definition, limitation and regulation of the
powers of the corporation, of its
12.
<PAGE> 14
directors and of its stockholders or any class thereof, as the case may be, it
is further provided that:
A. The management of the business and the conduct of the affairs of the
corporation shall be vested in its Board of Directors. The number of directors
which shall constitute the whole Board of Directors shall be fixed exclusively
by one or more resolutions adopted by the Board of Directors.
B. Subject to the rights of the holders of any series of Preferred Stock
to elect additional directors under specified circumstances, following the
closing of the initial public offering pursuant to an effective registration
statement under the Securities Act of 1933, as amended (the "1993 Act"),
covering the offer and sale of Common Stock to the public (the "Initial Public
Offering"), the directors shall be divided into three classes designated as
Class I, Class II and Class III, respectively. Directors shall be assigned to
each class in accordance with a resolution or resolutions adopted by the Board
of Directors. At the first annual meeting of stockholders following the closing
of the Initial Public Offering, the term of office of the Class I directors
shall expire and Class I directors shall be elected for a full term of three
years. At the second annual meeting of stockholders following the Initial Public
Offering, the term of office of the Class II directors shall expire and Class II
directors shall be elected for a full term of three years. At the third annual
meeting of stockholders following the Initial Public Offering, the term of
office of the Class III directors shall expire and Class III directors shall be
elected for a full term of three years. At each succeeding annual meeting of
stockholders, directors shall be elected for a full term of three years to
succeed the directors of the class whose terms expire at such annual meeting.
During such time or times that the corporation is subject to Section 2115(b) of
the California General Corporation Law ("CGCL"), this paragraph B of this
Article V shall become effective and be applicable only when the corporation is
a "listed" corporation within the meaning of Section 301.5 of the CGCL.
C. In the event that the corporation is unable to have a classified
board under applicable law, Section 301.5 of the CGCL, paragraph B of this
Article V shall not apply and all directors shall be elected at each annual
meeting of stockholders to hold office until the next annual meeting.
D. No stockholder entitled to vote at an election for directors may
cumulate votes to which such stockholder is entitled, unless, at the time of
such election, the corporation (i) is subject to Section 2115(b) of the CGCL and
(ii) is not or ceases to be a "listed" corporation under Section 301.5 of the
CGCL. During this time, every stockholder entitled to vote at an election for
directors may cumulate such stockholder's votes and give one candidate a number
of votes equal to the number of directors to be elected multiplied by the number
of votes to which such stockholder's shares are otherwise entitled, or
distribute the stockholder's votes on the same principle among as many
candidates as such stockholder thinks fit. No stockholder, however, shall be
entitled to so cumulate such stockholder's votes unless (i) the names of such
candidate or candidates have been placed in nomination prior to the voting and
(ii) the stockholder has given notice at the meeting, prior to the voting, of
such stockholder's intention to cumulate such stockholder's votes. If any
stockholder has given proper notice to cumulate votes, all stockholders may
cumulate their votes for any candidates who have been properly placed in
13.
<PAGE> 15
nomination. Under cumulative voting, the candidates receiving the highest number
of votes, up to the number of directors to be elected, are elected.
Notwithstanding the foregoing provisions of this section, each director
shall serve until his successor is duly elected and qualified or until his
death, resignation or removal. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.
E. REMOVAL OF DIRECTORS
SECTION 1. During such time or times that the corporation is subject to
Section 2115(b) of the CGCL, the Board of Directors or any individual director
may be removed from office at any time without cause by the affirmative vote of
the holders of at least a majority of the outstanding shares entitled to vote on
such removal; provided, however, that unless the entire Board is removed, no
individual director may be removed when the votes cast against such director's
removal, or not consenting in writing to such removal, would be sufficient to
elect that director if voted cumulatively at an election which the same total
number of votes were cast (or, if such action is taken by written consent, all
shares entitled to vote were voted) and the entire number of directors
authorized at the time of such director's most recent election were then being
elected.
SECTION 2. At any time or times that the corporation is not subject to
Section 2115(b) of the CGCL and subject to any limitations imposed by law,
Section 1 shall no longer apply and removal shall be as provided in Section
141(k) of the DGCL.
F. VACANCIES
SECTION 1. Subject to the rights of the holders of any series of
Preferred Stock, any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other causes and any newly created
directorships resulting from any increase in the number of directors, shall,
unless the Board of Directors determines by resolution that any such vacancies
or newly created directorships shall be filled by the stockholders, except as
otherwise provided by law, be filled only by the affirmative vote of a majority
of the directors then in office, even though less than a quorum of the Board of
Directors, and not by the stockholders. Any director elected in accordance with
the preceding sentence shall hold office for the remainder of the full term of
the director for which the vacancy was created or occurred and until such
director's successor shall have been elected and qualified.
SECTION 2. If at the time of filling any vacancy or any newly created
directorship, the directors then in office shall constitute less than a majority
of the whole board (as constituted immediately prior to any such increase), the
Delaware Court of Chancery may, upon application of any stockholder or
stockholders holding at least ten percent (10%) of the total number of the
shares at the time outstanding having the right to vote for such directors,
summarily order an election to be held to fill any such vacancies or newly
created directorships, or to replace the directors chosen by the directors then
in offices as aforesaid, which election shall be governed by Section 211 of the
DGCL.
14.
<PAGE> 16
SECTION 3. At any time or times that the corporation is subject to
Section 2115(b) of the CGCL, if, after the filling of any vacancy by the
directors then in office who have been elected by stockholders shall constitute
less than a majority of the directors then in office, then
(a) Any holder or holders of an aggregate of five percent (5%) or
more of the total number of shares at the time outstanding having the right to
vote for those directors may call a special meeting of stockholders; or
(b) The Superior Court of the proper county shall, upon
application of such stockholder or stockholders, summarily order a special
meeting of stockholders, to be held to elect the entire board, all in accordance
with Section 305(c) of the CGCL. The term of office of any director shall
terminate upon that election of a successor.
G. Subject to paragraph (h) of Section 43 of the Bylaws, the Bylaws may
be altered or amended or new Bylaws adopted by the affirmative vote of at least
sixty-six and two-thirds percent (66-2/3%) of the voting power of all of the
then-outstanding shares of the voting stock of the corporation entitled to vote.
The Board of Directors shall also have the power to adopt, amend, or repeal
Bylaws.
SECTION 1. The directors of the corporation need not be elected by
written ballot unless the Bylaws so provide.
SECTION 2. No action shall be taken by the stockholders of the
corporation except at an annual or special meeting of stockholders called in
accordance with the Bylaws or by written consent of stockholders in accordance
with the Bylaws prior to the closing of the Initial Public Offering and
following the closing of the Initial Public Offering no action shall be taken by
the stockholders by written consent.
SECTION 3. Advance notice of stockholder nominations for the election of
directors and of business to be brought by stockholders before any meeting of
the stockholders of the corporation shall be given in the manner provided in the
Bylaws of the corporation.
VI.
A. The liability of the directors for monetary damages shall be
eliminated to the fullest extent under applicable law.
B. This corporation is authorized to provide indemnification of agents
(as defined in Section 317 of the CGCL) for breach of duty to the corporation
and its stockholders through bylaw provisions or through agreements with the
agents, or through stockholder resolutions, or otherwise, in excess of the
indemnification otherwise permitted by Section 317 of the CGCL, subject, at any
time or times the corporation is subject to Section 2115(b), to the limits on
such excess indemnification set forth in Section 204 of the CGCL.
C. Any repeal or modification of this Article VI shall be prospective
and shall not affect the rights under this Article VI in effect at the time of
the alleged occurrence of any act or omission to act giving rise to liability or
indemnification.
15.
<PAGE> 17
VII.
A. The corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, except as provided in paragraph B of this
Article VII, and all rights conferred upon the stockholders herein are granted
subject to this reservation.
B. Notwithstanding any other provisions of this Certificate of
Incorporation or any provision of law which might otherwise permit a lesser vote
or no vote, but in addition to any affirmative vote of the holders of any
particular class or series of the voting stock required by law, this Certificate
of Incorporation or any Preferred Stock Designation, the affirmative vote of the
holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting
power of all of the then-outstanding shares of the voting stock, voting together
as a single class, shall be required to alter, amend or repeal Articles V, VI,
and VII.
VIII.
The name and the mailing address of the Sole Incorporator is as follows:
Aaron D. Schapiro
Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94603
IN WITNESS WHEREOF, this Certificate has been subscribed this 11th day
of February, 2000 by the undersigned who affirms that the statements made herein
are true and correct.
/s/ AARON D. SCHAPIRO
----------------------------
Aaron D. Schapiro
Sole Incorporator
16.
<PAGE> 1
EXHIBIT 3.2
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
REPEATER TECHNOLOGIES, INC.
Kenneth L. Kenitzer hereby certifies that:
ONE: The date of filing the original Certificate of Incorporation of
this corporation with the Secretary of State of the State of Delaware was
February 11, 2000.
TWO: He is the duly elected and acting President of Repeater
Technologies, Inc., a Delaware corporation.
THREE: The Certificate of Incorporation of this corporation is hereby
amended and restated to read as follows:
I.
The name of this corporation is REPEATER TECHNOLOGIES, INC.
II.
The address of the registered office of the corporation in the State of
Delaware is 9 East Lockerman Street, City of Dover, County of Kent, and the
name of the registered agent of the corporation in the State of Delaware at such
address is National Registrered Agents, Inc.
III.
The purpose of this corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of the State of Delaware.
IV.
A. This corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total number
of shares which the corporation is authorized to issue is Seventy-Five Million
(75,000,000) shares. Seventy Million (70,000,000) shares shall be Common Stock,
each having a par value of one-tenth of one cent ($.001). Five Million
(5,000,000) shares shall be Preferred Stock, each having a par value of
one-tenth of one cent ($.001).
B. The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized, by filing a certificate (a
"Preferred Stock Designation") pursuant to the Delaware General Corporation Law
("DGCL"), to fix or alter from time to time the designation, powers, preferences
and rights of the shares of each such series and the qualifications, limitations
or restrictions of any wholly unissued series of Preferred Stock, and to
establish from time to time the number of shares constituting any such series or
any of them; and to increase or decrease the number of shares of any series
subsequent to the issuance of shares of that series, but not below the number of
shares of such series then outstanding. In case the
1.
<PAGE> 2
number of shares of any series shall be decreased in accordance with the
foregoing sentence, the shares constituting such decrease shall resume the
status that they had prior to the adoption of the resolution originally fixing
the number of shares of such series.
V.
For the management of the business and for the conduct of the affairs of
the corporation, and in further definition, limitation and regulation of the
powers of the corporation, of its directors and of its stockholders or any class
thereof, as the case may be, it is further provided that:
A. The management of the business and the conduct of the affairs of the
corporation shall be vested in its Board of Directors. The number of directors
which shall constitute the whole Board of Directors shall be fixed exclusively
by one or more resolutions adopted by the Board of Directors.
B. Subject to the rights of the holders of any series of Preferred Stock
to elect additional directors under specified circumstances, the directors shall
be divided into three classes designated as Class I, Class II and Class III,
respectively. Directors shall be assigned to each class in accordance with a
resolution or resolutions adopted by the Board of Directors. At the first annual
meeting of stockholders following the closing of the initial public offering
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1993 Act"), covering the offer and sale of Common Stock
to the public (the "Initial Public Offering"), the term of office of the Class I
directors shall expire and Class I directors shall be elected for a full term of
three years. At the second annual meeting of stockholders following the Initial
Public Offering, the term of office of the Class II directors shall expire and
Class II directors shall be elected for a full term of three years. At the third
annual meeting of stockholders following the Initial Public Offering, the term
of office of the Class III directors shall expire and Class III directors shall
be elected for a full term of three years. At each succeeding annual meeting of
stockholders, directors shall be elected for a full term of three years to
succeed the directors of the class whose terms expire at such annual meeting.
During such time or times that the corporation is subject to Section 2115(b) of
the California General Corporation Law ("CGCL"), this Paragraph B of this
Article V shall become effective and be applicable only when the corporation is
a "listed" corporation within the meaning of Section 301.5 of the CGCL.
C. In the event that the corporation is unable to have a classified
board under applicable law, including Section 301.5 of the CGCL, Paragraph B of
this Article V shall not apply and all directors shall be elected at each annual
meeting of stockholders to hold office until the next annual meeting.
D. No stockholder entitled to vote at an election for directors may
cumulate votes to which such stockholder is entitled, unless, at the time of
such election, the corporation (i) is subject to Section 2115(b) of the CGCL and
(ii) is not or ceases to be a "listed" corporation under Section 301.5 of the
CGCL. During this time, every stockholder entitled to vote at an election for
directors may cumulate such stockholder's votes and give one candidate a number
of votes equal to the number of directors to be elected multiplied by the number
of votes to which
2.
<PAGE> 3
such stockholder's shares are otherwise entitled, or distribute the
stockholder's votes on the same principle among as many candidates as such
stockholder thinks fit. No stockholder, however, shall be entitled to so
cumulate such stockholder's votes unless (i) the names of such candidate or
candidates have been placed in nomination prior to the voting and (ii) the
stockholder has given notice at the meeting, prior to the voting, of such
stockholder's intention to cumulate such stockholder's votes. If any stockholder
has given proper notice to cumulate votes, all stockholders may cumulate their
votes for any candidates who have been properly placed in nomination. Under
cumulative voting, the candidates receiving the highest number of votes, up to
the number of directors to be elected, are elected.
Notwithstanding the foregoing provisions of this section, each director
shall serve until his successor is duly elected and qualified or until his
death, resignation or removal. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.
E. REMOVAL OF DIRECTORS
1. During such time or times that the corporation is subject to
Section 2115(b) of the CGCL, the Board of Directors or any individual director
may be removed from office at any time without cause by the affirmative vote of
the holders of at least a majority of the outstanding shares entitled to vote on
such removal; provided, however, that unless the entire Board is removed, no
individual director may be removed when the votes cast against such director's
removal, or not consenting in writing to such removal, would be sufficient to
elect that director if voted cumulatively at an election which the same total
number of votes were cast (or, if such action is taken by written consent, all
shares entitled to vote were voted) and the entire number of directors
authorized at the time of such director's most recent election were then being
elected.
2. At any time or times that the corporation is not subject to
Section 2115(b) of the CGCL and subject to any limitations imposed by law,
Section E.1 above shall no longer apply and removal shall be as provided in
Section 141(k) of the DGCL.
F. VACANCIES
1. Subject to the rights of the holders of any series of Preferred
Stock, any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other causes and any newly created
directorships resulting from any increase in the number of directors, shall,
unless the Board of Directors determines by resolution that any such vacancies
or newly created directorships shall be filled by the stockholders, except as
otherwise provided by law, be filled only by the affirmative vote of a majority
of the directors then in office, even though less than a quorum of the Board of
Directors, and not by the stockholders. Any director elected in accordance with
the preceding sentence shall hold office for the remainder of the full term of
the director for which the vacancy was created or occurred and until such
director's successor shall have been elected and qualified.
2. If at the time of filling any vacancy or any newly created
directorship, the directors then in office shall constitute less than a majority
of the whole board (as constituted
3.
<PAGE> 4
immediately prior to any such increase), the Delaware Court of Chancery may,
upon application of any stockholder or stockholders holding at least ten percent
(10%) of the total number of the shares at the time outstanding having the right
to vote for such directors, summarily order an election to be held to fill any
such vacancies or newly created directorships, or to replace the directors
chosen by the directors then in offices as aforesaid, which election shall be
governed by Section 211 of the DGCL.
3. At any time or times that the corporation is subject to Section
2115(b) of the CGCL, if, after the filling of any vacancy by the directors then
in office who have been elected by stockholders shall constitute less than a
majority of the directors then in office, then
a. Any holder or holders of an aggregate of five percent (5%) or
more of the total number of shares at the time outstanding having the right to
vote for those directors may call a special meeting of stockholders; or
b. The Superior Court of the proper county shall, upon
application of such stockholder or stockholders, summarily order a special
meeting of stockholders, to be held to elect the entire board, all in accordance
with Section 305(c) of the CGCL. The term of office of any director shall
terminate upon that election of a successor.
G. Subject to paragraph (h) of Section 43 of the Bylaws, the Bylaws may
be altered or amended or new Bylaws adopted by the affirmative vote of at least
sixty-six and two-thirds percent (66-2/3%) of the voting power of all of the
then-outstanding shares of the voting stock of the corporation entitled to vote.
The Board of Directors shall also have the power to adopt, amend, or repeal
Bylaws.
1. The directors of the corporation need not be elected by written
ballot unless the Bylaws so provide.
2. No action shall be taken by the stockholders by written consent.
3. Advance notice of stockholder nominations for the election of
directors and of business to be brought by stockholders before any meeting of
the stockholders of the corporation shall be given in the manner provided in the
Bylaws of the corporation.
VI.
A. The liability of the directors for monetary damages shall be
eliminated to the fullest extent under applicable law.
B. This corporation is authorized to provide indemnification of agents
(as defined in Section 317 of the CGCL) for breach of duty to the corporation
and its stockholders through bylaw provisions or through agreements with the
agents, or through stockholder resolutions, or otherwise, in excess of the
indemnification otherwise permitted by Section 317 of the CGCL, subject, at any
time or times the corporation is subject to Section 2115(b) to the limits on
such excess indemnification set forth in Section 204 of the CGCL.
4.
<PAGE> 5
C. Any repeal or modification of this Article VI shall be prospective
and shall not affect the rights under this Article VI in effect at the time of
the alleged occurrence of any act or omission to act giving rise to liability or
indemnification.
VII.
A. The corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, except as provided in Paragraph B of this
Article VII, and all rights conferred upon the stockholders herein are granted
subject to this reservation.
B. Notwithstanding any other provisions of this Certificate of
Incorporation or any provision of law which might otherwise permit a lesser vote
or no vote, but in addition to any affirmative vote of the holders of any
particular class or series of the Voting Stock required by law, this Certificate
of Incorporation or any Preferred Stock Designation, the affirmative vote of the
holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting
power of all of the then-outstanding shares of the voting stock, voting together
as a single class, shall be required to alter, amend or repeal Articles V, VI,
and VII.
* * * *
FOUR: This Amended and Restated Certificate of Incorporation has been
duly approved by the Board of Directors of this corporation.
FIVE: This Amended and Restated Certificate of Incorporation has been
duly adopted in accordance with the provisions of Sections 228, 242 and 245 of
the General Corporation Law of the State of Delaware by the Board of Directors
and the stockholders of the corporation. A majority of the outstanding shares of
Common Stock approved this Amended and Restated Certificate of Incorporation by
written consent in accordance with Section 228 of the General Corporation Law of
the State of Delaware and written notice of such was given by the corporation in
accordance with said Section 228.
IN WITNESS WHEREOF, REPEATER TECHNOLOGIES, INC. has caused this Restated
Certificate of Incorporation to be signed by its President this _______ day of
_______________, 2000.
REPEATER TECHNOLOGIES, INC.
By:
-----------------------------------
Kenneth L. Kenitzer
President
5.
<PAGE> 1
EXHIBIT 3.3
BYLAWS
OF
REPEATER TECHNOLOGIES, INC.
(A DELAWARE CORPORATION)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE I OFFICES.....................................................................1
Section 1. Registered Office......................................................1
Section 2. Other Offices..........................................................1
ARTICLE II CORPORATE SEAL..............................................................1
Section 3. Corporate Seal.........................................................1
ARTICLE III STOCKHOLDERS' MEETINGS......................................................1
Section 4. Place Of Meetings......................................................1
Section 5. Annual Meetings........................................................1
Section 6. Special Meetings.......................................................3
Section 7. Notice Of Meetings.....................................................4
Section 8. Quorum.................................................................5
Section 9. Adjournment And Notice Of Adjourned Meetings...........................5
Section 10. Voting Rights..........................................................5
Section 11. Joint Owners Of Stock..................................................6
Section 12. List Of Stockholders...................................................6
Section 13. Action Without Meeting.................................................6
Section 14. Organization...........................................................7
ARTICLE IV DIRECTORS...................................................................7
Section 15. Number And Term Of Office..............................................7
Section 16. Powers.................................................................8
Section 17. Classes of Directors...................................................8
Section 18. Vacancies..............................................................9
Section 19. Resignation............................................................9
Section 20. Removal...............................................................10
Section 21. Meetings..............................................................10
Section 22. Quorum And Voting.....................................................11
Section 23. Action Without Meeting................................................11
Section 24. Fees And Compensation.................................................11
Section 25. Committees............................................................12
Section 26. Organization..........................................................13
</TABLE>
i.
<PAGE> 3
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE V OFFICERS...................................................................13
Section 27. Officers Designated...................................................13
Section 28. Tenure And Duties Of Officers.........................................13
Section 29. Delegation Of Authority...............................................15
Section 30. Resignations..........................................................15
Section 31. Removal...............................................................15
ARTICLE VI EXECUTION OF CORPORATE INSTRUMENTS AND VOTING OF SECURITIES OWNED BY
THE CORPORATION............................................................15
Section 32. Execution Of Corporate Instruments....................................15
Section 33. Voting Of Securities Owned By The Corporation.........................15
ARTICLE VII SHARES OF STOCK............................................................16
Section 34. Form And Execution Of Certificates....................................16
Section 35. Lost Certificates.....................................................16
Section 36. Transfers.............................................................16
Section 37. Fixing Record Dates...................................................17
Section 38. Registered Stockholders...............................................18
ARTICLE VIII OTHER SECURITIES OF THE CORPORATION........................................18
Section 39. Execution Of Other Securities.........................................18
ARTICLE IX DIVIDENDS..................................................................18
Section 40. Declaration Of Dividends..............................................18
Section 41. Dividend Reserve......................................................19
ARTICLE X FISCAL YEAR................................................................19
Section 42. Fiscal Year...........................................................19
ARTICLE XI INDEMNIFICATION............................................................19
Section 43. Indemnification Of Directors, Executive Officers, Other
Officers, Employees And Other Agents..................................19
ARTICLE XII NOTICES....................................................................22
Section 44. Notices...............................................................22
ARTICLE XIII AMENDMENTS.................................................................24
Section 45. Amendments............................................................24
ARTICLE XIV LOANS TO OFFICERS..........................................................24
</TABLE>
ii.
<PAGE> 4
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
Section 46. Loans To Officers.....................................................24
</TABLE>
iii.
<PAGE> 5
BYLAWS
OF
REPEATER TECHNOLOGIES, INC.
(A DELAWARE CORPORATION)
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office of the corporation
in the State of Delaware shall be in the City of Dover, County of Kent.
SECTION 2. OTHER OFFICES. The corporation shall also have and maintain
an office or principal place of business at such place as may be fixed by the
Board of Directors, and may also have offices at such other places, both within
and without the State of Delaware as the Board of Directors may from time to
time determine or the business of the corporation may require.
ARTICLE II
CORPORATE SEAL
SECTION 3. CORPORATE SEAL. The corporate seal shall consist of a die
bearing the name of the corporation and the inscription, "Corporate
Seal-Delaware." Said seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE III
STOCKHOLDERS' MEETINGS
SECTION 4. PLACE OF MEETINGS. Meetings of the stockholders of the
corporation shall be held at such place, either within or without the State of
Delaware, as may be designated from time to time by the Board of Directors, or,
if not so designated, then at the office of the corporation required to be
maintained pursuant to Section 2 hereof.
SECTION 5. ANNUAL MEETINGS.
(a) The annual meeting of the stockholders of the corporation,
for the purpose of election of directors and for such other business as may
lawfully come before it, shall be held on such date and at such time as may be
designated from time to time by the Board of Directors. Nominations of persons
for election to the Board of Directors of the corporation and the proposal of
business to be considered by the stockholders may be made at an annual meeting
of stockholders: (i) pursuant to the corporation's notice of meeting of
stockholders; (ii) by or at the direction of the Board of Directors; or (iii) by
any stockholder of the corporation who was a stockholder of record at the time
of giving of notice provided for in the following paragraph,
1.
<PAGE> 6
who is entitled to vote at the meeting and who complied with the notice
procedures set forth in Section 5.
(b) At an annual meeting of the stockholders, only such business
shall be conducted as shall have been properly brought before the meeting. For
nominations or other business to be properly brought before an annual meeting by
a stockholder pursuant to clause (c) of Section 5(a) of these Bylaws, (i) the
stockholder must have given timely notice thereof in writing to the Secretary of
the corporation, (ii) such other business must be a proper matter for
stockholder action under the Delaware General Corporation Law ("DGCL"), (iii) if
the stockholder, or the beneficial owner on whose behalf any such proposal or
nomination is made, has provided the corporation with a Solicitation Notice (as
defined in this Section 5(b)), such stockholder or beneficial owner must, in the
case of a proposal, have delivered a proxy statement and form of proxy to
holders of at least the percentage of the corporation's voting shares required
under applicable law to carry any such proposal, or, in the case of a nomination
or nominations, have delivered a proxy statement and form of proxy to holders of
a percentage of the corporation's voting shares reasonably believed by such
stockholder or beneficial owner to be sufficient to elect the nominee or
nominees proposed to be nominated by such stockholder, and must, in either case,
have included in such materials the Solicitation Notice, and (iv) if no
Solicitation Notice relating thereto has been timely provided pursuant to this
section, the stockholder or beneficial owner proposing such business or
nomination must not have solicited a number of proxies sufficient to have
required the delivery of such a Solicitation Notice under this Section 5. To be
timely, a stockholder's notice shall be delivered to the Secretary at the
principal executive offices of the Corporation not later than the close of
business on the ninetieth (90th) day nor earlier than the close of business on
the one hundred twentieth (120th) day prior to the first anniversary of the
preceding year's annual meeting; provided, however, that in the event that the
date of the annual meeting is advanced more than thirty (30) days prior to or
delayed by more than thirty (30) days after the anniversary of the preceding
year's annual meeting, notice by the stockholder to be timely must be so
delivered not earlier than the close of business on the one hundred twentieth
(120th) day prior to such annual meeting and not later than the close of
business on the later of the ninetieth (90th) day prior to such annual meeting
or the tenth (10th) day following the day on which public announcement of the
date of such meeting is first made. In no event shall the public announcement of
an adjournment of an annual meeting commence a new time period for the giving of
a stockholder's notice as described above. Such stockholder's notice shall set
forth: (A) as to each person whom the stockholder proposed to nominate for
election or reelection as a director all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
directors in an election contest, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended
(the "1934 Act") and Rule 14a-11 thereunder (including such person's written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected); (B) as to any other business that the stockholder proposes
to bring before the meeting, a brief description of the business desired to be
brought before the meeting, the reasons for conducting such business at the
meeting and any material interest in such business of such stockholder and the
beneficial owner, if any, on whose behalf the proposal is made; and (C) as to
the stockholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made (i) the name and address of such
stockholder, as they appear on the corporation's books, and of such beneficial
owner, (ii) the class and number of shares of the corporation which are owned
beneficially and of record by such stockholder and such beneficial owner, and
(iii)
2.
<PAGE> 7
whether either such stockholder or beneficial owner intends to deliver a proxy
statement and form of proxy to holders of, in the case of the proposal, at least
the percentage of the corporation's voting shares required under applicable law
to carry the proposal or, in the case of a nomination or nominations, a
sufficient number of holders of the corporation's voting shares to elect such
nominee or nominees (an affirmative statement of such intent, a "Solicitation
Notice").
(c) Notwithstanding anything in the second sentence of Section
5(b) of these Bylaws to the contrary, in the event that the number of directors
to be elected to the Board of Directors of the Corporation is increased and
there is no public announcement naming all of the nominees for director or
specifying the size of the increased Board of Directors made by the corporation
at least one hundred (100) days prior to the first anniversary of the preceding
year's annual meeting, a stockholder's notice required by this Section 5 shall
also be considered timely, but only with respect to nominees for any new
positions created by such increase, if it shall be delivered to the Secretary at
the principal executive offices of the corporation not later than the close of
business on the tenth (10th) day following the day on which such public
announcement is first made by the corporation.
(d) Only such persons who are nominated in accordance with the
procedures set forth in this Section 5 shall be eligible to serve as directors
and only such business shall be conducted at a meeting of stockholders as shall
have been brought before the meeting in accordance with the procedures set forth
in this Section 5. Except as otherwise provided by law, the Chairman of the
meeting shall have the power and duty to determine whether a nomination or any
business proposed to be brought before the meeting was made, or proposed, as the
case may be, in accordance with the procedures set forth in these Bylaws and, if
any proposed nomination or business is not in compliance with these Bylaws, to
declare that such defective proposal or nomination shall not be presented for
stockholder action at the meeting and shall be disregarded.
(e) Notwithstanding the foregoing provisions of this Section 5,
in order to include information with respect to a stockholder proposal in the
proxy statement and form of proxy for a stockholders' meeting, stockholders must
provide notice as required by the regulations promulgated under the 1934 Act.
Nothing in these Bylaws shall be deemed to affect any rights of stockholders to
request inclusion of proposals in the corporation proxy statement pursuant to
Rule 14a-8 under the 1934 Act.
(f) For purposes of this Section 5, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document publicly
filed by the corporation with the Securities and Exchange Commission pursuant to
Section 13, 14 or 15(d) of the 1934 Act.
SECTION 6. SPECIAL MEETINGS.
(a) Special meetings of the stockholders of the corporation may
be called, for any purpose or purposes, by (i) the Chairman of the Board of
Directors, (ii) the Chief Executive Officer, or (iii) the Board of Directors
pursuant to a resolution adopted by a majority of the total number of authorized
directors (whether or not there exist any vacancies in previously authorized
directorships at the time any such resolution is presented to the Board of
Directors for adoption).
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At any time or times that the corporation is subject to Section 2115(b) of the
California General Corporation Law ("CGCL"), stockholders holding five percent
(5%) or more of the outstanding shares shall have the right to call a special
meeting of stockholders only as set forth in Section 18(c) herein.
(b) If a special meeting is properly called by any person or
persons other than the Board of Directors, the request shall be in writing,
specifying the general nature of the business proposed to be transacted, and
shall be delivered personally or sent by registered mail or by telegraphic or
other facsimile transmission to the Chairman of the Board of Directors, the
Chief Executive Officer, or the Secretary of the corporation. No business may be
transacted at such special meeting otherwise than specified in such notice. The
Board of Directors shall determine the time and place of such special meeting,
which shall be held not less than thirty-five (35) nor more than one hundred
twenty (120) days after the date of the receipt of the request. Upon
determination of the time and place of the meeting, the officer receiving the
request shall cause notice to be given to the stockholders entitled to vote, in
accordance with the provisions of Section 7 of these Bylaws. If the notice is
not given within one hundred (100) days after the receipt of the request, the
person or persons properly requesting the meeting may set the time and place of
the meeting and give the notice. Nothing contained in this paragraph (b) shall
be construed as limiting, fixing, or affecting the time when a meeting of
stockholders called by action of the Board of Directors may be held.
(c) Nominations of persons for election to the Board of Directors
may be made at a special meeting of stockholders at which directors are to be
elected pursuant to the corporation's notice of meeting (i) by or at the
direction of the Board of Directors or (ii) by any stockholder of the
corporation who is a stockholder of record at the time of giving notice provided
for in these Bylaws who shall be entitled to vote at the meeting and who
complies with the notice procedures set forth in this Section 6(c). In the event
the corporation calls a special meeting of stockholders for the purpose of
electing one or more directors to the Board of Directors, any such stockholder
may nominate a person or persons (as the case may be), for election to such
position(s) as specified in the corporation's notice of meeting, if the
stockholder's notice required by Section 5(b) of these Bylaws shall be delivered
to the Secretary at the principal executive offices of the corporation not
earlier than the close of business on the one hundred twentieth (120th) day
prior to such special meeting and not later than the close of business on the
later of the ninetieth (90th) day prior to such meeting or the tenth (10th) day
following the day on which public announcement is first made of the date of the
special meeting and of the nominees proposed by the Board of Directors to be
elected at such meeting. In no event shall the public announcement of an
adjournment of a special meeting commence a new time period for the giving of a
stockholder's notice as described above.
SECTION 7. NOTICE OF MEETINGS. Except as otherwise provided by law or
the Certificate of Incorporation, written notice of each meeting of stockholders
shall be given not less than ten (10) nor more than sixty (60) days before the
date of the meeting to each stockholder entitled to vote at such meeting, such
notice to specify the place, date and hour and purpose or purposes of the
meeting. Notice of the time, place and purpose of any meeting of stockholders
may be waived in writing, signed by the person entitled to notice thereof,
either before or after such meeting, and will be waived by any stockholder by
his attendance thereat in person or by proxy, except when the stockholder
attends a meeting for the express purpose of
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objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Any stockholder so
waiving notice of such meeting shall be bound by the proceedings of any such
meeting in all respects as if due notice thereof had been given.
SECTION 8. QUORUM. At all meetings of stockholders, except where
otherwise provided by statute or by the Certificate of Incorporation, or by
these Bylaws, the presence, in person or by proxy duly authorized, of the
holders of a majority of the outstanding shares of stock entitled to vote shall
constitute a quorum for the transaction of business. In the absence of a quorum,
any meeting of stockholders may be adjourned, from time to time, either by the
chairman of the meeting or by vote of the holders of a majority of the shares
represented thereat, but no other business shall be transacted at such meeting.
The stockholders present at a duly called or convened meeting, at which a quorum
is present, may continue to transact business until adjournment, notwithstanding
the withdrawal of enough stockholders to leave less than a quorum. Except as
otherwise provided by statute, the Certificate of Incorporation or these Bylaws,
in all matters other than the election of directors, the affirmative vote of the
majority of shares present in person or represented by proxy at the meeting and
entitled to vote on the subject matter shall be the act of the stockholders.
Except as otherwise provided by statute, the Certificate of Incorporation or
these Bylaws, directors shall be elected by a plurality of the votes of the
shares present in person or represented by proxy at the meeting and entitled to
vote on the election of directors. Where a separate vote by a class or classes
or series is required, except where otherwise provided by the statute or by the
Certificate of Incorporation or these Bylaws, a majority of the outstanding
shares of such class or classes or series, present in person or represented by
proxy, shall constitute a quorum entitled to take action with respect to that
vote on that matter and, except where otherwise provided by the statute or by
the Certificate of Incorporation or these Bylaws, the affirmative vote of the
majority (plurality, in the case of the election of directors) of the votes cast
by the holders of shares of such class or classes or series shall be the act of
such class or classes or series.
SECTION 9. ADJOURNMENT AND NOTICE OF ADJOURNED MEETINGS. Any meeting of
stockholders, whether annual or special, may be adjourned from time to time
either by the chairman of the meeting or by the vote of a majority of the shares
casting votes. When a meeting is adjourned to another time or place, notice need
not be given of the adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken. At the adjourned
meeting, the corporation may transact any business which might have been
transacted at the original meeting. If the adjournment is for more than thirty
(30) days or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
SECTION 10. VOTING RIGHTS. For the purpose of determining those
stockholders entitled to vote at any meeting of the stockholders, except as
otherwise provided by law, only persons in whose names shares stand on the stock
records of the corporation on the record date, as provided in Section 12 of
these Bylaws, shall be entitled to vote at any meeting of stockholders. Every
person entitled to vote or execute consents shall have the right to do so either
in person or by an agent or agents authorized by a proxy granted in accordance
with Delaware law. An agent so appointed need not be a stockholder. No proxy
shall be voted after three (3) years from its date of creation unless the proxy
provides for a longer period.
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SECTION 11. JOINT OWNERS OF STOCK. If shares or other securities having
voting power stand of record in the names of two (2) or more persons, whether
fiduciaries, members of a partnership, joint tenants, tenants in common, tenants
by the entirety, or otherwise, or if two (2) or more persons have the same
fiduciary relationship respecting the same shares, unless the Secretary is given
written notice to the contrary and is furnished with a copy of the instrument or
order appointing them or creating the relationship wherein it is so provided,
their acts with respect to voting shall have the following effect: (a) if only
one (1) votes, his act binds all; (b) if more than one (1) votes, the act of the
majority so voting binds all; (c) if more than one (1) votes, but the vote is
evenly split on any particular matter, each faction may vote the securities in
question proportionally, or may apply to the Delaware Court of Chancery for
relief as provided in the DGCL, Section 217(b). If the instrument filed with the
Secretary shows that any such tenancy is held in unequal interests, a majority
or even-split for the purpose of subsection (c) shall be a majority or
even-split in interest.
SECTION 12. LIST OF STOCKHOLDERS. The Secretary shall prepare and make,
at least ten (10) days before every meeting of stockholders, a complete list of
the stockholders entitled to vote at said meeting, arranged in alphabetical
order, showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten (10) days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not
specified, at the place where the meeting is to be held. The list shall be
produced and kept at the time and place of meeting during the whole time thereof
and may be inspected by any stockholder who is present.
SECTION 13. ACTION WITHOUT MEETING.
(a) Unless otherwise provided in the Certificate of
Incorporation, any action required by statute to be taken at any annual or
special meeting of the stockholders, or any action which may be taken at any
annual or special meeting of the stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting forth
the action so taken, shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted.
(b) Every written consent shall bear the date of signature of
each stockholder who signs the consent, and no written consent shall be
effective to take the corporate action referred to therein unless, within sixty
(60) days of the earliest dated consent delivered to the corporation in the
manner herein required, written consents signed by a sufficient number of
stockholders to take action are delivered to the corporation by delivery to its
registered office in the State of Delaware, its principal place of business or
an officer or agent of the corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to a
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested.
(c) Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented
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in writing and who, if the action had been taken at a meeting, would have been
entitled to notice of the meeting if the record date for such meeting had been
the date that written consents signed by a sufficient number of stockholders to
take action were delivered to the corporation as provided in Section 228 (c) of
the DGCL. If the action which is consented to is such as would have required the
filing of a certificate under any section of the DGCL if such action had been
voted on by stockholders at a meeting thereof, then the certificate filed under
such section shall state, in lieu of any statement required by such section
concerning any vote of stockholders, that written consent has been given in
accordance with Section 228 of the DGCL.
(d) Notwithstanding the foregoing, no such action by written
consent may be taken following the closing of the initial public offering
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), covering the offer and sale of Common Stock
of the corporation (the "Initial Public Offering").
SECTION 14. ORGANIZATION.
(a) At every meeting of stockholders, the Chairman of the Board
of Directors, or, if a Chairman has not been appointed or is absent, the
President, or, if the President is absent, a chairman of the meeting chosen by a
majority in interest of the stockholders entitled to vote, present in person or
by proxy, shall act as chairman. The Secretary, or, in his absence, an Assistant
Secretary directed to do so by the President, shall act as secretary of the
meeting.
(b) The Board of Directors of the corporation shall be entitled
to make such rules or regulations for the conduct of meetings of stockholders as
it shall deem necessary, appropriate or convenient. Subject to such rules and
regulations of the Board of Directors, if any, the chairman of the meeting shall
have the right and authority to prescribe such rules, regulations and procedures
and to do all such acts as, in the judgment of such chairman, are necessary,
appropriate or convenient for the proper conduct of the meeting, including,
without limitation, establishing an agenda or order of business for the meeting,
rules and procedures for maintaining order at the meeting and the safety of
those present, limitations on participation in such meeting to stockholders of
record of the corporation and their duly authorized and constituted proxies and
such other persons as the chairman shall permit, restrictions on entry to the
meeting after the time fixed for the commencement thereof, limitations on the
time allotted to questions or comments by participants and regulation of the
opening and closing of the polls for balloting on matters which are to be voted
on by ballot. Unless and to the extent determined by the Board of Directors or
the chairman of the meeting, meetings of stockholders shall not be required to
be held in accordance with rules of parliamentary procedure.
ARTICLE IV
DIRECTORS
SECTION 15. NUMBER AND TERM OF OFFICE. For so long as the Corporation
has only one stockholder, the number of authorized directors shall be one;
otherwise, the authorized number of directors of the corporation shall be fixed
in accordance with the Certificate of Incorporation. Directors need not be
stockholders unless so required by the Certificate of Incorporation. If for any
cause, the directors shall not have been elected at an annual meeting,
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they may be elected as soon thereafter as convenient at a special meeting of the
stockholders called for that purpose in the manner provided in these Bylaws.
SECTION 16. POWERS. The powers of the corporation shall be exercised,
its business conducted and its property controlled by the Board of Directors,
except as may be otherwise provided by statute or by the Certificate of
Incorporation.
SECTION 17. CLASSES OF DIRECTORS.
(a) Subject to the rights of the holders of any series of
Preferred Stock to elect additional directors under specified circumstances,
following the closing of the Initial Public Offering, the directors shall be
divided into three classes designated as Class I, Class II and Class III,
respectively. Directors shall be assigned to each class in accordance with a
resolution or resolutions adopted by the Board of Directors. At the first annual
meeting of stockholders following the closing of the Initial Public Offering,
the term of office of the Class I directors shall expire and Class I directors
shall be elected for a full term of three years. At the second annual meeting of
stockholders following the Initial Public Offering, the term of office of the
Class II directors shall expire and Class II directors shall be elected for a
full term of three years. At the third annual meeting of stockholders following
the Initial Public Offering, the term of office of the Class III directors shall
expire and Class III directors shall be elected for a full term of three years.
At each succeeding annual meeting of stockholders, directors shall be elected
for a full term of three years to succeed the directors of the class whose terms
expire at such annual meeting. During such time or times that the corporation is
subject to Section 2115(b) of the CGCL, this Section 17(a) shall become
effective and apply only when the corporation is a "listed" corporation within
the meaning of Section 301.5 of the CGCL.
(b) In the event that the corporation is unable to have a
classified Board of Directors under applicable law, Section 17(a) of these
Bylaws shall not apply and all directors shall be elected at each annual meeting
of stockholders to hold office until the next annual meeting.
(c) No stockholder entitled to vote at an election for directors
may cumulate votes to which such stockholder is entitled, unless, at the time of
the election, the corporation (i) is subject to Section 2115(b) of the CGCL and
(ii) is not or ceases to be a "listed" corporation under Section 301.5 of the
CGCL. During this time, every stockholder entitled to vote at an election for
directors may cumulate such stockholder's votes and give one candidate a number
of votes equal to the number of directors to be elected multiplied by the number
of votes to which such stockholder's shares are otherwise entitled, or
distribute the stockholder's votes on the same principle among as many
candidates as such stockholder thinks fit. No stockholder, however, shall be
entitled to so cumulate such stockholder's votes unless (i) the names of such
candidate or candidates have been placed in nomination prior to the voting and
(ii) the stockholder has given notice at the meeting, prior to the voting, of
such stockholder's intention to cumulate such stockholder's votes. If any
stockholder has given proper notice to cumulate votes, all stockholders may
cumulate their votes for any candidates who have been properly placed in
nomination. Under cumulative voting, the candidates receiving the highest number
of votes, up to the number of directors to be elected, are elected.
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Notwithstanding the foregoing provisions of this section, each director
shall serve until his successor is duly elected and qualified or until his
death, resignation or removal. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.
SECTION 18. VACANCIES.
(a) Unless otherwise provided in the Certificate of
Incorporation, any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other causes and any newly created
directorships resulting from any increase in the number of directors shall,
unless the Board of Directors determines by resolution that any such vacancies
or newly created directorships shall be filled by stockholders, be filled only
by the affirmative vote of a majority of the directors then in office, even
though less than a quorum of the Board of Directors. Any director elected in
accordance with the preceding sentence shall hold office for the remainder of
the full term of the director for which the vacancy was created or occurred and
until such director's successor shall have been elected and qualified. A vacancy
in the Board of Directors shall be deemed to exist under this Section 18 in the
case of the death, removal or resignation of any director.
(b) If at the time of filling any vacancy or any newly created
directorship, the directors then in office shall constitute less than a majority
of the whole board (as constituted immediately prior to any such increase), the
Delaware Court of Chancery may, upon application of any stockholder or
stockholders holding at least ten percent (10%) of the total number of the
shares at the time outstanding having the right to vote for such directors,
summarily order an election to be held to fill any such vacancies or newly
created directorships, or to replace the directors chosen by the directors then
in offices as aforesaid, which election shall be governed by Section 211 of the
DGCL.
(c) At any time or times that the corporation is subject to
Section 2115(b) of the CGCL, if, after the filling of any vacancy, the directors
then in office who have been elected by stockholders shall constitute less than
a majority of the directors then in office, then
(1) Any holder or holders of an aggregate of five percent
(5%) or more of the total number of shares at the time outstanding having the
right to vote for those directors may call a special meeting of stockholders; or
(2) The Superior Court of the proper county shall, upon
application of such stockholder or stockholders, summarily order a special
meeting of stockholders, to be held to elect the entire board, all in accordance
with Section 305(c) of the CGCL. The term of office of any director shall
terminate upon that election of a successor.
SECTION 19. RESIGNATION. Any director may resign at any time by
delivering his written resignation to the Secretary, such resignation to specify
whether it will be effective at a particular time, upon receipt by the Secretary
or at the pleasure of the Board of Directors. If no such specification is made,
it shall be deemed effective at the pleasure of the Board of Directors. When one
or more directors shall resign from the Board of Directors, effective at a
future date, a majority of the directors then in office, including those who
have so resigned, shall have power
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to fill such vacancy or vacancies, the vote thereon to take effect when such
resignation or resignations shall become effective, and each Director so chosen
shall hold office for the unexpired portion of the term of the Director whose
place shall be vacated and until his successor shall have been duly elected and
qualified.
SECTION 20. REMOVAL.
(a) During such time or times that the corporation is subject to
Section 2115(b) of the CGCL, the Board of Directors or any individual director
may be removed from office at any time without cause by the affirmative vote of
the holders of at least a majority of the outstanding shares entitled to vote on
such removal; provided, however, that unless the entire Board is removed, no
individual director may be removed when the votes cast against such director's
removal, or not consenting in writing to such removal, would be sufficient to
elect that director if voted cumulatively at an election which the same total
number of votes were cast (or, if such action is taken by written consent, all
shares entitled to vote were voted) and the entire number of directors
authorized at the time of such director's most recent election were then being
elected.
(b) Following any date on which the corporation is no longer
subject to Section 2115(b) of the CGCL and subject to any limitations imposed by
law, Section 20(a) above shall no longer apply and removal shall be as provided
in Section 141(k) of the DGCL.
SECTION 21. MEETINGS.
(a) ANNUAL MEETINGS. The annual meeting of the Board of Directors
shall be held immediately before or after the annual meeting of stockholders and
at the place where such meeting is held. No notice of an annual meeting of the
Board of Directors shall be necessary and such meeting shall be held for the
purpose of electing officers and transacting such other business as may lawfully
come before it.
(b) REGULAR MEETINGS. Unless otherwise restricted by the
Certificate of Incorporation, regular meetings of the Board of Directors may be
held at any time or date and at any place within or without the State of
Delaware which has been designated by the Board of Directors and publicized
among all directors. No formal notice shall be required for regular meetings of
the Board of Directors.
(c) SPECIAL MEETINGS. Unless otherwise restricted by the
Certificate of Incorporation, special meetings of the Board of Directors may be
held at any time and place within or without the State of Delaware whenever
called by the Chairman of the Board, the President or any two of the directors.
(d) TELEPHONE MEETINGS. Any member of the Board of Directors, or
of any committee thereof, may participate in a meeting by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
by such means shall constitute presence in person at such meeting.
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(e) NOTICE OF MEETINGS. Notice of the time and place of all
meetings of the Board of Directors shall be orally or in writing, by telephone,
including a voice messaging system or other system or technology designed to
record and communicate messages, facsimile, telegraph or telex, or by electronic
mail or other electronic means, during normal business hours, at least
twenty-four (24) hours before the date and time of the meeting, or sent in
writing to each director by first class mail, charges prepaid, at least three
(3) days before the date of the meeting. Notice of any meeting may be waived in
writing at any time before or after the meeting and will be waived by any
director by attendance thereat, except when the director attends the meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
(f) WAIVER OF NOTICE. The transaction of all business at any
meeting of the Board of Directors, or any committee thereof, however called or
noticed, or wherever held, shall be as valid as though had at a meeting duly
held after regular call and notice, if a quorum be present and if, either before
or after the meeting, each of the directors not present shall sign a written
waiver of notice. All such waivers shall be filed with the corporate records or
made a part of the minutes of the meeting.
SECTION 22. QUORUM AND VOTING.
(a) Unless the Certificate of Incorporation requires a greater
number and except with respect to indemnification questions arising under
Section 43 hereof, for which a quorum shall be one-third of the exact number of
directors fixed from time to time in accordance with the Certificate of
Incorporation, a quorum of the Board of Directors shall consist of a majority of
the exact number of directors fixed from time to time by the Board of Directors
in accordance with the Certificate of Incorporation; provided, however, at any
meeting whether a quorum be present or otherwise, a majority of the directors
present may adjourn from time to time until the time fixed for the next regular
meeting of the Board of Directors, without notice other than by announcement at
the meeting.
(b) At each meeting of the Board of Directors at which a quorum
is present, all questions and business shall be determined by the affirmative
vote of a majority of the directors present, unless a different vote be required
by law, the Certificate of Incorporation or these Bylaws.
SECTION 23. ACTION WITHOUT MEETING. Unless otherwise restricted by the
Certificate of Incorporation or these Bylaws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all members of the Board of Directors or
committee, as the case may be, consent thereto in writing, and such writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee.
SECTION 24. FEES AND COMPENSATION. Directors shall be entitled to such
compensation for their services as may be approved by the Board of Directors,
including, if so approved, by resolution of the Board of Directors, a fixed sum
and expenses of attendance, if any, for attendance at each regular or special
meeting of the Board of Directors and at any meeting of a committee of the Board
of Directors. Nothing herein contained shall be construed
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to preclude any director from serving the corporation in any other capacity as
an officer, agent, employee, or otherwise and receiving compensation therefor.
SECTION 25. COMMITTEES.
(a) EXECUTIVE COMMITTEE. The Board of Directors may appoint an
Executive Committee to consist of one (1) or more members of the Board of
Directors. The Executive Committee, to the extent permitted by law and provided
in the resolution of the Board of Directors shall have and may exercise all the
powers and authority of the Board of Directors in the management of the business
and affairs of the corporation, and may authorize the seal of the corporation to
be affixed to all papers which may require it; but no such committee shall have
the power or authority in reference to (i) approving or adopting, or
recommending to the stockholders, any action or matter expressly required by the
DGCL to be submitted to stockholders for approval, or (ii) adopting, amending or
repealing any bylaw of the corporation.
(b) OTHER COMMITTEES. The Board of Directors may, from time to
time, appoint such other committees as may be permitted by law. Such other
committees appointed by the Board of Directors shall consist of one (1) or more
members of the Board of Directors and shall have such powers and perform such
duties as may be prescribed by the resolution or resolutions creating such
committees, but in no event shall any such committee have the powers denied to
the Executive Committee in these Bylaws.
(c) TERM. Each member of a committee of the Board of Directors
shall serve a term on the committee coexistent with such member's term on the
Board of Directors. The Board of Directors, subject to any requirements of any
outstanding series of preferred Stock and the provisions of subsections (a) or
(b) of this Bylaw, may at any time increase or decrease the number of members of
a committee or terminate the existence of a committee. The membership of a
committee member shall terminate on the date of his death or voluntary
resignation from the committee or from the Board of Directors. The Board of
Directors may at any time for any reason remove any individual committee member
and the Board of Directors may fill any committee vacancy created by death,
resignation, removal or increase in the number of members of the committee. The
Board of Directors may designate one or more directors as alternate members of
any committee, who may replace any absent or disqualified member at any meeting
of the committee, and, in addition, in the absence or disqualification of any
member of a committee, the member or members thereof present at any meeting and
not disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member.
(d) MEETINGS. Unless the Board of Directors shall otherwise
provide, regular meetings of the Executive Committee or any other committee
appointed pursuant to this Section 25 shall be held at such times and places as
are determined by the Board of Directors, or by any such committee, and when
notice thereof has been given to each member of such committee, no further
notice of such regular meetings need be given thereafter. Special meetings of
any such committee may be held at any place which has been determined from time
to time by such committee, and may be called by any director who is a member of
such committee, upon written notice to the members of such committee of the time
and place of such special meeting
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given in the manner provided for the giving of written notice to members of the
Board of Directors of the time and place of special meetings of the Board of
Directors. Notice of any special meeting of any committee may be waived in
writing at any time before or after the meeting and will be waived by any
director by attendance thereat, except when the director attends such special
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called or
convened. A majority of the authorized number of members of any such committee
shall constitute a quorum for the transaction of business, and the act of a
majority of those present at any meeting at which a quorum is present shall be
the act of such committee.
SECTION 26. ORGANIZATION. At every meeting of the directors, the
Chairman of the Board of Directors, or, if a Chairman has not been appointed or
is absent, the President (if a director), or if the President is absent, the
most senior Vice President (if a director), or, in the absence of any such
person, a chairman of the meeting chosen by a majority of the directors present,
shall preside over the meeting. The Secretary, or in his absence, any Assistant
Secretary directed to do so by the President, shall act as secretary of the
meeting.
ARTICLE V
OFFICERS
SECTION 27. OFFICERS DESIGNATED. The officers of the corporation shall
include, if and when designated by the Board of Directors, the Chairman of the
Board of Directors, the Chief Executive Officer, the President, one or more Vice
Presidents, the Secretary, the Chief Financial Officer, the Treasurer and the
Controller, all of whom shall be elected at the annual organizational meeting of
the Board of Directors. The Board of Directors may also appoint one or more
Assistant Secretaries, Assistant Treasurers, Assistant Controllers and such
other officers and agents with such powers and duties as it shall deem
necessary. The Board of Directors may assign such additional titles to one or
more of the officers as it shall deem appropriate. Any one person may hold any
number of offices of the corporation at any one time unless specifically
prohibited therefrom by law. The salaries and other compensation of the officers
of the corporation shall be fixed by or in the manner designated by the Board of
Directors.
SECTION 28. TENURE AND DUTIES OF OFFICERS.
(a) GENERAL. All officers shall hold office at the pleasure of
the Board of Directors and until their successors shall have been duly elected
and qualified, unless sooner removed. Any officer elected or appointed by the
Board of Directors may be removed at any time by the Board of Directors. If the
office of any officer becomes vacant for any reason, the vacancy may be filled
by the Board of Directors.
(b) DUTIES OF CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of
the Board of Directors, when present, shall preside at all meetings of the
stockholders and the Board of Directors. The Chairman of the Board of Directors
shall perform other duties commonly incident to his office and shall also
perform such other duties and have such other powers, as the Board of Directors
shall designate from time to time. If there is no President, then the Chairman
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of the Board of Directors shall also serve as the Chief Executive Officer of the
corporation and shall have the powers and duties prescribed in paragraph (c) of
this Section 28.
(c) DUTIES OF PRESIDENT. The President shall preside at all
meetings of the stockholders and at all meetings of the Board of Directors,
unless the Chairman of the Board of Directors has been appointed and is present.
Unless some other officer has been elected Chief Executive Officer of the
corporation, the President shall be the chief executive officer of the
corporation and shall, subject to the control of the Board of Directors, have
general supervision, direction and control of the business and officers of the
corporation. The President shall perform other duties commonly incident to his
office and shall also perform such other duties and have such other powers, as
the Board of Directors shall designate from time to time.
(d) DUTIES OF VICE PRESIDENTS. The Vice Presidents may assume and
perform the duties of the President in the absence or disability of the
President or whenever the office of President is vacant. The Vice Presidents
shall perform other duties commonly incident to their office and shall also
perform such other duties and have such other powers as the Board of Directors
or the President shall designate from time to time.
(e) DUTIES OF SECRETARY. The Secretary shall attend all meetings
of the stockholders and of the Board of Directors and shall record all acts and
proceedings thereof in the minute book of the corporation. The Secretary shall
give notice in conformity with these Bylaws of all meetings of the stockholders
and of all meetings of the Board of Directors and any committee thereof
requiring notice. The Secretary shall perform all other duties given him in
these Bylaws and other duties commonly incident to his office and shall also
perform such other duties and have such other powers, as the Board of Directors
shall designate from time to time. The President may direct any Assistant
Secretary to assume and perform the duties of the Secretary in the absence or
disability of the Secretary, and each Assistant Secretary shall perform other
duties commonly incident to his office and shall also perform such other duties
and have such other powers as the Board of Directors or the President shall
designate from time to time.
(f) DUTIES OF CHIEF FINANCIAL OFFICER. The Chief Financial
Officer shall keep or cause to be kept the books of account of the corporation
in a thorough and proper manner and shall render statements of the financial
affairs of the corporation in such form and as often as required by the Board of
Directors or the President. The Chief Financial Officer, subject to the order of
the Board of Directors, shall have the custody of all funds and securities of
the corporation. The Chief Financial Officer shall perform other duties commonly
incident to his office and shall also perform such other duties and have such
other powers as the Board of Directors or the President shall designate from
time to time. The President may direct the Treasurer or any Assistant Treasurer,
or the Controller or any Assistant Controller to assume and perform the duties
of the Chief Financial Officer in the absence or disability of the Chief
Financial Officer, and each Treasurer and Assistant Treasurer and each
Controller and Assistant Controller shall perform other duties commonly incident
to his office and shall also perform such other duties and have such other
powers as the Board of Directors or the President shall designate from time to
time.
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SECTION 29. DELEGATION OF AUTHORITY. The Board of Directors may from
time to time delegate the powers or duties of any officer to any other officer
or agent, notwithstanding any provision hereof.
SECTION 30. RESIGNATIONS. Any officer may resign at any time by giving
written notice to the Board of Directors or to the President or to the
Secretary. Any such resignation shall be effective when received by the person
or persons to whom such notice is given, unless a later time is specified
therein, in which event the resignation shall become effective at such later
time. Unless otherwise specified in such notice, the acceptance of any such
resignation shall not be necessary to make it effective. Any resignation shall
be without prejudice to the rights, if any, of the corporation under any
contract with the resigning officer.
SECTION 31. REMOVAL. Any officer may be removed from office at any time,
either with or without cause, by the affirmative vote of a majority of the
directors in office at the time, or by the unanimous written consent of the
directors in office at the time, or by any committee or superior officers upon
whom such power of removal may have been conferred by the Board of Directors.
ARTICLE VI
EXECUTION OF CORPORATE INSTRUMENTS AND VOTING OF SECURITIES
OWNED BY THE CORPORATION
SECTION 32. EXECUTION OF CORPORATE INSTRUMENTS. The Board of Directors
may, in its discretion, determine the method and designate the signatory officer
or officers, or other person or persons, to execute on behalf of the corporation
any corporate instrument or document, or to sign on behalf of the corporation
the corporate name without limitation, or to enter into contracts on behalf of
the corporation, except where otherwise provided by law or these Bylaws, and
such execution or signature shall be binding upon the corporation.
All checks and drafts drawn on banks or other depositaries on funds to
the credit of the corporation or in special accounts of the corporation shall be
signed by such person or persons as the Board of Directors shall authorize so to
do.
Unless authorized or ratified by the Board of Directors or within the
agency power of an officer, no officer, agent or employee shall have any power
or authority to bind the corporation by any contract or engagement or to pledge
its credit or to render it liable for any purpose or for any amount.
SECTION 33. VOTING OF SECURITIES OWNED BY THE CORPORATION. All stock and
other securities of other corporations owned or held by the corporation for
itself, or for other parties in any capacity, shall be voted, and all proxies
with respect thereto shall be executed, by the person authorized so to do by
resolution of the Board of Directors, or, in the absence of such authorization,
by the Chairman of the Board of Directors, the Chief Executive Officer, the
President, or any Vice President.
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ARTICLE VII
SHARES OF STOCK
SECTION 34. FORM AND EXECUTION OF CERTIFICATES. Certificates for the
shares of stock of the corporation shall be in such form as is consistent with
the Certificate of Incorporation and applicable law. Every holder of stock in
the corporation shall be entitled to have a certificate signed by or in the name
of the corporation by the Chairman of the Board of Directors, or the President
or any Vice President and by the Treasurer or Assistant Treasurer or the
Secretary or Assistant Secretary, certifying the number of shares owned by him
in the corporation. Any or all of the signatures on the certificate may be
facsimiles. In case any officer, transfer agent, or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent, or registrar before such certificate is
issued, it may be issued with the same effect as if he were such officer,
transfer agent, or registrar at the date of issue. Each certificate shall state
upon the face or back thereof, in full or in summary, all of the powers,
designations, preferences, and rights, and the limitations or restrictions of
the shares authorized to be issued or shall, except as otherwise required by
law, set forth on the face or back a statement that the corporation will furnish
without charge to each stockholder who so requests the powers, designations,
preferences and relative, participating, optional, or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights. Within a reasonable time after
the issuance or transfer of uncertificated stock, the corporation shall send to
the registered owner thereof a written notice containing the information
required to be set forth or stated on certificates pursuant to this section or
otherwise required by law or with respect to this section a statement that the
corporation will furnish without charge to each stockholder who so requests the
powers, designations, preferences and relative participating, optional or other
special rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights. Except as
otherwise expressly provided by law, the rights and obligations of the holders
of certificates representing stock of the same class and series shall be
identical.
SECTION 35. LOST CERTIFICATES. A new certificate or certificates shall
be issued in place of any certificate or certificates theretofore issued by the
corporation alleged to have been lost, stolen, or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen, or destroyed. The corporation may require, as a condition
precedent to the issuance of a new certificate or certificates, the owner of
such lost, stolen, or destroyed certificate or certificates, or his legal
representative, to agree to indemnify the corporation in such manner as it shall
require or to give the corporation a surety bond in such form and amount as it
may direct as indemnity against any claim that may be made against the
corporation with respect to the certificate alleged to have been lost, stolen,
or destroyed.
SECTION 36. TRANSFERS.
(a) Transfers of record of shares of stock of the corporation
shall be made only upon its books by the holders thereof, in person or by
attorney duly authorized, and upon the surrender of a properly endorsed
certificate or certificates for a like number of shares.
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(b) The corporation shall have power to enter into and perform
any agreement with any number of stockholders of any one or more classes of
stock of the corporation to restrict the transfer of shares of stock of the
corporation of any one or more classes owned by such stockholders in any manner
not prohibited by the DGCL.
SECTION 37. FIXING RECORD DATES.
(a) In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the Board of Directors may fix, in advance, a record date,
which record date shall not precede the date upon which the resolution fixing
the record date is adopted by the Board of Directors, and which record date
shall, subject to applicable law, not be more than sixty (60) nor less than ten
(10) days before the date of such meeting. If no record date is fixed by the
Board of Directors, the record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any adjournment
of the meeting; provided, however, that the Board of Directors may fix a new
record date for the adjourned meeting.
(b) Prior to the Initial Public Offering, in order that the
corporation may determine the stockholders entitled to consent to corporate
action in writing without a meeting, the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which date
shall not be more than ten (10) days after the date upon which the resolution
fixing the record date is adopted by the Board of Directors. Any stockholder of
record seeking to have the stockholders authorize or take corporate action by
written consent shall, by written notice to the Secretary, request the Board of
Directors to fix a record date. The Board of Directors shall promptly, but in
all events within ten (10) days after the date on which such a request is
received, adopt a resolution fixing the record date. If no record date has been
fixed by the Board of Directors within ten (10) days of the date on which such a
request is received, the record date for determining stockholders entitled to
consent to corporate action in writing without a meeting, when no prior action
by the Board of Directors is required by applicable law, shall be the first date
on which a signed written consent setting forth the action taken or proposed to
be taken is delivered to the corporation by delivery to its registered office in
the State of Delaware, its principal place of business or an officer or agent of
the corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
If no record date has been fixed by the Board of Directors and prior action by
the Board of Directors is required by law, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action.
(c) In order that the corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix, in advance, a
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record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted, and which record date shall be not
more than sixty (60) days prior to such action. If no record date is fixed, the
record date for determining stockholders for any such purpose shall be at the
close of business on the day on which the Board of Directors adopts the
resolution relating thereto.
SECTION 38. REGISTERED STOCKHOLDERS. The corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and shall not
be bound to recognize any equitable or other claim to or interest in such share
or shares on the part of any other person whether or not it shall have express
or other notice thereof, except as otherwise provided by the laws of Delaware.
ARTICLE VIII
OTHER SECURITIES OF THE CORPORATION
SECTION 39. EXECUTION OF OTHER SECURITIES. All bonds, debentures and
other corporate securities of the corporation, other than stock certificates
(covered in Section 34), may be signed by the Chairman of the Board of
Directors, the President or any Vice President, or such other person as may be
authorized by the Board of Directors, and the corporate seal impressed thereon
or a facsimile of such seal imprinted thereon and attested by the signature of
the Secretary or an Assistant Secretary, or the Chief Financial Officer or
Treasurer or an Assistant Treasurer; provided, however, that where any such
bond, debenture or other corporate security shall be authenticated by the manual
signature, or where permissible facsimile signature, of a trustee under an
indenture pursuant to which such bond, debenture or other corporate security
shall be issued, the signatures of the persons signing and attesting the
corporate seal on such bond, debenture or other corporate security may be the
imprinted facsimile of the signatures of such persons. Interest coupons
appertaining to any such bond, debenture or other corporate security,
authenticated by a trustee as aforesaid, shall be signed by the Treasurer or an
Assistant Treasurer of the corporation or such other person as may be authorized
by the Board of Directors, or bear imprinted thereon the facsimile signature of
such person. In case any officer who shall have signed or attested any bond,
debenture or other corporate security, or whose facsimile signature shall appear
thereon or on any such interest coupon, shall have ceased to be such officer
before the bond, debenture or other corporate security so signed or attested
shall have been delivered, such bond, debenture or other corporate security
nevertheless may be adopted by the corporation and issued and delivered as
though the person who signed the same or whose facsimile signature shall have
been used thereon had not ceased to be such officer of the corporation.
ARTICLE IX
DIVIDENDS
SECTION 40. DECLARATION OF DIVIDENDS. Dividends upon the capital stock
of the corporation, subject to the provisions of the Certificate of
Incorporation and applicable law, if any, may be declared by the Board of
Directors pursuant to law at any regular or special meeting.
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Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the Certificate of Incorporation and applicable
law.
SECTION 41. DIVIDEND RESERVE. Before payment of any dividend, there may
be set aside out of any funds of the corporation available for dividends such
sum or sums as the Board of Directors from time to time, in their absolute
discretion, think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
corporation, or for such other purpose as the Board of Directors shall think
conducive to the interests of the corporation, and the Board of Directors may
modify or abolish any such reserve in the manner in which it was created.
ARTICLE X
FISCAL YEAR
SECTION 42. FISCAL YEAR. The fiscal year of the corporation shall be
fixed by resolution of the Board of Directors.
ARTICLE XI
INDEMNIFICATION
SECTION 43. INDEMNIFICATION OF DIRECTORS, EXECUTIVE OFFICERS, OTHER
OFFICERS, EMPLOYEES AND OTHER AGENTS.
(a) DIRECTORS AND EXECUTIVE OFFICERS. The corporation shall
indemnify its directors and executive officers (for the purposes of this Article
XI, "executive officers" shall have the meaning defined in Rule 3b-7 promulgated
under the 1934 Act) to the fullest extent not prohibited by the DGCL or any
other applicable law; provided, however, that the corporation may modify the
extent of such indemnification by individual contracts with its directors and
executive officers; and, provided, further, that the corporation shall not be
required to indemnify any director or executive officer in connection with any
proceeding (or part thereof) initiated by such person unless (i) such
indemnification is expressly required to be made by law, (ii) the proceeding was
authorized by the Board of Directors of the corporation, (iii) such
indemnification is provided by the corporation, in its sole discretion, pursuant
to the powers vested in the corporation under the DGCL or any other applicable
law or (iv) such indemnification is required to be made under subsection (d).
(b) OTHER OFFICERS, EMPLOYEES AND OTHER AGENTS. The corporation
shall have power to indemnify its other officers, employees and other agents as
set forth in the DGCL or any other applicable law. The Board of Directors shall
have the power to delegate the determination of whether indemnification shall be
given to any such person to such officers or other persons as the Board of
Directors shall determine.
(c) EXPENSES. The corporation shall advance to any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director or executive
officer of the corporation, or is or was serving at the request of
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the corporation as a director or executive officer of another corporation,
partnership, joint venture, trust or other enterprise, prior to the final
disposition of the proceeding, promptly following request therefor, all expenses
incurred by any director or executive officer in connection with such proceeding
upon receipt of an undertaking by or on behalf of such person to repay said
amounts if it should be determined ultimately that such person is not entitled
to be indemnified under this Section 43 or otherwise.
Notwithstanding the foregoing, unless otherwise determined pursuant to
paragraph (e) of this Section 43, no advance shall be made by the corporation to
an executive officer of the corporation (except by reason of the fact that such
executive officer is or was a director of the corporation in which event this
paragraph shall not apply) in any action, suit or proceeding, whether civil,
criminal, administrative or investigative, if a determination is reasonably and
promptly made (i) by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to the proceeding, or (ii) if such
quorum is not obtainable, or, even if obtainable, a quorum of disinterested
directors so directs, by independent legal counsel in a written opinion, that
the facts known to the decision-making party at the time such determination is
made demonstrate clearly and convincingly that such person acted in bad faith or
in a manner that such person did not believe to be in or not opposed to the best
interests of the corporation.
(d) ENFORCEMENT. Without the necessity of entering into an
express contract, all rights to indemnification and advances to directors and
executive officers under this Bylaw shall be deemed to be contractual rights and
be effective to the same extent and as if provided for in a contract between the
corporation and the director or executive officer. Any right to indemnification
or advances granted by this Section 43 to a director or executive officer shall
be enforceable by or on behalf of the person holding such right in any court of
competent jurisdiction if (i) the claim for indemnification or advances is
denied, in whole or in part, or (ii) no disposition of such claim is made within
ninety (90) days of request therefor. The claimant in such enforcement action,
if successful in whole or in part, shall be entitled to be paid also the expense
of prosecuting his claim. In connection with any claim for indemnification, the
corporation shall be entitled to raise as a defense to any such action that the
claimant has not met the standards of conduct that make it permissible under the
DGCL or any other applicable law for the corporation to indemnify the claimant
for the amount claimed. In connection with any claim by an executive officer of
the corporation (except in any action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that such
executive officer is or was a director of the corporation) for advances, the
corporation shall be entitled to raise a defense as to any such action clear and
convincing evidence that such person acted in bad faith or in a manner that such
person did not believe to be in or not opposed to the best interests of the
corporation, or with respect to any criminal action or proceeding that such
person acted without reasonable cause to believe that his conduct was lawful.
Neither the failure of the corporation (including its Board of Directors,
independent legal counsel or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant is
proper in the circumstances because he has met the applicable standard of
conduct set forth in the DGCL or any other applicable law, nor an actual
determination by the corporation (including its Board of Directors, independent
legal counsel or its stockholders) that the claimant has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that claimant has not met the applicable standard of conduct. In any suit
brought by a director or executive officer to enforce a right to indemnification
or to an advancement of
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expenses hereunder, the burden of proving that the director or executive officer
is not entitled to be indemnified, or to such advancement of expenses, under
this Section 43 or otherwise shall be on the corporation.
(e) NON-EXCLUSIVITY OF RIGHTS. The rights conferred on any person
by this Bylaw shall not be exclusive of any other right which such person may
have or hereafter acquire under any applicable statute, provision of the
Certificate of Incorporation, Bylaws, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding office. The corporation is
specifically authorized to enter into individual contracts with any or all of
its directors, officers, employees or agents respecting indemnification and
advances, to the fullest extent not prohibited by the Delaware General
Corporation Law, or by any other applicable law.
(f) SURVIVAL OF RIGHTS. The rights conferred on any person by
this Bylaw shall continue as to a person who has ceased to be a director,
officer, employee or other agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(g) INSURANCE. To the fullest extent permitted by the DGCL or any
other applicable law, the corporation, upon approval by the Board of Directors,
may purchase insurance on behalf of any person required or permitted to be
indemnified pursuant to this Section 43.
(h) AMENDMENTS. Any repeal or modification of this Section 43
shall only be prospective and shall not affect the rights under this Bylaw in
effect at the time of the alleged occurrence of any action or omission to act
that is the cause of any proceeding against any agent of the corporation.
(i) SAVING CLAUSE. If this Bylaw or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
corporation shall nevertheless indemnify each director and executive officer to
the full extent not prohibited by any applicable portion of this Section 43 that
shall not have been invalidated, or by any other applicable law. If this Section
43 shall be invalid due to the application of the indemnification provisions of
another jurisdiction, then the corporation shall indemnify each director and
executive officer to the full extent under any other applicable law.
(j) CERTAIN DEFINITIONS. For the purposes of this Bylaw, the
following definitions shall apply:
(1) The term "proceeding" shall be broadly construed and
shall include, without limitation, the investigation, preparation, prosecution,
defense, settlement, arbitration and appeal of, and the giving of testimony in,
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative.
(2) The term "expenses" shall be broadly construed and shall
include, without limitation, court costs, attorneys' fees, witness fees, fines,
amounts paid in settlement or judgment and any other costs and expenses of any
nature or kind incurred in connection with any proceeding.
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(3) The term the "corporation" shall include, in addition to
the resulting corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger which, if
its separate existence had continued, would have had power and authority to
indemnify its directors, officers, and employees or agents, so that any person
who is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall stand in the same position under
the provisions of this Section 43 with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
(4) References to a "director," "executive officer,"
"officer," "employee," or "agent" of the corporation shall include, without
limitation, situations where such person is serving at the request of the
corporation as, respectively, a director, executive officer, officer, employee,
trustee or agent of another corporation, partnership, joint venture, trust or
other enterprise.
(5) References to "other enterprises" shall include employee
benefit plans; references to "fines" shall include any excise taxes assessed on
a person with respect to an employee benefit plan; and references to "serving at
the request of the corporation" shall include any service as a director,
officer, employee or agent of the corporation which imposes duties on, or
involves services by, such director, officer, employee, or agent with respect to
an employee benefit plan, its participants, or beneficiaries; and a person who
acted in good faith and in a manner he reasonably believed to be in the interest
of the participants and beneficiaries of an employee benefit plan shall be
deemed to have acted in a manner "not opposed to the best interests of the
corporation" as referred to in this Section 43.
ARTICLE XII
NOTICES
SECTION 44. NOTICES.
(a) NOTICE TO STOCKHOLDERS. Whenever, under any provisions of
these Bylaws, notice is required to be given to any stockholder, it shall be
given in writing, timely and duly deposited in the United States mail, postage
prepaid, and addressed to his last known post office address as shown by the
stock record of the corporation or its transfer agent.
(b) NOTICE TO DIRECTORS. Any notice required to be given to any
director may be given by the method stated in subsection (a), or by overnight
delivery service, facsimile, telex or telegram, except that such notice other
than one which is delivered personally shall be sent to such address as such
director shall have filed in writing with the Secretary, or, in the absence of
such filing, to the last known post office address of such director.
(c) AFFIDAVIT OF MAILING. An affidavit of mailing, executed by a
duly authorized and competent employee of the corporation or its transfer agent
appointed with respect to the class of stock affected, specifying the name and
address or the names and
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addresses of the stockholder or stockholders, or director or directors, to whom
any such notice or notices was or were given, and the time and method of giving
the same, shall in the absence of fraud, be prima facie evidence of the facts
therein contained.
(d) TIME NOTICES DEEMED GIVEN. All notices given by mail or by
overnight delivery service, as above provided, shall be deemed to have been
given as at the time of mailing, and all notices given by facsimile, telex or
telegram shall be deemed to have been given as of the sending time recorded at
time of transmission.
(e) METHODS OF NOTICE. It shall not be necessary that the same
method of giving notice be employed in respect of all directors, but one
permissible method may be employed in respect of any one or more, and any other
permissible method or methods may be employed in respect of any other or others.
(f) FAILURE TO RECEIVE NOTICE. The period or limitation of time
within which any stockholder may exercise any option or right, or enjoy any
privilege or benefit, or be required to act, or within which any director may
exercise any power or right, or enjoy any privilege, pursuant to any notice sent
him in the manner above provided, shall not be affected or extended in any
manner by the failure of such stockholder or such director to receive such
notice.
(g) NOTICE TO PERSON WITH WHOM COMMUNICATION IS UNLAWFUL.
Whenever notice is required to be given, under any provision of law or of the
Certificate of Incorporation or Bylaws of the corporation, to any person with
whom communication is unlawful, the giving of such notice to such person shall
not be required and there shall be no duty to apply to any governmental
authority or agency for a license or permit to give such notice to such person.
Any action or meeting which shall be taken or held without notice to any such
person with whom communication is unlawful shall have the same force and effect
as if such notice had been duly given. In the event that the action taken by the
corporation is such as to require the filing of a certificate under any
provision of the DGCL, the certificate shall state, if such is the fact and if
notice is required, that notice was given to all persons entitled to receive
notice except such persons with whom communication is unlawful.
(h) NOTICE TO PERSON WITH UNDELIVERABLE ADDRESS. Whenever notice
is required to be given, under any provision of law or the Certificate of
Incorporation or Bylaws of the corporation, to any stockholder to whom (i)
notice of two consecutive annual meetings, and all notices of meetings or of the
taking of action by written consent without a meeting to such person during the
period between such two consecutive annual meetings, or (ii) all, and at least
two, payments (if sent by first class mail) of dividends or interest on
securities during a twelve-month period, have been mailed addressed to such
person at his address as shown on the records of the corporation and have been
returned undeliverable, the giving of such notice to such person shall not be
required. Any action or meeting which shall be taken or held without notice to
such person shall have the same force and effect as if such notice had been duly
given. If any such person shall deliver to the corporation a written notice
setting forth his then current address, the requirement that notice be given to
such person shall be reinstated. In the event that the action taken by the
corporation is such as to require the filing of a certificate under any
provision of the DGCL, the certificate need not state that notice was not given
to persons to whom notice was not required to be given pursuant to this
paragraph.
23.
<PAGE> 28
ARTICLE XIII
AMENDMENTS
SECTION 45. AMENDMENTS. Subject to paragraph (h) of Section 43 of the
Bylaws, the Bylaws may be altered or amended or new Bylaws adopted by the
affirmative vote of at least sixty-six and two-thirds percent (66-2/3%) of the
voting power of all of the then-outstanding shares of the voting stock of the
corporation entitled to vote. The Board of Directors shall also have the power
to adopt, amend, or repeal Bylaws.
ARTICLE XIV
LOANS TO OFFICERS
SECTION 46. LOANS TO OFFICERS. The corporation may lend money to, or
guarantee any obligation of, or otherwise assist any officer or other employee
of the corporation or of its subsidiaries, including any officer or employee who
is a Director of the corporation or its subsidiaries, whenever, in the judgment
of the Board of Directors, such loan, guarantee or assistance may reasonably be
expected to benefit the corporation. The loan, guarantee or other assistance may
be with or without interest and may be unsecured, or secured in such manner as
the Board of Directors shall approve, including, without limitation, a pledge of
shares of stock of the corporation. Nothing in these Bylaws shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
24.
<PAGE> 1
EXHIBIT 4.1
NUMBER SHARES
COMMON STOCK [REPEATER TECHNOLOGIES LOGO] COMMON STOCK
THIS CERTIFICATE IS TRANSFERABLE
IN BOSTON, MA OR NEW YORK, NY
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
CUSIP __________
THIS CERTIFIES THAT SEE REVERSE FOR CERTAIN
DEFINITIONS AND A STATEMENT
AS TO THE RIGHTS, PREFERENCES,
PRIVILEGES AND RESTRICTIONS
OF SHARES
IS THE OWNER OF
FULLY PAID AND NONASSESSABLE SHARES OF THE COMMON STOCK,
$0.001 PAR VALUE PER SHARE, OF
REPEATER TECHNOLOGIES, INC.
transferable on the books of the Corporation in person or by duly authorized
attorney upon surrender of this Certificate properly endorsed. This Certificate
is not valid until countersigned and registered by the Transfer Agent and
Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
Dated:
REPEATER TECHNOLOGIES, INC.
CORPORATE SEAL
CHIEF FINANCIAL OFFICER FEBRUARY 11, 2000 PRESIDENT
DELAWARE
COUNTERSIGNED AND REGISTERED
U.S. STOCK TRANSFER CORPORATION
TRANSFER AGENT AND REGISTRAR
By:
AUTHORIZED SIGNATURE
<PAGE> 2
REPEATER TECHNOLOGIES, INC.
A statement of the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights as established, from time to time, by the Certificate of
Incorporation of the Corporation and by any certificate of determination, the
number of shares constituting each class and series, and the designations
thereof, may be obtained by the holder hereof upon request and without charge at
the principal office of the Corporation.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as through they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT - _______________ Custodian _______________
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts to Minors
Act _________________________
JT TEN - as joint tenants with right of (State)
survivorship and not as tenants UNIF TRF MIN ACT - ________________ Custodian (until age ____)
in common (Cust)
___________________ under Uniform Transfers
(Minor)
to Minors Act _____________________________
(State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED _______________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
______________________________________
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
________________________________________________________________________________
________________________________________________________________________________
_________________________________________________________________________ Shares
of the common stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
_______________________________________________________________________ Attorney
to transfer the said Stock on the books of the within-named Corporation with
full power of substitution in the premises.
Dated ________________________________
X _______________________________________
X _______________________________________
NOTICE: THE SIGNATURE(S) OF THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME(S) AS WRITTEN
UPON THE FACE OF THE CERTIFICATE IN
EVERY PARTICULAR WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.
SIGNATURE GUARANTEED
By _______________________________________________________________________
THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT
TO S.E.C. RULE 17Ad-15.
<PAGE> 1
EXHIBIT 4.2
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "1933 ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT
BE SOLD OR TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS IN ACCORDANCE WITH THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR SOME OTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS IS
AVAILABLE WITH RESPECT THERETO.
AMENDED AND RESTATED PREFERRED STOCK PURCHASE WARRANT
Warrant No. WBB-18 Number of Shares 14,205
Series BB Preferred Stock
REPEATER TECHNOLOGIES, INC.
Void after July 31, 2004
1. ISSUANCE. This Amended and Restated Preferred Stock Purchase Warrant
replaces that certain Preferred Stock Purchase Warrant dated August 6, 1997
issued to LIGHTHOUSE CAPITAL PARTNERS II, LP. ("Lighthouse") by REPEATER
TECHNOLOGIES, INC., a California corporation (hereinafter with its successors
called the "Company").
2. PURCHASE PRICE; NUMBER OF SHARES. The registered holder of this
Warrant (the "Holder"), commencing on the date hereof, is entitled upon
surrender of this Warrant with the subscription form annexed hereto duly
executed, at the principal of the Company, to purchase from the Company at a
price per share of $2.64 (the "Purchase Price"), 14,205 fully paid and
nonassessable shares (the "Shares") of Series BB Preferred Stock, no par value,
of the Company (the "Preferred Stock").
Until such time as this Warrant is exercised in full or expires, the Purchase
Price and the securities issuable upon exercise of this Warrant are subject to
adjustment as hereinafter provided. The person or persons on whose name or names
any certificate representing shares of Preferred Stock is issued hereunder shall
be deemed to have become the holder of record of the shares represented thereby
as at the close of business on the date this Warrant is exercised with respect
to such shares, whether or not the transfer books of the Company shall be
closed.
3. PAYMENT OF PURCHASE PRICE. The Purchase Price may be paid (i) in
cash or by check, (ii) by the surrender by the Holder to the Company of any
promissory notes or other obligations issued by the Company, with all such
notes and obligations so surrendered being credited against the Purchase Price
in an amount equal to the principal amount thereof plus accrued interest to the
date of surrender, or (iii) by any combination of the foregoing.
4. NET ISSUE ELECTION. The Holder may elect to receive, without the
payment by the Holder of any additional consideration, shares of Preferred Stock
equal to the value of this Warrant or any portion hereof by the surrender of
this Warrant or such portion to the Company, with the net issue election notice
annexed hereto duly executed, at the principal office of the Company. Thereupon,
the Company shall issue to the Holder such number of fully paid and
nonassesab1e shares of Preferred Stock as is computed using the following
formula:
Y(A-B)
X = ------
A
1.
<PAGE> 2
where: X = the number of shares of Preferred Stock to be issued to the
Holder pursuant to this Section 4.
Y = the number of shares of Preferred Stock covered by
this Warrant in respect of which the net issue
election is made pursuant to this SECTION 4.
A = the Fair Market Value (defined below) of one share
of Preferred Stock, as determined at the time the net
issue election is made pursuant to this SECTION 4.
B = the Purchase Price in effect under this Warrant at
the time the net issue election is made pursuant to
this SECTION 4.
"Fair Market Value" of a share of Preferred Stock (or Common Stock if the
Preferred Stock has been automatically converted into Common Stock) as of a
particular date (the "Determination Date") shall mean:
(i) If the net issue election is made in connection with and
contingent upon the closing of the sale of the Company's Common Stock
to the public in a public offering pursuant to a Registration Statement
under the Act (a "Public Offering"), and if the Company's Registration
Statement relating to such Public Offering ("Registration Statement")
has been declared effective by the SEC, then the initial "Price to
Public" specified in the final prospectus with respect to such offering
multiplied by the number of shares of Common Stock into which each
share of Preferred Stock is then convertible.
(ii) If the net issue election is not made in connection with
and contingent upon a Public Offering, then as follows:
(A) If traded on a securities exchange or the NASDAQ
National Market, the fair market value of the Common Stock
shall be deemed to be the average of the closing or last
reported sale prices of the Common Stock on such exchange or
market over the 30-day period ending five business days prior
to the Determination Date, and the fair market value of the
Preferred Stock shall be deemed to be such fair market value
of the Common Stock multiplied by the number of shares of
Common Stock into which each share of Preferred Stock is then
convertible;
(B) If otherwise traded in an over-the-counter
market, the fair market value of the Common Stock shall be
deemed to be the average of the closing ask prices of the
Common Stock over the 30-day period ending five business days
prior to the Determination Date, and the fair market value of
the Preferred Stock shall be deemed to be such fair market
value of the Common Stock multiplied by the number of shares
of Common Stock into which each share of Preferred Stock is
then convertible; and
(C) If there is no public market for the Common
Stock, then fair market value shall be determined by mutual
agreement of the holder of this Warrant and the Company, and
if the holder and the Company are unable to so agree, at the
Company's sole expense by an investment banker of national
reputation selected by the Company and reasonably acceptable
to the holder of this Warrant.
5. PARTIAL EXERCISE. This Warrant may be exercised in part, and the
Holder shall be entitled to receive a new warrant, which shall be dated as of
the date of this Warrant, covering the number of shares in respect of which this
Warrant shall not have been exercised.
6. FRACTIONAL SHARE. In no event shall any fractional share of
Preferred Stock be issued upon any exercise of this Warrant. If, upon exercise
of this Warrant in its entirety, the Holder would, except as provided in this
SECTION 6, be entitled to receive a fractional share of Preferred Stock, then
the Company shall pay in lieu thereof, the Fair Market Value of such fractional
share in cash.
2.
<PAGE> 3
7. EXPIRATION DATE; AUTOMATIC EXERCISE. This Warrant shall expire at
the close of business on July 31, 2004 and shall be void thereafter.
Notwithstanding the foregoing, this Warrant shall automatically be deemed to be
exercised in full pursuant to the provisions of Section 4 hereof, without any
further action on behalf of the Holder, immediately prior to the time this
Warrant would otherwise expire pursuant to the preceding sentence.
8. RESERVED SHARES; VALID ISSUANCE. The Company covenants that it will
at all times from and after the date hereof reserve and keep available such
number of its authorized shares of Preferred Stock and Common Stock, no par
value, of the Company (the "Common Stock"), free from all preemptive or similar
rights therein, as will be sufficient to permit, respectively, the exercise of
this Warrant in full and the conversion into shares of Common Stock of all
shares of Preferred Stock receivable upon such exercise. The Company further
covenants that such shares as may be issued pursuant to such exercise and/or
conversion will, upon issuance in accordance with the terms hereof, be duly and
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issuance thereof.
9. STOCK SPLITS AND DIVIDENDS. If after the date hereof the Company
shall subdivide the Preferred Stock, by split-up or otherwise, or combine the
Preferred Stock, or issue additional shares of Preferred Stock in payment of a
stock dividend on the Preferred Stock, the number of shares of Preferred Stock
issuable on the exercise of this Warrant shall forthwith be proportionately
increased in the case of a subdivision or stock dividend, or proportionately
decreased in the case of a combination, and the Purchase Price shall forthwith
be proportionately decreased in the case of a subdivision or stock dividend, or
proportionately increased in the case of a combination.
10. REORGANIZATION, RECLASSIFICATIONS, CONSOLIDATION, MERGER OR SALE.
If any recapitalization, reclassification or reorganization of the capital stock
of the Company, or any consolidation or merger of the Company with another
corporation, or the sale of all or substantially all of its assets or other
transaction shall be effected in such a way that holders of the Preferred Stock
shall be entitled to receive stock, securities, or other assets or property (an
"Organic Change") then, as a condition of such Organic Change, lawful and
adequate provisions shall be made by the Company whereby the Holder hereof shall
thereafter have the right to purchase and receive (on the terms contained herein
and in lieu of the shares of the Preferred Stock of the Company immediately
theretofore purchasable and receivable upon the exercise of the rights
represented hereby) such shares of stock, securities or other assets or property
as may be issued or payable with respect to or in exchange for a number of
outstanding shares of such Preferred Stock equal to the number of shares of such
stock immediately theretofore purchasable and receivable upon the exercise of
the rights represented hereby, provided, however, that in the event the value of
the stock, securities or the assets or property (determined in good faith by the
Board of Directors of the Company) issuable or payable with respect to one share
of the preferred Stock of the Company immediately theretofore purchasable or
receivable upon the exercise of the rights represented hereby is in excess of an
amount equal to two times the Purchase Price hereof effective at the time of a
merger and securities received in such reorganization, if any, are publicly
traded, then this Warrant shall expire unless exercised prior to such Organic
Change. In the event of any Organic Change, appropriate provision shall be made
by the Company with respect to the provisions of this Warrant to the end that
such provisions (including, without limitation, provisions for adjustments of
the Purchase Price and the number of shares purchasable and receivable upon the
exercise of this Warrant) shall thereafter be applicable, in relation to any
shares of stock, securities or assets thereafter deliverable upon the exercise
hereof.
11. CERTIFICATE OF ADJUSTMENT. Whenever the Purchase Price is adjusted,
as herein provided, the Company shall promptly deliver to the Holder a
certificate of the Company's chief financial officer setting forth the Purchase
Price after such adjustment and setting forth a brief statement of the facts
requiring such adjustment.
12. NOTICES OF RECORD DATE, ETC. In the event of:
(a) any taking by the Company of a record of the holders of
any class of securities for the purpose of determining the holders thereof who
are entitled to receive any dividend or other distribution, or any
3.
<PAGE> 4
right to subscribe for, purchase, sell or otherwise acquire or dispose of any
shares of stock of any class or any other securities or property, or to receive
any other right;
(b) any reclassification of the capital stock of the Company,
capital reorganization of the Company, consolidation or merger involving the
Company, or sale or conveyance of all or substantially all of its assets,
including any Organic Change; or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company;
then in each such event the Company will provide or cause to be provided to the
Holder a written notice thereof. Such notice shall be provided at least ten (10)
business days prior to the date specified in such notice on which any such
action is to be taken.
13. REPRESENTATIONS, WARRANTIES AND COVENANTS. This Warrant is issued
and delivered by the Company and accepted by each Holder on the basis of the
following representations, warranties and covenants made by the Company:
A. The Company has all necessary authority to issue, execute
and deliver this Warrant and to perform its obligations hereunder. This Warrant
has been duly authorized issued, executed and delivered by the Company and is
the valid and binding obligation of the Company, enforceable in accordance with
its terms.
B. The shares of Preferred Stock issuable upon the exercise of
this Warrant have been duly authorized and reserved for issuance by the Company
and, when issued in accordance with the terms hereof, will be validly issued,
fully paid and nonassessable.
C. The issuance, execution and delivery of this Warrant do
not, and the issuance of the shares of Preferred Stock upon the exercise of this
Warrant in accordance with the terms hereof will not, (i) violate or contravene
the Company's Articles or by-laws, or any law, statute, regulation, rule,
judgment or order applicable to the Company, (ii) violate, contravene or result
in a breach or default under any contract, agreement or instrument to which the
Company is a party or by which the Company or any of its assets are bound or
(iii) require the consent or approval of or the filing of any notice or
registration with any person or entity, except as may properly be made after the
date hereof.
D. Attached hereto as EXHIBIT D is a true and complete copy of
the Amended and Restated Articles of Incorporation of the Company in effect on
the date hereof.
E. So long as this Warrant has not terminated, Holder shall be
entitled to receive such financial and other information as the Holder would be
entitled to receive if Holder were a holder of more than 5% of any Registrable
Securities under the Fourth Amended and Restated Investor Rights Agreement,
dated September 3, 1996, as may be amended from time to time.
F. As of the date hereof, the authorized capital stock of the
Company consists of (i) 10,000,000 shares of Common Stock, of which 2,429,503
shares are issued and outstanding and 18,940 shares are reserved for issuance
upon the conversion of the Preferred Stock and exercise of this Warrant, (ii)
1,250,000 shares of Series AA Preferred Stock of which 1,228,409 are issued and
outstanding and (iii) 3,500,000 shares of Series BB Preferred Stock, of which
3,429,904 shares are issued and outstanding and 14,205 shares are reserved for
issuance upon the exercise of this Warrant. Attached hereto as EXHIBIT C is a
capitalization table summarizing the capitalization of the Company, including,
without limitation, the current Conversion Price of the Series BB Preferred
Stock.
14. AMENDMENT. The terms of this Warrant may be amended, modified or
waived only with the written consent of the Holder and Company.
4.
<PAGE> 5
15. REPRESENTATIONS AND COVENANTS OF THE HOLDER. This Preferred Stock
Purchase Warrant has been entered into by the Company in reliance upon the
following representations and covenants of the Holder, which by its execution
hereof the Holder hereby confirms:
A. INVESTMENT PURPOSE. The right to acquire Preferred Stock or
the Preferred Stock issuable upon exercise of the Holder's rights contained
herein will be acquired for investment and not with a view to the sale or
distribution of any part thereof, and the Holder has no present intention of
selling or engaging in any public distribution of the same.
B. ACCREDITED INVESTOR. Holder is an "accredited investor"
within the meaning of the Securities and Exchange Rule 501 of Regulation D, as
presently in effect.
C. PRIVATE ISSUE. The Holder understands (i) that the
Preferred Stock issuable upon exercise of the Holder's rights contained herein
is not registered under the 1933 Act or qualified under applicable state
securities laws on the ground that the issuance contemplated by this Warrant
will be exempt from the registration and qualifications requirements thereof,
and (ii) that the Company's reliance on such exemption is predicated in part on
the representations set forth in this Section 15.
D. FINANCIAL RISK. The Holder 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.
16. NOTICES, TRANSFERS, ETC.
A. Any notice or written communication required or permitted
to be given to the Holder may be given by certified mail or delivered to the
Holder at the address most recently provided by the Holder to the Company.
B. Subject to compliance with applicable federal and state
securities laws, this Warrant may only be transferred in its entirety by the
Holder with respect to all of the shares purchasable hereunder to any
affiliates of Lighthouse. Upon surrender of this Warrant to the Company,
together with the assignment notice annexed hereto duly executed, for transfer
of this Warrant as an entirety by the Holder, the Company shall issue a new
warrant of the same denomination to the assignee. Upon surrender of this Warrant
to the Company, together with the assignment hereof properly endorsed, by the
Holder for transfer with respect to a portion of the shares of Preferred Stock
purchasable hereunder, the Company shall issue a new warrant to the assignee, in
such denomination as shall be requested by the Holder hereof, and shall issue
to such Holder a new warrant covering the number of shares in respect of which
this Warrant shall not have been transferred.
C. In case this Warrant shall be mutilated, lost, stolen or
destroyed, the Company shall issue a new warrant of like tenor and denomination
and deliver the same (i) in exchange and substitution for and upon surrender
and cancellation of any mutilated Warrant, or (ii) in lieu of any Warrant lost,
stolen or destroyed, upon receipt of an affidavit of the Holder or other
evidence reasonably satisfactory to the Company of the loss, theft or
destruction of such Warrant and indemnification of the Company by the Holder
with respect thereto.
17. NO IMPAIRMENT. The Company will not, by amendment of its Articles
or through any reclassification, capital reorganization, consolidation, merger,
sale or conveyance of assets, dissolution, liquidation, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
of performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such action as may be necessary or appropriate in order to protect the rights of
the Holder.
18. GOVERNING LAW. The provisions and terms of this Warrant shall be
governed by and construed in accordance with the internal laws of the State of
California.
5.
<PAGE> 6
19. SUCCESSORS AND ASSIGNS. This Warrant shall be binding upon the
Company's successors and assigns and shall inure to the benefit of the Holder's
successors, legal representatives and permitted assigns.
20. BUSINESS DAYS. If the last or appointed day for the taking of any
action required or the expiration of any rights granted herein shall be a
Saturday or Sunday or a legal holiday in California, then such action may be
taken or right may be exercised on the next succeeding day which is not a
Saturday or Sunday or such a legal holiday.
21. QUALIFYING PUBLIC OFFERING. If the Company shall effect a firm
commitment underwritten public offering of shares of Common Stock which results
in the conversion of the Preferred Stock into Common Stock pursuant to the
Company's Articles in effect immediately prior to such offering, then,
effective upon such conversion, this Warrant shall change from the right to
purchase shares of Preferred Stock to the right to purchase shares of Common
Stock, and the Holder shall thereupon have the right to purchased, at a total
price equal to that payable upon the exercise of this Warrant in full, the
number of shares of Common Stock which would have been receivable by the Holder
upon the exercise of this Warrant for shares of Preferred Stock immediately
prior to such conversion of such shares of Preferred Stock into shares of Common
Stock, and in such event appropriate provisions shall be made with respect to
the rights and interest of the Holder to the end that the provisions hereof
(including, without limitation, the provisions for the adjustment of the
Purchase Price and of the number of shares purchasable upon exercise of this
Warrant and the provisions relating to the net issue election) shall thereafter
be applicable to any shares of Common Stock deliverable upon the exercise
hereof.
22. VALUE. The Company and the Holder agree that the value of this
Warrant on the date of grant is $100.
23. RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be
entitled to any rights of a shareholder in the Company, either at law or
equity, and the rights of the Holder are limited to those expressed in this
Warrant. Nothing contained in this Warrant shall be construed as conferring upon
the Holder hereof the right to vote or to consent or to receive notice as a
shareholder of the Company on any matters or with respect to any rights
whatsoever as a shareholder of the Company. No dividends or interest shall be
payable or accrued in respect of this Warrant or the interest represented hereby
or the Shares purchasable hereunder until, and only to the extent that, this
Warrant shall have been exercised in accordance with its terms.
24. MARKET STANDOFF. The holder of this Warrant, by acceptance hereof,
agrees (but only if each Company officer, director, and shareholder owning
beneficially 5% or more of the Company's equity securities, and each shareholder
selling shares in such offering, also agrees) that such holder will not,
without the prior written consent of the lead underwriter of the initial public
offering of the Common Stock of the Company pursuant to a registration statement
filed under the Act (the "Offering"), directly or indirectly offer to sell,
contact to sell (including, without limitation, any short sale), grant any
option for the sale of, acquire any option to dispose of any Warrant Shares for
a period of 180 days following the day on which the registration statement filed
on behalf of the Company in connection with the Offering shall become effective
by order of the SEC.
25. DESCRIPTIVE HEADINGS. The description headings of the several
sections and paragraphs of this Warrant are inserted for convenience only and do
not constitute a part of this Warrant.
6.
<PAGE> 7
26. ENTIRE AGREEMENT. This Warrant and the attachments hereto
constitute the entire agreement between the parties pertaining to the subject
matter herein and supersedes all prior and contemporaneous agreements,
representations and undertakings of the parties.
REPEATER TECHNOLOGIES, INC.
[CORPORATE SEAL]
By: /s/ TODD B. SCHULL
--------------------------
Name: Todd B. Schull
------------------------
Title: Vice President and CFO
-----------------------
Attest:
/s/ EDWARD R. JOHNSON
- -----------------------------
7.
<PAGE> 8
ASSIGNMENT
For value received _______________________________ hereby sells, assigns
and transfers unto______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address of Assignee)
________________________________________________________________________________
the within Warrant, and does hereby irrevocably constitute and appoint _________
_________________ its attorney to transfer the within Warrant on the books of
the within named Company with full power of substitution on the premises.
Dated:
-----------------------
--------------------------------
In the Presence of:
- -----------------------------
<PAGE> 9
EXHIBIT A
SUBSCRIPTION FORM
Date:
----------,-----
Repeater Technologies, Inc.
1150 Morse Avenue
Sunnyvale, CA 94089
Attn.: President
Ladies and Gentlemen:
The undersigned hereby elects to exercise the Warrant issued to it by
Repeater Technologies, Inc. and dated August 6, 1997 Warrant No. BB-18
(the "Warrant") and to purchase thereunder ______ shares of the Series
BB Preferred Stock of the Company (the "Shares") at a purchase price of
Two and 64/100 Dollars ($2.64) per Share or an aggregate purchase price
of ___________________ Dollars ($_______._______)(the "Purchase
Price").
The undersigned hereby elects to convert ________ percent (____%) of
the value of the Warrant pursuant to the provisions of SECTION 4 of the
Warrant.
Pursuant to the terms of the Warrant, the undersigned has delivered the
Purchase Price herewith in full in cash or by certified check or wire transfer.
The undersigned also makes representations set forth on the attached EXHIBIT B
of the Warrant.
Very truly yours,
By:
---------------------------
Name:
-------------------------
Title:
------------------------
<PAGE> 10
EXHIBIT B
INVESTMENT REPRESENTATION
THIS AGREEMENT MUST BE COMPLETED, SIGNED AND RETURNED TO [COMPANY/ENTITY NAME]
ALONG WITH THE SUBSCRIPTION FORM BEFORE THE PREFERRED STOCK ISSUABLE UPON
EXERCISE OF THE WARRANT DATED JULY __, 1997 WILL BE ISSUED.
Date:
-----------,------
Repeater Technologies, Inc.
1150 Morse Avenue
Sunnyvale, CA 94089
Attn.: President
Ladies and Gentlemen:
The undersigned, _______________ ("Purchaser"), intends to acquire up
to ________ shares of the Series BB Preferred Stock (the "Preferred Stock") of
Repeater Technologies, Inc. (the "Company") from the Company pursuant to the
exercise or conversion of certain Warrants to purchase Preferred Stock held by
Purchaser. The Preferred Stock will be issued to Purchaser in a transaction not
involving a public offering and pursuant to an exemption from registration under
the Securities Act of 1933, as amended (the "1933 Act") and applicable state
securities laws. In connection with such purchase and in order to comply with
the exemptions from registration relied upon by the Company, Purchaser
represents, warrants and agrees as follows:
Purchaser is acquiring the Preferred Stock for its own account, to hold for
investment, and Purchaser shall not make any sale, transfer or other disposition
of the Preferred Stock in violation of the 1933 Act or the General Rules and
Regulations promulgated thereunder by the Securities Exchange Commission (the
"SEC") or in violation of any applicable state securities law.
Purchaser has been advised that the Preferred Stock has not been registered
under the 1933 Act or state securities laws on the ground that this transaction
is exempt from registration, and that reliance by the Company on such
exemptions is predicated in part on Purchaser's representations set forth in
this letter.
Purchaser has been informed that under the 1933 Act, the Preferred Stock must be
held indefinitely unless it is subsequently registered under the 1933 Act or
unless an exemption from such registration (such as Rule 144) is available with
respect to any proposed transfer or disposition by Purchaser of the Preferred
Stock. Purchaser further agrees that the Company may refuse to permit Purchaser
to sell, transfer or dispose of the Preferred Stock (excepted as permitted under
Rule 144) unless there is in effect a registration statement under the 1933 Act
and any applicable state securities laws covering such transfer, or unless
Purchaser furnishes an opinion of counsel reasonable satisfactory to counsel for
the Company, to the effect that such registration is not required.
Purchaser also understands and agrees that there will be placed on the
certificate(s) for the Preferred Stock, or any substitutions therefor, a legend
stating in substance:
"The shares represented by this certificate have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), or any state
securities laws. These shares have been acquired for investment and may not be
sold or otherwise transferred in the absence of an effective registration
statement for these shares under the Securities Act and applicable state
securities laws, or an opinion of counsel satisfactory to the Company that
registration is not required and that an applicable exemption is available."
<PAGE> 11
Purchaser has carefully read this letter and has discussed its requirements and
other applicable limitations upon Purchaser's resale of the Preferred Stock with
Purchaser's counsel.
Very truly yours,
By:
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Name:
------------------------------------
Title:
-----------------------------------
<PAGE> 1
EXHIBIT 4.3
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO SALE OR DISPOSITION OF
SUCH SECURITIES MAY BE EFFECTED WITHOUT (i) AN EFFECTIVE REGISTRATION
STATEMENT RELATING THERETO, (ii) AN OPINION OF COUNSEL FOR HOLDER,
REASONABLY SATISFACTORY TO COMPANY, THAT SUCH REGISTRATION IS NOT
REQUIRED, (iii) RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES AND
EXCHANGE COMMISSION, OR (iv) OTHERWISE COMPLYING WITH THE PROVISIONS OF
ARTICLE III OF THIS WARRANT.
WARRANT
TO PURCHASE SHARES OF SERIES DD PREFERRED STOCK
Dated January 25, 1999
This certifies that for value received, PHOENIX LEASING INCORPORATED, or
registered assigns, is entitled as of January 25, 1999 (the "Closing Date"),
subject to the terms set forth herein, to purchase from REPEATER TECHNOLOGIES,
INC., a California corporation (the "Company"), up to Three Thousand Nine
Hundred Fifty-five (3,955) fully paid and non-assessable shares of Company's
Series DD Preferred Stock, at the price of Five Dollars and Fifty Cents ($5.50)
per share. The initial exercise price of Five Dollars and Fifty Cents ($5.50)
per share, and the number of shares purchasable hereunder, are subject to
adjustment in certain events, all as more fully set forth under Article IV
herein.
ARTICLE I
DEFINITIONS
"Articles of Incorporation" means the Amended and Restated Articles of
Incorporation of Company, as filed with the California Secretary of State on
November 24, 1998.
"Commission" means the Securities Exchange Commission, or any other
federal agency then administering the Exchange Act or the Securities Act, as
defined herein.
"Common Stock" means Company's Common Stock, any stock into which such
stock shall have been changed or any stock resulting from any reclassification
of such stock, and any other capital stock of Company of any class or series
now or hereafter authorized having the right to share in distributions either
of earnings or assets of Company without limit as to amount or percentage.
"Company" means REPEATER TECHNOLOGIES, INC., a California corporation, and
any successor corporation.
"Conversion Price" means the Conversion Price for Series DD Preferred
Stock, as determined in accordance with the Articles of Incorporation.
"Convertible Securities" means evidences of indebtedness, shares of
stock or other securities which are convertible into or exchangeable for, with
or without payment of additional consideration, shares of Common Stock, either
immediately or upon the arrival of a specified date or the happening of a
specified event or both.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any successor federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect from time to time.
"Exercise Period" means the period commencing on the Closing Date and
terminating at the later to occur of: (i) 5:00 p.m., Pacific Time on the tenth
(10th) anniversary of the Closing Date, or (ii) 5:00 p.m., Pacific Time on the
fifth (5th) anniversary of the closing of Company's initial sale and issuance
of shares of Common Stock in an underwritten public offering, pursuant to a
Registration.
"Exercise Price" means the price per share of Series DD Preferred Stock
set forth in the Preamble to this Warrant, as such price may be adjusted
pursuant to Article IV hereof.
"Fair Market Value" means
(i) If shares of Series DD Preferred Stock or Common Stock, as
the case may be, are being sold pursuant to a Registration and Fair Market
Value is being determined as of the closing of the public offering, the "price
to public" specified for such shares in the final prospectus for such public
offering;
(ii) If shares of Series DD Preferred Stock or Common Stock, as
the case may be, are then listed or admitted to trading on any national
securities exchange or traded on any national market system and Fair Market
Value is not being determined as of the date described in clause (i) of this
definition, the average of the daily closing prices for the thirty (30) trading
days before such date, excluding any trades which are not bona fide, arm's
length transactions. The closing price for each day shall be the last sale
price on such date or, if no such sale takes place on such date, the average of
the closing bid and asked prices on such date, in each case as officially
reported on the principal national securities exchange or national market
system on which such shares are then listed, admitted to trading or traded;
(iii) If no shares of Series DD Preferred Stock or Common Stock, as
the case may be, are then listed or admitted to trading on any national
securities exchange or traded on any national market system or being offered to
the public pursuant to a Registration, the average of the reported closing bid
and asked prices thereof on such date in the over-the-counter market as shown
by the National Association of Securities Dealers automated quotation system
or, if such shares are not then quotes in such system, as published by the
National Quotation Bureau, Incorporated or any similar successor organization,
and in either case as reported by any member firm of the New York Stock Exchange
selected by Holder;
(iv) If no shares of Series DD Preferred Stock or Common Stock, as
the case may be, are then listed or admitted to trading on any national
exchange or traded on any national market system, if no closing bid and asked
prices thereof are then so quoted or published in the over-the-counter market
and if no such shares are being offered to the public pursuant to a
Registration, the Fair Market Value of a share of Series DD Preferred Stock or
Common Stock, as the case may be, shall be determined in good faith by Company's
Board of Directors.
"Fiscal Year" means the fiscal year of Company.
"Holder" means the person in whose name this Warrant is held as set forth
on the cover page.
"Option" means any right, warrant or option to subscribe for or purchase
shares of Common Stock or Convertible Securities.
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<PAGE> 3
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, joint ventures,
associations, companies, trusts, banks, trust companies, land trusts, business
trusts, government entities and authorities and other organizations, whether or
not legal entities.
"Preferred Stock" means the Preferred Stock of Company, as defined in the
Articles of Incorporation.
"Principal Executive Office" means Company's office at 1150 Morse Avenue,
Sunnyvale, CA 94089, or such other office as designated in writing to Holder by
Company.
"Register," "Registered" and "Registration" refer to a registration
effected by preparing and filing a registration statement in compliance with
the Securities Act, and the declaration or ordering of the effectiveness of
such registration statement.
"Rights Agreement" means the Sixth Amended and Restated Investors' Rights
Agreement, dated as of November ___, 1998, by and among Company and the
shareholders of Company named therein, attached hereto as Exhibit "D".
"Rule 144" means Rule 144 as promulgated by the Commission under the
Securities Act, as such Rule may be amended from time to time, or any similar
successor rule that the Commission may promulgate.
"Securities Act" means the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect from time to time.
"Series DD Preferred Stock" means the Series DD Preferred Stock of
Company, as defined in the Articles of Incorporation.
"Shareholder" means a holder of one or more Warrant Shares or shares of
Common Stock acquired upon conversion of Warrant Shares.
"Warrant" means the warrant dated as of Closing Date issued to Holder and
all warrants issued upon the partial exercise, transfer or division of or in
substitution for any Warrant.
"Warrant Shares" means the shares of Series DD Preferred Stock issuable
upon the exercise of this Warrant provided that if under the terms hereof there
shall be a change such that the securities purchasable hereunder shall be
issued by an entity other than Company or there shall be a change in the type
or class of securities purchasable hereunder, then the term shall mean the
securities issuable upon the exercise of the rights granted hereunder.
ARTICLE II
EXERCISE
2.1 Exercise Right; Manner of Exercise. Holder may exercise this
Warrant, in whole or in part, at any time and from time to time during the
Exercise Period upon (i) surrender of this Warrant, together with an executed
Notice of Exercise, substantially in the form of Exhibit "A" attached hereto,
at the Principal Executive Office, and (ii) payment to Company of the aggregate
Exercise Price for the number of Warrant Shares specified in the Notice of
Exercise (such aggregate Exercise Price the
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<PAGE> 4
"Total Exercise Price"). The Total Exercise Price shall be paid by check.
Certificates for the Warrant Shares so purchased shall be delivered to Holder
within a reasonable time, not exceeding fifteen (15) days after this Warrant is
exercised. The issuance of Warrant Shares upon exercise of this Warrant shall be
made without charge to Holder for any issuance tax with respect thereto or any
other cost incurred by Company in connection with the exercise of this Warrant
and the related issuance of Warrant Shares.
2.2 Conversion Right. In lieu of exercising this Warrant as specified in
Section 2.1, Holder may from time to time convert this Warrant, in whole or in
part, into that number of shares of Series DD Preferred Stock equal to the
product of: (a) the quotient obtained by dividing (i) the Fair Market Value of
one share of Series DD Preferred Stock at the time of such net exercise election
less the Exercise Price of one such share by (ii) the Fair Market Value of such
share; and (b) the aggregate number of shares of Series DD Preferred Stock for
which the Warrant is exercisable to be converted pursuant to this Section 2.2.
If, as of the last day of the Exercise Period, this Warrant has not been fully
exercised, then as of such date this Warrant shall be automatically converted,
in full, in accordance with this Section 2.2, without any action or notice by
Holder if such a conversion would result in shares being issued to Holder.
2.3 Delivery of Certificate and New Warrant. Promptly after Holder
exercises or converts this Warrant, Company shall deliver to Holder
certificates for the Shares acquired and, if this Warrant has not been fully
exercised or converted and has not expired, a new Warrant representing the
Shares not so acquired.
2.4 Fractional Shares. Company shall not issue fractional shares of
Series DD Preferred Stock or Common Stock or scrip representing fractional
shares of Series DD Preferred Stock or Common Stock upon any exercise or
conversion of this Warrant. As to any fractional share of Series DD Preferred
Stock or Common Stock which Holder would otherwise be entitled to purchase from
Company upon such exercise or conversion, Company shall purchase from Holder
such fractional share at a price equal to an amount calculated by multiplying
such fractional share (calculated to the nearest 1/100th of a share) by the fair
market value of a share of Series DD Preferred Stock or Common Stock, as
applicable, on the date of the Notice of Exercise of the Conversion Date, as
applicable, as determined in good faith by Company's Board of Directors. Payment
of such amount shall be made in cash or by check payable to the order of Holder
at the time of delivery of any certificate or certificates arising upon such
exercise or conversion.
ARTICLE III
REGISTRATION, TRANSFER, EXCHANGE AND REPLACEMENT
3.1 Restrictions on Transfers.
(a) Compliance with Securities Act. Holder, by acceptance hereof,
agrees that this Warrant, the Series DD Preferred Stock to be issued upon
exercise hereof and the shares of Common Stock to be issued upon conversion of
such shares of Series DD Preferred Stock are being acquired for investment,
solely for Holder's own account and not as a nominee for any other Person, and
that Holder will not offer, sell or otherwise dispose of this Warrant, any such
shares of Series DD Preferred Stock or any such shares of Common Stock except
under circumstances which will not result in a violation of the Securities Act.
Upon exercise of this Warrant, Holder shall confirm in writing, by executing the
form attached as Exhibit "B" hereto, that the shares of Series DD Preferred
Stock or Common Stock purchased thereby are being acquired for investment,
solely for Holder's own account and not as a nominee for any other Person, and
not with a view toward distribution or resale.
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<PAGE> 5
(b) Certificate Legends. This Warrant, all shares of Series DD
Preferred Stock issued upon exercise of this Warrant (unless Registered under
the Securities Act), and all shares of Common Stock issued upon conversion of
such shares of Series DD Preferred Stock (unless Registered under the
Securities Act) shall be stamped or imprinted with a legend in substantially
the following form (in addition to any legends required by applicable state
securities laws):
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. NO SALE OR DISPOSITION OF SUCH
SECURITIES MAY BE EFFECTED WITHOUT (i) AN EFFECTIVE REGISTRATION STATEMENT
RELATING THERETO, (ii) AN OPINION OF COUNSEL FOR HOLDER, REASONABLY
SATISFACTORY TO COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED, (iii)
RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION,
OR (iv) OTHERWISE COMPLYING WITH THE PROVISIONS OF ARTICLE III OF THE
WARRANT UNDER WHICH THIS SECURITY WAS ISSUED.
(c) Disposition of Warrant or Shares. With respect to any offer, sale
or other disposition of this Warrant, any shares of Series DD Preferred Stock
issued upon exercise of this Warrant or shares of Common Stock acquired pursuant
to conversion of such shares of Series DD Preferred Stock prior to Registration
of such shares, Holder or the Shareholder, as the case may be, agrees to give
written notice to Company prior thereto, describing briefly the manner thereof,
together with a written opinion of Holder's or Shareholder's counsel, if
reasonably requested by Company, to the effect that such offer, sale or other
disposition may be effected without Registration under the Securities Act or
qualification under any applicable state securities laws of this Warrant or
such shares, as the case may be, and indicating whether or not under the
Securities Act certificates for this Warrant or such shares, as the case may
be, to be sold or otherwise disposed of require any restrictive legend as to
applicable restrictions on transferability in order to insure compliance with
the Securities Act. Promptly upon receiving such written notice and reasonably
satisfactory opinion, if so requested, Company, as promptly as practicable,
shall notify Holder or the Shareholder, as the case may be, that it may sell or
otherwise dispose of this Warrant or such shares, as the case may be, all in
accordance with the terms of the notice delivered to Company. If a determination
has been made pursuant to this subsection (c) that the opinion of counsel for
Holder or the Shareholder, as the case may be, is not reasonably satisfactory
to Company, Company shall so notify Holder or the Shareholder, as the case may
be, promptly after such determination has been made and shall specify the legal
analysis supporting any such conclusion. Notwithstanding the foregoing, this
Warrant or such shares, as the case may be, may be offered, sold or otherwise
disposed of in accordance with Rule 144, provided that Company shall have been
furnished with such information as Company may reasonably request to provide
reasonable assurance that the provisions of Rule 144 have been satisfied. Each
certificate representing this Warrant or the shares thus transferred (except a
transfer pursuant to Rule 144) shall bear a legend as to the applicable
restrictions on transferability in order to insure compliance with the
Securities Act, unless in the aforesaid reasonably satisfactory opinion of
counsel for Holder or the Shareholder, as the case may be, such legend is not
necessary in order to insure compliance with the Securities Act. Company may
issue stop transfer instructions to its transfer agent in connection with such
restrictions.
(d) Warrant Transfer Procedure. Transfer of this Warrant to a third
party, following compliance with the preceding subsections of this Section 3.1,
shall be effected by execution of the Assignment Form attached hereto as
Exhibit "C", and surrender for registration of transfer of this Warrant at the
Principal Executive Office, together with funds sufficient to pay any
applicable transfer tax. Upon receipt of the duly executed Assignment Form and
the necessary transfer tax funds, if any, Company, at its expense, shall
execute and deliver, in the name of the designated transferee or
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transferees, one or more new Warrants representing the right to purchase a like
aggregate number of shares of Series DD Preferred Stock.
(e) Termination of Restrictions. The restrictions imposed under this
Section 3.1 upon the transferability of the Warrant, the shares of Series DD
Preferred Stock acquired upon the exercise of this Warrant and the shares of
Common Stock issuable upon conversion of such shares of Series DD Preferred
Stock shall cease when (i) a registration statement covering all shares of
Common Stock issued or issuable upon conversion of the Series DD Preferred Stock
becomes effective under the Securities Act, (ii) Company is presented with an
opinion of counsel reasonably satisfactory to Company that such restrictions are
no longer required in order to insure compliance with the Securities Act or with
a Commission "no-action" letter stating that future transfers of such securities
by the transferor or the contemplated transferee would be exempt from
registration under the Securities Act, or (iii) such securities may be
transferred in accordance with Rule 144(k). When such restrictions terminate,
Company shall, or shall instruct its transfer agent to, promptly, and without
expense to Holder or the Shareholder, as the case maybe, issue new securities in
the name of Holder and/or the Shareholder, as the case may be, not bearing the
legends required under subsection (b) of this Section 3.1. In addition, new
securities shall be issued without such legends if such legends may be properly
removed under the terms of Rule 144(k).
3.2 Exchange. At Holder's option, this Warrant may be exchanged for other
Warrants representing the right to purchase a like aggregate number of shares of
Series DD Preferred Stock upon surrender of this Warrant at the Principal
Executive Office. Whenever this Warrant is so surrendered to Company at the
Principal Executive Office for exchange, Company shall execute and deliver the
Warrants which Holder is entitled to receive. All Warrants issued upon any
registration of transfer or exchange of Warrants shall be the valid obligations
of Company, evidencing the same rights, and entitled to the same benefits, as
the Warrants surrendered upon such registration of transfer or exchange. No
service charge shall be made for any exchange of this Warrant.
3.3 Replacement. Upon receipt of evidence reasonably satisfactory to
Company of the loss, theft, destruction or mutilation of this Warrant and (i) in
the case of any such loss, theft or destruction, upon delivery of indemnity
reasonably satisfactory to Company in form and amount, or (ii) in the case of
any such mutilation, upon surrender of such Warrant for cancellation at the
Principal Executive Office, Company, at its expense, shall execute and deliver,
in lieu thereof, a new Warrant.
ARTICLE IV
ANTIDILUTION PROVISIONS
4.1 Conversion of Series DD Preferred Stock. If all of the Series DD
Preferred Stock is converted into shares of Common Stock in connection with a
Registration, then this Warrant shall automatically become exercisable for that
number of shares of Common Stock equal to the number of shares of Common Stock
that would have been received if this Warrant had been exercised in full and the
shares of Series DD Preferred Stock received thereupon had been simultaneously
converted into shares of Common Stock immediately prior to such event, and the
Exercise Price shall be automatically adjusted to equal the amount obtained by
dividing (i) the aggregate Exercise Price of the shares of Series DD Preferred
Stock for which this Warrant was exercisable immediately prior to such
conversion, by (ii) the number of shares of Common Stock for which this Warrant
is exercisable immediately after such conversion.
4.2 Reorganization, Reclassification or Recapitalization of Company. In
case of (1) a capital reorganization, reclassification or recapitalization of
Company's capital stock (other than in the cases referred to in Section 4.4
hereof), (2) Company's consolidation or merger with or into another
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corporation in which Company is not the surviving entity, or a reverse
triangular merger in which Company is the surviving entity but the shares of
Company's capital stock outstanding immediately prior to the merger are
converted, by virtue of the merger, into other property, whether in the form of
securities, cash or otherwise, or (3) the sale of transfer of Company's property
as an entirety or substantially as an entirety, then, as part of such
reorganization, reclassification, recapitalization, merger, consolidation, sale
or transfer, lawful provision shall be made so that there shall thereafter be
deliverable upon the exercise of this Warrant or any portion thereof (in lieu of
or in addition to the number of shares of Series DD Preferred Stock theretofore
deliverable, as appropriate), and without payment of any additional
consideration, the number of shares of stock or other securities or property to
which the holder of the number of shares of Series DD Preferred Stock which
would otherwise have been deliverable upon the exercise of this Warrant or any
portion thereof at the time of such reorganization, reclassification,
recapitalization, consolidation, merger, sale or transfer would have been
entitled to receive in such reorganization, reclassification, recapitalization,
merger, consolidation, sale or transfer.
This Section 4.2 shall apply to successive reorganizations, reclassifications,
recapitalizations, consolidations, mergers, sales and transfers and to the
stock or securities of any other corporation that are at the time receivable
upon the exercise of this Warrant. If the per-share consideration payable to
Holder for shares of Series DD Preferred Stock in connection with any
transaction described in this Section 4.2 is in a form other than cash or
marketable securities, then the value of such consideration shall be determined
in good faith by Company's Board of Directors.
4.3 Splits and Combinations. If Company at any time subdivides any of
its outstanding shares of Series DD Preferred Stock into a greater number of
shares, the Exercise Price in effect immediately prior to such subdivision
shall be proportionately reduced, and, conversely, if the outstanding shares of
Series DD Preferred Stock are combined into a smaller number of shares, the
Exercise Price in effect immediately prior to such combination shall be
proportionately increased. Upon any adjustment of the Exercise Price under this
Section 4.3, the number of shares of Series DD Preferred Stock issuable upon
exercise of this Warrant shall equal the number of shares determined by
dividing (i) the aggregate Exercise Price payable for the purchase of all
shares issuable upon exercise of this Warrant immediately prior to such
adjustment by (ii) the Exercise Price per share in effect immediately after
such adjustment.
4.4 Reclassifications. If Company changes any of the securities as to
which purchase rights under this Warrant exist into the same or a different
number of securities of any other class or classes, this Warrant shall
thereafter represent the right to acquire such number and kind of securities as
would have been issuable as the result of such change with respect to the
securities that were subject to the purchase rights under this Warrant
immediately prior to such reclassification or other change and the Exercise
Price therefor shall be appropriately adjusted. No adjustment shall be made
pursuant to this Section 4.4 upon any conversion described in Section 4.1
hereof.
4.5 Dividends and Distributions. If Company declares a dividend or
other distribution on the Series DD Preferred Stock or if a dividend or other
distribution on the Series DD Preferred Stock occurs pursuant to the Articles of
Incorporation (other than a cash dividend or distribution), then, as part of
such dividend or distribution, lawful provision shall be made so that there
shall thereafter be deliverable upon the exercise of this Warrant or any
portion thereof, in addition to the number of shares of Series DD Preferred
Stock receivable thereupon and without payment of any additional consideration,
the amount of the dividend or other distribution to which the holder of the
number of shares of Series DD Preferred Stock obtained upon exercise hereof
would have been entitled to receive had the exercise occurred as of the record
date for such dividend or distribution.
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4.6. Liquidation; Dissolution. If Company shall dissolve, liquidate or
wind up its affairs, Holder shall have the right, but not the obligation, to
exercise this Warrant effective as of the date of such dissolution, liquidation
or winding up. If any such dissolution, liquidation or winding up results in any
cash distribution to Holder in excess of the aggregate Exercise Price for the
shares of Series DD Preferred Stock for which this Warrant is exercised, then
Holder may, at its option, exercise this Warrant without making payment of such
aggregate Exercise Price and, in such case, Company shall, upon distribution to
Holder, consider such aggregate Exercise Price to have been paid in full, and in
making such settlement to Holder, shall deduct an amount equal to such aggregate
Exercise Price from the amount payable to Holder.
4.7. Other Dilutive Events. If any event occurs as to which the other
provisions of this Article IV are not strictly applicable but the failure to
make any adjustment would not fairly protect the purchase rights represented by
this Warrant in accordance with the essential intent and principles hereof,
then, in each such case, Company shall appoint a firm of independent public
accountants of recognized national standing (which may be Company's regular
auditors) which shall give their opinion upon the adjustment, if any, on a basis
consistent with the essential intent and principles established in this Article
IV, necessary to preserve, without dilution, the purchase rights represented by
this Warrant. Upon receipt of such opinion, Company shall promptly mail a copy
thereof to Holder and shall make the adjustments described therein.
4.8. Certificates and Notices.
(a) Adjustment Certificates. Upon any adjustment of the Exercise
Price and/or the number of shares of Series DD Preferred Stock purchasable
upon exercise of this Warrant, a certificate, signed by (i) Company's President
and Chief Financial Officer, or (ii) any independent firm of certified public
accountants of recognized national standing Company selects at its own expense,
setting forth in reasonable detail the events requiring the adjustment and the
method by which such adjustment was calculated, shall be mailed to Holder and
shall specify the adjusted Exercise Price and the number of shares of Series DD
Preferred Stock purchasable upon exercise of the Warrant after giving effect to
the adjustment.
(b) Extraordinary Corporate Events. If Company, after the date
hereof, proposes to effect (i) any transaction described in Sections 4.2 or 4.4
hereof, (ii) a liquidation, dissolution or winding up of Company described in
Section 4.6 hereof, or (iii) any payment of a dividend or distribution with
respect to Series DD Preferred Stock or Common Stock, then, in each such case,
Company shall mail to Holder a notice describing such proposed action and
specifying the date on which Company's books shall close, or a record shall be
taken, for determining the holders of Series DD Preferred Stock or Common Stock,
as appropriate, entitled to participate in such action, or the date on which
such reorganization, reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution or winding up shall take place or commence, as the case
may be, and the date as of which it is expected that holders of Series DD
Preferred Stock and Common Stock of record shall be entitled to receive
securities and/or other property deliverable upon such action, if any such date
is to be fixed. Such notice shall be mailed to Holder at least (30) days prior
to the record date for such action in the case of any action described in clause
(i) or clause (iii) above, and in the case of any action described in clause
(ii) above, at least thirty (30) days prior to the date on which the action
described is to take place and at least thirty (30) days prior to the record
date for determining holders of Series DD Preferred Stock or Common Stock, as
appropriate, entitled to receive securities and/or other property in connection
with such action.
4.9. No Impairment. Company shall not, by amendment of the Articles of
Incorporation or through any reorganization, recapitalization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance
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or performance of any of the terms to be observed or performed hereunder by
Company, but shall at all times in good faith assist in the carrying out of all
the provisions of this Article IV and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of Holder against
impairment.
4.10 Application. Except as otherwise provided herein, all sections of this
Article IV are intended to operate independently of one another. If an event
occurs that requires the application of more than one section, all applicable
sections shall be given independent effect.
ARTICLE V.
RESERVED
ARTICLE VI.
COVENANTS
6.1 Financial Information. Company shall deliver to Holder, concurrent
with delivery to any of the Investors, as defined in the Rights Agreement, all
information delivered to any of the Investors pursuant to Section 4.1 of Article
IV of the Rights Agreement and all other information delivered to any of the
Investors from time to time pursuant to the Rights Agreement as in effect from
time to time during the term hereof. If the Rights Agreement is terminated for
any reason, and for so long as Company is not subject to the periodic reporting
requirements of Sections 12(g) or 15(d) of the Exchange Act, Company shall
deliver to Holder all information that was required to be delivered to any of
the Investors, as defined in the Rights Agreement, pursuant to the Section 4.1
of Article IV of the Rights Agreement, as in effect on the date hereof.
6.2 Non-Financial Covenants. Company covenants that:
(a) Authorized Shares. Company will at all times have authorized, and
reserved for the purpose of issue or transfer upon exercise of the rights
evidenced by this Warrant, a sufficient number of shares of Series DD Preferred
Stock to provide for the exercise of the rights represented by this Warrant (for
purposes of determining compliance with this covenant, the shares of Series DD
Preferred Stock issuable upon exercise of all other options and warrants shall
be deemed issued and outstanding), and a sufficient number of shares of Common
Stock to provide for the conversion into Common Stock of all the shares of
Series DD Preferred Stock issued and issuable upon the exercise of this Warrant
but theretofore unconverted (for purposes of determining compliance with this
covenant, the shares of Common Stock issuable upon exercise of all options and
warrants to acquire Common Stock and upon conversion of all instruments
convertible into Common Stock shall be deemed issued and outstanding);
(b) Proper Issuance. Company, at its expense, will take all such
action as may be necessary to assure that the Series DD Preferred Stock issuable
upon the exercise of this Warrant, and the Common Stock issuable upon the
conversion of such Series DD Preferred Stock, may be so issued without violation
of any applicable law or regulation, or of any requirements of any domestic
securities exchange upon which any capital stock of Company may be listed. Such
action may include, but not be limited to, causing such shares to be duly
registered or approved or listed on relevant domestic securities exchanges; and
(c) Fully Paid Shares. Company will take all actions necessary or
appropriate to validly and legally issue (i) fully paid and non-assessable
shares of Series DD Preferred Stock upon exercise of this Warrant and (ii) fully
paid and non-assessable shares of Common Stock upon
9
<PAGE> 10
conversion of such shares of Series DD Preferred Stock. All such shares will be
free from all taxes, liens and charges with respect to the issuance thereof,
other than any stock transfer taxes in respect to any transfer occurring
contemporaneously with such issuance.
ARTICLE VII
MISCELLANEOUS
7.1 Certain Expenses. Company shall pay all expenses in connection
with, and all taxes (other than stock transfer taxes or capital gains taxes or
taxes related to the appreciation in value of the Warrant) and other
governmental charges that may be imposed in respect of, the issuance, sale and
delivery of the Warrant, the Warrant Shares and the shares of Common Stock
issuable upon conversion of the Warrant Shares.
7.2 Remedies. Company stipulates that the remedies at law of Holder
in the event of any default or threatened default by Company in the performance
of or compliance with any of the terms of this Warrant are not and will not be
adequate to the fullest extent permitted by law, and that such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.
7.3 Enforcement Costs. If any part to, or beneficiary of, this
Warrant seeks to enforce its rights hereunder by legal proceedings or
otherwise, then the non-prevailing party shall pay all reasonable costs and
expenses incurred by the prevailing party, including, without limitation, all
reasonable attorneys' fees (including the allocable costs of in-house counsel).
7.4 Notices. Any notice, demand or delivery to be made pursuant to
this Warrant will be sufficiently given or made if sent by first class mail,
postage prepaid, addressed to (a) Holder and the Shareholders at their last
known addresses appearing on the books of Company maintained for such purpose or
(b) Company at its Principal Executive Office. Holder, the Shareholders and
Company may each designate a different address by notice to the other pursuant
to this section. A notice shall be deemed effective upon the earlier of (i)
receipt or (ii) the third day after mailing in accordance with the terms of
this Section 7.4.
7.5 Successors and Assigns. This Warrant shall be binding upon
Company and any Person succeeding Company by merger, consolidation or
acquisition of all or substantially all of Company's assets, and all of the
obligations of Company with respect to the shares of Series DD Preferred Stock
issuable upon exercise of this Warrant and the shares of Common Stock issuable
upon the conversion of such shares of Series DD Preferred Stock, shall survive
the exercise, expiration or termination of this Warrant and all of the
covenants and agreements of Company shall inure to the benefit of Holder, each
Shareholder and their respective successors and assigns.
7.6 Modification; Severability. If, in any action before any court or
agency legally empowered to enforce any term, any term is found to be
unenforceable, then such term shall be deemed modified to the extent necessary
to make it enforceable by such court or agency. If any term is not curable as
set forth in this section, the unenforceability of such term shall not affect
the other provisions of this Warrant but this Warrant shall be construed as if
such unenforceable term had ever been contained herein.
7.7 Amendment. This Warrant may not be modified or amended except by
written agreement of Company and Holder.
10
<PAGE> 11
7.8. Headings. The headings of the Articles and Sections of this
Warrant are for the convenience of reference only and shall not, for any
purpose, be deemed a part of this Warrant.
7.9. Governing Law. This Warrant shall be governed by, and construed
in accordance with, the California law, without giving effect to conflicts of
law principles.
IN WITNESS WHEREOF, Company has caused this Warrant to be executed by its
duly authorized officer as of January 25, 1999.
REPEATER TECHNOLOGIES, INC.
By: /s/ TODD SCHULL
--------------------------------
Name: Todd Schull
------------------------------
Title: V.P. and CFO
-----------------------------
11
<PAGE> 12
EXHIBIT "A"
NOTICE OF EXERCISE FORM
(To be executed only upon partial or full
exercise of the within Warrant)
The undersigned registered Holder of the within Warrant hereby irrevocably
exercises the within Warrant for and purchases shares of Series DD Preferred
Stock of REPEATER TECHNOLOGIES, INC. and herewith makes payment therefor in the
amount of $________, all at the price and on the terms and conditions specified
in the within Warrant and requests that a certificate (or ______ certificates in
denominations of shares) for the shares of Series DD Preferred Stock of REPEATER
TECHNOLOGIES, INC. hereby purchased be issued in the name of and delivered to
(choose one) (a) the undersigned, or (b) *[NAME], whose address is
______________ and, if such shares of Series DD Preferred Stock shall not
include all the shares of Series DD Preferred Stock issuable as provided in the
within Warrant, that a new Warrant of like tenor for the number of shares of
Series DD Preferred Stock of REPEATER TECHNOLOGIES, INC. not being purchased
hereunder be issued in the name of and delivered to (choose one) (a) the
undersigned, or (b) *[NAME], whose address is _____________________________.
Dated: _________________, 199_
Signature Guaranteed
------------------------------------
------------------------------------
------------------------------------
By:
--------------------------------
(Signature of Registered Holder)
Title:
------------------------------
NOTICE: The signature to this Notice of Exercise must correspond with the name
as written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatever.
The signature to this Notice of Exercise must be guaranteed by a
commercial bank or trust company in the United States or a member firm
of the New York Stock Exchange.
<PAGE> 13
EXHIBIT "B"
INVESTMENT REPRESENTATION CERTIFICATE
Purchaser:
Company: REPEATER TECHNOLOGIES, INC.
Security: Series DD Preferred Stock
Amount:
Date:
In connection with the purchase of the above-listed securities (the
"Securities"), the undersigned (the "Purchaser") represents to Company as
follows:
The Purchaser is aware of Company's business affairs and financial condition,
and has acquired sufficient information about Company to reach an informed and
knowledgeable decision to acquire the Securities. The Purchaser is purchasing
the Securities for its own account for investment purposes only and not with a
view to, or for the resale in connection with, any "distribution" thereof for
purposes of the Securities Act of 1933, as amended (the "Securities Act");
The Purchaser understands that the Securities have not been registered under the
Securities Act in reliance upon a specific exemption therefor, which exemption
depends upon, among other things, the bona fide nature of the Purchaser's
investment intent as expressed herein. In this connection, the Purchaser
understands that, in the view of the Securities and Exchange Commission ("SEC"),
the statutory basis for such exemption may be unavailable if the Purchaser's
representation was predicated solely upon a present intention to hold these
Securities for the minimum capital gains period specified under tax statutes,
for a deferred sale, for or until an increase or decrease in the market price of
the Securities, or for a period of one year or any other fixed period in the
future;
The Purchaser further understands that the Securities must be held indefinitely
unless subsequently registered under the Securities Act or unless an exemption
from registration is otherwise available. Moreover, the Purchaser understands
that Company is under no obligation to register the Securities. In addition, the
Purchaser understands that the certificate evidencing the Securities will be
imprinted with the legend referred to in the Warrant under which the Securities
are being purchased;
The Purchaser is aware of the provisions of Rule 144, promulgated under the
Securities Act, which, in substance, permit limited public resale of "restricted
securities" acquired, directly or indirectly, from the issuer thereof (or from
an affiliate of such issuer), in a non-public offering subject to the
satisfaction of certain conditions, if applicable, including, among other
things: (i) the availability of certain public information about Company; (ii)
the resale occurring not less than one (1) year after the party has purchased
and paid for the securities to be sold; (iii) the sale being made through a
broker in an unsolicited "broker's transaction" or in transactions directly with
a market maker (as said term is defined under the Securities Exchange Act of
1934) and the amount of securities being sold during any three-month period not
exceeding the specified limitations stated therein;
The Purchaser further understands that at the time it wishes to sell the
Securities there may be no public market upon which to make such a sale, and
that, even if such a public market upon which to make such a
<PAGE> 14
sale then exists, Company may not be satisfying the current public information
requirements of Rule 144, and that, in such event, the Purchaser may be
precluded from selling the securities under Rule 144 even if the one (1) year
minimum holding period has been satisfied; and
The Purchaser further understands that in the event all of the requirements of
Rule 144 are not satisfied, registration under the Securities Act, compliance
with Regulation A, or some other registration exemption will be required; and
that, notwithstanding the fact that Rule 144 is not exclusive, the staff of the
SEC has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rule 144 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk.
Date: _______________, 199__
PURCHASER:
_______________________________
<PAGE> 15
EXHIBIT "C"
ASSIGNMENT FORM
(To be executed only upon the assignment of
the within Warrant)
FOR VALUE RECEIVED, the undersigned registered Holder of the within
Warrant hereby sells, assigns and transfers unto ____________________, whose
address is ___________________________ all of the rights of the undersigned
under the within Warrant, with respect to shares of Series DD Preferred Stock of
REPEATER TECHNOLOGIES, INC. and, if such shares of Series DD Preferred Stock
shall not include all the shares of Series DD Preferred Stock issuable as
provided in the within Warrant, that a new Warrant of like tenor for the number
of shares of Series DD Preferred Stock of REPEATER TECHNOLOGIES, INC. not being
transferred hereunder be issued in the name of and delivered to the undersigned,
and does hereby irrevocably constitute and appoint __________________________
attorney to register such transfer on the books of REPEATER TECHNOLOGIES, INC.
maintained for the purpose, with full power of substitution in the premises.
Dated: _______________, 199___
Signature Guaranteed ___________________________________
___________________________________
By:________________________________
(Signature of Registered Holder)
Title:_____________________________
NOTICE: The signature to this Assignment must correspond with the name upon
the face of the within Warrant in every particular, without
alteration or enlargement or any change whatever.
The signature to this Notice of Assignment must be guaranteed by a commercial
bank or trust company in the United States or a member firm of the New York
Stock Exchange.
<PAGE> 1
EXHIBIT 4.4
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR SALE
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER
SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR THE AVAILABILITY OF AN
EXEMPTION FROM REGISTRATION UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES
LAWS.
NO.
STOCK SUBSCRIPTION WARRANT
TO PURCHASE SERIES DD PREFERRED STOCK OF
REPEATER TECHNOLOGIES, INC. (THE "COMPANY")
DATE OF INITIAL ISSUANCE: JULY 8, 1999
THIS CERTIFIES THAT for value received, TBCC FUNDING TRUST II or its
registered assigns (hereinafter called the "Holder") is entitled to purchase
from the Company, at any time during the Term of this Warrant, One Hundred
Thousand (100,000) shares of Series DD Preferred Stock, without par value, of
the Company (the "Series DD Preferred Stock"), at the Warrant Price, payable as
provided herein. The exercise of this Warrant shall be subject to the
provisions, limitations and restrictions herein contained, and may be
exercised in whole or in part.
SECTION 1. DEFINITIONS.
For all purposes of this Warrant, the following terms shall have the
meanings indicated:
SERIES DD PREFERRED STOCK - shall mean and include the Company's authorized
Series DD Preferred Stock, without par value, as constituted at the date hereof.
EXCHANGE ACT - shall mean the Securities Exchange Act of 1934, as amended
from time to time.
SECURITIES ACT - the Securities Act of 1933, as amended.
TERM OF THIS WARRANT - shall mean the period beginning on the date of
initial issuance hereof and ending on July 8, 2006.
WARRANT PRICE - $5.50 per share, subject to adjustment in accordance with
Section 5 hereof.
WARRANTS - this Warrant issued in connection with a Commitment Letter
dated June 8, 1999 executed by the Company and Transamerica Business Credit
Corporation (the "Commitment Letter") to the original holder of this Warrant,
or any transferees from such original holder or this Holder.
WARRANT SHARES - shares of Series DD Preferred Stock purchased or
purchasable by the Holder of this Warrant upon the exercise hereof.
<PAGE> 2
SECTION 2. EXERCISE OF WARRANT.
2.1. PROCEDURE FOR EXERCISE OF WARRANT. To exercise this Warrant in
whole or in part (but not as to any fractional share of Series DD Preferred
Stock), the Holder shall deliver to the Company at its office referred to in
Section 12 hereof at any time and from time to time during the Term of this
Warrant:(i) the Notice of Exercise in the form attached hereto, (ii) cash,
certified or official bank check payable to the order of the Company, wire
transfer of funds to the Company's account, or evidence of any indebtedness of
the Company to the Holder (or any combination of any of the foregoing) in the
amount of the Warrant Price for each share being purchased, and (iii) this
Warrant. Notwithstanding any provisions herein to the contrary, if the Current
Market Price (as defined in Section 5) is greater than the Warrant Price (at the
date of calculation, as set forth below), in lieu of exercising this Warrant as
hereinabove permitted, the Holder may elect to receive shares of Series DD
Preferred Stock equal to the value (as determined below) of this Warrant (or the
portion thereof being canceled) by surrender of this Warrant at the office of
the Company referred to in Section 12 hereof, together with the Notice of
Exercise, in which event the Company shall issue to the Holder that number of
shares of Series DD Preferred Stock computed using the following formula:
PS = WPS x (CMP-WP)
--------------
CMP
Where
PS equals the number of shares of Series DD Preferred Stock to be
issued to the Holder
WPS equals the number of shares of Series DD Preferred Stock
purchasable under the Warrant or, if only a portion of the
Warrant is being exercised, the portion of the Warrant being
exercised (at the date of such calculation)
CMP equals the Current Market Price (at the date of such
calculations)
WP equals the Warrant Price (as adjusted to the date of such
calculation)
In the event of any exercise of the rights represented by this Warrant, a
certificate or certificates for the shares of Series DD Preferred Stock so
purchased, registered in the name of the Holder or such other name or names as
may be designated by the Holder, shall be delivered to the Holder hereof within
a reasonable time, not exceeding fifteen (15) days, after the rights represented
by this Warrant shall have been so exercised; and, unless this Warrant has
expired, a new Warrant representing the number of shares (except a remaining
fractional share), if any, with respect to which this Warrant shall not then
have been exercised shall also be issued to the Holder hereof within such time.
The person in whose name any certificate for shares of Series DD Preferred Stock
is issued upon exercise of this Warrant shall for all purposes be deemed to have
become the holder of record of such shares on the date on which the Warrant was
surrendered and payments of the Warrant Price and any applicable taxes was made,
irrespective of the date of delivery of such certificate, except that, if the
date of such surrender and payment is a date when the stock transfer books of
the Company are closed, such person shall be deemed to have become the holder of
such shares at the close of business on the next succeeding date on which the
stock transfer books are open.
-2-
<PAGE> 3
2.2. TRANSFER RESTRICTION LEGEND. Each certificate for Warrant Shares
shall bear the following legend (and any additional legend required by (i) any
applicable state securities laws and (ii) any securities exchange upon which
such Warrant Shares may, at the time of such exercise, be listed) on the face
thereof unless at the time of exercise such Warrant Shares shall be registered
under the Securities Act:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, and may not be sold or
transferred in the absence of such registration or an exemption
therefrom under said Act."
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon
completion of a public distribution under a registration statement of the
securities represented thereby) shall also bear such legend unless, in the
opinion of counsel for the holder thereof (which counsel shall be reasonably
satisfactory to counsel for the Company) the securities represented thereby are
not, at such time, required by law to bear such legend.
SECTION 3. COVENANTS AS TO SERIES DD PREFERRED STOCK. The Company covenants and
agrees that all shares of Series DD Preferred Stock that may be issued upon the
exercise of the rights represented by this Warrant will, upon issuance, be
validly issued, fully paid and nonassessable, and free from all taxes, liens and
charges with respect to the issue thereof. The Company further covenants and
agrees that it will pay when due and payable any all federal and state taxes
which may be payable in respect of the issue of this Warrant or any Series DD
Preferred Stock or certificates therefor issuable upon the exercise of this
Warrant. The Company further covenants and agrees that the Company will at all
times have authorized and reserved, free from preemptive rights, a sufficient
number of shares of Series DD Preferred Stock to provide for the exercise of the
rights represented by this Warrant. The Company further covenants and agrees
that if any shares of capital stock to be reserved for the purpose of the
issuance of shares upon the exercise of this Warrant require registration with
or approval of any governmental authority under any federal or state law before
such shares may be validly issued or delivered upon exercise, then the Company
will in good faith and as expeditiously as possible endeavor to secure such
registration or approval, as the case may be. If and so long as the Series DD
Preferred Stock issuable upon the exercise of this Warrant is listed on any
national securities exchange, the Company will, if permitted by the rules of
such exchange, list and keep listed on such exchange, upon official notice of
issuance, all shares of such Series DD Preferred Stock issuable upon exercise of
this Warrant.
SECTION 4. ADJUSTMENT OF NUMBER OF SHARES. Upon each adjustment of the Warrant
Price as provided in Section 5, the Holder shall thereafter be entitled to
purchase, at the Warrant Price resulting from such adjustment, the number of
shares (calculated to the nearest tenth of a share) obtained by multiplying the
Warrant Price in effect immediately prior to such adjustment by the number of
shares purchasable pursuant hereto immediately prior to such adjustment and
dividing the product thereof by the Warrant Price resulting from such
adjustment.
SECTION 5. ADJUSTMENT OF WARRANT PRICE. The Warrant Price shall be subject to
adjustment from time to time as follows:
(i) If, at any time during the Term of this Warrant, the number of
shares of Series DD Preferred Stock outstanding is increased by a stock dividend
payable in shares of Series DD Preferred Stock or by a subdivision or split-up
of shares of Series DD Preferred Stock, then, following the record date fixed
for
-3-
<PAGE> 4
the determination of holders of Series DD Preferred Stock entitled to receive
such stock dividend, subdivision or split-up, the Warrant Price shall be
appropriately decreased so that the number of shares of Series DD Preferred
Stock issuable upon the exercise hereof shall be increased in proportion to such
increase in outstanding shares.
(ii) If, at any time during the Term of this Warrant, the number of
shares of Series DD Preferred Stock outstanding is decreased by a combination of
the outstanding shares of Series DD Preferred Stock, then, following the record
date for such combination, the Warrant Price shall appropriately increase so
that the number of shares of Series DD Preferred Stock issuable upon the
exercise hereof shall be decreased in proportion to such decrease in the
outstanding shares.
(iii) In case, at any time during the Term of this Warrant, the Company
shall declare a cash dividend upon its Series DD Preferred Stock payable
otherwise than out of earnings or earned surplus or shall distribute to holders
of its Series DD Preferred Stock shares of its capital stock (other than Series
DD Preferred Stock), stock or other securities of other persons, evidences of
indebtedness issued by the Company or the other persons, assets (excluding cash
dividends and distributions) or options or rights (excluding options to purchase
and rights to subscribe for Series DD Preferred Stock or other securities of the
Company convertible into or exchangeable for Series DD Preferred Stock), then,
in each such case, immediately following the record date fixed for the
determination of the holders of Series DD Preferred Stock entitled to receive
such dividend or distribution, the Warrant Price in effect thereafter shall be
determined by multiplying the Warrant Price in effect immediately prior to such
record date by a fraction of which the numerator shall be an amount equal to the
difference of (x) the Current Market Price of one share of Series DD Preferred
Stock minus (y) the fair market value (as determined by the Board of Directors
of the Company, whose determination shall be conclusive) of the stock,
securities, evidences of indebtedness, assets, options or rights so distributed
in respect of one share of Series DD Preferred Stock, and of which the
denominator shall be such Current Market Price.
(iv) All calculations under this Section 5 shall be made to the nearest
cent or to the nearest one-tenth (1/10) of a share, as the case may be.
(v) For the purpose of any computation pursuant to this Section 5, the
Current Market Price at any date of one share of Series DD Preferred Stock shall
be deemed to be the average of the daily closing prices for the 15 consecutive
business days ending on the last business day before the day in question (as
adjusted for any stock dividend, split, combination or reclassification that
took effect during such 15 business day period). The closing price for each day
shall be the last reported sales price regular way or, in case no such reported
sales took place on such day, the average of the last reported bid and asked
prices regular way, in either case on the principal national securities exchange
on which the Series DD Preferred Stock is listed or admitted to trading or as
reported by Nasdaq (or if the Series DD Preferred Stock is not at the time
listed or admitted for trading on any such exchange or if prices of the Series
DD Preferred Stock are not reported by Nasdaq then such price shall be equal to
the average of the last reported bid and asked prices on such day as reported by
The National Quotation Bureau Incorporated or any similar reputable quotation
and reporting service, if such quotation is not reported by The National
Quotation Bureau Incorporated); provided, however, that if the Series DD
Preferred Stock is not traded in such manner that the quotations referred to in
this clause (v) are available for the period required hereunder, the Current
Market Price shall be determined in good faith by the Board of Directors of the
Company or, if such determination cannot be made, by a nationally recognized
independent investment banking firm selected by the Board of Directors of the
Company (or if such selection cannot be made, by
-4-
<PAGE> 5
a nationally recognized independent investment banking firm selected by the
American Arbitration Association in accordance with its rules).
(vi) Whenever the Warrant Price shall be adjusted as provided in
Section 5, the Company shall prepare a statement showing the facts requiring
such adjustment and the Warrant Price that shall be in effect after such
adjustment. The Company shall cause a copy of such statement to be sent by mail,
first class postage prepaid, to each Holder of this Warrant at its, his or her
address appearing on the Company's records. Where appropriate, such copy may be
given in advance and may be included as part of the notice required to be mailed
under the provisions of subsection (viii) of this Section 5.
(vii) Adjustments made pursuant to clauses (i), (ii) and (iii) above
shall be made on the date such dividend, subdivision, split-up, combination or
distribution, as the case may be, is made, and shall become effective at the
opening of business on the business day next following the record date for the
determination of stockholders entitled to such dividend, subdivision, split-up,
combination or distribution.
(viii) In the event the Company shall propose to take any action of
the types described in clauses (i), (ii), or (iii) of this Section 5, the
Company shall forward, at the same time and in the same manner, to the Holder
of this Warrant such notice, if any, which the Company shall give to the
holders of capital stock of the Company.
(ix) In any case in which the provisions of this Section 5 shall
require that an adjustment shall become effective immediately after a record
date for an event, the Company may defer until the occurrence of such event
issuing to the Holder of all or any part of this Warrant which is exercised
after such record date and before the occurrence of such event the additional
shares of capital stock issuable upon such exercise by reason of the adjustment
required by such event over and above the shares of capital stock issuable upon
such exercise before giving effect to such adjustment exercise; provided,
however, that the Company shall deliver to such Holder a due bill or other
appropriate instrument evidencing such Holder's right to receive such
additional shares upon the occurrence of the event requiring such adjustment.
SECTION 6. OWNERSHIP.
6.1. OWNERSHIP OF THIS WARRANT. The Company may deem and treat the
person in whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary until presentation of this Warrant for registration of transfer
as provided in this Section 6.
6.2. TRANSFER AND REPLACEMENT. This Warrant and all rights hereunder
are transferable in whole or in part upon the books of the Company by the
Holder hereof in person or by duly authorized attorney, and a new Warrant or
Warrants, of the same tenor as this Warrant but registered in the name of the
transferee or transferees (and in the name of the Holder, if a partial transfer
is effected) shall be made and delivered by the Company upon surrender of this
Warrant duly endorsed, at the office of the Company referred to in Section 12
hereof. Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft or destruction, and, in such case, of indemnity or security
reasonably satisfactory to it, and upon surrender of this Warrant if mutilated,
the Company will make and deliver a new Warrant of like tenor, in lieu of this
Warrant; provided that if the Holder hereof is an instrumentality of a state or
local government or an institutional holder or a nominee for such an
instrumentality or
-5-
<PAGE> 6
institutional holder an irrevocable agreement of indemnity by such Holder shall
be sufficient for all purposes of this Section 6, and no evidence of loss or
theft or destruction shall be necessary. Notwithstanding the foregoing, Holder
shall pay for any indemnification bond fee required by the transfer agent of the
Company's securities in the event of a loss, theft or destruction of this
Warrant. This Warrant shall be promptly cancelled by the Company upon the
surrender hereof in connection with any transfer or replacement. Except as
otherwise provided above, in the case of the loss, theft or destruction of a
Warrant, the Company shall pay all expenses, taxes and other charges payable in
connection with any transfer or replacement of this Warrant, other than stock
transfer taxes (if any) payable in connection with a transfer of this Warrant,
which shall be payable by the Holder. Holder will not transfer this Warrant and
the rights hereunder except in compliance with federal and state securities
laws.
SECTION 7. MERGERS, CONSOLIDATION, SALES. In the case of any proposed
consolidation or merger of the Company with another entity, or the proposed sale
of all or substantially all of its assets to another person or entity, or any
proposed reorganization or reclassification of the capital stock of the Company,
then, as a condition of such consolidation, merger, sale, reorganization or
reclassification, lawful and adequate provision shall be made whereby the Holder
of this Warrant shall thereafter have the right to receive upon the basis and
upon the terms and conditions specified herein, in lieu of the shares of the
Series DD Preferred Stock of the Company theretofore purchasable hereunder, such
shares of stock, securities or assets as may (by virtue of such consolidation,
merger, sale, reorganization or reclassification) be issued or payable with
respect to or in exchange for the number of shares of such Series DD Preferred
Stock purchasable hereunder immediately before such consolidation, merger, sale,
reorganization or reclassification. In any such case appropriate provision shall
be made with respect to the rights and interests of the Holder of this Warrant
to the end that the provisions hereof 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 this Warrant.
SECTION 8. NOTICE OF DISSOLUTION OR LIQUIDATION. In case of any distribution of
the assets of the Company in dissolution or liquidation (except under
circumstances when the foregoing Section 7 shall be applicable), the Company
shall give notice thereof to the Holder hereof and shall make no distribution to
shareholders until the expiration of thirty (30) days from the date of mailing
of the aforesaid notice and in any case, the Holder hereof may exercise this
Warrant within thirty (30) days from the date of the giving of such notice, and
all rights herein granted not so exercised within such thirty-day period shall
thereafter become null and void.
SECTION 9. NOTICE OF EXTRAORDINARY DIVIDENDS. If the Board of Directors of the
Company shall declare any dividend or other distribution on its Series DD
Preferred Stock except out of earned surplus or by way of a stock dividend
payable in shares of its Series DD Preferred Stock, the Company shall mail
notice thereof to the Holder hereof not less than thirty (30) days prior to the
record date fixed for determining shareholders entitled to participate in such
dividend or other distribution, and the Holder hereof shall not participate in
such dividend or other distribution unless this Warrant is exercised prior to
such record date. The provisions of this Section 9 shall not apply to
distributions made in connection with transactions covered by Section 7.
SECTION 10. FRACTIONAL SHARES. Fractional shares shall not be issued upon the
exercise of this Warrant but in any case where the Holder would, except for the
provisions of this Section 10, be entitled under the terms hereof to receive a
fractional share upon the complete exercise of this Warrant, the Company shall,
upon the exercise of this Warrant for the largest number of whole shares then
called for, pay a sum in cash equal to the excess of the value of such
fractional share (determined in such reasonable
-6-
<PAGE> 7
manner as may be prescribed in good faith by the Board of Directors of the
Company) over the Warrant Price for such fractional share.
SECTION 11. SPECIAL ARRANGEMENTS OF THE COMPANY. The Company covenants and
agrees that during the Term of this Warrant, unless otherwise approved by the
Holder of this Warrant:
11.1. WILL RESERVE SHARES. The Company will reserve and set apart and
have available for issuance at all times, free from preemptive or other
preferential rights, the number of shares of authorized but unissued Series DD
Preferred Stock deliverable upon the exercise of this Warrant.
11.2. WILL NOT AMEND CERTIFICATE. The Company will not amend its
Certificate of Incorporation to as an authorized class of capital stock that
class denominated as "Series DD Preferred Stock" on the date hereof.
11.3. Will BIND SUCCESSORS. This Warrant shall be binding upon any
corporation or other person or entity succeeding to the Company by merger,
consolidation or acquisition of all or substantially all of the Company's
assets.
SECTION 12. REGISTRATION RIGHTS; ETC.
No later than fifteen (15) days after the date of initial issuance of this
Warrant, the Company shall cause the Company's Sixth Amended and Restated
Investor Rights Agreement to be amended to include the initial Holder as a
Purchaser thereunder and the Warrant Shares as Registrable Securities
thereunder.
SECTION 13. NOTICES. Any notice or other document required or permitted to be
given or delivered to the Holder shall be delivered at, or sent by certified or
registered mail to, the Holder at Transamerica Technology Finance Division, 76
Batterson Park Road, Farmington, Connecticut 06032. Attention: Assistant Vice
President, Lease Administration, with a copy to the Lender at Riverway II, West
Office Tower, 9399 West Higgins Road, Rosemont, Illinois 60018, Attention:
Legal Department or to such other address as shall have been furnished to the
Company in writing by the Holder. Any notice or other document required or
permitted to be given or delivered to the Company shall be delivered at, or
sent by certified or registered mail to, the Company at 1150 Morse Avenue,
Sunnyvale, California 94089, Attention: Chief Financial Officer with a copy to
Cooley Godward LLP, Five Palo Alto Square, 3000 El Camino Real, Palo Alto, CA
94306, Attention: Andrei Manoliu, or to such other address as shall have been
furnished in writing to the Holder by the Company. Any notice so addressed and
mailed by registered or certified mail shall be deemed to be given when so
mailed. Any notice so addressed and otherwise delivered shall be deemed to be
given when actually received by the addressee.
SECTION 14. NO RIGHTS AS STOCKHOLDER; LIMITATION OF LIABILITY. This Warrant
shall not entitle the Holder to any of the rights of a shareholder of the
Company except upon exercise in accordance with the terms hereof. No provision
hereof, in the absence of affirmative action by the Holder to purchase shares of
Series DD Preferred Stock and no mere enumeration herein of the rights or
privileges of the Holder, shall give rise to any liability of the Holder for the
Warrant Price hereunder or as a shareholder of the Company, whether such
liability is asserted by the Company or by creditors of the Company.
SECTION 15. LAW GOVERNING. The VALIDITY, INTERPRETATION,AND ENFORCEMENT OF
THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF CALIFORNIA WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES
THEREOF.
-7-
<PAGE> 8
SECTION 16. MISCELLANEOUS. This Warrant and any provision hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by both
parties (or any respective predecessor in interest thereof). The headings in
this Warrant are for purposes of reference only and shall not affect the meaning
or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer this 8th day of July, 1999.
REPEATER TECHNOLOGIES, INC.
[CORPORATE SEAL]
By: /s/ KENNETH L. KENITZER
----------------------------------
Title: President and CEO
----------------------------------
-8-
<PAGE> 9
FORM OF NOTICE OF EXERCISE
[TO BE SIGNED ONLY UPON EXERCISE OF THE WARRANT]
TO BE EXECUTED BY THE REGISTERED HOLDER
TO EXERCISE THE WITHIN WARRANT
The undersigned hereby exercises the right to purchase ______ shares of
Series DD Preferred Stock which the undersigned is entitled to purchase by the
terms of the within Warrant according to the conditions thereof, and herewith.
[check one] [ ] makes payment of $ therefor; or
------------
[ ] directs the Company to issue _______ shares,
and to withhold ___________ shares in lieu
of payment of the Warrant Price, as described
in Section 2.1 of the Warrant.
All shares to be issued pursuant hereto shall be issued in the name of and the
initial address of such person to be entered on the books of the Company shall
be:
The shares are to be issued in certificates of the following
denominations:
----------------------------------------
[Type Name of Holder]
By:
-------------------------------------
Title:
----------------------------------
Dated:
-------------------------
-9-
<PAGE> 10
FORM OF ASSIGNMENT
(ENTIRE)
[TO BE SIGNED ONLY UPON TRANSFER OF ENTIRE WARRANT]
TO BE EXECUTED BY THE REGISTERED HOLDER
TO TRANSFER THE WITHIN WARRANT
FOR VALUE RECEIVED ______________________ hereby sells, assigns and
transfers unto ______________________ all rights of the undersigned and pursuant
to the within Warrant, and the undersigned does hereby irrevocably constitute
and appoint ____________________ Attorney to transfer the said Warrant on the
books of the Company, with full power of substitution.
-----------------------------
[Type Name of Holder]
By:
--------------------------
Title:
------------------------
Dated:
--------------------------
NOTICE
The signature to the foregoing Assignment must correspond to the name
as written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever.
-10-
<PAGE> 11
FORM OF ASSIGNMENT
(PARTIAL)
[TO BE SIGNED ONLY UPON PARTIAL TRANSFER OF WARRANT]
TO BE EXECUTED BY THE REGISTERED HOLDER
TO TRANSFER THE WITHIN WARRANT
FOR VALUE RECEIVED __________ hereby sells, assigns and transfers unto
____________________ (i) the rights of the undersigned to purchase ___ shares
of Series DD Preferred Stock under and pursuant to the within Warrant, and (ii)
on a non-exclusive basis, all other rights of the undersigned under and
pursuant to the within Warrant, it being understood that the undersigned shall
retain, severally (and not jointly) with the transferee(s) named herein, all
rights assigned on such non-exclusive basis. The undersigned does hereby
irrevocably constitute and appoint ______________ Attorney to transfer the said
Warrant on the books of the Company, with full power of substitution.
--------------------------------
[Type Name of Holder]
By:
-----------------------------
Title:
--------------------------
Dated:
-----------------------
NOTICE
The signature to the foregoing Assignment must correspond to the name as
written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever.
-11-
<PAGE> 1
EXHIBIT 4.5
REPEATER TECHNOLOGIES, INC.
SIXTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
NOVEMBER 25, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
I. DEFINITIONS..........................................................1
1.1 "Restricted Securities".......................................1
1.2 "Registrable Securities"......................................1
1.3 The terms "register," "registered" and "registration".........1
1.4 "Registration Expenses".......................................1
1.5 "Selling Expenses"............................................2
1.6 "Holder"......................................................2
1.7 "Preferred Stock".............................................2
II. AMENDMENT AND RESTATEMENT OF PRIOR INVESTORS' RIGHTS AGREEMENT.......2
III. REGISTRATION; RESTRICTIONS ON TRANSFER...............................2
3.1 Restrictions on Transferability...............................2
3.2 Restrictive Legend............................................2
3.3 Notice of Proposed Transfers..................................3
3.4 Requested Registration........................................3
3.5 Company Registration..........................................5
3.6 Expenses of Registration......................................6
3.7 Registration Procedures.......................................6
3.8 Registration on Form S-3......................................6
3.9 Termination of Registration Rights............................7
3.10 Lockup Agreement..............................................7
3.11 Indemnification...............................................7
3.12 Information by Holder.........................................8
3.13 Rule 144 Reporting............................................9
3.14 Transfer of Registration Rights...............................9
IV. COVENANTS OF THE COMPANY.............................................9
4.1 Annual Financial Information..................................9
4.2 Inspection...................................................10
4.3 Assignment of Rights to Financial Information................10
4.4 Proprietary Information and Non-Competition Agreements.......10
</TABLE>
-i-
<PAGE> 3
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<S> <C>
4.5 Confidentiality Agreement....................................10
4.6 Insider Transactions.........................................10
4.7 Employee Stock and Option Plans..............................10
4.8 Financial Updates to Board...................................11
4.9 Termination of Covenants.....................................11
V. RIGHTS OF FIRST REFUSAL.............................................11
5.1 New Securities...............................................11
5.2 Outstanding Securities.......................................12
VI. MISCELLANEOUS.......................................................13
6.1 Governing Law................................................13
6.2 Survival.....................................................13
6.3 Successors and Assigns.......................................13
6.4 Separability.................................................13
6.5 Amendment and Waiver.........................................13
6.6 Delays or Omissions..........................................14
6.7 Notices, etc.................................................14
6.8 Attorneys' Fees..............................................14
6.9 No Investment Obligation.....................................14
6.10 Aggregation and Affiliate Status.............................14
6.11 Entire Agreement.............................................14
6.12 Titles and Subtitles.........................................14
6.13 Counterparts.................................................15
</TABLE>
-ii-
<PAGE> 4
REPEATER TECHNOLOGIES, INC.
THIS SIXTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT (the
"Agreement") is entered into as of November 25, 1998, by and among REPEATER
TECHNOLOGIES, INC., a California corporation (the "Company"), those prior
purchasers of the Company's preferred stock set forth on Exhibit A hereto and
those purchasers under that certain Convertible Debenture Purchase Agreement of
even date herewith (the "Debenture Purchase Agreement") set forth on Exhibit A
hereto (collectively, the "Purchasers").
I. DEFINITIONS
1.1 "RESTRICTED SECURITIES" shall mean the securities of the Company
required to bear the legend set forth in Section 3.2 hereof (or any similar
legend).
1.2 "REGISTRABLE SECURITIES" shall mean (i) shares of the Company's
Common Stock issued or issuable pursuant to the conversion of the Company's
Series A Preferred Stock (the "Series A Stock"), Series B Preferred Stock (the
"Series B Stock"), Series C Preferred Stock (the "Series C Stock"), Series D
Preferred Stock (the "Series D Stock"), Series E Preferred Stock (the "Series E
Stock"), Series AA Preferred Stock (the "Series AA Stock"), Series BB Preferred
Stock (the "Series BB Stock"), Series CC Preferred Stock (the "Series CC Stock")
and Series DD Preferred Stock (the "Series DD Stock"), (ii) shares of the
Company's Common Stock issued or issuable upon exercise of the Warrants granted
in connection with the Company's interim financings in 1985, 1986 and 1990 (the
"Prior Warrants"), (iii) shares of the Company's Common Stock issued upon
exercise of Warrants granted in connection with the Series A Preferred Stock
Purchase Agreements dated April 17, 1987 and November 23, 1988 pursuant to
Warrant Agreements of even date therewith (the "1987 Warrants" and the "1988
Warrants" respectively), (iv) shares of the Company's Common Stock issued upon
exercise of Warrants granted in 1995 (the "1995 Warrants"), (v) shares of Series
BB Preferred Stock issued upon exercise of Warrants granted in connection with
the Company's 1997 Series BB and Warrant financing (the "1997 Warrants"), (vi)
shares of Series DD Preferred Stock issued or issuable upon conversion of
Convertible Debentures issued pursuant to the Debenture Purchase Agreement (the
"Convertible Debentures"), (vii) shares of the Company's Common Stock issued or
issuable upon conversion of the Series DD Preferred Stock, and (viii) any Common
Stock of the Company issued or issuable in respect of any of such shares upon
any stock split, stock dividend, recapitalization or similar event.
1.3 THE TERMS "REGISTER," "REGISTERED" AND "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act of 1933, as amended (the "Securities Act"),
and the declaration or ordering of the effectiveness of such registration
statement.
1.4 "REGISTRATION EXPENSES" shall mean all expenses incurred by the
Company in complying with Sections 3.4, 3.5 and 3.8 hereof, including, without
limitation, all registration,
<PAGE> 5
qualification, and filing fees, printing expenses, escrow fees, fees and
disbursements of counsel for the Company, fees and disbursements of one special
counsel for all Holders which shall be the same as counsel for the Company
unless the holders of a majority of the Registrable Securities of the selling
Holders specify otherwise, blue sky fees and expenses, and the expense of any
special audits incident to or required by any such registration (but excluding
the compensation of regular employees of the Company which shall be paid in any
event by the Company).
1.5 "SELLING EXPENSES" shall mean all underwriting discounts, selling
commissions, and stock transfer taxes applicable to the securities registered by
the Holders.
1.6 "HOLDER" shall mean any holder of Registrable Securities, or any
transferee of such Holder under Section 3.14, which have not been sold to the
public.
1.7 "PREFERRED STOCK" shall mean shares of the Company's Series A Stock,
Series B Stock, Series C Stock, Series D Stock, Series E Stock, Series AA Stock,
Series BB Stock, Series CC Stock and Series DD Stock.
II. AMENDMENT AND RESTATEMENT OF PRIOR INVESTORS' RIGHTS AGREEMENT
Effective and contingent upon the first closing of the sale of
Convertible Debentures of the Company pursuant to the Convertible Debenture
Purchase Agreement, that certain Fifth Amended and Restated Investors' Rights
Agreement dated as of November 26, 1997, by and among the Company and certain
holders of the Company's securities shall be null and void and superseded by the
rights and obligations set forth in this Agreement.
III. REGISTRATION; RESTRICTIONS ON TRANSFER
3.1 RESTRICTIONS ON TRANSFERABILITY. The Registrable Securities shall
not be transferable except upon the conditions specified in this Article III,
which conditions are intended to ensure compliance with the provisions of the
Securities Act. Each Holder will cause any proposed transferee of Registrable
Securities held by a Holder to agree to take and hold such securities subject to
the provisions and upon the conditions specified in this Article III.
3.2 RESTRICTIVE LEGEND. Each certificate representing Preferred Stock or
Registrable Securities shall (unless otherwise permitted by the provisions of
Section 3.3 below) be stamped or otherwise imprinted with a legend in the
following form (in addition to any legend required under applicable state
securities laws):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT OR EXCEPT
PURSUANT TO RULE 144. COPIES OF THE AGREEMENT COVERING THE PURCHASE OF
THESE SECURITIES AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO
COST BY WRITTEN
2.
<PAGE> 6
REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE
TO THE SECRETARY OF THE CORPORATION AT THE PRINCIPAL EXECUTIVE OFFICES
OF THE CORPORATION.
3.3 NOTICE OF PROPOSED TRANSFERS. The holder of each certificate
representing Preferred Stock or Registrable Securities by acceptance thereof
agrees to comply in all respects with the provisions of this Section 3.3. Prior
to any proposed transfer of any Preferred Stock or Registrable Securities,
unless there is in effect a Registration Statement under the Securities Act
covering the proposed transfer, the holder thereof shall give written notice to
the Company of such holder's intention to effect such transfer. Each such notice
shall describe the manner and circumstances of the proposed transfer in
sufficient detail, and shall, if the Company so requests, be accompanied (except
in transactions in compliance with Rule 144) by either (i) an unqualified
written opinion of legal counsel who shall be reasonably satisfactory to the
Company, addressed to the Company and reasonably satisfactory in form and
substance to the Company's counsel, to the effect that the proposed transfer of
the Preferred Stock or Registrable Securities may be effected without
registration under the Securities Act, or (ii) a "No Action" letter from the
Securities and Exchange Commission (the "Commission") to the effect that the
transfer of such securities without registration will not result in a
recommendation by the staff of the Commission that action be taken with respect
thereto, whereupon the holder of such Preferred Stock or Registrable Securities
shall be entitled to transfer such Preferred Stock or Registrable Securities in
accordance with the terms of the notice delivered by the holder to the Company;
provided, however, that no opinion or No Action letter need be obtained with
respect to a transfer to (A) a partner, active or retired, of a Holder, (B) the
estate of any such partner, or (C) an "affiliate" of a Holder, as that term is
defined in Rule 405 promulgated by the Commission under the Securities Act, if
the transferee agrees to be subject to the terms hereof. Each certificate
evidencing the Preferred Stock or Registrable Securities transferred as above
provided shall bear the appropriate restrictive legend set forth in Section 3.2
above, except that such certificate shall not bear such restrictive legend if in
the opinion of counsel for the Company such legend is not required in order to
establish compliance with any provisions of the Securities Act.
3.4 REQUESTED REGISTRATION.
(a) REQUEST FOR REGISTRATION. In case the Company shall receive
from any Holder or group of Holders holding at least 35% of the Registrable
Securities a written request that the Company effect any registration,
qualification, or compliance with respect to such Holder's or Holders'
Registrable Securities having an anticipated aggregate offering price of at
least $10,000,000, the Company will:
(i) promptly give written notice of the proposed
registration, qualification, or compliance to all other Holders; and
(ii) as soon as practicable, use its best efforts to
effect such registration, qualification, or compliance (including, without
limitation, the execution of an undertaking to file post-effective amendments,
appropriate qualification under applicable blue sky or other state securities
laws, and appropriate compliance with applicable regulations promulgated under
the Securities Act and any other governmental requirements or regulations) as
may be so requested and as would permit or facilitate the sale and distribution
of all or such
3.
<PAGE> 7
portion of such Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any Holder or
Holders joining in such request as are specified in a written request received
by the Company within 15 days after receipt of such written notice from the
Company; provided, however, that the Company shall not be obligated to take any
action to effect any such registration, qualification, or compliance pursuant to
this Section 3.4:
(A) in any particular jurisdiction in which the
Company would be required to execute a general consent to service of process in
effecting such registration, qualification, or compliance unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act;
(B) prior to November 25, 2000, or six months
following the close of the Company's initial underwritten public offering,
whichever shall first occur;
(C) after the Company has effected two such
registrations pursuant to this subparagraph 3.4(a), such registrations have been
declared or ordered effective and the securities offered pursuant to such
registration have been sold.
Subject to the foregoing clauses (A) through (C), the Company shall file
a registration statement covering the Registrable Securities so requested to be
registered as soon as practicable, after receipt of the request or requests of
any Holder or Holders. If, however, the Company shall furnish to the Holder or
Holders requesting a registration statement pursuant to this Section 3.4, a
certificate signed by the President of the Company stating that, in the good
faith judgment of the Board of Directors of the Company, it would be seriously
detrimental to the Company and its shareholders for such registration statement
to be filed and that it is therefore essential to defer the filing of such
registration statement, the Company shall have the right to defer such filing
for a period of not more than 120 days after receipt of the request of the
Holder or Holders requesting such registration; provided, however, that the
Company may not utilize this right more than once in any twelve-month period.
(b) UNDERWRITING. If the Holders intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
Section 3.4 and the Company shall include such information in the written notice
referred to in Section 3.4(a)(i). The right of any Holder to registration
pursuant to Section 3.4 shall be conditioned upon such Holder's participation in
such underwriting and the inclusion of such Holder's Registrable Securities in
the underwriting to the extent requested (unless otherwise mutually agreed by a
majority in interest of the Holders) to the extent provided herein.
The Company shall (together with all Holders proposing to distribute
their securities through such underwriting) enter into an underwriting agreement
in customary form with the managing underwriter selected for such underwriting
by a majority in interest of the Holders requesting registration and reasonably
acceptable to the company. Notwithstanding any other provision of this Section
3.4, if the managing underwriter advises the Holders in writing that the
marketing factors require a limitation of the number of shares to be
underwritten, then, subject to the provisions of Section 3.4(a), shares will be
excluded from such underwriting as follows:
4.
<PAGE> 8
securities (other than Registrable Securities) held by officers or directors of
the Company shall first be excluded; second, if required, all securities (other
than Registrable Securities) shall be excluded on a pro rata basis; and third,
if required, the Registrable Securities requested to be registered under this
Section 3.4 shall be excluded on a pro rata basis. No Registrable Securities
excluded from the underwriting by reason of the managing underwriter's marketing
limitation shall be included in such registration.
If any Holder of Registrable Securities disapproves of the terms of the
underwriting, such Holder may elect to withdraw therefrom by written notice to
the Company, the managing underwriter, and the other Holders. The Registrable
Securities and/or other securities so withdrawn shall also be withdrawn from
registration; provided, however, that if by the withdrawal of such Registrable
Securities a greater number of Registrable Securities held by other Holders may
be included in such registration (up to the maximum of any limitation imposed by
the underwriters), then, the Company shall offer to all Holders who have
included Registrable Securities in the same proportion used in determining the
underwriter limitation in this Section 3.4(b). If the registration does not
become effective due to the withdrawal of Registrable Securities, then, unless
the withdrawal was due to the discovery by the withdrawing Holder of material
information relating to the registration that was not previously known by such
Holder, either, at the option of a majority of the Holders requesting such
registration, (1) the Holders requesting registration shall reimburse the
Company for expenses incurred in complying with the request or (2) the aborted
registration shall be treated as effected for purposes of Section 3.4(a)(ii)(C).
3.5 COMPANY REGISTRATION.
(a) NOTICE OF REGISTRATION. If at any time the Company shall
determine to register any of its securities, either for its own account or the
account of a security holder or holders exercising their respective demand
registration rights, other than (i) a registration relating solely to employee
benefit plans or (ii) a registration relating solely to a Commission Rule 145
transaction, the Company will:
(i) promptly give to each Holder of the Company written
notice thereof; and
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any underwriting
involved therein, all the Registrable Securities specified in a written request
or requests, made within 15 days after receipt of such written notice from the
Company, by any Holder or Holders.
(b) If the registration of which the Company gives notice is for
a registered public offering involving an underwriting, the Company shall so
advise the Holders as a part of the written notice given pursuant to subsection
3.5(a)(i). In such event the right of any Holder to registration pursuant to
this Section 3.5 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their securities through such underwriting shall, together with the Company and
the other parties distributing their securities through such underwriting, enter
into an underwriting agreement in customary form with the
5.
<PAGE> 9
underwriter or underwriters selected for such underwriting by the Company.
Notwithstanding any other provision of this Section 3.5, if the underwriter
shall advise the Company in writing that marketing factors (including, without
limitation, an adverse effect on the per share offering price) require a
limitation of the number of shares to be underwritten, then shares (other than
securities to be sold for the account of the Company), shall be excluded as
follows: securities (other than Registrable Securities) and second, if required,
the Registrable Securities requested to be registered shall be excluded on a pro
rata basis; provided, however, that in connection with any registration under
this Section 3.5, other than the registration pertaining to the Company's
initial public offering of securities, the amount of Registrable Securities of
the selling Holders to be included in the offering shall not be reduced below
50% of the securities included in such offering. No Registrable Securities
excluded from the underwriting by reason of the managing underwriter's marketing
limitation shall be included in such registration.
If any Holder disapproves of the terms of the underwriting, it may elect
to withdraw therefrom by written notice to the Company and the underwriter. Any
securities so withdrawn shall also be withdrawn from registration. If by the
withdrawal of such securities a greater number of securities held by other
Holders may be included in such registration (up to the maximum of any
limitation imposed by the underwriters), then the Company shall offer to all
Holders who have included securities in the registration the right to include
additional securities in the same proportion used in determining the underwriter
limitation in this paragraph 3.5(b).
3.6 EXPENSES OF REGISTRATION. Except as set forth in Section 3.4(b), the
Registration Expenses incurred in connection with (i) registrations pursuant to
Section 3.4, (ii) all registrations pursuant to Section 3.8 below, and (iii) all
registrations pursuant to Section 3.5 shall be borne by the Company. Unless
otherwise stated, all Selling Expenses relating to securities registered by the
Holders shall be borne by the holders of such securities pro rata on the basis
of the number of shares so registered.
3.7 REGISTRATION PROCEDURES. In the case of each registration,
qualification, or compliance effected by the Company pursuant to this Article
III, the Company will keep each Holder advised in writing as to the initiation
of each registration, qualification, and compliance and as to the completion
thereof. At its expense, the Company will:
(a) Keep such registration, qualification, or compliance
effective for a period of 120 days or until the Holder or Holders have completed
the distribution described in the registration statement relating thereto,
whichever first occurs; and
(b) Furnish such number of prospectuses and other documents
incident thereto as a Holder from time to time may reasonably request.
3.8 REGISTRATION ON FORM S-3. In addition to the rights set forth in
Section 3.4, if Holder or Holders of at least 25% of the then outstanding
Registrable Securities of the Company request that the Company file a
registration statement on Form S-3 (or any successor thereto) for a public
offering of shares of such Registrable Securities, the reasonably anticipated
aggregate price to the public of which would exceed $3,000,000, and the Company
is a registrant entitled to use Form S-3 to register securities for such an
offering, the Company shall use its best efforts to cause such shares to be
registered for the offering on such form (or any successor thereto),
6.
<PAGE> 10
provided, however, that the Company shall not be required to effect any such
registration within 180 days of the effective date of any registration statement
pertaining to an underwritten public offering of the Company's securities or if
the Company has, within the 12 month period preceding the date of such request,
already effected a registration on Form S-3 for the Holders pursuant to this
Section 3.8.
3.9 TERMINATION OF REGISTRATION RIGHTS. The registration rights granted
pursuant to this Article III shall terminate as to each Holder at such time as
all Registrable Securities or held by such Holder (including any Common Stock
issued upon conversion of the Preferred Stock of each Holder) can be sold
without compliance with the registration requirements of the Securities Act
pursuant to Rule 144(k).
3.10 LOCKUP AGREEMENT. In consideration for the Company agreeing to its
obligations under this Article III, each Holder and each transferee pursuant to
Section 3.14 hereof agrees (but only if each Company officer, director and
shareholder beneficially owning 5% or more of the Company's equity securities,
and each shareholder selling shares in such offering, also agrees), in
connection with the initial registration of the Company's securities, upon
request of the Company or the underwriters managing any underwritten offering of
the Company's securities, not to sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of any Registrable Securities
(other than those included in the registration) without the prior written
consent of the Company or such underwriters, as the case may be, for such period
of time (not to exceed 180 days) from the effective date of such registration as
the Company or the underwriters may specify. The Holders agree that the Company
may instruct its transfer agent to place stop-transfer notations in its records
to enforce the provisions of this Section 3.10.
3.11 INDEMNIFICATION. The Company will indemnify each Holder, each of
its officers, directors, and partners, and such Holder's legal counsel and
independent accountants, and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, with respect to which registration,
qualification, or compliance has been effected pursuant to this Article III, and
each underwriter, if any, and each person who controls any underwriter within
the meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages, and liabilities (or actions in respect thereof), including any
of the foregoing incurred in settlement of any litigation, commenced or
threatened, arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any registration statement,
prospectus, offering circular, or other document, or any amendment or supplement
thereto, incident to any such registration, qualification, or compliance, or
based on any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, or any
violation by the Company of any rule or regulation promulgated under the
Securities Act or under state securities laws applicable to the Company and
relating to action or inaction required of the Company in connection with any
such registration, qualification, or compliance, and will reimburse each such
Holder, each of its officers, directors, and partners, and such Holder's legal
counsel and independent accountants, and each person controlling such Holder,
each such underwriter, and each person who controls any such underwriter, for
any legal and any other expenses reasonably incurred in connection with
investigating, preparing, or
7.
<PAGE> 11
defending any such claim, loss, damage, liability, or action, provided that the
Company will not be liable in any such case to the extent that any such claim,
loss, damage, liability, or expense arises out of or is based on any untrue
statement or omission or alleged untrue statement or omission, made in reliance
upon and in conformity with written information furnished to the Company by an
instrument duly executed by such Holder or underwriter and stated to be
specifically for use therein.
(a) Each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such registration,
qualification, or compliance is being effected, severally and not jointly,
indemnify the Company, each of its directors and officers and its legal counsel
and independent accountants, each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who controls
the Company or such underwriter within the meaning of Section 15 of the
Securities Act, and each other such Holder, each of its officers and directors,
and each person controlling such Holder within the meaning of Section 15 of the
Securities Act, against all claims, losses, damages, and liabilities (or actions
in respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular, or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
the Company, such Holders, such directors, officers, legal counsel, independent
accountants, underwriters, or control persons for any legal or any other
expenses reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability, or action, in each case to the extent, but
only to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular, or other document in reliance upon and in
conformity with written information furnished to the Company by an instrument
duly executed by such Holder and stated to be specifically for use therein;
provided, however, that the obligations of such Holders hereunder shall be
limited to an amount equal to the net proceeds after expenses and commissions to
each such Holder of Registrable Securities sold as contemplated herein.
(b) Each party entitled to indemnification under this Section
3.11 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Article III, except to the
extent, but only to the extent, that the Indemnifying Party's ability to defend
against such claim or litigation is impaired as a result of such failure to give
notice. No Indemnifying Party, in the defense of any such claim or litigation,
shall, except with the consent of each Indemnified Party, consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
8.
<PAGE> 12
3.12 INFORMATION BY HOLDER. Each Holder including securities of the
Company in any registration shall furnish to the Company such information
regarding such Holder and the distribution proposed by such Holder as the
Company may request in writing and as shall be required in connection with any
registration, qualification, or compliance referred to in this Article III.
3.13 RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the
sale of the Preferred Stock and/or Registrable Securities to the public without
registration, after such time as a public market exists for the Common Stock of
the Company, the Company agrees to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all times
after the effective date of the first registration under the Securities Act
filed by the Company for an offering of its securities to the general public;
(b) Use its best efforts to then file with the Commission in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (at any time after it has become subject to such reporting
requirements);
(c) So long as a Holder owns Preferred Stock and/or Registrable
Securities to furnish to the Holder forthwith upon request (i) a written
statement by the Company as to its compliance with the reporting requirements of
Rule 144 (at any time after 90 days after the effective date of the first
registration statement filed by the Company for an offering of its securities to
the general public) and of the Securities Act and the Exchange Act (at any time
after it has become subject to such reporting requirements), (ii) a copy of the
most recent annual or quarterly report of the Company, and (iii) such other
reports and documents of the Company as a Holder may reasonably request in
availing itself of any rule or regulation of the Commission allowing a Holder to
sell any such securities without registration.
3.14 TRANSFER OF REGISTRATION RIGHTS. The right to cause the Company to
register securities granted Holders under Sections 3.4, 3.5, and 3.8 may be
assigned to a transferee or assignee who acquires at least 25,000 shares of
Preferred Stock (or securities convertible thereinto) (or Common Stock issued
upon conversion of the Preferred Stock or a combination of such Common Stock and
Preferred Stock) then held by such Holder, provided that the Company is given
written notice of such assignment prior to such assignment. In addition, rights
to cause the Company to register securities may be freely assigned to any
constituent partner of a Holder, where such Holder is a partnership, or to any
affiliate (as that term is defined in Rule 405 promulgated by the Commission
under the Securities Act) or any officer, director, or principal shareholder
thereof, where such Holder is a corporation.
IV. COVENANTS OF THE COMPANY
The Company hereby covenants and agrees as follows:
9.
<PAGE> 13
4.1 ANNUAL FINANCIAL INFORMATION. The Company will furnish the following
reports to each Holder for so long as such Holder (together will all of its
affiliates) is a holder of more than 5% of any series of Preferred Stock, as
soon as practicable after the end of each fiscal year, and in any event within
90 days thereafter: (i) consolidated balance sheet of the Company and its
subsidiaries, if any, as of the end of such fiscal year, and (ii) consolidated
statement of income and consolidated statement of cash flows of the Company and
its subsidiaries, if any, for such year, prepared in accordance with generally
accepted accounting principles consistently applied and setting forth in each
case in comparative form the figures for the previous fiscal year, all in
reasonable detail and certified in an unqualified opinion by a national
accounting firm selected by the Company.
4.2 INSPECTION. For so long as a Holder is eligible to receive reports
under Section 4.1, it shall also have the right, at its expense, to visit and
inspect any of the properties of the Company or any of its subsidiaries, and to
discuss their affairs, finances, and accounts with their officers, all at such
reasonable times and as often as may be reasonably requested.
4.3 ASSIGNMENT OF RIGHTS TO FINANCIAL INFORMATION. The rights granted
pursuant to Sections 4.1 and 4.2 may be assigned or otherwise conveyed by any
Holder or by any subsequent transferee of any such rights, upon written notice
to the Company; provided, however, that such rights may not be transferred to
any transferee who the Company, acting in good faith, deems to be a competitor
of the Company.
4.4 PROPRIETARY INFORMATION AND NON-COMPETITION AGREEMENTS. The Company
will require each person employed by the Company in a technical or management
position, whether at present or in the future, to execute a Proprietary
Information Agreement in the Company's standard form, as a condition of such
employment. The Company will also require certain key employees to enter into
non-competition agreements as a condition of their continued employment.
4.5 CONFIDENTIALITY AGREEMENT. Each Holder agrees that it will use its
best efforts to hold any information such Holder receives after the date of this
Agreement regarding the Company pursuant to Section 4.1 or 4.2, or while in
attendance at meetings of the Board of Directors, and which the Company deems to
be confidential, in confidence and will use its best efforts not to disclose
such information without the prior consent of the Company, except to the extent
such information: (i) is or becomes publicly known from a source other than a
Holder, (ii) is made publicly known by the Company, (iii) is known by the Holder
at the time of disclosure by the Company or (iv) is disclosed to the Holder by a
source other than the Company or another Holder free of any obligation of
confidentiality. Notwithstanding the foregoing, the Company will collaborate
with each Holder as necessary to develop mutually agreed-upon information which
such Holder can provide to its investors.
4.6 INSIDER TRANSACTIONS. The Company will not enter into any material
insider transactions without the approval of a majority of the representatives
of the Holders, if any, to the Board of Directors.
4.7 EMPLOYEE STOCK AND OPTION PLANS. The Company will not sell shares of
its Common Stock or options to purchase shares of its Common Stock to its
employees except
10.
<PAGE> 14
pursuant to an existing plan and any future plan approved by a unanimous vote of
the Board of Directors of the Company.
4.8 FINANCIAL UPDATES TO BOARD. At each meeting of the Board of
Directors of the Company, each member of the Board of Directors will receive
actual and forecasted updated financial statements for the current year by
quarter.
4.9 TERMINATION OF COVENANTS. Notwithstanding anything to the contrary
set forth herein, the covenants set forth in this Article IV shall terminate and
be of no further force or effect on or after the date of the first sale of the
Company's securities pursuant to which a registration statement is filed by the
Company under the Securities Act in connection with an underwritten public
offering of its securities.
V. RIGHTS OF FIRST REFUSAL
5.1 NEW SECURITIES. The Company hereby grants to the holders of
Convertible Debentures (the "Debenture Holders") and the Series CC Preferred
Stock and Series DD Preferred Stock (the "Series CC and DD Holders," and,
together with the Debenture Holders, the "Rightholders") the right of first
refusal to purchase such Rightholder's pro rata share of "New Securities" (as
defined in this Section 5.1) that the Company may propose to sell and issue.
Such Rightholder's pro rata share, for purposes of this right of first refusal,
is the ratio of (X) the number of shares of Registrable Securities with respect
to which such Rightholder is deemed to be a holder immediately prior to the
issuance of such New Securities to (Y) the total number of outstanding shares of
Common Stock on an as-converted basis. For all purposes in this Agreement of
determining the Preferred Stock held by a Purchaser, all Convertible Debentures
shall be treated as if converted to Series DD Preferred. This right of first
refusal shall be subject to the following provisions:
(a) "New Securities" shall mean any Common Stock and Preferred
Stock of the Company whether or not authorized on the date hereof, and rights,
options, or warrants to purchase said Common Stock or Preferred Stock and
securities of any type whatsoever that are, or may become, convertible into said
Common Stock or Preferred Stock; provided, however, that "New Securities" does
not include the following:
(i) up to 4,025,000 shares of Common Stock, or options to
purchase shares of Common Stock, issued, issuable or granted to officers,
directors, and employees of or consultants to the Company pursuant to stock
plans or option plans approved by the Board of Directors;
(ii) shares of Common Stock issuable upon conversion of
the Preferred Stock;
(iii) securities of the Company offered to the public
pursuant to a registration statement filed under the Securities Act;
(iv) securities of the Company issued in connection with
strategic transactions approved by the Board of Directors of the Company;
11.
<PAGE> 15
(v) securities of the Company issued pursuant to the
acquisition of another corporation by the Company by merger, purchase of all or
substantially all of the assets, or other reorganization whereby the Company
owns more than fifty percent (50%) of the voting power of such other
corporation, so long as such transactions were approved by the Board of
Directors of the Company; or
(vi) securities issued in connection with any stock split,
stock dividend, or recapitalization by the Company.
(b) In the event that Company proposes to undertake an issuance
of New Securities, the Company shall give each Rightholder written notice of its
intention, describing the type of New Securities, the price, and the general
terms upon which the Company proposes to issue the same. Each Rightholder shall
have 20 days after receipt of such notice to agree to purchase its pro rata
share of such New Securities at the price and upon the terms specified in the
notice by giving written notice to the Company and stating therein the quantity
of New Securities to be purchased.
(c) In the event that any Rightholder fails to exercise in full
the right of first refusal within the 20-day period specified above, the Company
shall have 120 days thereafter to sell (or enter into an agreement pursuant to
which the sale of New Securities covered thereby shall be closed, if at all,
within 60 days from the date of said agreement) any remaining New Securities
respecting which the Rightholders' Rights were not exercised, at a price and
upon terms no more favorable to the purchasers thereof than specified in the
Company's notice to the Rightholders. In the event the Company has not sold any
remaining New Securities within such 120 day period (or sold and issued New
Securities in accordance with the foregoing within 60 days from the date of such
agreement) the Company shall not thereafter issue or sell any New Securities,
without first offering such New Securities to the Rightholders in the manner
provided above.
(d) The right of first refusal granted under this Section 5.1
shall not apply to, and shall terminate on the earlier of (i) the date of a
liquidation, dissolution or winding up of the Company pursuant to Section 3 of
the Articles of Incorporation, or (ii) the date upon which a registration
statement filed by the Company under the Securities Act, in connection with an
underwritten public offering, first becomes effective.
(e) This right of first refusal is nonassignable except to any
transferee to whom registration rights may be transferred pursuant to Section
3.14.
5.2 OUTSTANDING SECURITIES. If (i) the Company receives notice under
Section 10.1(a) of the Company's Bylaws of the proposed sale of shares of the
Company's capital stock by (A) an officer of the Company, (B) a director of the
Company or (C) a holder of at least 5% of the Company's capital stock
(determined on an as-converted-to Common Stock basis) and (ii) the Company
elects not to purchase such shares pursuant to the right of first refusal in
favor of the Company provided in Section 10.1 of the Company's Bylaws, then the
Company shall within ten days of such notice assign its right of first refusal
to the Rightholders (on a pro-rata basis with respect to the number of shares of
Common Stock (as determined on an as-converted-basis) by each such holder) and
provide notice of such assignment to such holders and, thereafter, shall
12.
<PAGE> 16
take such actions as are reasonably necessary to permit such holders to exercise
such right of first refusal.
VI. MISCELLANEOUS
6.1 GOVERNING LAW. This Agreement shall be governed in all respects by
the laws of the State of California.
6.2 SURVIVAL. The representations, warranties, covenants, and agreements
made herein shall survive any investigation made by any Holder and the closing
of the transactions contemplated hereby. All statements as to factual matters
contained in any certificate or other instrument delivered by or on behalf of
the Company pursuant hereto in connection with the transactions contemplated
hereby shall be deemed to be representations and warranties by the Company
hereunder solely as of the date of such certificate or instrument.
6.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors, and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of Registrable Securities from time to time;
provided, however, that prior to the receipt by the Company of adequate written
notice of the transfer of any Registrable Securities specifying the full name
and address of the transferee, the Company may deem and treat the person listed
as the holder of such shares in its records as the absolute owner and holder of
such shares for all purposes, including the payment of dividends or any
redemption price.
6.4 SEPARABILITY. In case any provision of the Agreement shall be
invalid, illegal, or unenforceable, the validity, legality, and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
6.5 AMENDMENT AND WAIVER.
(a) This Agreement may be amended or modified only upon the
written consent of the Holders of not less than 66-2/3% of the Registrable
Securities; provided, however, that the rights set forth in paragraph 3.5 of
this Agreement may be amended or modified only with the written consent of the
Company and Holders of more than 66-2/3% of the aggregate outstanding shares of
Registrable Securities.
(b) The obligations of the Company and the rights of the Holders
under this Agreement may be waived only with the written consent of the Holders
of not less than 66-2/3% of the Registrable Securities; provided, however, that
the obligations of the Company and the rights of the Holders set forth in
Section 3.5 of this Agreement may be waived only with the written consent of the
Company and Holders of more than 66-2/3% of the aggregate outstanding shares of
Registrable Securities.
(c) Except to the extent provided in this Section 6.5, neither
this Agreement nor any provision hereof may be changed, waived, discharged, or
terminated, except by a
13.
<PAGE> 17
statement in writing signed by the party against which enforcement of the
change, waiver, discharge, or termination is sought.
6.6 DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power, or remedy accruing to any Holder, upon any breach,
default or noncompliance of the Company under this Agreement shall impair any
such right, power, or remedy, nor shall it be construed to be a waiver of any
such breach, default or noncompliance, or any acquiescence therein, or of or in
any similar breach, default or noncompliance thereafter occurring. It is further
agreed that any waiver, permit, consent, or approval of any kind or character on
any Holder's part of any breach, default or noncompliance under the Agreement or
any waiver on such Holder's part of any provisions or conditions of this
Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, by law, or otherwise afforded to Holders, shall be cumulative and not
alternative.
6.7 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be sent by registered or
certified mail, return receipt requested, postage prepaid, by means of a
nationally recognized overnight courier service, by telex or by facsimile,
addressed or sent: (a) if to a Holder, at such Holder's address or facsimile
number as set forth on the Company's records, or at such other address or
facsimile number as such Holder shall have furnished to the Company in writing,
or (b) if to the Company, at its address or facsimile number as set forth at the
end of this Agreement, or at such other address or facsimile number as the
Company shall have furnished to the Holders in writing.
6.8 ATTORNEYS' FEES. If legal action is brought to enforce or interpret
this Agreement, the prevailing party shall be entitled to recover its reasonable
attorneys' fees and legal costs in connection therewith.
6.9 NO INVESTMENT OBLIGATION. The Company and each of the Purchasers
hereby agree and acknowledge that the Purchasers, individually and jointly, are
under no express or implied obligation to continue to invest in the Company. The
decision to make any future investments in the Company is within the complete
and absolute discretion of each Purchaser.
6.10 AGGREGATION AND AFFILIATE STATUS. For purposes of determining the
amount of shares or Registrable Securities held by a Purchaser or Holder, all
shares or Registrable Securities held by entities affiliated with such Purchaser
or Holder shall be aggregated with the shares or Registrable Securities held by
such Purchaser or Holder. For such purpose, all entities under the management of
Chancellor LGT Asset Management shall be deemed to be affiliates of each other
and of Chancellor LGT Asset Management.
6.11 ENTIRE AGREEMENT. The Company and each of the Purchasers hereby
agrees and acknowledges that this Agreement and all exhibits hereto constitute
the full and entire understanding and agreement between the parties with regard
to the subject matter hereof. There are no other agreements or understandings
with respect to the subject matter set forth herein, express or implied, other
than this Agreement.
14.
<PAGE> 18
6.12 TITLES AND SUBTITLES. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
6.13 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
15.
<PAGE> 19
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By: /s/ KEN KENITZER
-------------------------------------
Ken Kenitzer
President
PURCHASER:
BRENTWOOD ASSOCIATES VI, L.P.
BY BRENTWOOD VI VENTURES, L.P., GENERAL PARTNER
By:
-------------------------------------
Name:
Title:
<PAGE> 20
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By:
-------------------------------------
Ken Kenitzer
President
PURCHASER:
BRENTWOOD ASSOCIATES VI, L.P.
BY BRENTWOOD VI VENTURES, L.P., GENERAL PARTNER
By: /s/ JOHN C. WALECKE
-------------------------------------
Name: John C. Walecke
Title: General Partner
<PAGE> 21
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By: /s/ KEN KENITZER
-------------------------------------
Ken Kenitzer
President
PURCHASER:
CHANCELLOR LGT PRIVATE CAPITAL III, L.P.
BY:
BY:
By:
-------------------------------------
Name:
Title:
<PAGE> 22
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By:
-------------------------------------
Ken Kenitzer
President
PURCHASER:
CHANCELLOR PRIVATE CAPITAL PARTNERS III, L.P.
By: CPCP Associates L.P. its General Partner
By: INVESCO Private Capital Inc, its General Partner
By: /s/ ALESSANDRO PIOL
-------------------------------------
Name: Alessandro Piol
Title: Managing Director
<PAGE> 23
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By:
-------------------------------------
Ken Kenitzer
President
PURCHASER:
CHANCELLOR PRIVATE CAPITAL OFFSHORE PARTNERS I, C.V.
BY: Chancellor KME IV Partner, L.P., its Investment General Partner
BY: INVESCO Private Capital, Inc., its General Partner
By: /s/ ALESSANDRO PIOL
-------------------------------------
Name: Alessandro Piol
Title: Managing Director
<PAGE> 24
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By:
-------------------------------------
Ken Kenitzer
President
PURCHASER:
CHANCELLOR PRIVATE CAPITAL OFFSHORE PARTNERS II, L.P.
BY: CPCO Associates, L.P., its Investment General Partner
BY: INVESCO Private Capital, Inc., its General Partner
By: /s/ ALESSANDRO PIOL
-------------------------------------
Name: Alessandro Piol
Title: Managing Director
<PAGE> 25
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By:
-------------------------------------
Ken Kenitzer
President
PURCHASER:
CITIVENTURE 96 PARTNERSHIP FUND, L.P.
By: INVESCO (NY), INC., as Investment Adviser
By: /s/ [SIGNATURE ILLEGIBLE]
-------------------------------------
Name: [ILLEGIBLE]
Title: Managing Director
<PAGE> 26
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By:
-------------------------------------
Ken Kenitzer
President
PURCHASER:
CHARTER GROWTH CAPITAL, L.P.
By: /s/ [SIGNATURE ILLEGIBLE]
-------------------------------------
Name: [ILLEGIBLE]
Title: General P
<PAGE> 27
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By:
-------------------------------------
Ken Kenitzer
President
PURCHASER:
CHARTER GROWTH CAPITAL CO-INVESTMENT FUND, L.P.
By: /s/ KEVIN McQUILLAN
-------------------------------------
Name: Kevin McQuillan
Title: General Partner
<PAGE> 28
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By:
-------------------------------------
Ken Kenitzer
President
PURCHASER:
CGC INVESTORS, L.P.
By: /s/ KEVIN MCQUILLAN
-------------------------------------
Name: Kevin McQuillan
Title: General Partner
<PAGE> 29
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By:
-------------------------------------
Ken Kenitzer
President
PURCHASER:
DIXON R. DOLL AND CAROL DOLL AS TRUSTEES UTA
9-10-92 OF THE DIXON AND CAROL DOLL FAMILY TRUST
By: /s/ DIXON R. DOLL
-------------------------------------
Name: Dixon R. Doll
Title: Trustee
<PAGE> 30
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By:
-------------------------------------
Ken Kenitzer
President
PURCHASER:
DOLL FAMILY PARTNERSHIP
By: /s/ DIXON R. DOLL
-------------------------------------
Name: Dixon R. Doll
Title: Partner
<PAGE> 31
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By:
-------------------------------------
Ken Kenitzer
President
PURCHASER:
DMW INVESTORS '95
By: /s/ [SIGNATURE ILLEGIBLE]
-------------------------------------
Name:
Title:
<PAGE> 32
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By:
-------------------------------------
Ken Kenitzer
President
PURCHASER:
HALLADOR VENTURE FUND II, A CALIFORNIA LIMITED PARTNERSHIP
BY HALLADOR VENTURE PARTNERS
By: /s/ CHRIS L. BRANSCUM Hallador Venture Fund II
------------------------------------- By Hallador Venture Ptrs.
Name: CHRIS L. BRANSCUM By Chris L. Branscum
Title: General Partner
<PAGE> 33
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By:
-------------------------------------
Ken Kenitzer
President
PURCHASER:
HMS GROUP
By: /s/ FRANK ATKINSON
-------------------------------------
Name: Frank Atkinson
Title: General Partner
<PAGE> 34
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By:
-------------------------------------
Ken Kenitzer
President
PURCHASER:
INTERNATIONAL SYNERGIES LTD.
By: /s/ DIXON R. DOLL
-------------------------------------
Name: Dixon R. Doll
Title: Authorized Agent
<PAGE> 35
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By:
-------------------------------------
Ken Kenitzer
President
PURCHASER:
J.F. SHEA CO., INC. AS NOMINEE 1990-13
By: /s/ EDMUND H. SHEA, JR.
-------------------------------------
Name: EDMUND H. SHEA, JR.
Title: VICE PRESIDENT
<PAGE> 36
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By:
-------------------------------------
Ken Kenitzer
President
PURCHASER:
NAZEM & COMPANY IV, L.P.
BY NAZEM & ASSOCIATES IV, L.P., GENERAL PARTNER
By: /s/ PHILIP BARAK
-------------------------------------
Name: PHILIP BARAK
Title: GENERAL MANAGER
<PAGE> 37
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By:
-------------------------------------
Ken Kenitzer
President
PURCHASER:
OAK INVESTMENT PARTNERS VI, LIMITED PARTNERSHIP
By: /s/ BANDEL CARANO
-------------------------------------
Name: Bandel Carano
Title:
MANAGING MEMBER OF OAK ASSOCIATES VI, LLC,
THE GENERAL PARTNER OF
OAK INVESTMENT PARTNERS VI,
LIMITED PARTNERSHIP
<PAGE> 38
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By:
-------------------------------------
Ken Kenitzer
President
PURCHASER:
TRANSATLANTIC VENTURE FUND C.V.
By: /s/ PHILIP BARAK
-------------------------------------
Name: PHILIP BARAK
Title: INVESTMENT MANAGER
<PAGE> 39
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By:
-------------------------------------
Ken Kenitzer
President
PURCHASER:
UNIVERSITY OF MICHIGAN
BUSINESS SCHOOL GROWTH FUND
By: /s/ DIXON R. DOLL
-------------------------------------
Name: DIXON R. DOLL
Title: INV MANAGER
<PAGE> 40
EXHIBIT A
PRIOR PURCHASERS
Bay Partners IV, L.P.
Brentwood Associates VI
California BPIV, L.P.
Chancellor LGT Private Capital Partners III, L.P.
Chancellor LGT Private Capital Offshore Partners I, C.V.
Chancellor LGT Private Capital Offshore Partners II, L.P.
Citiventure 96 Partnership Fund, L.P.
Dixon R. Doll & Carol Doll as Trustees
DMW Investors '95
Doll Family Partnership
Hallador Venture Fund II, a California Limited Partnership
HMS Capital Partners
HMS Capital Partners (Annex)
HMS Group
HMS (Overseas) Partners
Michael Hone as Trustee
International Synergies Ltd.
J.F. Shea Company, Inc., as nominee 1990-13
Nazem & Company IV, L.P.
Oak Investment Partners VI, L.P.
Oak VI Affiliates Fund, L.P.
Kevin J. McQuillen
Spring Point Partners, L.P.
Edward F. Straube
Transatlantic Venture Fund
University of Michigan Business School Growth Fund
WA&H Investment, L.L.C.
New Purchasers
Charter Growth Capital, L.P.
Charter Growth Capital Co-investment Fund L.P.
CGC Investors, L.P.
1
<PAGE> 41
AMENDMENT NO. 1 TO
THE SIXTH AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
This AMENDMENT NO. 1 TO THE SIXTH AMENDED AND RESTATED INVESTORS' RIGHTS
AGREEMENT (the "Amendment No. 1) is made effective as of July 8, 1999, by and
among REPEATER TECHNOLOGIES, INC., a California corporation (the "Company"),
TBCC Funding Trust II ("TBCC") and those parties to that certain Sixth Amended
and Restated Investors' Rights Agreement of the Company entered into as of
November 25, 1998 (the "Investors' Rights Agreement") listed as "Prior
Purchasers" on Exhibit A hereto (capitalized terms used herein and not otherwise
defined are given the meanings assigned them in the Investors' Rights
Agreement).
RECITALS
A. WHEREAS, the Company and Transamerica Business Credit Corporation, a
Delaware corporation, entered into that certain Loan and Security Agreement
dated as of July 8, 1999 (the "Loan and Security Agreement") and, in connection
with such agreement, the Company and TBCC entered into that certain Stock
Subscription Warrant issued on July 8, 1999 (the "TBCC Warrant") which warrant
is exercisable in accordance with its terms to purchase up to 100,000 shares of
the Company's Series DD Preferred Stock, without par value.
B. WHEREAS, pursuant to Section 12 of the TBCC Warrant, the Company has
agreed to cause the Investors' Rights Agreement to be amended to include TBCC as
a "Purchaser" thereunder and the shares issuable upon exercise of the Warrant as
"Registrable Securities" thereunder.
C. WHEREAS, Section 6.5 of the Investors' Rights Agreement provides that
the Investors' Rights Agreement may be amended or modified upon the written
consent of the holders of not less than 66-2/3% of the Registrable Securities
thereunder.
D. WHEREAS, the requisite number of holders of such Registrable
Securities, by executing this Amendment No. 1, have agreed to amend the
Investors' Rights Agreement in accordance with the foregoing.
AGREEMENT
ACCORDINGLY, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
1. The definition of "Purchaser" (and collectively, the "Purchasers")
under the Investors' Rights Agreement is hereby amended to include TBCC as a
"Purchaser" thereunder.
2. Section 1.2 of the Investors' Rights Agreement is amended to read in
its entirety as follows:
1.
<PAGE> 42
"1.2 "REGISTRABLE SECURITIES" shall mean shares of the Company's
Common Stock issued or issuable pursuant to (i) the conversion of the
Company's Series A Preferred Stock (the "Series A Stock"), Series B
Preferred Stock (the "Series B Stock"), Series C Preferred Stock (the
"Series C Stock"), Series D Preferred Stock (the "Series D Stock"),
Series E Preferred Stock (the "Series E Stock"), Series AA Preferred
Stock (the "Series AA Stock"), Series BB Preferred Stock (the "Series BB
Stock"), Series CC Preferred Stock (the "Series CC Stock") and Series DD
Preferred Stock (the "Series DD Stock"), (ii) the exercise of the
warrants granted in connection with the Company's interim financings in
1985, 1986 and 1990 (the "Prior Warrants"), (iii) the exercise of
warrants granted in connection with the Series A Preferred Stock
Purchase Agreements dated April 17, 1987 and November 23, 1988 pursuant
to Warrant Agreements of even date therewith (the "1987 Warrants" and
the "1988 Warrants" respectively), (iv) the exercise of warrants granted
in 1995 (the "1995 Warrants"), (v) the exercise of warrants granted in
connection with the Company's 1997 Series BB Preferred Stock and Warrant
financing (the "1997 Warrants"), (vi) the conversion of convertible
debentures issued pursuant to that certain Convertible Debenture
Purchase Agreement dated as of November 25, 1998 (the "Convertible
Debentures") and (vii) the exercise of the TBCC Warrant, and any Common
Stock of the Company issued or issuable in respect of any of the
foregoing securities upon any stock split, stock dividend,
recapitalization or similar event."
3. Except as expressly set forth herein, all of the terms and conditions
set forth in the Investors' Rights Agreement shall remain in full force and
effect.
4. This Amendment shall be deemed to be a contract made under the laws
of the State of California and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State.
4. This Amendment may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.
2.
<PAGE> 43
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
1 as of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By: /s/ KEN KENITZER
-------------------------------------
Ken Kenitzer
President
TBCC:
TBCC FUNDING TRUST II
By: /s/ IAN SCHNIDER
-------------------------------------
Name: Ian Schnider
-----------------------------------
Title: Senior Vice President
----------------------------------
General Manager
----------------------------------
AMENDMENT NO. 1 TO SIXTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
SIGNATURE PAGE
<PAGE> 44
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
1 as of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By: /s/ KEN KENITZER
-------------------------------------
Ken Kenitzer
President
PRIOR PURCHASER:
BRENTWOOD ASSOCIATES VI, L.P.
By: /s/ JOHN L. WALECKA
-------------------------------------
Name: John L. Walecka
-----------------------------------
Title: General Partner
----------------------------------
AMENDMENT NO. 1 TO SIXTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
SIGNATURE PAGE
<PAGE> 45
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
1 as of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By: /s/ KEN KENITZER
-------------------------------------
Ken Kenitzer
President
PRIOR PURCHASER:
CHARTER GROWTH CAPITAL, L.P.
By: /s/ KEVIN J. McQUILLAN
-------------------------------------
Name: Kevin J. McQuillan
-----------------------------------
Title: General Partner of the
----------------------------------
General Partner
----------------------------------
AMENDMENT NO. 1 TO SIXTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
SIGNATURE PAGE
<PAGE> 46
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
1 as of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By: /s/ KEN KENITZER
-------------------------------------
Ken Kenitzer
President
PRIOR PURCHASER:
TRANSATLANTIC VENTURE FUND
By: /s/ KEVIN J. McQUILLAN
-------------------------------------
Name: Kevin J. McQuillan
-----------------------------------
Title: General Partner of the
----------------------------------
General Partner
----------------------------------
AMENDMENT NO. 1 TO SIXTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
SIGNATURE PAGE
<PAGE> 47
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
1 as of the date set forth in the first paragraph hereof.
PRIOR PURCHASER:
TRANS ATLANTIC VENTURE FUND
By: /s/ PHILIP BARAK
-------------------------------------
Name: Philip Barak
-----------------------------------
Title: Investment Manager
----------------------------------
COMPANY
REPEATER TECHNOLOGIES, INC.
By: /s/ KEN KENITZER
-------------------------------------
Ken Kenitzer
President
AMENDMENT NO. 1 TO SIXTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
SIGNATURE PAGE
<PAGE> 48
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
1 as of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By: /s/ KEN KENITZER
-------------------------------------
Ken Kenitzer
President
PRIOR PURCHASER:
CHARTER GROWTH CAPITAL CO-INVESTMENT FUND, L.P.
By: /s/ KEVIN J. McQUILLAN
-------------------------------------
Name: Kevin J. McQuillan
-----------------------------------
Title: General Partner of the
----------------------------------
General Partner
----------------------------------
AMENDMENT NO. 1 TO SIXTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
SIGNATURE PAGE
<PAGE> 49
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
1 as of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By: /s/ KEN KENITZER
-------------------------------------
Ken Kenitzer
President
PRIOR PURCHASER:
BAY PARTNERS IV
By: /s/ JOHN BOSCH
-------------------------------------
Name: John Bosch
-----------------------------------
Title:
----------------------------------
AMENDMENT NO. 1 TO SIXTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
SIGNATURE PAGE
<PAGE> 50
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
1 as of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By: /s/ KEN KENITZER
-------------------------------------
Ken Kenitzer
President
PRIOR PURCHASER:
CHANCELLOR PRIVATE CAPITAL III, L.P.
By: CPCP Associates, L.P., its General Partner
By: INVESCO Private Capital One, its General Partner
By: /s/ ALESSANDRO PIOL
-------------------------------------
Name: Alessandro Piol
-----------------------------------
Title: Managing Director
----------------------------------
AMENDMENT NO. 1 TO SIXTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
SIGNATURE PAGE
<PAGE> 51
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
1 as of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By: /s/ KEN KENITZER
-------------------------------------
Ken Kenitzer
President
PRIOR PURCHASER:
CHANCELLOR PRIVATE CAPITAL OFFSHORE PARTNERS I, C.V.
By: Chancellor KME IV Partner, L.P., Its Investment General Partner
By: INVESCO Private Capital One, its General Partner
By: /s/ ALESSANDRO PIOL
-------------------------------------
Name: Alessandro Piol
-----------------------------------
Title: Managing Director
----------------------------------
AMENDMENT NO. 1 TO SIXTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
SIGNATURE PAGE
<PAGE> 52
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
1 as of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By: /s/ KEN KENITZER
-------------------------------------
Ken Kenitzer
President
PRIOR PURCHASER:
CHANCELLOR PRIVATE CAPITAL OFFSHORE PARTNERS II, L.P.
By: CPCP Associates L.P., its Investment General Partner
By: INVESCO Private Capital One, its General Partner.
By: /s/ ALESSANDRO PIOL
-------------------------------------
Name: Alessandro Piol
-----------------------------------
Title: Managing Director
----------------------------------
AMENDMENT NO. 1 TO SIXTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
SIGNATURE PAGE
<PAGE> 53
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
1 as of the date set forth in the first paragraph hereof.
PRIOR PURCHASER:
CITIVENTURE 96 Partnership, L.P.
By: INVESCO Private Capital Inc., its Investment Advisor
By: /s/ ALESSANDRO PIOL
-------------------------------------
Name: Alessandro Piol
-----------------------------------
Title: Managing Director
----------------------------------
AMENDMENT NO. 1 TO SIXTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
SIGNATURE PAGE
<PAGE> 54
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
1 as of the date set forth in the first paragraph hereof.
PRIOR PURCHASER:
HALLADOR VENTURE FUND II, A CALIFORNIA LIMITED PARTNERSHIP
By: HALLADOR VENTURE PARTNERS, G.P.
-------------------------------------
Name: /s/ CHRIS L. BRANSCUM
-----------------------------------
Title:
----------------------------------
COMPANY:
REPEATER TECHNOLOGIES, INC.
By: /s/ KEN KENITZER
-------------------------------------
Ken Kenitzer
President
AMENDMENT NO. 1 TO SIXTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
SIGNATURE PAGE
<PAGE> 55
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
1 as of the date set forth in the first paragraph hereof.
PRIOR PURCHASER:
HMS CAPITAL PARTNERS
By: /s/ R. G. GREY
-------------------------------------
Name: R. G. Grey
-----------------------------------
Title: General Partner of HMS Group
----------------------------------
COMPANY:
REPEATER TECHNOLOGIES, INC.
By: /s/ KEN KENITZER
-------------------------------------
Ken Kenitzer
President
AMENDMENT NO. 1 TO SIXTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
SIGNATURE PAGE
<PAGE> 56
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
1 as of the date set forth in the first paragraph hereof.
PRIOR PURCHASER:
HMS GROUP
By: /s/ R. G. GREY
-------------------------------------
Name: R. G. Grey
-----------------------------------
Title: General Partner
----------------------------------
COMPANY:
REPEATER TECHNOLOGIES, INC.
By: /s/ KEN KENITZER
-------------------------------------
Ken Kenitzer
President
AMENDMENT NO. 1 TO SIXTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
SIGNATURE PAGE
<PAGE> 57
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
1 as of the date set forth in the first paragraph hereof.
PRIOR PURCHASER:
NAZEM & COMPANY IV, L.P.
By: /s/ PHILIP BARAK
-------------------------------------
Name: Philip Barak
-----------------------------------
Title: General Partner
----------------------------------
COMPANY:
REPEATER TECHNOLOGIES, INC.
By: /s/ KEN KENITZER
-------------------------------------
Ken Kenitzer
President
AMENDMENT NO. 1 TO SIXTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
SIGNATURE PAGE
<PAGE> 58
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
1 as of the date set forth in the first paragraph hereof.
PRIOR PURCHASER:
OAK INVESTMENT PARTNERS VI, LIMITED PARTNERSHIP
By: /s/ BANDEL CARANO
--------------------------------------------------
Name: Bandel Carano
------------------------------------------------
Title: MANAGING MEMBER OF OAK ASSOCIATES VI, LLC.
---------------------------------------------
THE GENERAL PARTNER OF
---------------------------------------------
OAK INVESTMENT PARTNERS VI,
---------------------------------------------
LIMITED PARTNERSHIP
---------------------------------------------
COMPANY:
REPEATER TECHNOLOGIES, INC.
By: /s/ KEN KENITZER
-------------------------------------
Ken Kenitzer
President
AMENDMENT NO. 1 TO SIXTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
SIGNATURE PAGE
<PAGE> 59
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
1 as of the date set forth in the first paragraph hereof.
PRIOR PURCHASER:
OAK VI AFFILIATES FUND, LIMITED PARTNERSHIP
By: /s/ BANDEL CARANO
--------------------------------------------------
Name: Bandel Carano
------------------------------------------------
Title: MANAGING MEMBER OF OAK VI ASSOCIATES, LLC.
---------------------------------------------
THE GENERAL PARTNER OF
---------------------------------------------
OAK AFFILIATES FUND, VI
---------------------------------------------
LIMITED PARTNERSHIP
---------------------------------------------
COMPANY:
REPEATER TECHNOLOGIES, INC.
By: /s/ KEN KENITZER
-------------------------------------
Ken Kenitzer
President
AMENDMENT NO. 1 TO SIXTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
SIGNATURE PAGE
<PAGE> 60
EXHIBIT A
PRIOR PURCHASERS:
Bay Partners IV, L.P.
Brentwood Associates VI
CGC Investors, L.P.
California BPIV, L.P.
Chancellor LGT Private Capital Partners III, L.P.
Chancellor LGT Private Capital Offshore Partners I, C.V.
Chancellor LGT Private Capital Offshore Partners II, L.P.
Charter Growth Capital, L.P.
Charter Growth Capital Co-investment Fund L.P.
Citiventure 96 Partnership Fund, L.P.
Dixon R. Doll & Carol Doll as Trustees
DMW Investors '95
Doll Family Partnership
Hallador Venture Fund II, a California Limited Partnership
HMS Capital Partners
HMS Capital Partners (Annex)
HMS Group
HMS (Overseas) Partners
Michael Hone as Trustee
International Synergies Ltd.
J.F. Shea Company, Inc., as nominee 1990-13
Nazem & Company IV, L.P.
Oak Investment Partners VI, L.P.
Oak VI Affiliates Fund, L.P.
Kevin J. McQuillen
Spring Point Partners, L.P.
Edward F. Straube
Transatlantic Venture Fund
University of Michigan Business School Growth Fund
WA&H Investment, L.L.C.
AMENDMENT NO. 1 TO SIXTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
SIGNATURE PAGE
<PAGE> 1
EXHIBIT 10.1
FORM OF
INDEMNITY AGREEMENT
THIS AGREEMENT is made and entered into this ____ day of _________, 2000
by and between REPEATER TECHNOLOGIES, INC., a Delaware corporation (the
"Corporation"), and ____________ ("Agent").
RECITALS
WHEREAS, Agent performs a valuable service to the Corporation in his/her
capacity as _______________ of the Corporation;
WHEREAS, the stockholders of the Corporation have adopted bylaws (the
"Bylaws") providing for the indemnification of the directors, officers,
employees and other agents of the Corporation, including persons serving at the
request of the Corporation in such capacities with other corporations or
enterprises, as authorized by the Delaware General Corporation Law, as amended
(the "Code");
WHEREAS, the Bylaws and the Code, by their non-exclusive nature, permit
contracts between the Corporation and its agents, officers, employees and other
agents with respect to indemnification of such persons; and
WHEREAS, in order to induce Agent to continue to serve as ______________
of the Corporation, the Corporation has determined and agreed to enter into this
Agreement with Agent;
NOW, THEREFORE, in consideration of Agent's continued service as
_______________ after the date hereof, the parties hereto agree as follows:
AGREEMENT
1. SERVICES TO THE CORPORATION. Agent will serve, at the will of the
Corporation or under separate contract, if any such contract exists, as
______________ of the Corporation or as a director, officer or other fiduciary
of an affiliate of the Corporation (including any employee benefit plan of the
Corporation) faithfully and to the best of his ability so long as he is duly
elected and qualified in accordance with the provisions of the Bylaws or other
applicable charter documents of the Corporation or such affiliate; provided,
however, that Agent may at any time and for any reason resign from such position
(subject to any contractual obligation that Agent may have assumed apart from
this Agreement) and that the Corporation or any affiliate shall have no
obligation under this Agreement to continue Agent in any such position.
2. INDEMNITY OF AGENT. The Corporation hereby agrees to hold harmless
and indemnify Agent to the fullest extent authorized or permitted by the
provisions of the Bylaws and the Code, as the same may be amended from time to
time (but, only to the extent that such
1.
<PAGE> 2
amendment permits the Corporation to provide broader indemnification rights than
the Bylaws or the Code permitted prior to adoption of such amendment).
3. ADDITIONAL INDEMNITY. In addition to and not in limitation of the
indemnification otherwise provided for herein, and subject only to the
exclusions set forth in Section 4 hereof, the Corporation hereby further agrees
to hold harmless and indemnify Agent:
(a) against any and all expenses (including attorneys' fees), witness
fees, damages, judgments, fines and amounts paid in settlement and any other
amounts that Agent becomes legally obligated to pay because of any claim or
claims made against or by him in connection with any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, arbitrational,
administrative or investigative (including an action by or in the right of the
Corporation) to which Agent is, was or at any time becomes a party, or is
threatened to be made a party, by reason of the fact that Agent is, was or at
any time becomes a director, officer, employee or other agent of Corporation, or
is or was serving or at any time serves at the request of the Corporation as a
director, officer, employee or other agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise; and
(b) otherwise to the fullest extent as may be provided to Agent by
the Corporation under the non-exclusivity provisions of the Code and Section 43
of the Bylaws.
4. LIMITATIONS ON ADDITIONAL INDEMNITY. No indemnity pursuant to Section
3 hereof shall be paid by the Corporation:
(a) on account of any claim against Agent for an accounting of
profits made from the purchase or sale by Agent of securities of the Corporation
pursuant to the provisions of Section 16(b) of the Securities Exchange Act of
1934 and amendments thereto or similar provisions of any federal, state or local
statutory law;
(b) on account of Agent's conduct that was knowingly fraudulent or
deliberately dishonest or that constituted willful misconduct;
(c) on account of Agent's conduct that constituted a breach of
Agent's duty of loyalty to the Corporation or resulted in any personal profit or
advantage to which Agent was not legally entitled;
(d) for which payment is actually made to Agent under a valid and
collectible insurance policy or under a valid and enforceable indemnity clause,
bylaw or agreement, except in respect of any excess beyond payment under such
insurance, clause, bylaw or agreement;
(e) if indemnification is not lawful (and, in this respect, both the
Corporation and Agent have been advised that the Securities and Exchange
Commission believes that indemnification for liabilities arising under the
federal securities laws is against public policy and is, therefore,
unenforceable and that claims for indemnification should be submitted to
appropriate courts for adjudication); or
(f) in connection with any proceeding (or part thereof) initiated by
Agent, or any proceeding by Agent against the Corporation or its directors,
officers, employees or other
2.
<PAGE> 3
agents, unless (i) such indemnification is expressly required to be made by law,
(ii) the proceeding was authorized by the Board of Directors of the Corporation,
(iii) such indemnification is provided by the Corporation, in its sole
discretion, pursuant to the powers vested in the Corporation under the Code, or
(iv) the proceeding is initiated pursuant to Section 9 hereof.
5. CONTINUATION OF INDEMNITY. All agreements and obligations of the
Corporation contained herein shall continue during the period Agent is a
director, officer, employee or other agent of the Corporation (or is or was
serving at the request of the Corporation as a director, officer, employee or
other agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise) and shall continue thereafter so long as Agent
shall be subject to any possible claim or threatened, pending or completed
action, suit or proceeding, whether civil, criminal, arbitrational,
administrative or investigative, by reason of the fact that Agent was serving in
the capacity referred to herein.
6. PARTIAL INDEMNIFICATION. Agent shall be entitled under this Agreement
to indemnification by the Corporation for a portion of the expenses (including
attorneys' fees), witness fees, damages, judgments, fines and amounts paid in
settlement and any other amounts that Agent becomes legally obligated to pay in
connection with any action, suit or proceeding referred to in Section 3 hereof
even if not entitled hereunder to indemnification for the total amount thereof,
and the Corporation shall indemnify Agent for the portion thereof to which Agent
is entitled.
7. NOTIFICATION AND DEFENSE OF CLAIM. Not later than thirty (30) days
after receipt by Agent of notice of the commencement of any action, suit or
proceeding, Agent will, if a claim in respect thereof is to be made against the
Corporation under this Agreement, notify the Corporation of the commencement
thereof; but the omission so to notify the Corporation will not relieve it from
any liability which it may have to Agent otherwise than under this Agreement.
With respect to any such action, suit or proceeding as to which Agent notifies
the Corporation of the commencement thereof:
(a) the Corporation will be entitled to participate therein at its
own expense;
(b) except as otherwise provided below, the Corporation may, at its
option and jointly with any other indemnifying party similarly notified and
electing to assume such defense, assume the defense thereof, with counsel
reasonably satisfactory to Agent. After notice from the Corporation to Agent of
its election to assume the defense thereof, the Corporation will not be liable
to Agent under this Agreement for any legal or other expenses subsequently
incurred by Agent in connection with the defense thereof except for reasonable
costs of investigation or otherwise as provided below. Agent shall have the
right to employ separate counsel in such action, suit or proceeding but the fees
and expenses of such counsel incurred after notice from the Corporation of its
assumption of the defense thereof shall be at the expense of Agent unless (i)
the employment of counsel by Agent has been authorized by the Corporation, (ii)
Agent shall have reasonably concluded that there may be a conflict of interest
between the Corporation and Agent in the conduct of the defense of such action
or (iii) the Corporation shall not in fact have employed counsel to assume the
defense of such action, in each of which cases the fees and expenses of Agent's
separate counsel shall be at the expense of the Corporation.
3.
<PAGE> 4
The Corporation shall not be entitled to assume the defense of any action, suit
or proceeding brought by or on behalf of the Corporation or as to which Agent
shall have made the conclusion provided for in clause (ii) above; and
(c) the Corporation shall not be liable to indemnify Agent under this
Agreement for any amounts paid in settlement of any action or claim effected
without its written consent, which shall not be unreasonably withheld. The
Corporation shall be permitted to settle any action except that it shall not
settle any action or claim in any manner which would impose any penalty or
limitation on Agent without Agent's written consent, which may be given or
withheld in Agent's sole discretion.
8. EXPENSES. The Corporation shall advance, prior to the final
disposition of any proceeding, promptly following request therefor, all expenses
incurred by Agent in connection with such proceeding upon receipt of an
undertaking by or on behalf of Agent to repay said amounts if it shall be
determined ultimately that Agent is not entitled to be indemnified under the
provisions of this Agreement, the Bylaws, the Code or otherwise.
9. ENFORCEMENT. Any right to indemnification or advances granted by this
Agreement to Agent shall be enforceable by or on behalf of Agent in any court of
competent jurisdiction if (i) the claim for indemnification or advances is
denied, in whole or in part, or (ii) no disposition of such claim is made within
ninety (90) days of request therefor. Agent, in such enforcement action, if
successful in whole or in part, shall be entitled to be paid also the expense of
prosecuting his claim. It shall be a defense to any action for which a claim for
indemnification is made under Section 3 hereof (other than an action brought to
enforce a claim for expenses pursuant to Section 8 hereof, provided that the
required undertaking has been tendered to the Corporation) that Agent is not
entitled to indemnification because of the limitations set forth in Section 4
hereof. Neither the failure of the Corporation (including its Board of Directors
or its stockholders) to have made a determination prior to the commencement of
such enforcement action that indemnification of Agent is proper in the
circumstances, nor an actual determination by the Corporation (including its
Board of Directors or its stockholders) that such indemnification is improper
shall be a defense to the action or create a presumption that Agent is not
entitled to indemnification under this Agreement or otherwise.
10. SUBROGATION. In the event of payment under this Agreement, the
Corporation shall be subrogated to the extent of such payment to all of the
rights of recovery of Agent, who shall execute all documents required and shall
do all acts that may be necessary to secure such rights and to enable the
Corporation effectively to bring suit to enforce such rights.
11. NON-EXCLUSIVITY OF RIGHTS. The rights conferred on Agent by this
Agreement shall not be exclusive of any other right which Agent may have or
hereafter acquire under any statute, provision of the Corporation's Certificate
of Incorporation or Bylaws, agreement, vote of stockholders or directors, or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding office.
4.
<PAGE> 5
12. SURVIVAL OF RIGHTS.
(a) The rights conferred on Agent by this Agreement shall continue
after Agent has ceased to be a director, officer, employee or other agent of the
Corporation or to serve at the request of the Corporation as a director,
officer, employee or other agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise and shall inure to the
benefit of Agent's heirs, executors and administrators.
(b) The Corporation shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Corporation, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform if no such succession
had taken place.
13. SEPARABILITY. Each of the provisions of this Agreement is a separate
and distinct agreement and independent of the others, so that if any provision
hereof shall be held to be invalid for any reason, such invalidity or
unenforceability shall not affect the validity or enforceability of the other
provisions hereof. Furthermore, if this Agreement shall be invalidated in its
entirety on any ground, then the Corporation shall nevertheless indemnify Agent
to the fullest extent provided by the Bylaws, the Code or any other applicable
law.
14. GOVERNING LAW. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Delaware.
15. AMENDMENT AND TERMINATION. No amendment, modification, termination
or cancellation of this Agreement shall be effective unless in writing signed by
both parties hereto.
16. IDENTICAL COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute but one and the same
Agreement. Only one such counterpart need be produced to evidence the existence
of this Agreement.
17. HEADINGS. The headings of the sections of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction hereof.
18. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given (i)
upon delivery if delivered by hand to the party to whom such communication was
directed or (ii) upon the third business day after the date on which such
communication was mailed if mailed by certified or registered mail with postage
prepaid:
(a) If to Agent, at the address indicated on the signature page
hereof.
5.
<PAGE> 6
(b) If to the Corporation, to
Repeater Technologies, Inc.
1150 Morse Avenue
Sunnyvale, CA 94089
or to such other address as may have been furnished to Agent by the Corporation.
IN WITNESS WHEREOF, the parties hereto have executed this Indemnity
Agreement on and as of the day and year first above written.
REPEATER TECHNOLOGIES, INC.
By:
-----------------------------------------
Title:
--------------------------------------
AGENT
--------------------------------------
Address:
--------------------------------------------
--------------------------------------------
6.
<PAGE> 1
EXHIBIT 10.2
REPEATER TECHNOLOGIES, INC.
1990 INCENTIVE STOCK PLAN
Adopted May 18, 1990
Amended by the Board of Directors on September 4, 1990
Approved by the Shareholders on May 10, 1991
Amended by the Board of Directors on October 23, 1992
Approved by the Shareholders on December 31, 1992
Amended by the Board of Directors on February 17, 1993
Amended by the Board of Directors on October 14, 1994
Amended by the Board of Directors on May 25, 1995
Amended by the Board of Directors on January 29, 1997.
1. PURPOSE.
(a) The purpose of the 1990 Incentive Stock Plan (the "Plan")
is to provide a means by which selected key employees and directors (if declared
eligible under paragraph 4) of and consultants to Repeater Technologies. Inc., a
California corporation (the "Company"), and its Affiliates, as defined in
subparagraph 1(b), may be given an opportunity to benefit from increases in
value of the stock of the Company. It is intended that this purpose will be
effected through the granting of (a) incentive stock options, (b) nonstatutory
stock options, (c) stock bonuses, and (d) purchases of restricted stock.
(b) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company, as those terms are defined
in Sections 425(e) and (f), respectively, of the Internal Revenue Code of 1986,
as amended from time to time (the "Code").
(c) The Company, by means of the Plan, seeks to retain the
services of persons now employed by or serving as consultants or directors to
the Company, to secure and retain the services of persons capable of filling
such positions, and to provide incentives for such persons to exert maximum
efforts for the success of the Company.
1.
<PAGE> 2
(d) The Company intends that rights granted under the Plan
("Stock Awards") shall, in the discretion of the Board of Directors of the
Company (the "Board") or any committee to which responsibility for
administration of the Plan has been delegated pursuant to subparagraph 2(c), be
either (i) stock options granted pursuant to paragraph 5 hereof, including
incentive stock options as that term is used in Section 422A of the Code
("Incentive Stock Options"), or options which do not qualify as incentive stock
options ("Supplemental Stock Options") or (ii) stock bonuses or purchases of
restricted stock granted pursuant to paragraph 6 hereof.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board unless and
until the Board delegates administration to a committee, as provided in
subparagraph 2(c). Whether or not the Board has delegated administration, the
Board shall have the final power to determine all questions of policy and
expediency that may arise in the administration of the Plan.
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(1) To determine from time to time which of the
persons eligible under the Plan shall be granted Stock Awards; when and how
Stock Awards shall be granted; whether a Stock Award will be an Incentive Stock
Option, a Supplemental Stock Option, a stock bonus, a purchase of restricted
stock, or a combination of the foregoing; the provisions of each Stock Award
granted (which need not be identical), including the time or times when a person
shall be permitted to purchase or receive stock pursuant to a Stock Award; and
the number of shares with respect to which Stock Awards shall be granted to each
such person.
2.
<PAGE> 3
(2) To construe and interpret the Plan and Stock
Awards granted under it, and to establish, amend and revoke rules and
regulations for its administration. The Board, in the exercise of this power,
may correct any defect, omission or inconsistency in the Plan or in any Stock
Award, in a manner and to the extent it shall deem necessary or expedient to
make the Plan fully effective.
(3) To amend the Plan as provided in paragraph 11.
(4) Generally, to exercise such powers and to perform
such acts as the Board deems necessary or expedient to promote the best
interests of the Company.
(c) The Board may delegate administration of the Plan to a
committee composed of not fewer than three (3) members (the "Committee"). If the
Committee grants Stock Awards to persons subject to Section 16(b) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), all of the
members of the Committee shall be disinterested persons, if required and as
defined by the provisions of subparagraph 2(d). If administration is delegated
to a Committee, the Committee shall have, in connection with the administration
of the Plan, the powers theretofore possessed by the Board, subject, however,
to such resolutions, not inconsistent with the provisions of the Plan, as may be
adopted from time to time by the Board. The Board may abolish the Committee at
any time and revest in the Board the administration of the Plan.
(d) The term "disinterested person," as used in this Plan,
shall mean an administrator of the Plan, whether a member of the Board or of any
Committee to which responsibility for administration of the Plan has been
delegated pursuant to subparagraph 2(c): (i) who is not at the time he or she
exercises discretion in administering the Plan eligible and
3.
<PAGE> 4
has not at any time within one (1) year prior thereto been eligible for
selection as a person to whom stock may be allocated or to whom stock options
may be granted pursuant to the Plan or any other plan of the Company or any of
its affiliates (as defined in the Exchange Act) entitling the participants
therein to acquire stock or stock options of the Company or any of its
affiliates (as defined in the Exchange Act); or (ii) who is otherwise considered
to be a "disinterested person" in accordance with the rules, regulations or
interpretations of the Securities and Exchange Commission. Any such person shall
otherwise comply with the requirements of Rule 16b-3 promulgated under the
Exchange Act.
(e) Any requirement that an administrator of the Plan be a
"disinterested person" shall not apply if the Board or the Committee expressly
declares that such requirement shall not apply.
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 10 relating to
adjustments upon changes in stock, the stock that may be issued pursuant to
Stock Awards granted under the Plan shall not exceed in the aggregate four
hundred seventy-six thousand nine hundred forty-two (476,942) shares of the
Company's common stock; (as set by board action on January 29, 1997 and
including all adjustments through such date); provided, however, that such
aggregate number of shares shall be reduced to reflect the number of shares of
the Company's common stock which has been sold under, or may be sold pursuant to
outstanding options granted under this Plan. If any option or right granted
under the Plan shall for any reason expire or otherwise terminate without having
been exercised in full, the stock not issued under such option or right shall
again become available for the Plan.
4.
<PAGE> 5
(b) The stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.
4. ELIGIBILITY.
(a) Incentive Stock Options may be granted only to employees
(including officers) of the Company or its Affiliates. A director of the Company
shall not be eligible to receive Incentive Stock Options unless such director is
also an employee (including an officer) of the Company or any Affiliate. Stock
Awards other than Incentive Stock Options way be granted only to directors,
officers or employees of or consultants to the Company or its Affiliates.
(b) A director shall in no event be eligible for the benefits
of the Plan unless and until such director is expressly declared eligible to
participate in the Plan by action of the Board or the Committee, and only if, at
any time discretion is exercised by the Board in the selection of a director as
a person to whom Stock Awards may be granted, or in the determination of the
number of shares which may be covered by Stock Awards granted to a director: (i)
a majority of the Board and a majority of the directors acting in such matter
are disinterested persons, as defined in subparagraph 2(d); (ii) the Committee
consists solely of "disinterested persons" as defined in subparagraph 2(d); or
(iii) the Plan otherwise complies with the requirements of Rule 16b-3
promulgated under the Exchange Act, as from time to time in effect. The Board
shall otherwise comply with the requirements of Rule 16b-3 promulgated under the
Exchange Act, as from time to time in effect. Notwithstanding the foregoing, the
restrictions set forth in this subparagraph 4(b) shall not apply if the Board or
Committee expressly declares that such restrictions shall not apply.
5.
<PAGE> 6
(c) No person shall be eligible for the grant of an option
under the Plan if, at the time of grant, such person owns (or is deemed to own
pursuant to Section 425(d) of the Code) stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or of any of its Affiliates unless the exercise price of such option is at least
one hundred ten percent (110%) of the fair market value of such stock at the
date of grant and the term of the option does not exceed five (5) years from the
date of grant.
5. TERMS OF STOCK OPTIONS.
Each stock option shall be in such form and shall contain such
terms and conditions as the Board or the Committee shall deem appropriate. All
options shall be separately designated Incentive Stock Options or Supplemental
Stock Options at the time of grant, and in such form as issued pursuant to this
paragraph 5, and a separate certificate or certificates shall be issued for
shares purchased on exercise of each type of option. An option designated as a
Supplemental Stock Option shall not be treated as an incentive stock option. The
provisions of separate options need not be identical, but each option shall
include (through incorporation of provisions hereof by reference in the option
or otherwise) the substance of each of the following provisions:
(a) The term of any option shall not be greater than ten (10)
years from the date it was granted.
(b) The exercise price of each Incentive Stock Option shall be
not less than one hundred percent (100%) of the fair market value of the stock
subject to the option on the date the option is granted. The exercise price of
each Supplemental Stock Option shall be not
6.
<PAGE> 7
less than eighty-five percent (85%) of the fair market value of the stock
subject to the option on the date the option is granted.
(c) The purchase price of stock acquired pursuant to an option
shall be paid, to the extent permitted by applicable statutes and regulations,
either (i) in cash at the time the option is exercised, or (ii) at the
discretion of the Board or the Committee, either at the time of the grant or
exercise of the option, (A) by delivery to the Company of other common stock of
the Company, (B) according to a deferred payment or other arrangement (which
may include, without limiting the generality of the foregoing, the use of other
common stock of the Company) with the person to whom the option is granted or to
whom the option is transferred pursuant to subparagraph 5(d), or (C) in any
other form of legal consideration that may be acceptable to the Board or the
Committee.
(d) Unless otherwise expressly stated in the option, an option
shall not be transferable except by will or by the laws of descent and
distribution, and shall be exercisable during the lifetime of the person to whom
the option is granted only by such person.
(e) The total number of shares of stock subject to an option
may, but need not, be allotted in periodic installments (which may, but need
not, be equal). From time to time during each of such installment periods, the
option may become exercisable ("vest") with respect to some or all of the shares
allotted to that period, and may be exercised with respect to some or all of the
shares allotted to such period and/or any prior period as to which the option
was not fully exercised. During the remainder of the term of the option (if its
term extends beyond the end of the installment periods), the option may be
exercised from time to time with respect to any shares then remaining subject to
the option. The provisions of this subparagraph 5(e) are
7.
<PAGE> 8
subject to any option provisions governing the minimum number of shares as to
which an option may be exercised.
(f) An option shall terminate three (3) months after
termination of the optionee's employment or relationship as a director of or
consultant to the Company or an Affiliate, unless (i) such termination is due to
such person's permanent and total disability, within the meaning of Section
422A(c)(7) of the Code, in which case the option may, but need not, provide
that it may be exercised at any time within one (1) year following such
termination of employment or relationship as a director or consultant; or (ii)
the optionee dies while in the employ of or while serving as a director of or
consultant to the Company or an Affiliate, or within not more than three (3)
months after termination of such relationship, in which case the option may, but
need not, provide that it may be exercised at any time within eighteen (18)
months following the death of the optionee by the person or persons to whom the
optionee's rights under such option pass by will or by the laws of descent and
distribution; or (iii) the option by its terms specifies either (a) that it
shall terminate sooner than three (3) months after termination of the optionee's
employment or relationship as a director or consultant, or (b) that it may be
exercised more than three (3) months after termination of the relationship with
the Company or an Affiliate. This subparagraph 5(f) shall not be construed to
extend the term of any option or to permit anyone to exercise the option after
expiration of its term, nor shall it be construed to increase the number of
shares as to which any option is exercisable from the amount exercisable on the
date of termination of the optionee's employment or relationship as a
consultant or director.
8.
<PAGE> 9
(g) The option may, but need not, include a provision whereby
the optionee may elect at any time during the term of his or her employment or
relationship as a director of or consultant to the Company or any Affiliate to
exercise the option as to any part or all of the shares subject to the option
prior to the stated vesting date of the option or of any installment or
installments specified in the option. Any shares so purchased from any unvested
installment or option may be subject to a repurchase right in favor of the
Company or to any other restriction the Board or the Committee determines to be
appropriate.
6. TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK.
Each stock bonus or restricted stock purchase agreement shall
be in such form and shall contain such terms and conditions as the Board or the
Committee shall deem appropriate. The terms and conditions of stock bonus or
restricted stock purchase agreements may change from time to time, and the terms
and conditions of separate agreements need not be identical, but each stock
bonus or restricted stock purchase agreement shall include (through
incorporation of provisions hereof by reference in the agreement or otherwise)
the substance of each of the following provisions as appropriate:
(a) The purchase price under each stock purchase agreement
shall be not less than eighty-five percent (85%) of the fair market value of the
stock on the date the stock purchase agreement is authorized by the Board or the
Committee. Notwithstanding the foregoing, the Board or the Committee may
determine that eligible participants in the Plan may be awarded stock pursuant
to a stock bonus agreement in consideration for past services actually rendered
to the Company or for its benefit.
9.
<PAGE> 10
(b) No rights under a stock bonus or restricted stock purchase
agreement shall be assignable by any participant under the Plan, either
voluntarily or by operation of law, except where such assignment is required by
law or expressly authorized by the terms of the applicable stock bonus or
restricted stock purchase agreement.
(c) The purchase price of stock acquired pursuant to a stock
purchase agreement shall be paid either (i) in cash at the time of purchase, or
(ii) at the discretion of the Board or a Committee to which administration of
the Plan has been delegated, (A) according to a deferred payment or other
arrangement (which may include, without limiting the generality of the
foregoing, the use of other common stock of the Company) with the person to
whom the stock is sold, or (B) in any other form of legal consideration that may
be acceptable to the Board or the Committee in its discretion. Notwithstanding
the foregoing, the Board or the Committee to which administration of the Plan
has been delegated may award stock pursuant to a stock bonus agreement in
consideration for past services actually rendered to the Company or for its
benefit.
(d) Shares of stock sold or awarded under the Plan may, but
need not, be subject to a repurchase option in favor of the Company in
accordance with a vesting schedule to be determined by the Board or the
Committee.
(e) In the event a person ceases to be an employee of or
ceases to serve as a director of or consultant to the Company or an Affiliate,
the Company may repurchase or otherwise reacquire any or all of the shares of
stock held by that person which have not vested as of the date of termination
under the terms of the stock bonus or restricted stock purchase agreement
between the Company and such person.
10.
<PAGE> 11
7. COVENANTS OF THE COMPANY.
(a) During the terms of any Stock Awards granted under the
Plan, the Company shall keep available at all times the number of shares of
stock required to satisfy such Stock Awards.
(b) The Company shall seek to obtain from each regulatory
commission or agency having jurisdiction over the Plan such authority as may be
required to issue and sell shares of stock upon grant or exercise of Stock
Awards under the Plan; provided, however, that this undertaking shall not
require the Company to register under the Securities Act of 1933, as amended
(the "Securities Act"), either the Plan, any Stock Award granted under the Plan
or any stock issued or issuable pursuant to any such Stock Awards. If, after
reasonable efforts, the Company is unable to obtain from any such regulatory
commission or agency the authority which counsel for the Company deems necessary
for the lawful issuance and sale of stock under the Plan, the Company shall be
relieved from any liability for failure to issue and sell stock upon exercise of
such Stock Awards unless and until such authority is obtained.
8. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to Stock Awards
granted under the Plan shall constitute general funds of the Company.
9. MISCELLANEOUS.
(a) The Board or the Committee shall have the power to
accelerate the time during which a Stock Award may be exercised or the time
during which an option or stock acquired pursuant to a Stock Award will vest,
notwithstanding the provisions in the Stock Award
11.
<PAGE> 12
stating the time during which it may be exercised or the time during which
stock acquired pursuant thereto will vest.
(b) Neither a recipient of a Stock Award nor any person to
whom a Stock Award is transferred under subparagraphs 5(d)and 6(b) shall be
deemed to be the holder of, or to have any of the rights of a holder with
respect to, any shares subject to such Stock Award unless and until such person
has satisfied all requirements for exercise of the Stock Award pursuant to its
terms and is thereby entitled to receive shares of stock.
(c) Throughout the term of any Stock Award granted pursuant to
the Plan, the Company shall make available to the holder of such Stock Award,
not later than one hundred twenty (120) days after the close of each of the
Company's fiscal years during the option term, upon request, such financial and
other information regarding the Company as comprises the annual report to the
shareholders of the Company provided for in the bylaws of the Company.
(d) Nothing in the Plan or any instrument executed or Stock
Award granted pursuant thereto shall confer upon any recipient any right to
continue in the employ of the Company or any Affiliate (or to continue acting as
a consultant or director) or shall affect the right of the Company or any
Affiliate to terminate the employment or consulting relationship or directorship
of any eligible employee or recipient with or without cause. In the event that a
Stock Award recipient is permitted or otherwise entitled to take a leave of
absence, the Company shall have the unilateral right to (i) determine whether
such leave of absence will be treated as a termination of employment for
purposes of his or her Stock Award, and (ii) suspend or otherwise delay the time
or times at which the shares subject to the Stock Award would otherwise vest.
12.
<PAGE> 13
(e) To the extent provided by the terms of any Stock Award,
the recipient may satisfy any federal, state or local tax withholding obligation
relating to the exercise or receipt of such Stock Award by any of the following
means or by a combination of such means: (1) tendering a cash payment; (2)
authorizing the Company to withhold from the shares of the common stock
otherwise issuable to the participant as a result of the exercise or receipt of
the Stock Award cash or a number of shares having a fair market value less than
or equal to the amount of the withholding tax obligation; or (3) delivering to
the Company owned and unencumbered shares of the common stock having a fair
market value less than or equal to the amount of the withholding tax obligation.
(f) In connection with each Stock Award made pursuant to the
Plan, the Company may require as a condition precedent to its obligation to
issue or transfer shares to an eligible participant, or to evidence the removal
of any restrictions on transfer or lapse of any repurchase right, that such
participant make arrangements satisfactory to the Company to insure that the
amount of any federal or other withholding tax required to be withheld with
respect to such sale or transfer, or such removal or lapse, is made available to
the Company for timely payment of such tax.
(g) The Company may as a condition of transferring any stock
pursuant to the Plan, require any person who is to acquire such stock, (1) to
give written assurances satisfactory to the Company as to the optionee's
knowledge and experience in financial and business matters and/or to employ a
purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters, and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of
13.
<PAGE> 14
acquiring the stock; and (2) to give written assurances satisfactory to the
Company stating that such person is acquiring the stock for such person's own
account and not with any present intention of selling or otherwise distributing
the stock. These requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (i) the issuance of the shares has been
registered under a then currently effective registration statement under the
Securities Act or (ii), as to any particular requirement, a determination
is made by counsel for the Company that such requirement need not be met in the
circumstances under the then applicable securities laws.
10. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or
subject to any Stock Award granted under the Plan (through merger,
consolidation, reorganization, recapitalization, stock dividend, dividend in
property other than cash, stock split, liquidating dividend, combination of
shares, exchange of shares, change in corporate structure or otherwise), the
Plan and outstanding Stock Awards will be appropriately adjusted in the
class(es) and maximum number of shares subject to the Plan and the class(es) and
number of shares and price per share of stock subject to outstanding Stock
Awards.
(b) With respect to options granted on or after January 13,
1993 in the event of: (1) a merger or consolidation in which the Company is not
the surviving corporation or (2) a reverse merger in which the Company is the
surviving corporation but the shares of the Company's common stock outstanding
immediately preceding the merger are converted by virtue of the merger into
other property, whether in the form of securities, cash or otherwise then to the
extent permitted by applicable law: (i) any surviving corporation shall assume
any Stock
14.
<PAGE> 15
Awards outstanding under the Plan or shall substitute similar Stock Awards for
those outstanding under the Plan, or (ii) such Stock Awards shall continue in
full force and effect. In the event any surviving corporation refuses to assume
or continue such Stock Awards or to substitute similar options for those
outstanding under the Plan, then such Stock Awards shall be terminated if not
exercised prior to such event. In the event of a dissolution or liquidation of
the Company, any Stock Awards outstanding under the Plan shall terminate if not
exercised prior to such event.
11. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend
the Plan. However, except as provided in paragraph 10 relating to adjustments
upon changes in stock, no amendment shall be effective unless approved by the
shareholders of the Company within twelve (12) months before or after the
adoption of the amendment, where the amendment will increase the number of
shares reserved for issuance under the Plan.
(b) With a view to making available the benefits provided by
Section 422A of the Code and/or Rule 16b-3 promulgated under the Exchange Act,
if deemed desirable by the Board, the Board in its discretion shall determine at
the time of each amendment of the Plan whether or not to submit such amendment
to the shareholders of the Company for approval.
(c) It is expressly contemplated that the Board MAY amend the
Plan in any respect the Board deems necessary or advisable to provide eligible
employees with the maximum benefits provided or to be provided under the
provisions of the Code and the regulations promulgated thereunder relating to
employee incentive stock options and/or to bring the Plan and/or incentive stock
options granted under it into compliance therewith.
15.
<PAGE> 16
(d) Rights and obligations under any Stock Award granted
before amendment of the Plan shall not be altered or impaired by any amendment
of the Plan unless (i) the Company requests the consent of the person to whom
the Stock Award was granted and (ii) such person consents in writing.
12. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate ten (10) years from the date
the Plan is adopted by the Board or approved by the shareholders of the
Company, whichever is earlier. No Stock Awards may be granted under the Plan
while the Plan is suspended or after it is terminated.
(b) Rights and obligations under any Stock Award granted while
the Plan is in effect shall not be altered or impaired by suspension or
termination of the Plan, except with the consent of the person to whom the Stock
Award was granted.
13. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board,
but no Stock Award granted under the Plan shall be exercised and no stock shall
otherwise be issued under the Plan unless and until the Plan has been approved
by the shareholders of the Company, and, if required, an appropriate permit has
been issued by the Commissioner of Corporations of the State of California.
16.
<PAGE> 17
IT IS UNLAWFUL TO CONSUMMATE A SALE OR
TRANSFER OF THIS SECURITY, OR ANY INTEREST
THEREIN, OR TO RECEIVE ANY CONSIDERATION
THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT
OF THE COMMISSIONER OF CORPORATIONS OF THE
STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN
THE COMMISSIONER'S RULES.
FORM OF
INCENTIVE STOCK OPTION
___________, Optionee:
REPEATER TECHNOLOGIES, INC. (the "Company"), pursuant to its 1990
Incentive Stock Plan (the "Plan"), has this day granted to you, the optionee
named above, an option to purchase shares of the common stock of the Company
("Common Stock"). This option is intended to qualify as an "incentive stock
option" within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code").
The grant hereunder is in connection with and in furtherance of the
Company's compensatory benefit plan for participation of the Company's employees
(including officers), directors or consultants and is intended to comply with
the provisions of Rule 701 promulgated by the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Act").
The details of your option are as follows:
1. The total number of shares of Common Stock subject to this option
are ____________ (_____). Subject to the limitations contained herein, this
option shall be exercisable with respect to each installment shown below on or
after the date of vesting applicable to such installment, as follows (PROVIDED
THAT THE OPTION SHALL VEST AT LEAST 20% PER YEAR):
NUMBER OF SHARES (INSTALLMENT) DATE OF EARLIEST EXERCISE (VESTING)
XXXX
2. (a) The exercise price of this option is _________ ($_____) per
share, being not less than the fair market value of the Common Stock on the date
of grant of this option.
(b) Payment of the exercise price per share is due in full upon
exercise of all
1.
<PAGE> 18
or any part of each installment which has accrued to you. You may elect, to the
extent permitted by applicable statutes and regulations, to make payment of the
exercise price under one of the following alternatives:
(i) Payment of the exercise price per share in cash
(including check) at the time of exercise; or
(ii) Payment pursuant to a program developed under
Regulation T as promulgated by the Federal Reserve Board which results in the
receipt of cash (or check) by the Company prior to the issuance of Common Stock.
3. (a) Subject to the provisions of this option you may elect at
any time during your employment with the Company or an affiliate thereof, to
exercise the option as to any part or all of the shares subject to this option
at any time during the term hereof, including without limitation, a time prior
to the date of earliest exercise ("vesting") stated in paragraph 1 hereof;
provided, however, that:
(i) a partial exercise of this option shall be deemed
to cover first vested shares and then the earliest vesting installment of
unvested shares;
(ii) any shares so purchased from installments which
have not vested as of the date of exercise shall be subject to the purchase
option in favor of the Company as described in the Early Exercise Stock Purchase
Agreement attached hereto;
(iii) you shall enter into an Early Exercise Stock
Purchase Agreement in the form attached hereto with a vesting schedule that will
result in the same vesting as if no early exercise had occurred; and
(iv) this option shall not be exercisable under this
paragraph 3 to the extent such exercise would cause the aggregate fair market
value of any shares subject to incentive stock options granted you by the
Company or any affiliate (valued as of their grant date) which would become
exercisable for the first time during any calendar year to exceed $100,000.
(b) The election provided in this paragraph 3 to purchase
shares upon the exercise of this option prior to the vesting dates shall cease
upon termination of your employment with the Company or an affiliate thereof and
may not be exercised after the date thereof.
4. This option may not be exercised for any number of shares which
would require the issuance of anything other than whole shares.
5. Notwithstanding anything to the contrary contained herein, this
option may not be exercised unless the shares issuable upon exercise of this
option are then registered under the Act or, if such shares are not then so
registered, the Company has determined that such exercise and
2.
<PAGE> 19
issuance would be exempt from the registration requirements of the Act.
6. The term of this option commences on the date hereof and, unless
sooner terminated as set forth below or in the Plan, terminates on _________
(which date shall be no more than ten (10) years from date this option is
granted). In no event may this option be exercised on or after the date on which
it terminates. This option shall terminate prior to the expiration of its term
as follows: three (3) months after the termination of your employment with the
Company or an affiliate of the Company (as defined in the Plan) for any reason
or for no reason unless
(a) such termination of employment is due to your disability,
in which event the option shall terminate on the earlier of the termination
date set forth above or twelve (12) months following such termination of
employment; or
(b) such termination of employment is due to your death, in
which event the option shall terminate on the earlier of the termination date
set forth above or eighteen (18) months after your death; or
(c) during any part of such three (3) month period the option
is not exercisable solely because of the condition set forth in paragraph 5
above, in which event the option shall not terminate until the earlier of the
termination date set forth above or until it shall have been exercisable for an
aggregate period of three (3) months after the termination of employment; or
(d) exercise of the option within three (3) months after
termination of your employment with the Company or with an affiliate would
result in liability under section 16(b) of the Securities Exchange Act of 1934,
in which case the option will terminate on the earlier of (i) the termination
date set forth above, (ii) the tenth (10th) day after the last date upon which
exercise would result in such liability or (iii) six (6) months and ten (10)
days after the termination of your employment with the Company or an affiliate.
However, this option may be exercised following termination of
employment only as to that number of shares as to which it was exercisable on
the date of termination of employment under the provisions of paragraph 1 of
this option.
7. (a) This option may be exercised, to the extent specified
above, by delivering a notice of exercise (in a form designated by the Company)
together with the exercise price to the Secretary of the Company, or to such
other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require pursuant
to subparagraph 9(g) of the Plan.
3.
<PAGE> 20
(b) By exercising this option you agree that:
(i) the Company may require you to enter an
arrangement providing for the payment by you to the Company of any tax
withholding obligation of the Company arising by reason of (1) the exercise of
this option; (2) the lapse of any substantial risk of forfeiture to which the
shares are subject at the time of exercise; or (3) the disposition of shares
acquired upon such exercise;
(ii) you will notify the Company in writing within
fifteen (15) days after the date of any disposition of any of the shares of the
Common Stock issued upon exercise of this option that occurs within two (2)
years after the date of this option grant or within one (1) year after such
shares of Common Stock are transferred upon exercise of this option; and
(iii) the Company (or a representative of the
underwriters) may, in connection with the first underwritten registration of the
offering of any securities of the Company under the Act, require that you not
sell or otherwise transfer or dispose of any shares of Common Stock or other
securities of the Company during such period (not to exceed one hundred eighty
(180) days) following the effective date (the "Effective Date") of the
registration statement of the Company filed under the Act as may be requested by
the Company or the representative of the underwriters; provided, however, that
such restriction shall apply only if, on the Effective Date, you are an officer,
director, or owner of more than one percent (1%) of the outstanding securities
of the Company. For purposes of this restriction you will be deemed to own
securities which (i) are owned directly or indirectly by you, including
securities held for your benefit by nominees, custodians, brokers or pledgees;
(ii) may be acquired by you within sixty (60) days of the Effective Date; (iii)
are owned directly or indirectly, by or for your brothers or sisters (whether by
whole or half blood) spouse, ancestors and lineal descendants; or (iv) are
owned, directly or indirectly, by or for a corporation, partnership, estate or
trust of which you are a shareholder, partner or beneficiary, but only to the
extent of your proportionate interest therein as a shareholder, partner or
beneficiary thereof. You further agree that the Company may impose stop-transfer
instructions with respect to securities subject to the foregoing restrictions
until the end of such period.
8. This option is not transferable, except by will or by the laws of
descent and distribution, and is exercisable during your life only by you.
9. This option is not an employment contract and nothing in this option
shall be deemed to create in any way whatsoever any obligation on your part to
continue in the employ of the Company, or of the Company to continue your
employment with the Company.
10. Any notices provided for in this option or the Plan shall be given
in writing and shall be deemed effectively given upon receipt or, in the case of
notices delivered by the Company to you, five (5) days after deposit in the
United States mail, postage prepaid, addressed to you at the address specified
below or at such other address as you hereafter designate by written notice to
the Company.
4.
<PAGE> 21
11. This option is subject to all the provisions of the Plan, a copy of
which is attached hereto and its provisions are hereby made a part of this
option, including without limitation the provisions of paragraphs 5 and 9 of the
Plan relating to option provisions, and is further subject to all
interpretations, amendments, rules and regulations which may from time to time
be promulgated and adopted pursuant to the Plan. In the event of any conflict
between the provisions of this option and those of the Plan, the provisions of
the Plan shall control.
Dated the __th day of ________, 19__.
Very truly yours,
REPEATER TECHNOLOGIES, INC.
By
--------------------------------------
Duly authorized on behalf
of the Board of Directors
ATTACHMENTS:
1990 Incentive Stock Plan
Regulation 260.141.11
Notice of Exercise
Early Exercise Stock Purchase Agreement
5.
<PAGE> 22
The undersigned:
(a) Acknowledges receipt of the foregoing option and the attachments
referenced therein and understands that all rights and liabilities with respect
to this option are set forth in the option and the Plan; and
(b) Acknowledges that as of the date of grant of this option, it sets
forth the entire understanding between the undersigned optionee and the Company
and its affiliates regarding the acquisition of stock in the Company and
supersedes all prior oral and written agreements on that subject with the
exception of (i) the options previously granted and delivered to the undersigned
under stock option plans of the Company, and (ii) the following agreements only:
NONE
-------------------
(Initial)
OTHER
---------------------------------
---------------------------------
---------------------------------
(c) Acknowledges receipt of a copy of Section 260.141.11 of Title 10
of the California Code of Regulations.
-----------------------------------
OPTIONEE
Address:
-------------------------
-------------------------
6.
<PAGE> 23
IT IS UNLAWFUL TO CONSUMMATE A SALE OR
TRANSFER OF THIS SECURITY, OR ANY INTEREST
THEREIN, OR TO RECEIVE ANY CONSIDERATION
THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT
OF THE COMMISSIONER OF CORPORATIONS OF THE
STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN
THE COMMISSIONER'S RULES.
FORM OF
NONSTATUTORY STOCK OPTION
, Optionee:
- --------------------
REPEATER TECHNOLOGIES, INC. (the "Company"), pursuant to its 1990
Incentive Stock Plan (the "Plan") has this day granted to you, the optionee
named above, an option to purchase shares of the common stock of the Company
("Common Stock") This option is not intended to qualify as and will not be
treated as an "incentive stock option" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code").
The grant hereunder is in connection with and in furtherance of the
Company's compensatory benefit plan for participation of the Company's employees
(including officers), directors or consultants and is intended to comply with
the provisions of Rule 701 promulgated by the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Act").
The details of your option are as follows:
1. The total number of shares of Common Stock subject to this option is
___________ (________). Subject to the limitations contained herein, this option
shall be exercisable with respect to each installment shown below on or after
the date of vesting applicable to such installment, as follows (PROVIDED THAT
THE OPTION SHALL VEST AT LEAST 20% PER YEAR):
NUMBER OF SHARES (INSTALLMENT) DATE OF EARLIEST EXERCISE (VESTING)
2. (a) The exercise price of this option is ________ ($____) per share,
being not less than 85% of the fair market value of the Common Stock on the date
of grant of this option.
1.
<PAGE> 24
(b) Payment of the exercise price per share is due in full upon
exercise of all or any part of each installment which has accrued to you. You
may elect, to the extent permitted by applicable statutes and regulations, to
make payment of the exercise price under one of the following alternatives:
(i) Payment of the exercise price per share in cash (including
check) at the time of exercise; or
(ii) Payment pursuant to a program developed under Regulation
T as promulgated by the Federal Reserve Board which results in the receipt of
cash (or check) by the Company prior to the issuance of Common Stock.
3. (a) Subject to the provisions of this option you may elect at any
time during your employment with the Company or an affiliate thereof, to
exercise the option as to any part or all of the shares subject to this option
at any time during the term hereof, including without limitation, a time prior
to the date of earliest exercise ("vesting") stated in paragraph 1 hereof;
provided, however, that:
(i) a partial exercise of this option shall be deemed to cover
first vested shares and then the earliest vesting installment of unvested
shares;
(ii) any shares so purchased from installments which have not
vested as of the date of exercise shall be subject to the purchase option in
favor of the Company as described in the Early Exercise Stock Purchase Agreement
attached hereto; and
(iii) you shall enter into an Early Exercise Stock Purchase
Agreement in the form attached hereto with a vesting schedule that will result
in the same vesting as if no early exercise had occurred.
(b) The election provided in this paragraph 3 to purchase shares
upon the exercise of this option prior to the vesting dates shall cease upon
termination of your employment with the Company or an affiliate thereof and may
not be exercised after the date thereof.
4. This option may not be exercised for any number of shares which
would require the issuance of anything other than whole shares.
5. Notwithstanding anything to the contrary contained herein, this
option may not be exercised unless the shares issuable upon exercise of this
option are then registered under the Act or, if such Shares are not then so
registered, the Company has determined that such exercise and issuance would be
exempt from the registration requirements of the Act.
2.
<PAGE> 25
6. The term of this option commences on the date hereof and, unless
sooner terminated as set forth below or in the Plan, terminates on
_______________ (which date shall be no more than ten (10) years from the date
this option is granted). In no event may this option be exercised on or after
the date on which it terminates. This option shall terminate prior to the
expiration of its term as follows: three (3) months after the termination of
your employment with the Company or an affiliate of the Company (as defined in
the Plan) for any reason or for no reason unless:
(a) such termination of employment is due to your disability, in
which event the option shall terminate on the earlier of the termination date
set forth above or twelve (12) months following such termination of employment;
or
(b) such termination of employment is due to your death, in which
event the option shall terminate on the earlier of the termination date set
forth above or eighteen (18) months after your death; or
(c) during any part of such three (3) month period the option is not
exercisable solely because of the condition set forth in paragraph 5 above, in
which event the option shall not terminate until the earlier of the termination
date set forth above or until it shall have been exercisable for an aggregate
period of three (3) months after the termination of employment; or
(d) exercise of the option within three (3) months after termination
of your employment with the Company or with an affiliate would result in
liability under section 16(b) of the Securities Exchange Act of 1934, in which
case the option will terminate on the earlier of (i) the termination date set
forth above, (ii) the tenth (10th) day after the last date upon which exercise
would result in such liability or (iii) six (6) months and ten (10) days after
the termination of your employment with the Company or an affiliate.
However, this option may be exercised following termination of
employment only as to that number of shares as to which it was exercisable on
the date of termination of employment under the provisions of paragraph 1 of
this option.
7. (a) This option may be exercised, to the extent specified above, by
delivering a notice of exercise (in a form designated by the Company) together
with the exercise price to the Secretary of the Company, or to such other person
as the Company may designate, during regular business hours, together with such
additional documents as the Company may then require pursuant to subparagraph
9(g) of the Plan.
(b) By exercising this option you agree that:
3.
<PAGE> 26
(i) the Company may require you to enter an arrangement
providing for the cash payment by you to the Company of any tax withholding
obligation of the Company arising by reason of: (1) the exercise of this option;
(2) the lapse of any substantial risk of forfeiture to which the shares are
subject at the time of exercise; or (3) the disposition of shares acquired upon
such exercise; and
(ii) the Company (or a representative of the underwriters)
may, in connection with the first underwritten registration of the offering of
any securities of the Company under the Act, require that you not sell or
otherwise transfer or dispose of any shares of Common Stock or other securities
of the Company during such period (not to exceed one hundred eighty (180) days)
following the effective date (the "Effective Date") of the registration
statement of the Company filed under the Act as may be requested by the Company
or the representative of the underwriters; provided, however, that such
restriction shall apply only if, on the Effective Date, you are an officer,
director, or owner of more than one percent (1%) of the outstanding securities
of the Company. For purposes of this restriction you will be deemed to own
securities which (i) are owned directly or indirectly by you, including
securities held for your benefit by nominees, custodians, brokers or pledgees;
(ii) may be acquired by you within sixty (60) days of the Effective Date; (iii)
are owned directly or indirectly, by or for your brothers or sisters (whether by
whole or half blood) spouse, ancestors and lineal descendants; or (iv) are
owned, directly or indirectly, by or for a corporation, partnership, estate or
trust of which you are a shareholder, partner or beneficiary, but only to the
extent of your proportionate interest therein as a shareholder, partner or
beneficiary thereof. You further agree that the Company may impose stop-transfer
instructions with respect to securities subject to the foregoing restrictions
until the end of such period.
8. This option is not transferable, except by will or by the laws of
descent and distribution, and is exercisable during your life only by you.
9. This option is not an employment contract and nothing in this option
shall be deemed to create in any way whatsoever any obligation on your part to
continue in the employ of the Company, or of the Company to continue your
employment with the Company. In the event that this option is granted to you in
connection with the performance of services as a consultant or director,
references to employment, employee and similar terms shall be deemed to include
the performance of services as a consultant or a director, as the case may be,
provided, however, that no rights as an employee shall arise by reason of the
use of such terms.
10. Any notices provided for in this option or the Plan shall be given
in writing and shall be deemed effectively given upon receipt or, in the case of
notices delivered by the Company to you, five (5) days after deposit in the
United States mail, postage prepaid, addressed to you at the address specified
below or at such other address as you hereafter designate by written notice to
the Company.
4.
<PAGE> 27
11. This option is subject to all the provisions of the Plan, a copy of
which is attached hereto and its provisions are hereby made a part of this
option, including without limitation the provisions of paragraphs 5 and 9 of the
Plan relating to option provisions, and is further subject to all
interpretations, amendments, rules and regulations which may from time to time
be promulgated and adopted pursuant to the Plan. In the event of any conflict
between the provisions of this option and those of the Plan, the provisions of
the Plan shall control.
Dated the __th day of ______, l9__.
Very truly yours,
REPEATER TECHNOLOGIES, INC.
By
--------------------------------
Duly authorized on behalf
of the Board of Directors
ATTACHMENTS:
1990 Incentive Stock Plan
Regulation 260.141.11
Notice of Exercise
Early Exercise Stock Purchase Agreement
5.
<PAGE> 28
The undersigned:
(a) Acknowledges receipt of the foregoing option and the attachments
referenced therein and understands that all rights and liabilities with respect
to this option are set forth in the option and the Plan; and
(b) Acknowledges that as of the date of grant of this option, it sets
forth the entire understanding between the undersigned optionee and the Company
and its affiliates regarding the acquisition of stock in the Company and
supersedes all prior oral and written agreements on that subject with the
exception of (i) the options previously granted and delivered to the undersigned
under stock option plans of the Company, and (ii) the following agreements only:
NONE
--------------------
(Initial)
OTHER
-------------------------------
------------------------------------
------------------------------------
(c) Acknowledges receipt of a copy of Section 260.141.11 of Title 10
of the California Code of Regulations.
----------------------------------
OPTIONEE
Address:
------------------------
------------------------
6.
<PAGE> 29
NOTICE OF EXERCISE
Repeater Technologies, Inc.
1150 Morse Avenue
Sunnyvale, CA 94089 Date of Exercise:
-----------------
Ladies and Gentlemen:
This constitutes notice under my stock option that I elect to purchase
the number of shares for the price set forth below.
<TABLE>
<S> <C> <C>
Type of option (check one): Incentive [ ] Nonstatutory [ ]
Stock option dated:
------------------
Number of shares as to
which option is exercised:
------------------
Certificates to be
issued in name of:
------------------
Total exercise price: $
-----------------
Cash payment delivered
herewith: $
-----------------
</TABLE>
By this exercise, I agree (i) to provide such additional documents as
you may require pursuant to the terms of the 1990 INCENTIVE STOCK PLAN, (ii) to
provide for the payment by me to you (in the manner designated by you) of your
withholding obligation, if any, relating to the exercise of this option, and
(iii) if this exercise relates to an incentive stock option, to notify you in
writing within fifteen (15) days after the date of any disposition of any
shares of Common Stock issued upon exercise of this option that occurs within
two (2) years after the date of grant of this option or within one (1) year
after such shares of Common Stock are issued upon exercise of this option.
I hereby make the following certifications and representations with
respect to the number of shares of Common Stock of the Company listed above (the
"Shares"), which are being acquired by me for my own account upon exercise of
the Option as set forth above:
1.
<PAGE> 30
I acknowledge that the Shares have not been registered under the
Securities Act of 1933, as amended (the "Act"), and are deemed to constitute
"restricted securities" under Rule 701 and "control securities" under Rule 144
promulgated under the Act. I warrant and represent to the Company that I have no
present intention of distributing or selling said Shares, except as permitted
under the Act and any applicable state securities laws.
I further acknowledge that I will not be able to resell the Shares for
at least ninety days after the stock of the Company becomes publicly traded
(i.e., subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934) under Rule 701 and that more restrictive
conditions apply to affiliates of the Company under Rule 144.
I further acknowledge that all certificates representing any of the
Shares subject to the provisions of the Option shall have endorsed thereon
appropriate legends reflecting the foregoing limitations, as well as any legends
reflecting restrictions pursuant to the Company's Articles of Incorporation,
Bylaws and/or applicable securities laws.
I further agree that, if required by the Company (or a representative
of the underwriters) in connection with the first underwritten registration of
the offering of any securities of the Company under the Act, I will not sell or
otherwise transfer or dispose of any shares of Common Stock or other securities
of the Company during such period (not to exceed ninety (90) days) following the
effective date of the registration statement of the Company filed under the Act
(the "Effective Date") as may be requested by the Company or the representative
of the underwriters. For purposes of this restriction I will be deemed to own
securities that (i) are owned directly or indirectly by me, including securities
held for my benefit by nominees, custodians, brokers or pledgees; (ii) may be
acquired by me within sixty (60) days of the Effective Date; (iii) are owned
directly or indirectly, by or for my brothers or sisters (whether by whole or
half blood), spouse, ancestors and lineal descendants; or (iv) are owned,
directly or indirectly, by or for a corporation, partnership, estate or trust of
which I am a shareholder, partner or beneficiary, but only to the extent of my
proportionate interest therein as a shareholder, partner or beneficiary thereof.
I further agree that the Company may impose stop-transfer instructions with
respect to securities subject to the foregoing restrictions until the end of
such period.
Very truly yours,
---------------------------------------
2.
<PAGE> 1
EXHIBIT 10.3
REPEATER TECHNOLOGIES, INC.
KEY EXECUTIVES STOCK OPTION PLAN
ADOPTED MAY 21, 1993
APPROVED BY THE SHAREHOLDERS ON JULY 26, 1993
AMENDED BY THE BOARD OF DIRECTORS ON OCTOBER 14, 1994
AMENDED BY THE BOARD OF DIRECTORS ON MAY 25, 1995
AMENDED BY THE BOARD OF DIRECTORS ON JANUARY 29, 1997
1. PURPOSES.
(a) The purpose of the Plan is to provide a means by which selected
Key Executives of the Company, and its Affiliates, may be given an opportunity
to purchase stock of the Company.
(b) The Company, by means of the Plan, seeks to retain the services
of persons who are now Key Executives of the Company and its Affiliates, to
secure and retain the services of new Key Executives, and to provide incentives
for such persons to exert maximum efforts for the success of the Company and
its Affiliates.
(c) The Company intends that the Options issued under the Plan
shall, in the discretion of the Board or any Committee to which responsibility
for administration of the Plan has been delegated pursuant to subsection 3(c),
be either Incentive Stock Options or Nonstatutory Stock Options. All Options
shall be separately designated Incentive Stock Options or Nonstatutory Stock
Options at the time of grant, and in such form as issued pursuant to Section 6,
and a separate certificate or certificates will be issued for shares purchased
on exercise of each type of Option.
1.
<PAGE> 2
2. DEFINITIONS.
(a) "AFFILIATE" means any parent corporation or subsidiary
corporation, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f) respectively, of the Code.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as amended.
(d) "COMMITTEE" means a Committee appointed by the Board in
accordance with subsection 3(c) of the Plan.
(e) "COMPANY" means Repeater Technologies, Inc., a California
corporation.
(f) "CONTINUOUS STATUS AS AN EMPLOYEE" means the employment with
the Company is not interrupted or terminated. The Board, in its sole
discretion, may determine whether Continuous Status as an Employee shall be
considered interrupted in the case of: (i) any leave of absence approved by the
Board, including sick leave, military leave, or any other personal leave; or
(ii) transfers between locations of the Company or between the Company,
Affiliates or their successors.
(g) "DIRECTOR" means a member of the Board.
(e) "DISABILITY" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
(i) "DISINTERESTED PERSON" means a Director: (i) who was not during
the one year prior to service as an administrator of the Plan granted or
awarded equity securities pursuant to the Plan or any other plan of the Company
or any of its affiliates entitling the participants therein to acquire equity
securities of the Company or any of its affiliates except as permitted by
2.
<PAGE> 3
Rule 16b-3(c)(2)(i); or (ii) who is otherwise considered to be a "disinterested
person" in accordance with Rule 16b-3(c)(2)(i), or any other applicable rules,
regulations or interpretations of the Securities and Exchange Commission.
(j) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
(k) "FAIR MARKET VALUE" means the value of the common stock as determined
in good faith by the Board.
(l) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(m) "KEY EXECUTIVE" means any person, including Officers and Directors,
employed by the Company or any Affiliate of the Company in a senior management
or key technical position, as determined by the Board. Neither service as a
Director nor payment of a director's fee by the Company shall be sufficient to
constitute "employment" by the Company in such a position.
(n) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify as
an Incentive Stock Option.
(o) "OFFICER" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(p) "OPTION" means a stock option granted pursuant to the Plan.
(q) "OPTION AGREEMENT" means a written agreement between the Company and
an Optionee evidencing the terms and conditions of an individual Option grant.
Each Option Agreement shall be subject to the terms and conditions of the Plan.
3.
<PAGE> 4
(r) "OPTIONED STOCK" means the common stock of the Company subject to an
Option.
(s) "OPTIONEE" means a Key Executive who holds an outstanding Option.
(t) "PLAN" means this 1993 Key Executives Stock Option Plan.
(u) "RULE 16b-3" means Rule 16b-3 of the Exchange Act or any successor to
Rule 16b-3, as in effect when discretion is being exercised with respect to the
Plan.
3. ADMINISTRATION.
(a) The Plan shall be administered by the Board unless and until the
Board delegates administration to a Committee, as provided in subsection 3(c).
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(1) To determine from time to time which of the persons eligible
under the Plan shall be granted Options; when and how each Option shall be
granted; whether an Option will be an Incentive Stock Option or a Nonstatutory
Stock Option; the provisions of each Option granted (which need not be
identical), including the time or times such Option may be exercised in whole
or in part; and the number of shares for which an Option shall be granted to
each such person.
(2) To construe and interpret the Plan and Options granted under it,
and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Option Agreement, in a
manner and to the extent it shall deem necessary or expedient to make the Plan
fully effective.
(3) To amend the Plan as provided in Section 11.
4.
<PAGE> 5
(4) Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best interests of the
Company.
(c) The Board may delegate administration of the Plan to a committee
composed of not fewer than two (2) members (the "Committee"), all of the members
of which Committee shall be Disinterested Persons, if required under subsection
3(d). If administration is delegated to a Committee, the Committee shall have,
in connection with the administration of the Plan, the powers theretofore
possessed by the Board (and references in this Plan to the Board shall
thereafter be to the Committee), subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as any be adopted from time to
time by the Board. The Board may abolish the Committee at any time and revest in
the Board the administration of the Plan. Additionally, prior to the date of the
first registration of any equity security of the Company under Section 12 of the
Exchange Act, and notwithstanding anything to the contrary contained herein, the
Board may delegate administration of the Plan to any person or persons and the
term ""Committee" shall apply to any person or persons to whom such authority
has been delegated.
(d) Any requirement that an administrator of the Plan be a Disinterested
Person shall not apply (i) prior to the date of the first registration of an
equity security of the Company under Section 12 of the Exchange Act, or (ii) if
the Board or the Committee expressly declares that such requirement shall not
apply. Any Disinterested Person shall otherwise comply with the requirements of
Rule 16b-3.
4. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of Section 10 relating to adjustments upon
changes in stock, the stock that may be sold pursuant to Options shall not
exceed in the aggregate One
5.
<PAGE> 6
Million Three Hundred Fifty One Thousand Five Hundred Forty-Four (1,351,544)
shares of the Company's common stock (as set by board action on January 29,
1997 and including all adjustments through such date). If any Option shall for
any reason expire or otherwise terminate without having been exercised in full,
the stock not purchased under such Option shall revert to and again become
available for issuance under the Plan.
(b) The stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.
5. ELIGIBILITY
(a) Options may be granted only to Key Executives.
(b) No person shall be eligible for the grant of an Incentive Stock
Option if, at the time of grant, such person owns (or is deemed to own pursuant
to Section 424(d) of the Code) stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company or of
any of its Affiliates unless the exercise price of such Option is at least one
hundred ten percent (110%) of the Fair Market Value of such stock at the date
of grant and the Option is not exercisable after the expiration of five (5)
years from the date of grant.
6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:
(a) TERM. No Option shall be exercisable after the expiration of
ten (10) years from the date it was granted.
6.
<PAGE> 7
(b) PRICE. The exercise price of each Incentive Stock Option shall be
not less than one hundred percent (100%) of the Fair Market Value of the stock
subject to the Option on the date the Option is granted. The exercise price of
each Nonstatutory Stock Option shall be not less than eighty-five percent (85%)
of the Fair Market Value of the stock subject to the Option on the date the
Option is granted.
(c) CONSIDERATION. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the option is exercised, or (ii) at
the discretion of the Board or the Committee, either at the time of the grant
or exercise of the Option, by delivery to the Company of other common stock of
the Company.
(d) TRANSFERABILITY. An Option shall not be transferable except by will
or by the laws of descent and distribution, and shall be exercisable during the
lifetime of the person to whom the Option is granted only by such person.
(e) VESTING. The total number of shares of stock subject to an Option
may, but need not, be allotted in periodic installments (which may, but need
not, be equal). The Option Agreement may provide that from time to time during
each of such installment periods, the Option may become exercisable ("vest")
with respect to some or all of the shares allotted to that period, and may be
exercised with respect to some or all of the shares allotted to such period
and/or any prior period as to which the Option became vested but was not fully
exercised. During the remainder of the term of the Option (if its term extends
beyond the end of the installment periods), the option may be exercised from
time to time with respect to any shares then remaining subject to the Option.
The provisions of the subsection 6(e) are subject to any
7.
<PAGE> 8
Option provisions governing the minimum number of shares as to which an Option
may be exercised.
(f) SECURITIES LAW COMPLIANCE. The Company may require any Optionee, or
any person to whom an Option is transferred under subsection 6(d), as a
condition of exercising any such Option, (1) to give written assurances
satisfactory to the Company as to the Optionee's knowledge and experience in
financial and business matters and/or to employ a purchaser representative
reasonably satisfactory to the Company who is knowledgeable and experienced in
financial and business matters, and that he or she is capable of evaluating,
alone or together with the purchaser representative, the merits and risks of
exercising the Option; and (2) to give written assurances satisfactory to the
Company stating that such person is acquiring the stock subject to the Option
for such person's own account and not with any present intention of selling or
otherwise distributing the stock. These requirements, and any assurances given
pursuant to such requirements, shall be inoperative if (i) the issuance of the
shares upon the exercise of the Option has been registered under a then
currently effective registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), or (ii) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws. The
Company may, upon advice of counsel to the Company, place legends on stock
certificates issued under the Plan as such counsel deems necessary or
appropriate in order to comply with applicable securities laws, including, but
not limited to, legends restricting the transfer of the stock.
(g) TERMINATION OF EMPLOYMENT. In the event an Optionee's Continuous
Status as an Employee of the Company terminates (other than upon the Optionee's
death or Disability), the
8.
<PAGE> 9
Optionee may exercise his or her Option (to the extent that the Optionee was
entitled to exercise it at the date of termination) but only within such period
of time ending on the earlier of (i) the date three (3) months after the
termination of the Optionee's Continuous Status as an Employee (or such longer
or shorter period specified in the Option Agreement), or (ii) the expiration of
the term of the Option as set forth in the Option Agreement. If, after
termination, the Optionee does not exercise his or her Option within the time
specified in the Option Agreement, the Option shall terminate, and the shares
covered by such Option shall revert to and again become available for issuance
under the Plan.
(h) DISABILITY OF OPTIONEE. In the event an Optionee's Continuous
Status as an Employee terminates as a result of the Optionee's Disability, the
Optionee may exercise his or her Option (to the extent that the Optionee was
entitled to exercise it at the date of termination), but only within such
period of time ending on the earlier of (i) the date twelve (12) months
following such termination (or such longer or shorter period specified in the
Option Agreement), or (ii) the expiration of the term of the Option as set
forth in the Option Agreement. If, at the date of termination, the Optionee is
not entitled to exercise his or her entire Option, the shares covered by the
unexercisable portion of the Option shall revert to and again become available
for issuance under the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified herein, the Option shall
terminate, and the shares covered by such Option shall revert to and again
become available for issuance under the Plan.
(i) DEATH OF OPTIONEE. In the event of the death of an Optionee
during, or within three (3) months of the termination of, the Optionee's
Continuous Status as an Employee the Option may be exercised (to the extent the
Optionee was entitled to exercise the Option at the date of
9.
<PAGE> 10
death) by the Optionee's estate or by a person who acquired the right to
exercise the Option by bequest or inheritance, but only within the period
ending on the earlier of (i) the date eighteen (18) months following the date
of death (or such longer or shorter period specified in the Option Agreement),
or (ii) the expiration of the term of such Option as set forth in the Option
Agreement. If, at the time of death, the Optionee was not entitled to exercise
his or her entire Option, the shares covered by the unexercisable portion of
the Option shall revert to and again become available for issuance under the
Plan. If, after death, the Optionee's estate or a person who acquired the right
to exercise the Option by bequest or inheritance does not exercise the Option
within the time specified herein, the Option shall determine, and the shares
covered by such Option shall revert to and again become available for issuance
under the Plan.
(j) EARLY EXERCISE. The Option Agreement may, but need not, include a
provision whereby the Optionee may elect at any time while employeed by the
Company to exercise the Option as to any part or all of the shares subject to
the Option prior to full vesting of the Option. Any unvested shares so
purchased may be subject to a repurchase right in the favor of the Company or to
any other restriction the Board determines to be appropriate.
(k) WITHHOLDING. To the extent provided by the terms of an Option
Agreement, the Optionee may satisfy any federal, state or local tax withholding
obligation relating to the exercise of such Option by any of the following means
or by a combination of such means: (1) tendering a cash payment; (2) authorizing
the Company to withhold shares from the shares of the common stock otherwise
issuable to the participant as a result of the exercise of the Option; or (3)
delivering to the Company owned and unencumbered shares of the common stock of
the Company.
10.
<PAGE> 11
7. COVENANTS OF THE COMPANY.
(a) During the terms of the Options, the Company shall keep available at
all times the number of shares of stock required to satisfy such Options.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the Options; provided, however,
that this undertaking shall not require the Company to register under the
Securities Act either the Plan, any Option or any stock issued or issuable
pursuant to any such Option. If, after reasonable efforts, the Company is unable
to obtain from any such regulatory commission or agency the authority which
counsel for the Company deems necessary for the lawful issuance and sale of
stock under the Plan, the Company shall be relieved from any liability for
failure to issue and sell stock upon exercise of such Options unless and until
such authority is obtained.
8. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to Options shall constitute
general funds of the Company.
9. MISCELLANEOUS.
(a) The Board shall have the power to accelerate the time at which an
Option may first be exercised or the time during which an Option or any part
thereof will vest pursuant to subsection 6(e), notwithstanding the provisions in
the Option stating the time at which it may first be exercised or the time
during which it will vest.
(b) Neither an Optionee nor any person to whom an Option is transferred
under subsection 6(d) shall be deemed to be the holder of, or to have any of the
rights of a holder with
11.
<PAGE> 12
respect to, any shares subject to such Option unless and until such person has
satisfied all requirements for exercise of the Option pursuant to its terms.
(c) Throughout the term of any Option, the Company shall deliver to the
holder of such Option, not later than one hundred twenty (120) days after the
close of each of the Company's fiscal years during the Option term, such
financial and other information regarding the Company as comprises the annual
report to the shareholders of the Company provided for in the bylaws of the
Company.
(d) Noting in the Plan or any instrument executed or Option granted
pursuant thereto shall confer upon any Key Executive or Optionee any right to
continue in the employ of the Company or any Affiliate or shall affect the
right of the Company or any Affiliate to terminate the employment of any Key
Executive with or without cause.
(e) To the extent that the aggregate Fair Market Value (determined at the
time of grant) of stock with respect to which Incentive Stock Options granted
after 1986 are exercisable for the first time by any Optionee during any
calendar year under all plans of the Company and its Affiliates exceeds one
hundred thousand dollars ($100,000), the Options or portions thereof which
exceed such limit (according to the order in which they were granted) shall be
treated as Nonstatutory Stock Options.
10. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or subject to
any Option (through merger, consolidation, reorganization, recapitalization,
stock dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or otherwise), the Plan and outstanding Options will be
12.
<PAGE> 13
appropriately adjusted in the class(es) and maximum number of shares subject to
the Plan and the class(es) and the number of shares and price per share of
stock subject to outstanding Options.
(b) In the event of: (1) a dissolution or liquidation of the Company; (2)
a merger or consolidation in which the Company is not the surviving
corporation; or (3) a reverse merger in which the Company is the surviving
corporation but the shares of the Company's common stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise, then to the extent
permitted by applicable law: (i) any surviving corporation shall assume any
Options outstanding under the Plan or shall substitute similar Options for
those outstanding under the Plan, or (ii) such Options shall continue in full
force and effect. In the event any surviving corporation refuses to assume or
continue such Options, or to substitute similar options for those outstanding
under the Plan, then, with respect to Options held by persons then performing
services as an employee of the Company, the time during which such Options may
be exercised shall be accelerated and the Options terminated if not exercised
prior to such event.
11. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in Section 10 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the shareholders
of the Company within twelve (12) months before or after the adoption of the
amendment, where the amendment will:
(1) Increase the number of shares reserved for Options under the
Plan;
(2) Modify the requirements as to eligibility for participation in
the Plan (to the extent such modification requires shareholder approval in
order for the Plan to satisfy the
13.
<PAGE> 14
requirements of Section 422 of the Code); or
(3) Modify the Plan in any other way if such modification requires
shareholder approval in order for the Plan to satisfy the requirements of
Section 422 of the Code or to comply with the requirements of Rule 16b-3.
(b) It is expressly contemplated that the Board may amend the Plan in any
respect the Board deems necessary or advisable to provide Optionees with the
maximum benefits provided or to be provided under the provisions of the Code
and the regulations promulgated thereunder relating to Incentive Stock Options
and/or to bring the Plan and/or Incentive Stock Options granted under it into
compliance therewith.
(c) Rights and obligations under any Option granted before amendment of the
Plan shall not be altered or impaired by any amendment of the Plan unless (i)
the Company requests the consent of the person to whom the Option was granted
and (ii) such person consents in writing.
12. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. Unless sooner
terminated, the Plan shall terminate on April 30, 2003. No Options may be
granted under the Plan while the Plan is suspended or after it is terminated.
(b) Rights and obligations under any Option granted while the Plan is in
effect shall not be altered or impaired by suspension or termination of the
Plan, except with the consent of the person to whom the Option was granted.
14.
<PAGE> 15
13. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board, but no Options
granted under the Plan shall be exercised unless and until the Plan has been
approved by the shareholders of the Company.
15.
<PAGE> 16
FORM OF
INCENTIVE STOCK OPTION
_________________________, Optionee:
Repeater Technologies, Inc. (the "Company"), pursuant to its 1993 Key
Executives Stock Option Plan (the "Plan"), has this day granted to you, the
optionee named above, an option to purchase shares of the common stock of the
Company ("Common Stock"). This option is intended to qualify as an "incentive
stock option" within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code").
The grant hereunder is in connection with and in furtherance of the
Company's compensatory benefit plan for participation of the Company's Key
Executives, as defined in the Plan, and is intended to comply with the
provisions of Rule 701 promulgated by the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Act").
The details of your option are as follows:
1. The total number of shares of Common Stock subject to this option is
____________________ (______). Subject to the limitations contained herein, this
option shall be exercisable with respect to each installment shown below on or
after the date of vesting applicable to such installment, as follows:
NUMBER OF SHARES (INSTALLMENT) DATE OF EARLIEST EXERCISE (VESTING)
1.
<PAGE> 17
2. (a) The exercise price of this option is _______________________
($____) per share, being not less than the fair market value of the Common Stock
on the date of grant of this option.
(b) Payment of the exercise price per share is due in full in cash
(including check) upon exercise of all or any part of each installment which has
become exercisable by you; provided, however, that, if at the time of exercise
the Company's Common Stock is publicly traded and quoted regularly in the Wall
Street Journal, payment of the exercise price, to the extent permitted by
applicable statutes and regulations, may be made by delivery of already- owned
shares of Common Stock, or a combination of cash and already-owned Common Stock.
Such Common Stock (i) shall be valued at its fair market value on the date of
exercise, (ii) if originally acquired from the Company, must have been held for
at least the period required to avoid a charge to the Company's reported
earnings, and (iii) must be owned free and clear of any liens, claims,
encumbrances or security interests.
(c) Notwithstanding the foregoing, this option may be exercised
pursuant to a program developed under Regulation T as promulgated by the Federal
Reserve Board which results in the receipt of cash (or check) by the Company
prior to the issuance of Common Stock.
3. This option may not be exercised for any number of shares which would
require the issuance of anything other than whole shares.
4. Notwithstanding anything to the contrary contained herein, this option
may not be exercised unless the shares issuable upon exercise of this option are
then registered under the Act, or, if such shares are not then so registered,
the Company has determined that such exercise and issuance would be exempt from
the registration requirements of the Act.
5. The term of this option commences on the date hereof and, unless
sooner terminated as set forth below or in the Plan, terminates on
______________________ (which date shall be no more than ten (10) years from
date this option is granted). In no event may this option be exercised on or
after the date on which it terminates. This option shall terminate prior to the
expiration of its term as follows: three (3) months after the termination of
your employment with the Company or an affiliate of the Company (as defined in
the Plan) for any reason or for no reason unless
(a) such termination of employment is due to your permanent and total
disability (within the meaning of Section 422(c)(6) of the Code), in which event
the option shall terminate on the earlier of the termination date set forth
above or twelve (12) months following such termination of employment; or
(b) such termination of employment is due to your death, in which
event the option shall terminate on the earlier of the termination date set
forth above or eighteen (18) months after your death; or
2.
<PAGE> 18
(c) during any part of such three (3) month period the option is not
exercisable solely because of the condition set forth in paragraph 4 above, in
which event the option shall not terminate until the earlier of the termination
date set forth above or until it shall have been exercisable for an aggregate
period of three (3) months after the termination of employment; or
(d) exercise of the option within three (3) months after termination
of your employment with the Company or with an affiliate would result in
liability under section 16(b) of the Securities Exchange Act of 1934, in which
case the option will terminate on the earlier of (i) the tenth (10th) day after
the last date upon which exercise would result in such liability or (ii) six (6)
months and ten (10) days after the termination of your employment with the
Company or an affiliate.
However this option may be exercised following termination of
employment only as to that number of shares as to which it was exercisable on
the date of termination of employment under the provisions of paragraph 1 of
this option.
6. (a) This option may be exercised, to the extent specified above, by
delivering a notice of exercise (in a form designated by the Company) together
with the exercise price to the Secretary of the Company, or to such other person
as the Company may designate, during regular business hours, together with such
additional documents as the Company may then require pursuant to subparagraph
6(f) of the Plan.
(b) By exercising this option you agree that:
(i) the Company may require you to enter an arrangement
providing for the payment by you to the Company of any tax withholding
obligation of the Company arising by reason of (1) the exercise of this option;
(2) the lapse of any substantial risk of forfeiture to which the shares are
subject at the time of exercise; or (3) the disposition of shares acquired upon
such exercise;
(ii) you will notify the Company in writing within fifteen (15)
days after the date of any disposition of any of the shares of the Common Stock
issued upon exercise of this option that occurs within two (2) years after the
date of this option grant or within one (1) year after such shares of Common
Stock are transferred upon exercise of this option; and
(iii) the Company (or a representative of the underwriters)
may, in connection with the first underwritten registration of the offering of
any securities of the Company under the Act, require that you not sell or
otherwise transfer or dispose of any shares of Common Stock or other securities
of the Company during such period (not to exceed one hundred eighty (180) days)
following the effective date (the "Effective Date") of the registration
statement of the Company filed under the Act as may be requested by the Company
or the representative of the underwriters. For purposes of this restriction you
will be deemed to own securities which (i) are owned directly or indirectly by
you, including securities held for your benefit by nominees, custodians, brokers
or pledgees; (ii) may be acquired by you within sixty
3.
<PAGE> 19
(60) days of the Effective Date; (iii) are owned directly or indirectly, by or
for your brothers or sisters (whether by whole or half blood) spouse, ancestors
and lineal descendants; or (iv) are owned, directly or indirectly, by or for a
corporation, partnership, estate or trust of which you are a shareholder,
partner or beneficiary, but only to the extent of your proportionate interest
therein as a shareholder, partner or beneficiary thereof. You further agree that
the Company may impose stop-transfer instructions with respect to securities
subject to the foregoing restrictions until the end of such period.
7. This option is not transferable, except by will or by the laws of
descent and distribution, and is exercisable during your life only by you.
8. This option is not an employment contract and nothing in this option
shall be deemed to create in any way whatsoever any obligation on your part to
continue in the employ of the Company, or of the Company to continue your
employment with the Company.
9. Any notices provided for in this option or the Plan shall be given in
writing and shall be deemed effectively given upon receipt or, in the case of
notices delivered by the Company to you, five (5) days after deposit in the
United States mail, postage prepaid, addressed to you at the address specified
below or at such other address as you hereafter designate by written notice to
the Company.
10. This option is subject to all the provisions of the Plan, a copy of
which is attached hereto and its provisions are hereby made a part of this
option, including without limitation the provisions of paragraph 6 of the Plan
relating to option provisions, and is further subject to all interpretations,
amendments, rules and regulations which may from time to time be promulgated and
adopted pursuant to the Plan. In the event of any conflict between the
provisions of this option and those of the Plan, the provisions of the Plan
shall control.
Dated the ____ day of __________________, 19__.
Very truly yours,
Repeater Technologies, Inc.
By
----------------------------------
Duly authorized on behalf
of the Board of Directors
4.
<PAGE> 20
The undersigned:
(a) Acknowledges receipt of the foregoing option and the attachments
referenced therein and understands that all rights and liabilities with respect
to this option are set forth in the option and the Plan; and
(b) Acknowledges that as of the date of grant of this option, it sets
forth the entire understanding between the undersigned optionee and the Company
and its affiliates regarding the acquisition of stock in the Company and
supersedes all prior oral and written agreements on that subject with the
exception of the following agreements only:
NONE
--------------
(Initial)
OTHER
-------------------------
-------------------------
-------------------------
------------------------------------
Optionee
Address:
----------------------------
----------------------------
ATTACHMENTS:
1993 Key Executives Stock Option Plan
Form of Notice of Exercise
5.
<PAGE> 21
FORM OF
NONSTATUTORY STOCK OPTION
_________________________, Optionee:
Repeater Technologies, Inc. (the "Company"), pursuant to its 1993 Key
Executives Stock Option Plan (the "Plan") has this day granted to you, the
optionee named above, an option to purchase shares of the common stock of the
Company ("Common Stock"). This option is not intended to qualify as and will not
be treated as an "incentive stock option" within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code").
The grant hereunder is in connection with and in furtherance of the
Company's compensatory benefit plan for participation of the Company's Key
Executives, as defined in the Plan, and is intended to comply with the
provisions of Rule 701 promulgated by the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Act").
The details of your option are as follows:
1. The total number of shares of Common Stock subject to this option is
____________________ (__________). Subject to the limitations contained herein,
this option shall be exercisable with respect to each installment shown below on
or after the date of vesting applicable to such installment, as follows:
NUMBER OF SHARES (INSTALLMENT) DATE OF EARLIEST EXERCISE (VESTING)
1.
<PAGE> 22
2. (a) The exercise price of this option is ________________________
($___________) per share, being not less than 85% of the fair market value of
the Common Stock on the date of grant of this option.
(b) Payment of the exercise price per share is due in full in
cash (including check) upon exercise of all or any part of each installment
which has become exercisable by you; provided, however, that, if at the time of
exercise, the Company's Common Stock is publicly traded and quoted regularly in
the Wall Street Journal, payment of the exercise price, to the extent permitted
by applicable statutes and regulations, may be made by delivery of already-
owned shares of Common Stock, or a combination of cash and already-owned Common
Stock. Such Common Stock (i) shall be valued at its fair market value on the
date of exercise, (ii) if originally acquired from the Company, must have been
held for the period required to avoid a charge to the Company's reported
earnings, and (iii) must be owned free and clear of any liens, claims,
encumbrances or security interests.
(c) Notwithstanding the foregoing, this option may be exercised
pursuant to a program developed under Regulation T as promulgated by the Federal
Reserve Board which results in the receipt of cash (or check) by the Company
prior to the issuance of Common Stock.
3. This option may not be exercised for any number of shares which would
require the issuance of anything other than whole shares.
4. Notwithstanding anything to the contrary contained herein, this
option may not be exercised unless the shares issuable upon exercise of this
option are then registered under the Act or, if such Shares are not then so
registered, the Company has determined that such exercise and issuance would be
exempt from the registration requirements of the Act.
5. The term of this option commences on the date hereof and, unless
sooner terminated as set forth below or in the Plan, terminates on
_______________________ (which date shall be no more than ten (10) years from
the date this option is granted). In no event may this option be exercised on or
after the date on which it terminates. This option shall terminate prior to the
expiration of its term as follows: three (3) months after the termination of
your employment with the Company or an affiliate of the Company (as defined in
the Plan) for any reason or for no reason unless:
(a) such termination of employment is due to your permanent and
total disability (within the meaning of Section 422(c)(6) of the Code), in which
event the option shall terminate on the earlier of the termination date set
forth above or twelve (12) months following such termination of employment; or
(b) such termination of employment is due to your death, in which
event the option shall terminate on the earlier of the termination date set
forth above or eighteen (18) months after your death; or
2.
<PAGE> 23
(c) during any part of such three (3) month period the option is
not exercisable solely because of the condition set forth in paragraph 4 above,
in which event the option shall not terminate until the earlier of the
termination date set forth above or until it shall have been exercisable for an
aggregate period of three (3) months after the termination of employment; or
(d) exercise of the option within three (3) months after
termination of your employment with the Company or with an affiliate would
result in liability under section 16(b) of the Securities Exchange Act of 1934,
in which case the option will terminate on the earlier of (i) the termination
date set forth above, (ii) the tenth (10th) day after the last date upon which
exercise would result in such liability or (iii) six (6) months and ten (10)
days after the termination of your employment with the Company or an affiliate.
However, this option may be exercised following termination of
employment only as to that number of shares as to which it was exercisable on
the date of termination of employment under the provisions of paragraph 1 of
this option.
6. (a) This option may be exercised, to the extent specified above,
by delivering a notice of exercise (in a form designated by the Company)
together with the exercise price to the Secretary of the Company, or to such
other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require pursuant
to subparagraph 6(f) of the Plan.
(b) By exercising this option you agree that:
(i) the Company may require you to enter an
arrangement providing for the cash payment by you to the Company of any tax
withholding obligation of the Company arising by reason of: (1) the exercise of
this option; (2) the lapse of any substantial risk of forfeiture to which the
shares are subject at the time of exercise; or (3) the disposition of shares
acquired upon such exercise; and
(ii) the Company (or a representative of the
underwriters) may, in connection with the first underwritten registration of the
offering of any securities of the Company under the Act, require that you not
sell or otherwise transfer or dispose of any shares of Common Stock or other
securities of the Company during such period (not to exceed one hundred eighty
(180) days) following the effective date (the "Effective Date") of the
registration statement of the Company filed under the Act as may be requested by
the Company or the representative of the underwriters. For purposes of this
restriction you will be deemed to own securities which (i) are owned directly or
indirectly by you, including securities held for your benefit by nominees,
custodians, brokers or pledgees; (ii) may be acquired by you within sixty (60)
days of the Effective Date; (iii) are owned directly or indirectly, by or for
your brothers or sisters (whether by whole or half blood) spouse, ancestors and
lineal descendants; or (iv) are owned, directly or indirectly, by or for a
corporation, partnership, estate or trust of which you are a shareholder,
partner or beneficiary, but only to the extent of your proportionate interest
therein as a shareholder, partner or beneficiary thereof. You further agree that
the Company
3.
<PAGE> 24
may impose stop-transfer instructions with respect to securities subject to the
foregoing restrictions until the end of such period.
7. This option is not transferable, except by will or by the laws of
descent and distribution, and is exercisable during your life only by you.
8. This option is not an employment contract and nothing in this option
shall be deemed to create in any way whatsoever any obligation on your part to
continue in the employ of the Company, or of the Company to continue your
employment with the Company. In the event that this option is granted to you in
connection with the performance of services as a consultant or director,
references to employment, employee and similar terms shall be deemed to include
the performance of services as a consultant or a director, as the case may be,
provided, however, that no rights as an employee shall arise by reason of the
use of such terms.
9. Any notices provided for in this option or the Plan shall be given in
writing and shall be deemed effectively given upon receipt or, in the case of
notices delivered by the Company to you, five (5) days after deposit in the
United States mail, postage prepaid, addressed to you at the address specified
below or at such other address as you hereafter designate by written notice to
the Company.
10. This option is subject to all the provisions of the Plan, a copy of
which is attached hereto and its provisions are hereby made a part of this
option, including without limitation the provisions of paragraph 6 of the Plan
relating to option provisions, and is further subject to all interpretations,
amendments, rules and regulations which may from time to time be promulgated and
adopted pursuant to the Plan. In the event of any conflict between the
provisions of this option and those of the Plan, the provisions of the Plan
shall control.
Dated the ____ day of __________________, 19__.
Very truly yours,
Repeater Technologies, Inc.
By
-------------------------------------
Duly authorized on behalf
of the Board of Directors
4.
<PAGE> 25
The undersigned:
(a) Acknowledges receipt of the foregoing option and the attachments
referenced therein and understands that all rights and liabilities with respect
to this option are set forth in the option and the Plan; and
(b) Acknowledges that as of the date of grant of this option, it sets
forth the entire understanding between the undersigned optionee and the Company
and its affiliates regarding the acquisition of stock in the Company and
supersedes all prior oral and written agreements on that subject with the
exception of the following agreements only:
NONE
-------------------
(Initial)
OTHER
----------------------------------
----------------------------------
----------------------------------
----------------------------------------
Optionee
Address:
------------------------------
------------------------------
ATTACHMENTS:
1993 Key Executives Stock Option Plan
Form of Notice of Exercise
5.
<PAGE> 26
FORM OF
NOTICE OF EXERCISE
Repeater Technologies, Inc.
1150 Morse Avenue
Sunnyvale, CA 94089 Date of Exercise:____________
Ladies and Gentlemen:
This constitutes notice under my stock option that I elect to purchase
the number of shares for the price set forth below.
Type of option (check one): Incentive [ ] Nonstatutory [ ]
Stock option dated: ______________________
Number of shares as
to which option is
exercised: ______________________
Certificates to be
issued in name of: ______________________
Total exercise price: $______________________
Cash payment delivered
herewith: $______________________
By this exercise, I agree (i) to provide such additional documents as
you may require pursuant to the terms of the KEY EXECUTIVES INCENTIVE STOCK
OPTION PLAN, (ii) to provide for the payment by me to you (in the manner
designated by you) of your withholding obligation, if any, relating to the
exercise of this option, and (iii) if this exercise relates to an incentive
stock option, to notify you in writing within fifteen (15) days after the date
of any disposition of any shares of Common Stock issued upon exercise of this
option that occurs within two (2) years after the date of grant of this option
or within one (1) year after such shares of Common Stock are issued upon
exercise of this option.
I hereby make the following certifications and representations with
respect to the number of shares of Common Stock of the Company listed above (the
"Shares"), which are being acquired by me for my own account upon exercise of
the Option as set forth above:
1.
<PAGE> 27
I acknowledge that the Shares have not been registered under the
Securities Act of 1933, as amended (the "Act"), and are deemed to constitute
"restricted securities" under Rule 701 and "control securities" under Rule 144
promulgated under the Act. I warrant and represent to the Company that I have no
present intention of distributing or selling said Shares, except as permitted
under the Act and any applicable state securities laws.
I further acknowledge that I will not be able to resell the Shares for
at least ninety days after the stock of the Company becomes publicly traded
(i.e., subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934) under Rule 701 and that more restrictive
conditions apply to affiliates of the Company under Rule 144.
I further acknowledge that all certificates representing any of the
Shares subject to the provisions of the Option shall have endorsed thereon
appropriate legends reflecting the foregoing limitations, as well as any legends
reflecting restrictions pursuant to the Company's Articles of Incorporation,
Bylaws and/or applicable securities laws.
I further agree that, if required by the Company (or a representative of
the underwriters) in connection with the first underwritten registration of the
offering of any securities of the Company under the Act, I will not sell or
otherwise transfer or dispose of any shares of Common Stock or other securities
of the Company during such period (not to exceed ninety (90) days) following the
effective date of the registration statement of the Company filed under the Act
(the "Effective Date") as may be requested by the Company or the representative
of the underwriters. For purposes of this restriction I will be deemed to own
securities that (i) are owned directly or indirectly by me, including securities
held for my benefit by nominees, custodians, brokers or pledgees; (ii) may be
acquired by me within sixty (60) days of the Effective Date; (iii) are owned
directly or indirectly, by or for my brothers or sisters (whether by whole or
half blood), spouse, ancestors and lineal descendants; or (iv) are owned,
directly or indirectly, by or for a corporation, partnership, estate or trust of
which I am a shareholder, partner or beneficiary, but only to the extent of my
proportionate interest therein as a shareholder, partner or beneficiary thereof.
I further agree that the Company may impose stop-transfer instructions with
respect to securities subject to the foregoing restrictions until the end of
such period.
Very truly yours,
------------------------------------------------
2.
<PAGE> 28
FORM OF
EARLY EXERCISE STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made by and between REPEATER TECHNOLOGIES, INC., a
California corporation (the "Corporation"), and _________________ ("Purchaser").
WITNESSETH:
WHEREAS, Purchaser holds a ______ stock option to purchase shares of
common stock of the Corporation pursuant to the Corporation's Key Executive
Stock Option Plan (the "Plan") which Purchaser desires to exercise; and
WHEREAS, Purchaser wishes to take advantage of the early exercise provision
of his option and therefore to enter into this Agreement;
NOW, THEREFORE, IT IS AGREED between the parties as follows:
1. Purchaser hereby agrees to purchase from the Corporation, and the
Corporation hereby agrees to sell to Purchaser, an aggregate of _____ shares of
the common stock (the "Stock") of the Corporation, for an exercise price of
$____ per share (total exercise price: _________ ($_________)), payable in
cash.
The closing hereunder shall occur at the offices of the Corporation on the
date of this Agreement or at such other time and place as the parties may
mutually agree upon in writing.
At the closing, Purchaser shall deliver three (3) stock assignments in the
form of Exhibit B duly endorsed (with date and number of shares left blank),
joint escrow instructions (the "Joint Escrow Instructions") in the form of
Exhibit C, duly executed by Purchaser, and the total exercise price in cash.
At the closing or as soon thereafter as practicable, the Corporation shall
deliver to the Escrow Agent (as defined in paragraph 8 below) share certificates
for all of the Stock that is to be subject to the Purchase Option (as defined in
paragraph 2 below), and shall deliver share certificates to Purchaser for all
of the Stock, if any, that is not to be subject to the Purchase Option.
2. In accordance with the provisions of section 408(b) of the California
General Corporation Law, the Stock to be purchased by Purchaser pursuant to this
Agreement shall be subject to the following option ("Purchase Option"):
(a) In the event that Purchaser shall cease to be an employee of the
Corporation for any reason (including his death), or no reason, with or without
cause, the Purchase Option may be exercised. The Corporation shall have the
right at any time within sixty (60) days after such cessation of employment to
purchase from Purchaser or his personal representative, as the case may be, at
the price per share paid by Purchaser pursuant to this Agreement ("Option
Price"), up to but not exceeding
1.
<PAGE> 29
the number of shares of the Stock shown on Exhibit A hereto which is
incorporated herein by this reference.
(b) In addition, and without limiting the foregoing Purchase
Option, if at any time during the term of the Purchase Option, there occurs:
(a) a dissolution or liquidation of the Corporation; (b) a merger or
consolidation involving the Corporation in which the Corporation is not the
surviving corporation; (c) a reverse merger in which the Corporation is the
surviving corporation but the shares of the Corporation's common stock
outstanding immediately preceding the merger are converted by virtue of the
merger into other property, whether in the form of other securities, cash or
otherwise; or (d) any other capital reorganization in which more than fifty
percent (50%) of the shares of the Corporation entitled to vote are exchanged,
then: (i) if there will be no successor to the Corporation, the Corporation
shall have the right to exercise its Purchase Option as to all or any
portion of the Stock then subject to the Purchase Option set forth above to the
same extent as if Purchaser's employment by the Corporation had ceased on the
date preceding the date of consummation of said event or transaction, or (ii)
the Purchase Option may be assigned to any successor of the Corporation, and
the Purchase Option shall apply if Purchaser shall cease for any reason to be
an employee of such successor on the same basis as set forth above. In that
case, references herein to the "Corporation" shall be deemed to refer to such
successor.
(c) The Corporation shall be entitled to pay for any shares
purchased pursuant to its Purchase Option at the Corporation's option in cash,
by offset against any indebtedness owing to the Corporation Purchaser, or a
combination of both.
(d) As used herein, employment with the Corporation shall include
employment with an affiliate of the Corporation.
(e) This Agreement is not an employment contract and nothing in
this Agreement shall be deemed to create in any way whatsoever any obligation
on the part of the Purchaser to continue in the employ of the Corporation, or
of the Corporation to continue Purchaser in the employ of the Corporation.
3. The Purchase Option may be exercised by giving written notice of
exercise delivered or mailed as provided in paragraph 14. Upon providing such
notice and payment or tender of the purchase price, the Corporation shall
become the legal and beneficial owner of the Stock being purchased and all
rights and interests therein or related thereto.
4. If from time to time during the term of the Purchase Option there
is any stock dividend or liquidating dividend or distribution of cash and/or
property, stock split or other change in the character or amount of any of the
outstanding securities of the Corporation, then, in such event, any and all
new, substituted or additional securities or other property to which Purchaser
is entitled by reason of his ownership of Stock will be immediately subject to
the Purchase Option and be included in the word "Stock" for all purposes of the
Purchase Option with the same force and effect as the shares of Stock then
subject to the Purchase Option. While the total Option Price shall remain the
same after
2.
<PAGE> 30
each such event, the Option Price per share of Stock upon exercise of the
Purchase Option shall be appropriately adjusted.
5. All certificates representing any shares of Stock of the Corporation
subject to the provisions of this Agreement shall have endorsed thereon legends
in substantially the following form:
(i) "The shares represented by this certificate are subject to
an option set forth in an agreement between the corporation and the registered
holder, or his predecessor in interest, a copy of which is on file at the
principal office of this corporation. Any transfer or attempted transfer of any
shares subject to such option is void without the prior express written consent
of the issuer of these shares."
(ii) "These securities have not been registered under the
Securities Act of 1933. They may not be sold, offered for sale, pledged or
hypothecated in the absence of an effective registration statement as to the
securities under said Act or an opinion of counsel satisfactory to the
corporation that such registration is not required."
(iii) Any legend required to be placed thereon by the California
Commissioner of Corporations.
6. Purchaser acknowledges that he is aware that the Stock to be issued
to him by the Corporation pursuant to this Agreement has not been registered
under the Securities Act of 1933, as amended (the "Act"), on the basis that no
distribution or public offering of the Stock is to be effected, and in this
connection acknowledges that the Corporation is relying on the following
representations: Purchaser warrants and represents to the Corporation that he
is acquiring the Stock for investment and not with to or for sale in connection
with any distribution of the Stock or with any present intention of
distributing or selling the Stock and he does not presently have reason to
anticipate any change in circumstances or any particular occasion or event
which would cause him to sell the Stock. Purchaser recognizes that the Stock
must be held indefinitely unless it is subsequently registered under the Act or
an exemption from such registration is available and, further, recognizes that
the Corporation is under no obligation to register the Stock or to comply with
any exemption from such registration.
7. Purchaser is aware that the Stock may not be sold pursuant to Rule
144 adopted under the Act unless certain conditions are met and until Purchaser
has held the Stock for at least two (2) years. Among the conditions for use of
Rule 144 is the availability of specified current public information about the
Corporation. Purchaser recognizes that the Corporation presently has no plans
to make such information available to the public.
Whether or not the Purchase Option is exercised or has lapsed, Purchaser
further agrees not to make any disposition of any of the Stock in any event
unless and until:
(a) There is then in effect a registration statement under the Act
covering such proposed disposition and such disposition is made in accordance
with such registration statement; or
3.
<PAGE> 31
(b) (i) Purchaser shall have notified the Corporation of the proposed
disposition and shall have furnished the Corporation with a detailed statement
of the circumstances surrounding the proposed disposition, and (ii) Purchaser
shall have given the Corporation an opinion of counsel, which opinion and
counsel shall be satisfactory to the Corporation, to the effect that such
disposition will not require registration of the Stock under the Act.
8. As security for his faithful performance of the terms of this
Agreement and to insure the availability for delivery of Purchaser's Stock upon
exercise of the Purchase Option herein provided for, Purchaser agrees, at the
closing hereunder (or as soon thereafter as practicable) to deliver (or have
the Corporation deliver on the Purchaser's behalf) to and deposit with the
Secretary of the Corporation, as escrow agent in this transaction (the "Escrow
Agent"), three (3) stock assignments duly endorsed (with date and number of
shares left blank) in the form attached hereto as Exhibit B, together with a
certificate or certificates evidencing all of the Stock subject to the Purchase
Option; said documents are to be held by the Escrow Agent and delivered by said
Escrow Agent pursuant to the Joint Escrow Instructions of the Corporation and
Purchaser set forth in Exhibit C attached hereto and incorporated herein by
this reference, which instructions shall also be delivered to the Escrow Agent
at the closing hereunder (or as soon thereafter as practicable).
9. Purchaser shall not sell or transfer any of the Stock subject to the
Purchase Option or any interest therein so long as such Stock is subject to the
Purchase Option.
10. The Corporation shall not be required (i) to transfer on its books
any shares of Stock of the Corporation which shall have been sold or
transferred in violation of any of the provisions set forth in this Agreement
or (ii) to treat as owner of such shares or to accord the right to vote as such
owner or to pay dividends to any transferee to whom such shares shall have been
so transferred.
11. Subject to the provisions of paragraphs 9 and 10 above, Purchaser
(but not any unapproved transferee) shall, during the term of this Agreement,
exercise all rights and privileges of a stockholder of the Corporation with
respect to the Stock.
12. Purchaser acknowledges receipt of a copy of section 260.141.11 of
Title 10 of the California Administrative Code, attached hereto as Exhibit D.
13. The parties agree to execute such further instruments and to take
such further action as reasonably may be necessary to carry out the intent of
this Agreement.
14. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in
any United States Post Office Box, by registered or certified mail with postage
and fees prepaid, addressed to the other party hereto as his address
hereinafter shown below his signature or at such other address as such party
may designate by ten (10) days' advance written notice to the other party
hereto.
4.
<PAGE> 32
15. This Agreement shall bind and inure to the benefit of the successors
and assigns of the Corporation and, subject to the restrictions on transfer
herein set forth, inure to the benefit of and be binding upon Purchaser, his
heirs, executors, administrators, successors, and assigns. Without limiting the
generality of the foregoing, the Purchase Option of the Corporation hereunder
shall be assignable by the Corporation at any time or from time to time, in
whole or in part.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the ____ day of ___________, 19___.
__________________________________
By _______________________________
Address: __________________________________
__________________________________
__________________________________
Purchaser
Address: __________________________________
__________________________________
ATTACHMENTS:
Exhibit A Vesting Schedule
Exhibit B Assignment Separate from Certificate
Exhibit C Joint Escrow Instructions
5.
<PAGE> 33
EXHIBIT A
VESTING SCHEDULE
NUMBER OF SHARES
SUBJECT TO
IF CESSATION OF EMPLOYMENT OCCURS: PURCHASE OPTION:
<TABLE>
<S> <C>
Before___________, 19__ _________________ shares
After_______________, 19__
but before _____________, 19__ _________________ shares
After_______________, 19__ _________________ shares
but before _____________, 19__
After_______________, 19__
but before _____________, 19__ _________________ shares
After_______________, 19__
but before _____________, 19__ _________________ shares
After_______________, 19__
but before _____________, 19__ _________________ shares
After_______________, 19__
but before _____________, 19__ _________________ shares
After_______________, 19__
but before _____________, 19__ _________________ shares
After_______________, 19__
but before _____________, 19__ _________________ shares
After_______________, 19__
but before _____________, 19__ _________________ shares
After_______________, 19__
but before _____________, 19__ _________________ shares
</TABLE>
<PAGE> 34
EXHIBIT B
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED and pursuant to that certain Early Exercise Stock
Purchase Agreement dated as of _____________, 19__, __________________ hereby
sells, assigns and transfers unto _______________________________ (__________)
shares of common stock of Peninsula Wireless Communications, Inc., a California
corporation, standing in the undersigned's name on the books of said
corporation represented by Certificate No. _____ herewith, and does hereby
irrevocably constitute and appoint __________________________________ attorney
to transfer the said stock on the books of the said corporation with full power
of substitution in the premises. This Assignment may be used only in accordance
with and subject to the terms and conditions of the Agreement, in connection
with the repurchase of shares of Common Stock issued to the undersigned pursuant
to the Agreement, and only to the extent that such shares remain subject to the
Company's Purchase Option under the Agreement.
Dated: _________________
Signature _____________________________
<PAGE> 35
EXHIBIT C
JOINT ESCROW INSTRUCTIONS
Secretary
Peninsula Wireless Communications, Inc.
1150 Morse Avenue
Sunnyvale, CA 94089
Dear Sir:
As Escrow Agent for both Repeater Technologies, Inc., a California
corporation ("Corporation"), and the undersigned purchaser of stock of the
Corporation ("Purchaser"), you are hereby authorized and directed to hold the
documents delivered to you pursuant to the terms of that certain Early Exercise
Stock Purchase Agreement ("Agreement"), dated ______, to which a copy of these
Joint Escrow Instructions is attached as Exhibit C, in accordance with the
following instructions:
16. In the event the Corporation or an assignee shall elect to exercise
the Purchase Option set forth in the Agreement, the Corporation or its assignee
will give to Purchaser and you a written notice specifying the number of shares
of stock to be purchased, the purchase price, and the time for a closing
hereunder at the principal office of the Corporation. Purchaser and the
Corporation hereby irrevocably authorize and direct you to close the
transaction contemplated by such notice in accordance with the terms of said
notice.
17. At the closing you are directed (a) to date any stock assignments
necessary for the transfer in question, (b) to fill in the number of shares
being transferred, and (c) to deliver same, together with the certificate
evidencing the shares of stock to be transferred, to the Corporation against
the simultaneous delivery to you of the purchase price (which may include
suitable acknowledgment of cancellation of indebtedness) of the number of
shares of stock being purchased pursuant to the exercise of the Purchase Option.
18. Purchaser irrevocably authorizes the Corporation to deposit with you
any certificates evidencing shares of stock to be held by you hereunder and any
additions and substitutions to said shares as specified in the Agreement.
Purchaser does hereby irrevocably constitute and appoint you as his
attorney-in-fact and agent for the term of this escrow to execute with respect
to such securities and other property all documents of assignment and/or
transfer and all stock certificates necessary or appropriate to make all
securities negotiable and complete any transaction herein contemplated.
19. This escrow shall terminate upon expiration or exercise in full of
the Purchase Option, whichever occurs first.
<PAGE> 36
20. If at the time of termination of this escrow you should have in your
possession any documents, securities, or other property belonging to Purchaser,
you shall deliver all of same to Purchaser and shall be discharged of all
further obligations hereunder; provided, however, that if at the time of
termination of this escrow you are advised by the Corporation that the property
subject to this escrow is the subject of a pledge or other security agreement,
you shall deliver all such property to the pledgeholder or other person
designated by the Corporation.
21. Except as otherwise provided in these Joint Escrow Instructions, your
duties hereunder may be altered, amended, modified or revoked only by a writing
signed by all of the parties hereto.
22. You shall be obligated only for the performance of such duties as are
specifically set forth herein and may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties or
their assignees. You shall not be personally liable for any act you may do or
omit to do hereunder as Escrow Agent or as attorney-in-fact for Purchaser while
acting in good faith and any act done or omitted by you pursuant to the advice
of your own attorneys shall be conclusive evidence of such good faith.
23. You are hereby expressly authorized to disregard any and all warnings
given by any of the parties hereto or by any other person or corporation,
excepting only orders or process of courts of law, and are hereby expressly
authorized to comply with and obey orders, judgments or decrees of any court.
In case you obey or comply with any such order, judgment or decree of any
court, you shall not be liable to any of the parties hereto or to any other
person, firm or corporation by reason of such compliance, notwithstanding any
such order, judgment or decree being subsequently reversed, modified, annulled,
set aside, vacated or found to have been entered without jurisdiction.
24. You shall not be liable in any respect on account of the identity,
authority or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder.
25. You shall not be liable for the outlawing of any rights under any
statute of limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.
26. You shall be entitled to employ such legal counsel (including without
limitation the firm of Cooley Godward Castro Huddleson & Tatum) and other
experts as you may deem necessary properly to advise you in connection with
your obligations hereunder, may rely upon the advice of such counsel, and may
pay such counsel reasonable compensation therefor.
27. Your responsibilities as Escrow Agent hereunder shall terminate if
you shall cease to be Secretary of the Corporation or if you shall resign by
written notice to each party. In the
2.
<PAGE> 37
event of any such termination, the Corporation may appoint any officer or
assistant officer of the Corporation as successor Escrow Agent and Purchaser
hereby confirms the appointment of such successor or successors as his
attorney-in-fact and agent to the full extent of your appointment.
28. If you reasonably require other or further instruments in connection
with these Joint Escrow Instructions or obligations in respect hereto, the
necessary parties hereto shall join in furnishing such instruments.
29. It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the
securities, you may (but are not obligated to) retain in your possession
without liability to anyone all or any part of said securities until such
dispute shall have been settled either by mutual written agreement of the
parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.
30. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in
any United States Post Box, by registered or certified mail with postage and
fees prepaid, addressed to each of the other parties hereunto entitled at the
following addresses, or at such other addresses as a party may designate by ten
days' written notice to each of the other parties hereto:
CORPORATION: REPEATER TECHNOLOGIES, INC.
1150 Morse Avenue
Sunnyvale, CA 94089
PURCHASER:
---------------------------------------
---------------------------------------
---------------------------------------
SECRETARY: Secretary
REPEATER TECHNOLOGIES, INC.
1150 Morse Avenue
Sunnyvale, CA 94089
31. By signing these Joint Escrow Instructions you become a party hereto
only for the purpose of said Joint Escrow Instructions; you do no become a
party to the Agreement.
3.
<PAGE> 38
32. This instrument shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. It is
understood and agreed that references to "you" or "your" herein refer to the
original Escrow Agent and to any and all successor Escrow Agents. It is
understood and agreed that the Corporation may at any time or from time to time
assign its rights under the Agreement and these Joint Escrow Instructions in
whole or in part.
Very truly yours,
REPEATER TECHNOLOGIES, INC.
By
----------------------------------------
PURCHASER:
-----------------------------------------
ESCROW AGENT:
- ----------------------------------------
Secretary
4.
<PAGE> 1
EXHIBIT 10.4
REPEATER TECHNOLOGIES, INC.
2000 EQUITY INCENTIVE PLAN
ADOPTED FEBRUARY 15, 2000
APPROVED BY STOCKHOLDERS _______, 2000
TERMINATION DATE: _______, 2010
1. Purposes.
(a) ELIGIBLE STOCK AWARD RECIPIENTS. The persons eligible to receive
Stock Awards are the Employees, Directors and Consultants of the Company and its
Affiliates.
(b) AVAILABLE STOCK AWARDS. The purpose of the Plan is to provide a
means by which eligible recipients of Stock Awards may be given an opportunity
to benefit from increases in value of the Common Stock through the granting of
the following Stock Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock
Options, (iii) stock bonuses and (iv) rights to acquire restricted stock.
(c) GENERAL PURPOSE. The Company, by means of the Plan, seeks to retain
the services of the group of persons eligible to receive Stock Awards, to secure
and retain the services of new members of this group and to provide incentives
for such persons to exert maximum efforts for the success of the Company and its
Affiliates.
2. Definitions.
(a) "AFFILIATE" means any parent corporation or subsidiary corporation
of the Company, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as amended.
(d) "COMMITTEE" means a committee of one or more members of the Board
appointed by the Board in accordance with subsection 3(c).
(e) "COMMON STOCK" means the common stock of the Company.
(f) "COMPANY" means Repeater Technologies, Inc., a Delaware corporation.
(g) "CONSULTANT" means any person, including an advisor, (i) engaged by
the Company or an Affiliate to render consulting or advisory services and who is
compensated for such services or (ii) who is a member of the Board of Directors
of an Affiliate. However, the term "Consultant" shall not include either
Directors who are not compensated by the Company for their services as Directors
or Directors who are merely paid a director's fee by the Company for their
services as Directors.
1.
<PAGE> 2
(h) "CONTINUOUS SERVICE" means that the Participant's service with the
Company or an Affiliate, whether as an Employee, Director or Consultant, is not
interrupted or terminated. The Participant's Continuous Service shall not be
deemed to have terminated merely because of a change in the capacity in which
the Participant renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the Participant
renders such service, provided that there is no interruption or termination of
the Participant's Continuous Service. For example, a change in status from an
Employee of the Company to a Consultant of an Affiliate or a Director will not
constitute an interruption of Continuous Service. The Board or the chief
executive officer of the Company, in that party's sole discretion, may determine
whether Continuous Service shall be considered interrupted in the case of any
leave of absence approved by that party, including sick leave, military leave or
any other personal leave.
(i) "COVERED EMPLOYEE" means the chief executive officer and the four
(4) other highest compensated officers of the Company for whom total
compensation is required to be reported to Stockholders under the Exchange Act,
as determined for purposes of Section 162(m) of the Code.
(j) "DIRECTOR" means a member of the Board of Directors of the Company.
(k) "DISABILITY" means the permanent and total disability of a person
within the meaning of Section 22(e)(3) of the Code.
(l) "EMPLOYEE" means any person employed by the Company or an Affiliate.
Mere service as a Director or payment of a director's fee by the Company or an
Affiliate shall not be sufficient to constitute "employment" by the Company or
an Affiliate.
(m) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(n) "FAIR MARKET VALUE" means, as of any date, the value of the Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap Market,
the Fair Market Value of a share of Common Stock shall be the closing sales
price for such stock (or the closing bid, if no sales were reported) as quoted
on such exchange or market (or the exchange or market with the greatest volume
of trading in the Common Stock) on the last market trading day prior to the day
of determination, as reported in The Wall Street Journal or such other source as
the Board deems reliable.
(ii) In the absence of such markets for the Common Stock, the Fair
Market Value shall be determined in good faith by the Board.
(o) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(p) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a
current Employee or Officer of the Company or its parent or a subsidiary, does
not receive compensation
2.
<PAGE> 3
(directly or indirectly) from the Company or its parent or a subsidiary for
services rendered as a consultant or in any capacity other than as a Director
(except for an amount as to which disclosure would not be required under Item
404(a) of Regulation S-K promulgated pursuant to the Securities Act ("Regulation
S-K")), does not possess an interest in any other transaction as to which
disclosure would be required under Item 404(a) of Regulation S-K and is not
engaged in a business relationship as to which disclosure would be required
under Item 404(b) of Regulation S-K; or (ii) is otherwise considered a
"non-employee director" for purposes of Rule 16b-3.
(q) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify
as an Incentive Stock Option.
(r) "OFFICER" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(s) "OPTION" means an Incentive Stock Option or a Nonstatutory Stock
Option granted pursuant to the Plan.
(t) "OPTION AGREEMENT" means a written agreement between the Company and
an Optionholder evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of the
Plan.
(u) "OPTIONHOLDER" means a person to whom an Option is granted pursuant
to the Plan or, if applicable, such other person who holds an outstanding
Option.
(v) "OUTSIDE DIRECTOR" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (within the meaning of
Treasury Regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an "affiliated corporation" receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an "affiliated corporation"
at any time and is not currently receiving direct or indirect remuneration from
the Company or an "affiliated corporation" for services in any capacity other
than as a Director or (ii) is otherwise considered an "outside director" for
purposes of Section 162(m) of the Code.
(w) "PARTICIPANT" means a person to whom a Stock Award is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Stock Award.
(x) "PLAN" means this Repeater Technologies, Inc. 2000 Equity Incentive
Plan.
(y) "RULE 16b-3" means Rule 16b-3 promulgated under the Exchange Act or
any successor to Rule 16b-3, as in effect from time to time.
(z) "SECURITIES ACT" means the Securities Act of 1933, as amended.
(aa) "STOCK AWARD" means any right granted under the Plan, including an
Option, a stock bonus and a right to acquire restricted stock.
3.
<PAGE> 4
(bb) "STOCK AWARD AGREEMENT" means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. Each Stock Award Agreement shall be subject to the
terms and conditions of the Plan.
(cc) "TEN PERCENT SHAREHOLDER" means a person who owns (or is deemed to
own pursuant to Section 424(d) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or of any of its Affiliates.
3. Administration.
(a) ADMINISTRATION BY BOARD. The Board shall administer the Plan unless
and until the Board delegates administration to a Committee, as provided in
subsection 3(c).
(b) POWERS OF BOARD. The Board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:
(i) To determine from time to time which of the persons eligible
under the Plan shall be granted Stock Awards; when and how each Stock Award
shall be granted; what type or combination of types of Stock Award shall be
granted; the provisions of each Stock Award granted (which need not be
identical), including the time or times when a person shall be permitted to
receive Common Stock pursuant to a Stock Award; and the number of shares of
Common Stock with respect to which a Stock Award shall be granted to each such
person.
(ii) To construe and interpret the Plan and Stock Awards granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award Agreement,
in a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.
(iii) To amend the Plan or a Stock Award as provided in Section 13.
(iv) Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best interests of the
Company which are not in conflict with the provisions of the Plan.
(c) DELEGATION TO COMMITTEE.
(i) GENERAL. The Board may delegate administration of the Plan to
a Committee or Committees of one (1) or more members of the Board, and the term
"Committee" shall apply to any person or persons to whom such authority has been
delegated. If administration is delegated to a Committee, the Committee shall
have, in connection with the administration of the Plan, the powers theretofore
possessed by the Board, including the power to delegate to a subcommittee any of
the administrative powers the Committee is authorized to exercise (and
references in this Plan to the Board shall thereafter be to the Committee or
subcommittee), subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.
4.
<PAGE> 5
(ii) COMMITTEE COMPOSITION WHEN COMMON STOCK IS PUBLICLY TRADED. At
such time as the Common Stock is publicly traded, in the discretion of the
Board, a Committee may consist solely of two or more Outside Directors, in
accordance with Section 162(m) of the Code, and/or solely of two or more
Non-Employee Directors, in accordance with Rule 16b-3. Within the scope of such
authority, the Board or the Committee may (1) delegate to a committee of one or
more members of the Board who are not Outside Directors the authority to grant
Stock Awards to eligible persons who are either (a) not then Covered Employees
and are not expected to be Covered Employees at the time of recognition of
income resulting from such Stock Award or (b) not persons with respect to whom
the Company wishes to comply with Section 162(m) of the Code and/or) (2)
delegate to a committee of one or more members of the Board who are not
Non-Employee Directors the authority to grant Stock Awards to eligible persons
who are not then subject to Section 16 of the Exchange Act.
(d) EFFECT OF BOARD'S DECISION. All determinations, interpretations and
constructions made by the Board in good faith shall not be subject to review by
any person and shall be final, binding and conclusive on all persons.
4. Shares Subject to the Plan.
(a) SHARE RESERVE. Subject to the provisions of Section 12 relating to
adjustments upon changes in Common Stock, the Common Stock that may be issued
pursuant to Stock Awards shall not exceed in the aggregate Three Million
(3,000,000) shares of Common Stock, plus an annual increase to be added each
January 1, beginning January 1, 2002, equal to the lesser of One Million
(1,000,000) shares or four percent (4%) of the total number of shares of Common
Stock outstanding on such January 1. Notwithstanding the foregoing, the Board
may designate a smaller number of shares of Common Stock to be added to the
share reserve as of a particular January 1.
(b) REVERSION OF SHARES TO THE SHARE RESERVE. If any Stock Award shall
for any reason expire or otherwise terminate, in whole or in part, without
having been exercised in full, the shares of Common Stock not acquired under
such Stock Award shall revert to and again become available for issuance under
the Plan.
(c) SOURCE OF SHARES. The shares of Common Stock subject to the Plan may
be unissued shares or reacquired shares, bought on the market or otherwise.
5. Eligibility.
(a) ELIGIBILITY FOR SPECIFIC STOCK AWARDS. Incentive Stock Options may
be granted only to Employees. Stock Awards other than Incentive Stock Options
may be granted to Employees, Directors and Consultants.
5.
<PAGE> 6
(b) TEN PERCENT STOCKHOLDERS. A Ten Percent Shareholder shall not be
granted an Incentive Stock Option unless the exercise price of such Option is at
least one hundred ten percent (110%) of the Fair Market Value of the Common
Stock at the date of grant and the Option is not exercisable after the
expiration of five (5) years from the date of grant.
(c) SECTION 162(m) LIMITATION. Subject to the provisions of Section 12
relating to adjustments upon changes in the shares of Common Stock, no Employee
shall be eligible to be granted Options covering more than two million
(2,000,000) shares of Common Stock during any calendar year.
(d) CONSULTANTS.
(i) A Consultant shall not be eligible for the grant of a Stock
Award if, at the time of grant, a Form S-8 Registration Statement under the
Securities Act ("Form S-8") is not available to register either the offer or the
sale of the Company's securities to such Consultant because of the nature of the
services that the Consultant is providing to the Company, or because the
Consultant is not a natural person, or as otherwise provided by the rules
governing the use of Form S-8, unless the Company determines both (i) that such
grant (A) shall be registered in another manner under the Securities Act (e.g.,
on a Form S-3 Registration Statement) or (B) does not require registration under
the Securities Act in order to comply with the requirements of the Securities
Act, if applicable, and (ii) that such grant complies with the securities laws
of all other relevant jurisdictions.
(ii) Form S-8 generally is available to consultants and advisors
only if (i) they are natural persons; (ii) they provide bona fide services to
the issuer, its parents, its majority-owned subsidiaries or majority-owned
subsidiaries of the issuer's parent; and (iii) the services are not in
connection with the offer or sale of securities in a capital-raising
transaction, and do not directly or indirectly promote or maintain a market for
the issuer's securities.
6. Option Provisions.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. All Options shall be separately
designated Incentive Stock Options or Nonstatutory Stock Options at the time of
grant, and, if certificates are issued, a separate certificate or certificates
will be issued for shares of Common Stock purchased on exercise of each type of
Option. The provisions of separate Options need not be identical, but each
Option shall include (through incorporation of provisions hereof by reference in
the Option or otherwise) the substance of each of the following provisions:
(a) TERM. Subject to the provisions of subsection 5(b) regarding Ten
Percent Stockholders, no Incentive Stock Option shall be exercisable after the
expiration of ten (10) years from the date it was granted.
(b) EXERCISE PRICE OF AN INCENTIVE STOCK OPTION. Subject to the
provisions of subsection 5(b) regarding Ten Percent Stockholders, the exercise
price of each Incentive Stock Option shall be not less than one hundred percent
(100%) of the Fair Market Value of the Common Stock subject to the Option on the
date the Option is granted. Notwithstanding the foregoing, an Incentive Stock
Option may be granted with an exercise price lower than that set
6.
<PAGE> 7
forth in the preceding sentence if such Option is granted pursuant to an
assumption or substitution for another option in a manner satisfying the
provisions of Section 424(a) of the Code.
(c) EXERCISE PRICE OF A NONSTATUTORY STOCK OPTION. The exercise price of
each Nonstatutory Stock Option shall be not less than eighty-five percent (85%)
of the Fair Market Value of the Common Stock subject to the Option on the date
the Option is granted. Notwithstanding the foregoing, a Nonstatutory Stock
Option may be granted with an exercise price lower than that set forth in the
preceding sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner satisfying the provisions of Section
424(a) of the Code.
(d) CONSIDERATION. The purchase price of Common Stock acquired pursuant
to an Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised or (ii) at
the discretion of the Board at the time of the grant of the Option (or
subsequently in the case of a Nonstatutory Stock Option) (1) by delivery to the
Company of other Common Stock, (2) according to a deferred payment or other
similar arrangement with the Optionholder or (3) in any other form of legal
consideration that may be acceptable to the Board. Unless otherwise specifically
provided in the Option, the purchase price of Common Stock acquired pursuant to
an Option that is paid by delivery to the Company of other Common Stock
acquired, directly or indirectly from the Company, shall be paid only by shares
of the Common Stock of the Company that have been held for more than six (6)
months (or such longer or shorter period of time required to avoid a charge to
earnings for financial accounting purposes). At any time that the Company is
incorporated in Delaware, payment of the Common Stock's "par value," as defined
in the Delaware General Corporation Law, shall not be made by deferred payment.
In the case of any deferred payment arrangement, interest shall be compounded at
least annually and shall be charged at the minimum rate of interest necessary to
avoid the treatment as interest, under any applicable provisions of the Code, of
any amounts other than amounts stated to be interest under the deferred payment
arrangement.
(e) TRANSFERABILITY OF AN INCENTIVE STOCK OPTION. An Incentive Stock
Option shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Optionholder
only by the Optionholder. Notwithstanding the foregoing, the Optionholder may,
by delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the
Optionholder, shall thereafter be entitled to exercise the Option.
(f) TRANSFERABILITY OF A NONSTATUTORY STOCK OPTION. A Nonstatutory Stock
Option shall be transferable to the extent provided in the Option Agreement. If
the Nonstatutory Stock Option does not provide for transferability, then the
Nonstatutory Stock Option shall not be transferable except by will or by the
laws of descent and distribution and shall be exercisable during the lifetime of
the Optionholder only by the Optionholder. Notwithstanding the foregoing, the
Optionholder may, by delivering written notice to the Company, in a form
satisfactory to the Company, designate a third party who, in the event of the
death of the Optionholder, shall thereafter be entitled to exercise the Option.
7.
<PAGE> 8
(g) VESTING GENERALLY. The total number of shares of Common Stock
subject to an Option may, but need not, vest and therefore become exercisable in
periodic installments that may, but need not, be equal. The Option may be
subject to such other terms and conditions on the time or times when it may be
exercised (which may be based on performance or other criteria) as the Board may
deem appropriate. The vesting provisions of individual Options may vary. The
provisions of this subsection 6(g) are subject to any Option provisions
governing the minimum number of shares of Common Stock as to which an Option may
be exercised.
(h) TERMINATION OF CONTINUOUS SERVICE. In the event an Optionholder's
Continuous Service terminates (other than upon the Optionholder's death or
Disability), the Optionholder may exercise his or her Option (to the extent that
the Optionholder was entitled to exercise such Option as of the date of
termination) but only within such period of time ending on the earlier of (i)
the date three (3) months following the termination of the Optionholder's
Continuous Service (or such longer or shorter period specified in the Option
Agreement), or (ii) the expiration of the term of the Option as set forth in the
Option Agreement. If, after termination, the Optionholder does not exercise his
or her Option within the time specified in the Option Agreement, the Option
shall terminate.
(i) EXTENSION OF TERMINATION DATE. An Optionholder's Option Agreement
may also provide that if the exercise of the Option following the termination of
the Optionholder's Continuous Service (other than upon the Optionholder's death
or Disability) would be prohibited at any time solely because the issuance of
shares of Common Stock would violate the registration requirements under the
Securities Act, then the Option shall terminate on the earlier of (i) the
expiration of the term of the Option set forth in subsection 6(a) or (ii) the
expiration of a period of three (3) months after the termination of the
Optionholder's Continuous Service during which the exercise of the Option would
not be in violation of such registration requirements.
(j) DISABILITY OF OPTIONHOLDER. In the event that an Optionholder's
Continuous Service terminates as a result of the Optionholder's Disability, the
Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise such Option as of the date of termination), but only
within such period of time ending on the earlier of (i) the date twelve (12)
months following such termination (or such longer or shorter period specified in
the Option Agreement) or (ii) the expiration of the term of the Option as set
forth in the Option Agreement. If, after termination, the Optionholder does not
exercise his or her Option within the time specified herein, the Option shall
terminate.
(k) DEATH OF OPTIONHOLDER. In the event (i) an Optionholder's Continuous
Service terminates as a result of the Optionholder's death or (ii) the
Optionholder dies within the period (if any) specified in the Option Agreement
after the termination of the Optionholder's Continuous Service for a reason
other than death, then the Option may be exercised (to the extent the
Optionholder was entitled to exercise such Option as of the date of death) by
the Optionholder's estate, by a person who acquired the right to exercise the
Option by bequest or inheritance or by a person designated to exercise the
Option upon the Optionholder's death pursuant to subsection 6(e) or 6(f), but
only within the period ending on the earlier of (1) the date eighteen (18)
months following the date of death (or such longer or shorter period specified
in the Option Agreement) or (2) the expiration of the term of such Option as set
forth in the Option
8.
<PAGE> 9
Agreement. If, after death, the Option is not exercised within the time
specified herein, the Option shall terminate.
(l) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionholder may elect at any time before the Optionholder's
Continuous Service terminates to exercise the Option as to any part or all of
the shares of Common Stock subject to the Option prior to the full vesting of
the Option. Any unvested shares of Common Stock so purchased may be subject to a
repurchase option in favor of the Company or to any other restriction the Board
determines to be appropriate. The Company will not exercise its repurchase
option until at least six (6) months (or such longer or shorter period of time
required to avoid a charge to earnings for financial accounting purposes) have
elapsed following exercise of the Option unless the Board otherwise specifically
provides in the Option.
(m) RE-LOAD OPTIONS.
(i) Without in any way limiting the authority of the Board to make
or not to make grants of Options hereunder, the Board shall have the authority
(but not an obligation) to include as part of any Option Agreement a provision
entitling the Optionholder to a further Option (a "Re-Load Option") in the event
the Optionholder exercises the Option evidenced by the Option Agreement, in
whole or in part, by surrendering other shares of Common Stock in accordance
with this Plan and the terms and conditions of the Option Agreement. Unless
otherwise specifically provided in the Option, the Optionholder shall not
surrender shares of Common Stock acquired, directly or indirectly from the
Company, unless such shares have been held for more than six (6) months (or such
longer or shorter period of time required to avoid a charge to earnings for
financial accounting purposes).
(ii) Any such Re-Load Option shall (1) provide for a number of
shares of Common Stock equal to the number of shares of Common Stock surrendered
as part or all of the exercise price of such Option; (2) have an expiration date
which is the same as the expiration date of the Option the exercise of which
gave rise to such Re-Load Option; and (3) have an exercise price which is equal
to one hundred percent (100%) of the Fair Market Value of the Common Stock
subject to the Re-Load Option on the date of exercise of the original Option.
Notwithstanding the foregoing, a Re-Load Option shall be subject to the same
exercise price and term provisions heretofore described for Options under the
Plan.
(iii) Any such Re-Load Option may be an Incentive Stock Option or a
Nonstatutory Stock Option, as the Board may designate at the time of the grant
of the original Option; provided, however, that the designation of any Re-Load
Option as an Incentive Stock Option shall be subject to the one hundred thousand
dollar ($100,000) annual limitation on the exercisability of Incentive Stock
Options described in subsection 9(d) and in Section 422(d) of the Code. There
shall be no Re-Load Options on a Re-Load Option. Any such Re-Load Option shall
be subject to the availability of sufficient shares of Common Stock under
subsection 4(a) and the "Section 162(m) Limitation" on the grants of Options
under subsection 5(c) and shall be subject to such other terms and conditions as
the Board may determine which are not inconsistent with the express provisions
of the Plan regarding the terms of Options.
9.
<PAGE> 10
7. NON-EMPLOYEE DIRECTOR STOCK OPTIONS.
Without any further action of the Board, each Non-Employee Director shall
be granted Nonstatutory Stock Options as described in subsections 7(a) and 7(b)
(collectively, "Non-Employee Director Options"). Each Non-Employee Director
Option shall include the substance of the terms set forth in subsections 7(c)
through 7(k).
(a) INITIAL GRANTS. After the IPO Date, each person who is elected or
appointed for the first time to be a Non-Employee Director automatically shall,
upon the date of his or her initial election or appointment to be a Non-Employee
Director by the Board or stockholders of the Company, be granted an Initial
Grant to purchase twenty-five thousand (25,000) shares of Common Stock on the
terms and conditions set forth herein. For purposes of the foregoing sentence,
on the IPO Date, each person then serving as a Non-Employee Director and who has
not previously been granted options to acquire Common Stock shall be deemed to
have been initially elected as a Non-Employee Director on such date.
(b) ANNUAL GRANTS. After the IPO Date, each person who is a Non-Employee
Director on the Board on the day after the annual stockholders' meeting, shall,
on that date, be granted an Annual Grant to purchase six thousand five hundred
(6,500) shares of Common Stock on the terms and conditions set forth herein.
Notwithstanding the foregoing, the number of shares of Common Stock subject to
an Annual Grant to a Non-Employee Director that has not served in that capacity
for the entire period since the preceding annual stockholders' meeting shall be
reduced, pro rata, for each full quarter the person did not serve during such
period.
(c) TERM. Each Non-Employee Director Option shall have a term of ten
(10) years from the date it is granted.
(d) EXERCISE PRICE. The exercise price of each Non-Employee Director
Option shall be one hundred percent (100%) of the Fair Market Value of the stock
subject to the Non-Employee Director Option on the date of grant.
Notwithstanding the foregoing, a Non-Employee Director Option may be granted
with an exercise price lower than that set forth in the preceding sentence if
such Non-Employee Director Option is granted pursuant to an assumption or
substitution for another option in a manner satisfying the provisions of Section
424(a) of the Code.
(e) VESTING. Each Initial Grant shall vest fifty percent (50%) per year
from the date on which it is granted. Each Annual Grant shall vest fifty percent
(50%) per year from the date on which it is granted.
(f) CONSIDERATION. The purchase price of stock acquired pursuant to a
Non-Employee Director Option may be paid, to the extent permitted by applicable
statutes and regulations, in any combination of (i) cash or check, (ii) delivery
to the Company of other Common Stock, (ii) deferred payment or (iv) any other
form of legal consideration that may be acceptable to the Board and provided in
the Non-Employee Director Option Agreement; provided, however, that at any time
that the Company is incorporated in Delaware, payment of the Common Stock's "par
value," as defined in the Delaware General Corporation Law, shall not be made by
deferred payment. In the case of any deferred payment arrangement, interest
shall be
10.
<PAGE> 11
compounded at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be interest
under the deferred payment arrangement.
(g) TRANSFERABILITY. A Non-Employee Director Option shall not be
transferable except by will or by the laws of descent and distribution and shall
be exercisable during the lifetime of the Non-Employee Director only by the
Non-Employee Director except as otherwise provided in a Stock Award Agreement.
Notwithstanding the foregoing, the Non-Employee Director may, by delivering
written notice to the Company, in a form satisfactory to the Company, designate
a third party who, in the event of the death of the Non-Employee Director, shall
thereafter be entitled to exercise the Non-Employee Director Option.
(h) TERMINATION OF CONTINUOUS SERVICE. In the event a Non-Employee
Director's Continuous Service terminates (other than upon the Non-Employee
Director's death or Disability), the Non-Employee Director may exercise his or
her Non-Employee Director Option (to the extent that the Non-Employee Director
was entitled to exercise it as of the date of termination) but only within such
period of time ending on the earlier of (i) the date three (3) months following
the termination of the Non-Employee Director's Continuous Service, or (ii) the
expiration of the term of the Non-Employee Director Option as set forth in the
Non-Employee Director Option Agreement. If, after termination, the Non-Employee
Director does not exercise his or her Non-Employee Director Option within the
time specified in the Non-Employee Director Option Agreement, the Non-Employee
Director Option shall terminate.
(i) EXTENSION OF TERMINATION DATE. If the exercise of the Non-Employee
Director Option following the termination of the Non-Employee Director's
Continuous Service (other than upon the Non-Employee Director's death or
Disability) would be prohibited at any time solely because the issuance of
shares would violate the registration requirements under the Securities Act,
then the Non-Employee Director Option shall terminate on the earlier of (i) the
expiration of the term of the Non-Employee Director Option set forth in
subsection 7(c) or (ii) the expiration of a period of three (3) months after the
termination of the Non-Employee Director's Continuous Service during which the
exercise of the Non-Employee Director Option would not violate such registration
requirements.
(j) DISABILITY OF NON-EMPLOYEE DIRECTOR. In the event a Non-Employee
Director's Continuous Service terminates as a result of the Non-Employee
Director's Disability, the Non-Employee Director may exercise his or her
Non-Employee Director Option (to the extent that the Non-Employee Director was
entitled to exercise it as of the date of termination), but only within such
period of time ending on the earlier of (i) the date twelve (12) months
following such termination or (ii) the expiration of the term of the
Non-Employee Director Option as set forth in the Non-Employee Director Option
Agreement. If, after termination, the Non-Employee Director does not exercise
his or her Non-Employee Director Option within the time specified herein, the
Non-Employee Director Option shall terminate.
(k) DEATH OF NON-EMPLOYEE DIRECTOR. In the event (i) a Non-Employee
Director's Continuous Service terminates as a result of the Non-Employee
Director's death or (ii) the Non-Employee Director dies within the three-month
period after the termination of the Non-Employee Director's Continuous Service
for a reason other than death, then the Non-Employee
11.
<PAGE> 12
Director Option may be exercised (to the extent the Non-Employee Director was
entitled to exercise the Non-Employee Director Option as of the date of death)
by the Non-Employee Director's estate, by a person who acquired the right to
exercise the Non-Employee Director Option by bequest or inheritance or by a
person designated to exercise the Non-Employee Director Option upon the
Non-Employee Director's death, but only within the period ending on the earlier
of (1) the date eighteen (18) months following the date of death or (2) the
expiration of the term of such Non-Employee Director Option as set forth in the
Non-Employee Director Option Agreement. If, after death, the Non-Employee
Director Option is not exercised within the time specified herein, the
Non-Employee Director Option shall terminate.
8. Provisions of Stock Awards other than Options.
(a) STOCK BONUS AWARDS. Each stock bonus agreement shall be in such form
and shall contain such terms and conditions as the Board shall deem appropriate.
The terms and conditions of stock bonus agreements may change from time to time,
and the terms and conditions of separate stock bonus agreements need not be
identical, but each stock bonus agreement shall include (through incorporation
of provisions hereof by reference in the agreement or otherwise) the substance
of each of the following provisions:
(i) CONSIDERATION. A stock bonus may be awarded in consideration
for past services actually rendered to the Company or an Affiliate for its
benefit.
(ii) VESTING. Shares of Common Stock awarded under the stock bonus
agreement may, but need not, be subject to a share repurchase option in favor of
the Company in accordance with a vesting schedule to be determined by the Board.
(iii) TERMINATION OF PARTICIPANT'S CONTINUOUS SERVICE. In the event
a Participant's Continuous Service terminates, the Company may reacquire any or
all of the shares of Common Stock held by the Participant which have not vested
as of the date of termination under the terms of the stock bonus agreement.
(iv) TRANSFERABILITY. Rights to acquire shares of Common Stock
under the stock bonus agreement shall be transferable by the Participant only
upon such terms and conditions as are set forth in the stock bonus agreement, as
the Board shall determine in its discretion, so long as Common Stock awarded
under the stock bonus agreement remains subject to the terms of the stock bonus
agreement.
(b) RESTRICTED STOCK AWARDS. Each restricted stock purchase agreement
shall be in such form and shall contain such terms and conditions as the Board
shall deem appropriate. The terms and conditions of the restricted stock
purchase agreements may change from time to time, and the terms and conditions
of separate restricted stock purchase agreements need not be identical, but each
restricted stock purchase agreement shall include (through incorporation of
provisions hereof by reference in the agreement or otherwise) the substance of
each of the following provisions:
(i) PURCHASE PRICE. The purchase price under each restricted stock
purchase agreement shall be such amount as the Board shall determine and
designate in such restricted stock purchase agreement. The purchase price shall
not be less than eighty-five percent (85%) of
12.
<PAGE> 13
the Common Stock's Fair Market Value on the date such award is made or at the
time the purchase is consummated.
(ii) CONSIDERATION. The purchase price of Common Stock acquired
pursuant to the restricted stock purchase agreement shall be paid either: (i) in
cash at the time of purchase; (ii) at the discretion of the Board, according to
a deferred payment or other similar arrangement with the Participant; or (iii)
in any other form of legal consideration that may be acceptable to the Board in
its discretion; provided, however, that at any time that the Company is
incorporated in Delaware, then payment of the Common Stock's "par value," as
defined in the Delaware General Corporation Law, shall not be made by deferred
payment.
(iii) VESTING. Shares of Common Stock acquired under the restricted
stock purchase agreement may, but need not, be subject to a share repurchase
option in favor of the Company in accordance with a vesting schedule to be
determined by the Board.
(iv) TERMINATION OF PARTICIPANT'S CONTINUOUS SERVICE. In the event
a Participant's Continuous Service terminates, the Company may repurchase or
otherwise reacquire any or all of the shares of Common Stock held by the
Participant which have not vested as of the date of termination under the terms
of the restricted stock purchase agreement.
(v) TRANSFERABILITY. Rights to acquire shares of Common Stock
under the restricted stock purchase agreement shall be transferable by the
Participant only upon such terms and conditions as are set forth in the
restricted stock purchase agreement, as the Board shall determine in its
discretion, so long as Common Stock awarded under the restricted stock purchase
agreement remains subject to the terms of the restricted stock purchase
agreement.
9. Covenants of the Company.
(a) AVAILABILITY OF SHARES. During the terms of the Stock Awards, the
Company shall keep available at all times the number of shares of Common Stock
required to satisfy such Stock Awards.
(b) SECURITIES LAW COMPLIANCE. The Company shall seek to obtain from
each regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to grant Stock Awards and to issue and sell shares
of Common Stock upon exercise of the Stock Awards; provided, however, that this
undertaking shall not require the Company to register under the Securities Act
the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any
such Stock Award. If, after reasonable efforts, the Company is unable to obtain
from any such regulatory commission or agency the authority which counsel for
the Company deems necessary for the lawful issuance and sale of Common Stock
under the Plan, the Company shall be relieved from any liability for failure to
issue and sell Common Stock upon exercise of such Stock Awards unless and until
such authority is obtained.
10. Use of Proceeds from Stock.
Proceeds from the sale of Common Stock pursuant to Stock Awards shall
constitute general funds of the Company.
13.
<PAGE> 14
11. Miscellaneous.
(a) ACCELERATION OF EXERCISABILITY AND VESTING. The Board shall have the
power to accelerate the time at which a Stock Award may first be exercised or
the time during which a Stock Award or any part thereof will vest in accordance
with the Plan, notwithstanding the provisions in the Stock Award stating the
time at which it may first be exercised or the time during which it will vest.
(b) SHAREHOLDER RIGHTS. No Participant shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any shares of
Common Stock subject to such Stock Award unless and until such Participant has
satisfied all requirements for exercise of the Stock Award pursuant to its
terms.
(c) NO EMPLOYMENT OR OTHER SERVICE RIGHTS. Nothing in the Plan or any
instrument executed or Stock Award granted pursuant thereto shall confer upon
any Participant any right to continue to serve the Company or an Affiliate in
the capacity in effect at the time the Stock Award was granted or shall affect
the right of the Company or an Affiliate to terminate (i) the employment of an
Employee with or without notice and with or without cause, (ii) the service of a
Consultant pursuant to the terms of such Consultant's agreement with the Company
or an Affiliate or (iii) the service of a Director pursuant to the Bylaws of the
Company or an Affiliate, and any applicable provisions of the corporate law of
the state in which the Company or the Affiliate is incorporated, as the case may
be.
(d) INCENTIVE STOCK OPTION $100,000 LIMITATION. To the extent that the
aggregate Fair Market Value (determined at the time of grant) of Common Stock
with respect to which Incentive Stock Options are exercisable for the first time
by any Optionholder during any calendar year (under all plans of the Company and
its Affiliates) exceeds one hundred thousand dollars ($100,000), the Options or
portions thereof which exceed such limit (according to the order in which they
were granted) shall be treated as Nonstatutory Stock Options.
(e) INVESTMENT ASSURANCES. The Company may require a Participant, as a
condition of exercising or acquiring Common Stock under any Stock Award, (i) to
give written assurances satisfactory to the Company as to the Participant's
knowledge and experience in financial and business matters and/or to employ a
purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock Award; and (ii) to
give written assurances satisfactory to the Company stating that the Participant
is acquiring Common Stock subject to the Stock Award for the Participant's own
account and not with any present intention of selling or otherwise distributing
the Common Stock. The foregoing requirements, and any assurances given pursuant
to such requirements, shall be inoperative if (1) the issuance of the shares of
Common Stock upon the exercise or acquisition of Common Stock under the Stock
Award has been registered under a then currently effective registration
statement under the Securities Act or (2) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws. The
Company may, upon advice of counsel to the Company, place legends on stock
certificates issued under the Plan as such counsel deems necessary or
appropriate in order to comply with
14.
<PAGE> 15
applicable securities laws, including, but not limited to, legends restricting
the transfer of the Common Stock.
(f) WITHHOLDING OBLIGATIONS. To the extent provided by the terms of a
Stock Award Agreement, the Participant may satisfy any federal, state or local
tax withholding obligation relating to the exercise or acquisition of Common
Stock under a Stock Award by any of the following means (in addition to the
Company's right to withhold from any compensation paid to the Participant by the
Company) or by a combination of such means: (i) tendering a cash payment; (ii)
authorizing the Company to withhold shares of Common Stock from the shares of
Common Stock otherwise issuable to the Participant as a result of the exercise
or acquisition of Common Stock under the Stock Award, provided, however, that no
shares of Common Stock are withheld with a value exceeding the minimum amount of
tax required to be withheld by law; or (iii) delivering to the Company owned and
unencumbered shares of Common Stock.
12. Adjustments upon Changes in Stock.
(a) CAPITALIZATION ADJUSTMENTS. If any change is made in the Common
Stock subject to the Plan, or subject to any Stock Award, without the receipt of
consideration by the Company (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan will be appropriately
adjusted in the class(es) and maximum number of securities subject to the Plan
pursuant to subsection 4(a) and the maximum number of securities subject to
award to any person pursuant to subsection 5(c), and the outstanding Stock
Awards will be appropriately adjusted in the class(es) and number of securities
and price per share of Common Stock subject to such outstanding Stock Awards.
The Board shall make such adjustments, and its determination shall be final,
binding and conclusive. (The conversion of any convertible securities of the
Company shall not be treated as a transaction "without receipt of consideration"
by the Company.)
(b) CHANGE IN CONTROL--DISSOLUTION OR LIQUIDATION. In the event of a
dissolution or liquidation of the Company, then all outstanding Stock Awards
shall terminate immediately prior to such event.
(c) CHANGE IN CONTROL--ASSET SALE, MERGER, CONSOLIDATION OR REVERSE
MERGER. In the event of (i) a sale, lease or other disposition of all or
substantially all of the assets of the Company, (ii) a merger or consolidation
in which the Company is not the surviving corporation or (iii) a reverse merger
in which the Company is the surviving corporation but the shares of Common Stock
outstanding immediately preceding the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash or
otherwise, then any surviving corporation or acquiring corporation shall assume
any Stock Awards outstanding under the Plan or shall substitute similar stock
awards (including an award to acquire the same consideration paid to the
Stockholders in the transaction described in this subsection 12(c) for those
outstanding under the Plan). In the event any surviving corporation or acquiring
corporation refuses to assume such Stock Awards or to substitute similar stock
awards for those outstanding under the Plan, then with respect to Stock Awards
held by Participants whose Continuous Service has not terminated, the vesting of
such Stock Awards (and, if applicable, the
15.
<PAGE> 16
time during which such Stock Awards may be exercised) shall be accelerated in
full, and the Stock Awards shall terminate if not exercised (if applicable) at
or prior to such event. With respect to any other Stock Awards outstanding under
the Plan, such Stock Awards shall terminate if not exercised (if applicable)
prior to such event.
13. Amendment of the Plan and Stock Awards.
(a) AMENDMENT OF PLAN. The Board at any time, and from time to time, may
amend the Plan. However, except as provided in Section 12 relating to
adjustments upon changes in Common Stock, no amendment shall be effective unless
approved by the Stockholders of the Company to the extent shareholder approval
is necessary to satisfy the requirements of Section 422 of the Code, Rule 16b-3
or any Nasdaq or securities exchange listing requirements.
(b) SHAREHOLDER APPROVAL. The Board may, in its sole discretion, submit
any other amendment to the Plan for shareholder approval, including, but not
limited to, amendments to the Plan intended to satisfy the requirements of
Section 162(m) of the Code and the regulations thereunder regarding the
exclusion of performance-based compensation from the limit on corporate
deductibility of compensation paid to certain executive officers.
(c) CONTEMPLATED AMENDMENTS. It is expressly contemplated that the Board
may amend the Plan in any respect the Board deems necessary or advisable to
provide eligible Employees with the maximum benefits provided or to be provided
under the provisions of the Code and the regulations promulgated thereunder
relating to Incentive Stock Options and/or to bring the Plan and/or Incentive
Stock Options granted under it into compliance therewith.
(d) NO IMPAIRMENT OF RIGHTS. Rights under any Stock Award granted before
amendment of the Plan shall not be impaired by any amendment of the Plan unless
(i) the Company requests the consent of the Participant and (ii) the Participant
consents in writing.
(e) AMENDMENT OF STOCK AWARDS. The Board at any time, and from time to
time, may amend the terms of any one or more Stock Awards; provided, however,
that the rights under any Stock Award shall not be impaired by any such
amendment unless (i) the Company requests the consent of the Participant and
(ii) the Participant consents in writing.
14. Termination or Suspension of the Plan.
(a) PLAN TERM. The Board may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate on the day before the tenth
(10th) anniversary of the date the Plan is adopted by the Board or approved by
the Stockholders of the Company, whichever is earlier. No Stock Awards may be
granted under the Plan while the Plan is suspended or after it is terminated.
(b) NO IMPAIRMENT OF RIGHTS. Suspension or termination of the Plan shall
not impair rights and obligations under any Stock Award granted while the Plan
is in effect except with the written consent of the Participant.
16.
<PAGE> 17
15. Effective Date of Plan.
The Plan shall become effective as determined by the Board, but no Stock Award
shall be exercised (or, in the case of a stock bonus, shall be granted) unless
and until the Plan has been approved by the Stockholders of the Company, which
approval shall be within twelve (12) months before or after the date the Plan is
adopted by the Board.
16. Choice of Law.
The law of the State of Delaware shall govern all questions concerning the
construction, validity and interpretation of this Plan, without regard to such
state's conflict of laws rules.
17.
<PAGE> 18
REPEATER TECHNOLOGIES, INC.
2000 EQUITY INCENTIVE PLAN
FORM OF
STOCK OPTION GRANT NOTICE
REPEATER TECHNOLOGIES, INC. (the "Company"), pursuant to its 2000 Equity
Incentive Plan (the "Plan"), hereby grants to Optionholder an option to purchase
the number of shares of the Company's Common Stock set forth below. This option
is subject to all of the terms and conditions as set forth herein and in the
Stock Option Agreement, the Plan and the Notice of Exercise, all of which are
attached hereto and incorporated herein in their entirety.
Optionholder: _______________________________________
Date of Grant: _______________________________________
Vesting Commencement Date: _______________________________________
Number of Shares Subject to Option: _______________________________________
Exercise Price (Per Share): _______________________________________
Total Exercise Price: _______________________________________
Expiration Date: _______________________________________
<TABLE>
<CAPTION>
<S> <C> <C>
TYPE OF GRANT: [ ] Incentive Stock Option(1) [ ] Nonstatutory Stock Option
EXERCISE SCHEDULE: [ ] Same as Vesting Schedule [ ] Early Exercise Permitted
VESTING SCHEDULE: [1/4th of the shares vest one year after the Vesting Commencement Date.
1/48th of the shares vest monthly thereafter over the next three years.]
PAYMENT: By one or a combination of the following items (described in the Stock
Option Agreement):
By cash or check
Pursuant to a Regulation T Program if the Shares are
publicly traded By delivery of already-owned shares if
the Shares are publicly traded
[By deferred payment]
</TABLE>
ADDITIONAL TERMS/ACKNOWLEDGEMENTS: The undersigned Optionholder acknowledges
receipt of, and understands and agrees to, this Grant Notice, the Stock Option
Agreement and the Plan. Optionholder further acknowledges that as of the Date of
Grant, this Grant Notice, the Stock Option Agreement and the Plan set forth the
entire understanding between Optionholder and the Company regarding the
acquisition of stock in the Company and supersede all prior oral and written
agreements on that subject with the exception of (i) options previously granted
and delivered to Optionholder under the Plan, and (ii) the following agreements
only:
OTHER AGREEMENTS: _______________________________________
_______________________________________
- --------------
(1) If this is an incentive stock option, it (plus your other outstanding
incentive stock options) cannot be first exercisable for more than $100,000 in
any calendar year. Any excess over $100,000 is a nonstatutory stock option.
<PAGE> 19
REPEATER TECHNOLOGIES, INC. OPTIONHOLDER:
By:____________________________________ ____________________________________
Signature Signature
Title:_________________________________ Date: ______________________________
Date:__________________________________
ATTACHMENTS: Stock Option Agreement, 2000 Equity Incentive Plan and Notice of
Exercise
<PAGE> 20
REPEATER TECHNOLOGIES, INC.
2000 EQUITY INCENTIVE PLAN
FORM OF
STOCK OPTION AGREEMENT
(INCENTIVE AND NONSTATUTORY STOCK OPTIONS)
Pursuant to your Stock Option Grant Notice ("Grant Notice") and this Stock
Option Agreement, Repeater Technologies, Inc. (the "Company") has granted you an
option under its 2000 Equity Incentive Plan (the "Plan") to purchase the number
of shares of the Company's Common Stock indicated in your Grant Notice at the
exercise price indicated in your Grant Notice. Defined terms not explicitly
defined in this Stock Option Agreement but defined in the Plan shall have the
same definitions as in the Plan.
The details of your option are as follows:
1. VESTING. Subject to the limitations and provisions contained herein,
your option will vest as provided in your Grant Notice, provided that vesting
will cease upon the termination of your Continuous Service.
2. NUMBER OF SHARES AND EXERCISE PRICE. The number of shares of Common
Stock subject to your option and your exercise price per share referenced in
your Grant Notice may be adjusted from time to time for Capitalization
Adjustments, as provided in the Plan.
3. EXERCISE PRIOR TO VESTING ("EARLY EXERCISE"). If permitted in your
Grant Notice (i.e., the "Exercise Schedule" indicates that "Early Exercise" of
your option is permitted) and subject to the provisions of your option, you may
elect at any time that is both (i) during the period of your Continuous Service
and (ii) during the term of your option, to exercise all or part of your option,
including the nonvested portion of your option; provided, however, that:
(a) a partial exercise of your option shall be deemed to cover first
vested shares of Common Stock and then the earliest vesting
installment of unvested shares of Common Stock;
(b) any shares of Common Stock so purchased from installments that have
not vested as of the date of exercise shall be subject to the
purchase option in favor of the Company as described in the
Company's form of Early Exercise Stock Purchase Agreement;
(c) you shall enter into the Company's form of Early Exercise Stock
Purchase Agreement with a vesting schedule that will result in the
same vesting as if no early exercise had occurred; and
(d) if your option is an incentive stock option, then, as provided in
the Plan, to the extent that the aggregate Fair Market Value
(determined at the time of grant) of the shares of Common Stock with
respect to which your option plus all other incentive stock options
you hold are exercisable for the first time by you during
1.
<PAGE> 21
any calendar year (under all plans of the Company and its
Affiliates) exceeds one hundred thousand dollars ($100,000), your
option(s) or portions thereof that exceed such limit (according to
the order in which they were granted) shall be treated as
nonstatutory stock options.
4. METHOD OF PAYMENT. Payment of the exercise price is due in full upon
exercise of all or any part of your option. You may elect to make payment of the
exercise price in cash or by check or in any other manner PERMITTED BY YOUR
GRANT NOTICE, which may include one or more of the following:
(a) In the Company's sole discretion at the time your option is
exercised and provided that at the time of exercise the Common Stock
is publicly traded and quoted regularly in The Wall Street Journal,
pursuant to a program developed under Regulation T as promulgated by
the Federal Reserve Board that, prior to the issuance of Common
Stock, results in either the receipt of cash (or check) by the
Company or the receipt of irrevocable instructions to pay the
aggregate exercise price to the Company from the sales proceeds.
(b) Provided that at the time of exercise the Common Stock is publicly
traded and quoted regularly in The Wall Street Journal, by delivery
of already-owned shares of Common Stock either that you have held
for the period required to avoid a charge to the Company's reported
earnings (generally six months) or that you did not acquire,
directly or indirectly from the Company, that are owned free and
clear of any liens, claims, encumbrances or security interests, and
that are valued at Fair Market Value on the date of exercise.
"Delivery" for these purposes, in the sole discretion of the Company
at the time you exercise your option, shall include delivery to the
Company of your attestation of ownership of such shares of Common
Stock in a form approved by the Company. Notwithstanding the
foregoing, you may not exercise your option by tender to the Company
of Common Stock to the extent such tender would violate the
provisions of any law, regulation or agreement restricting the
redemption of the Company's stock.
(c) Pursuant to the following deferred payment alternative:
(i) Not less than one hundred percent (100%) of the aggregate
exercise price, plus accrued interest, shall be due four (4)
years from date of exercise or, at the Company's election,
upon termination of your Continuous Service.
(ii) Interest shall be compounded at least annually and shall be
charged at the minimum rate of interest necessary to avoid the
treatment as interest, under any applicable provisions of the
Code, of any portion of any amounts other than amounts stated
to be interest under the deferred payment arrangement.
(iii) At any time that the Company is incorporated in Delaware,
payment of the Common Stock's "par value," as defined in the
Delaware General Corporation Law, shall be made in cash and
not by deferred payment.
2.
<PAGE> 22
(iv) In order to elect the deferred payment alternative, you must,
as a part of your written notice of exercise, give notice of
the election of this payment alternative and, in order to
secure the payment of the deferred exercise price to the
Company hereunder, if the Company so requests, you must tender
to the Company a promissory note and a security agreement
covering the purchased shares of Common Stock, both in form
and substance satisfactory to the Company, or such other or
additional documentation as the Company may request.
5. WHOLE SHARES. You may exercise your option only for whole shares of
Common Stock.
6. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary
contained herein, you may not exercise your option unless the shares of Common
Stock issuable upon such exercise are then registered under the Securities Act
or, if such shares of Common Stock are not then so registered, the Company has
determined that such exercise and issuance would be exempt from the registration
requirements of the Securities Act. The exercise of your option must also comply
with other applicable laws and regulations governing your option, and you may
not exercise your option if the Company determines that such exercise would not
be in material compliance with such laws and regulations.
7. TERM. You may not exercise your option before the commencement of
its term or after its term expires. The term of your option commences on the
Date of Grant and expires upon the EARLIEST of the following:
(a) three (3) months after the termination of your Continuous Service
for any reason other than your Disability or death, provided that if
during any part of such three- (3-) month period your option is not
exercisable solely because of the condition set forth in the
preceding paragraph relating to "Securities Law Compliance," your
option shall not expire until the earlier of the Expiration Date or
until it shall have been exercisable for an aggregate period of
three (3) months after the termination of your Continuous Service;
(b) twelve (12) months after the termination of your Continuous Service
due to your Disability;
(c) eighteen (18) months after your death if you die either during your
Continuous Service or within three (3) months after your Continuous
Service terminates;
(d) the Expiration Date indicated in your Grant Notice; or
(e) the day before the tenth (10th) anniversary of the Date of Grant.
If your option is an incentive stock option, note that, to obtain the
federal income tax advantages associated with an "incentive stock option," the
Code requires that at all times beginning on the date of grant of your option
and ending on the day three (3) months before the date of your option's
exercise, you must be an employee of the Company or an Affiliate, except in the
event of your death or Disability. The Company has provided for extended
exercisability
3.
<PAGE> 23
of your option under certain circumstances for your benefit but cannot guarantee
that your option will necessarily be treated as an "incentive stock option" if
you continue to provide services to the Company or an Affiliate as a Consultant
or Director after your employment terminates or if you otherwise exercise your
option more than three (3) months after the date your employment terminates.
8. EXERCISE.
(a) You may exercise the vested portion of your option (and the unvested
portion of your option if your Grant Notice so permits) during its
term by delivering a Notice of Exercise (in a form designated by the
Company) together with the exercise price to the Secretary of the
Company, or to such other person as the Company may designate,
during regular business hours, together with such additional
documents as the Company may then require.
(b) By exercising your option you agree that, as a condition to any
exercise of your option, the Company may require you to enter into
an arrangement providing for the payment by you to the Company of
any tax withholding obligation of the Company arising by reason of
(1) the exercise of your option, (2) the lapse of any substantial
risk of forfeiture to which the shares of Common Stock are subject
at the time of exercise, or (3) the disposition of shares of Common
Stock acquired upon such exercise.
(c) If your option is an incentive stock option, by exercising your
option you agree that you will notify the Company in writing within
fifteen (15) days after the date of any disposition of any of the
shares of the Common Stock issued upon exercise of your option that
occurs within two (2) years after the date of your option grant or
within one (1) year after such shares of Common Stock are
transferred upon exercise of your option.
(d) By exercising your option you agree that the Company (or a
representative of the underwriter(s)) may, in connection with the
first underwritten registration of the offering of any securities of
the Company under the Securities Act, require that you not sell,
dispose of, transfer, make any short sale of, grant any option for
the purchase of, or enter into any hedging or similar transaction
with the same economic effect as a sale, any shares of Common Stock
or other securities of the Company held by you, for a period of time
specified by the underwriter(s) (not to exceed one hundred eighty
(180) days) following the effective date of the registration
statement of the Company filed under the Securities Act. You further
agree to execute and deliver such other agreements as may be
reasonably requested by the Company and/or the underwriter(s) that
are consistent with the foregoing or that are necessary to give
further effect thereto. In order to enforce the foregoing covenant,
the Company may impose stop-transfer instructions with respect to
your shares of Common Stock until the end of such period.
9. TRANSFERABILITY.
4.
<PAGE> 24
(a) If your option is an incentive stock option, your option is not
transferable, except by will or by the laws of descent and
distribution, and is exercisable during your life only by you.
Notwithstanding the foregoing, by delivering written notice to the
Company, in a form satisfactory to the Company, you may designate a
third party who, in the event of your death, shall thereafter be
entitled to exercise your option.
(b) If your option is a nonstatutory stock option, your option is not
transferable, except (i) by will or by the laws of descent and
distribution, (ii) with the prior written approval of the Company,
by instrument to an inter vivos or testamentary trust, in a form
accepted by the Company, in which the option is to be passed to
beneficiaries upon the death of the trustor (settlor) and (iii) with
the prior written approval of the Company, by gift, in a form
accepted by the Company, to your "immediate family" as that term is
defined in 17 C.F.R. 240.16a-1(e). The term "immediate family" is
defined in 17 C.F.R. 240.16a-1(e) to mean any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, sibling,
mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, and includes adoptive
relationships. Your option is exercisable during your life only by
you or a transferee satisfying the above-stated conditions. The
right of a transferee to exercise the transferred portion of your
option after termination of your Continuous Service shall terminate
in accordance with your right to exercise your option as specified
in your option. In the event that your Continuous Service terminates
due to your death, your transferee will be treated as a person who
acquired the right to exercise your option by bequest or
inheritance. In addition to the foregoing, the Company may require,
as a condition of the transfer of your option to a trust or by gift,
that your transferee enter into an option transfer agreement
provided by, or acceptable to, the Company. The terms of your option
shall be binding upon your transferees, executors, administrators,
heirs, successors, and assigns. Notwithstanding the foregoing, by
delivering written notice to the Company, in a form satisfactory to
the Company, you may designate a third party who, in the event of
your death, shall thereafter be entitled to exercise your option.
10. RIGHT OF FIRST REFUSAL. Shares of Common Stock that you acquire upon
exercise of your option are subject to any right of first refusal that may be
described in the Company's bylaws in effect at such time the Company elects to
exercise its right. The Company's right of first refusal shall expire on the
Listing Date.
11. RIGHT OF REPURCHASE. To the extent provided in the Company's bylaws
as amended from time to time, the Company shall have the right to repurchase all
or any part of the shares of Common Stock you acquire pursuant to the exercise
of your option.
12. OPTION NOT A SERVICE CONTRACT. Your option is not an employment or
service contract, and nothing in your option shall be deemed to create in any
way whatsoever any obligation on your part to continue in the employ of the
Company or an Affiliate, or of the Company or an Affiliate to continue your
employment. In addition, nothing in your option shall obligate the Company or an
Affiliate, their respective shareholders, Boards of Directors, Officers
5.
<PAGE> 25
or Employees to continue any relationship that you might have as a Director or
Consultant for the Company or an Affiliate.
13. WITHHOLDING OBLIGATIONS.
(a) At the time you exercise your option, in whole or in part, or at any
time thereafter as requested by the Company, you hereby authorize
withholding from payroll and any other amounts payable to you, and
otherwise agree to make adequate provision for (including by means
of a "cashless exercise" pursuant to a program developed under
Regulation T as promulgated by the Federal Reserve Board to the
extent permitted by the Company), any sums required to satisfy the
federal, state, local and foreign tax withholding obligations of the
Company or an Affiliate, if any, which arise in connection with your
option.
(b) Upon your request and subject to approval by the Company, in its
sole discretion, and compliance with any applicable conditions or
restrictions of law, the Company may withhold from fully vested
shares of Common Stock otherwise issuable to you upon the exercise
of your option a number of whole shares of Common Stock having a
Fair Market Value, determined by the Company as of the date of
exercise, not in excess of the minimum amount of tax required to be
withheld by law. If the date of determination of any tax withholding
obligation is deferred to a date later than the date of exercise of
your option, share withholding pursuant to the preceding sentence
shall not be permitted unless you make a proper and timely election
under Section 83(b) of the Code, covering the aggregate number of
shares of Common Stock acquired upon such exercise with respect to
which such determination is otherwise deferred, to accelerate the
determination of such tax withholding obligation to the date of
exercise of your option. Notwithstanding the filing of such
election, shares of Common Stock shall be withheld solely from fully
vested shares of Common Stock determined as of the date of exercise
of your option that are otherwise issuable to you upon such
exercise. Any adverse consequences to you arising in connection with
such share withholding procedure shall be your sole responsibility.
(c) You may not exercise your option unless the tax withholding
obligations of the Company and/or any Affiliate are satisfied.
Accordingly, you may not be able to exercise your option when
desired even though your option is vested, and the Company shall
have no obligation to issue a certificate for such shares of Common
Stock or release such shares of Common Stock from any escrow
provided for herein.
14. NOTICES. Any notices provided for in your option or the Plan shall
be given in writing and shall be deemed effectively given upon receipt or, in
the case of notices delivered by mail by the Company to you, five (5) days after
deposit in the United States mail, postage prepaid, addressed to you at the last
address you provided to the Company.
15. GOVERNING PLAN DOCUMENT. Your option is subject to all the
provisions of the Plan, the provisions of which are hereby made a part of your
option, and is further subject to all
6.
<PAGE> 26
interpretations, amendments, rules and regulations which may from time to time
be promulgated and adopted pursuant to the Plan. In the event of any conflict
between the provisions of your option and those of the Plan, the provisions of
the Plan shall control.
7.
<PAGE> 27
FORM OF
NOTICE OF EXERCISE
Repeater Technologies, Inc.
1150 Morse Avenue
Sunnyvale, CA 94089 Date of Exercise: ___________________
Ladies and Gentlemen:
This constitutes notice under my nonstatutory stock option that I elect to
purchase the number of shares for the price set forth below.
<TABLE>
<CAPTION>
<S> <C> <C>
Type of option (check one): Incentive [ ] Nonstatutory [ ]
Stock option dated: _______________
Number of shares as
to which option is
exercised: _______________
Certificates to be
issued in name of: _______________
Total exercise price: $______________
Cash payment delivered
herewith: $______________
[Promissory note delivered
herewith: $______________]
[Value of ________ shares of
REPEATER TECHNOLOGIES, INC. common
stock delivered herewith(1): $______________]
</TABLE>
By this exercise, I agree (i) to provide such additional documents as you
may require pursuant to the terms of the Repeater Technologies, Inc. 2000 Equity
Incentive Plan, (ii) to provide for the payment by me to you (in the manner
designated by you) of your withholding obligation, if any, relating to the
exercise of this option, and (iii) if this exercise relates to an incentive
stock option, to notify you in writing within fifteen (15) days after the date
of any disposition of any of the shares of Common Stock issued upon exercise of
this option that occurs
- --------------
(1) Shares must meet the public trading requirements set forth in the
option. Shares must be valued in accordance with the terms of the option being
exercised, must have been owned for the minimum period required in the option,
and must be owned free and clear of any liens, claims, encumbrances or security
interests. Certificates must be endorsed or accompanied by an executed
assignment separate from certificate.
1.
<PAGE> 28
within two (2) years after the date of grant of this option or within one (1)
year after such shares of Common Stock are issued upon exercise of this option.
I hereby make the following certifications and representations with
respect to the number of shares of Common Stock of the Company listed above (the
"Shares"), which are being acquired by me for my own account upon exercise of
the Option as set forth above:
I acknowledge that the Shares have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and are deemed to
constitute "restricted securities" under Rule 701 and "control securities" under
Rule 144 promulgated under the Securities Act. I warrant and represent to the
Company that I have no present intention of distributing or selling said Shares,
except as permitted under the Securities Act and any applicable state securities
laws.
I further acknowledge that I will not be able to resell the Shares for at
least ninety days (90) after the stock of the Company becomes publicly traded
(i.e., subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934) under Rule 701 and that more restrictive
conditions apply to affiliates of the Company under Rule 144.
I further acknowledge that all certificates representing any of the Shares
subject to the provisions of the Option shall have endorsed thereon appropriate
legends reflecting the foregoing limitations, as well as any legends reflecting
restrictions pursuant to the Company's Articles of Incorporation, Bylaws and/or
applicable securities laws.
I further agree that, if required by the Company (or a representative of
the underwriters) in connection with the first underwritten registration of the
offering of any securities of the Company under the Securities Act, I will not
sell, dispose of, transfer, make any short sale of, grant any option for the
purchase of, or enter into any hedging or similar transaction with the same
economic effect as a sale, any Shares or other securities of the Company held by
me, for a period of time specified by the underwriter(s) (not to exceed one
hundred eighty (180) days) following the effective date of the registration
statement of the Company filed under the Securities Act. I further agree to
execute and deliver such other agreements as may be reasonably requested by the
Company and/or the underwriter(s) that are consistent with the foregoing or that
are necessary to give further effect thereto. In order to enforce the foregoing
covenant, the Company may impose stop-transfer instructions with respect to my
Shares until the end of such period.
Very truly yours,
_____________________________________
2.
<PAGE> 29
REPEATER TECHNOLOGIES, INC.
2000 EQUITY INCENTIVE PLAN
FORM OF
NON-EMPLOYEE DIRECTOR
STOCK OPTION GRANT NOTICE
REPEATER TECHNOLOGIES, INC. (the "Company"), pursuant to its 2000 Equity
Incentive Plan (the "Plan"), hereby grants to Optionholder an option to purchase
the number of shares of the Company's Common Stock set forth below. This option
is subject to all of the terms and conditions as set forth herein and in the
Stock Option Agreement, the Plan and the Notice of Exercise, all of which are
attached hereto and incorporated herein in their entirety.
Optionholder: ____________________________________
Date of Grant: ____________________________________
Vesting Commencement Date: Date of Grant
Number of Shares Subject to Option: ____________________________________
Exercise Price (Per Share): ____________________________________
Total Exercise Price: ____________________________________
Expiration Date: The day before the 10th anniversary
of the Date of Grant
TYPE OF GRANT: Nonstatutory Stock Option
EXERCISE SCHEDULE: Early Exercise Permitted
VESTING SCHEDULE: 1/2 of the shares vest one year after the Vesting
Commencement Date.
1/2 of the shares vest two years after the Vesting
Commencement Date.
PAYMENT: By one or a combination of the following items (described in
the Stock Option Agreement):
By cash or check
Pursuant to a Regulation T Program if the Shares are
publicly traded
By delivery of already-owned shares if the Shares are
publicly traded
ADDITIONAL TERMS/ACKNOWLEDGEMENTS: The undersigned Optionholder acknowledges
receipt of, and understands and agrees to, this Grant Notice, the Stock Option
Agreement and the Plan. Optionholder further acknowledges that as of the Date of
Grant, this Grant Notice, the Stock Option Agreement and the Plan set forth the
entire understanding between Optionholder and the Company regarding the
acquisition of stock in the Company and supersede all prior oral and written
agreements on that subject with the exception of (i) options previously granted
and delivered to Optionholder under the Plan, and (ii) the following agreements
only:
OTHER AGREEMENTS: ________________________________________
________________________________________
REPEATER TECHNOLOGIES, INC. OPTIONHOLDER:
By:____________________________________ ____________________________________
Signature Signature
Title: ________________________________ Date: ______________________________
Date: _________________________________
ATTACHMENTS: Stock Option Agreement, 2000 Equity Incentive Plan and Notice of
Exercise
<PAGE> 30
REPEATER TECHNOLOGIES, INC.
2000 EQUITY INCENTIVE PLAN
FORM OF
NON-EMPLOYEE DIRECTOR STOCK OPTION AGREEMENT
(NONSTATUTORY STOCK OPTION)
Pursuant to your Stock Option Grant Notice ("Grant Notice") and this
Stock Option Agreement, Repeater Technologies, Inc. (the "Company") has granted
you an option under its 2000 Equity Incentive Plan (the "Plan") to purchase the
number of shares of the Company's Common Stock indicated in your Grant Notice at
the exercise price indicated in your Grant Notice. Defined terms not explicitly
defined in this Stock Option Agreement but defined in the Plan shall have the
same definitions as in the Plan.
The details of your option are as follows:
1. VESTING. Subject to the limitations and provisions contained herein,
your option will vest as provided in your Grant Notice, provided that vesting
will cease upon the termination of your Continuous Service.
2. NUMBER OF SHARES AND EXERCISE PRICE. The number of shares of Common
Stock subject to your option and your exercise price per share referenced in
your Grant Notice may be adjusted from time to time for Capitalization
Adjustments, as provided in the Plan.
3. EXERCISE PRIOR TO VESTING ("EARLY EXERCISE"). If permitted in your
Grant Notice (i.e., the "Exercise Schedule" indicates that "Early Exercise" of
your option is permitted) and subject to the provisions of your option, you may
elect at any time that is both (i) during the period of your Continuous Service
and (ii) during the term of your option, to exercise all or part of your option,
including the nonvested portion of your option; provided, however, that:
(a) a partial exercise of your option shall be deemed to cover first
vested shares of Common Stock and then the earliest vesting installment of
unvested shares of Common Stock;
(b) any shares of Common Stock so purchased from installments that
have not vested as of the date of exercise shall be subject to the purchase
option in favor of the Company as described in the Company's form of Early
Exercise Stock Purchase Agreement; and
(c) you shall enter into the Company's form of Early Exercise Stock
Purchase Agreement with a vesting schedule that will result in the same vesting
as if no early exercise had occurred.
4. METHOD OF PAYMENT. Payment of the exercise price is due in full upon
exercise of all or any part of your option. You may elect to make payment of the
exercise price in cash or by check or by one or more of the following:
1
<PAGE> 31
(a) Provided that at the time of exercise the Common Stock is
publicly traded and quoted regularly in The Wall Street Journal, pursuant to a
program developed under Regulation T as promulgated by the Federal Reserve Board
that, prior to the issuance of Common Stock, results in either the receipt of
cash (or check) by the Company or the receipt of irrevocable instructions to pay
the aggregate exercise price to the Company from the sales proceeds.
(b) Provided that at the time of exercise the Common Stock is
publicly traded and quoted regularly in The Wall Street Journal, by delivery of
already-owned shares of Common Stock either that you have held for the period
required to avoid a charge to the Company's reported earnings (generally six
months) or that you did not acquire, directly or indirectly from the Company,
that are owned free and clear of any liens, claims, encumbrances or security
interests, and that are valued at Fair Market Value on the date of exercise.
"Delivery" for these purposes, in the sole discretion of the Company at the time
you exercise your option, shall include delivery to the Company of your
attestation of ownership of such shares of Common Stock in a form approved by
the Company. Notwithstanding the foregoing, you may not exercise your option by
tender to the Company of Common Stock to the extent such tender would violate
the provisions of any law, regulation or agreement restricting the redemption of
the Company's stock.
5. WHOLE SHARES. You may exercise your option only for whole shares of
Common Stock.
6. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary
contained herein, you may not exercise your option unless the shares of Common
Stock issuable upon such exercise are then registered under the Securities Act
or, if such shares of Common Stock are not then so registered, the Company has
determined that such exercise and issuance would be exempt from the registration
requirements of the Securities Act. The exercise of your option must also comply
with other applicable laws and regulations governing your option, and you may
not exercise your option if the Company determines that such exercise would not
be in material compliance with such laws and regulations.
7. TERM. Except as otherwise provided herein, the term of your option
commences on the Date of Grant and expires upon the EARLIEST of the following:
(a) three (3) months after the termination of your Continuous Service
for any reason other than your Disability or death, provided that if during any
part of such three- (3-) month period your option is not exercisable solely
because of the condition set forth in the preceding paragraph relating to
"Securities Law Compliance," your option shall not expire until the earlier of
the Expiration Date or until it shall have been exercisable for an aggregate
period of three (3) months after the termination of your Continuous Service;
(b) twelve (12) months after the termination of your Continuous
Service due to your Disability;
2
<PAGE> 32
(c) eighteen (18) months after your death if you die either during
your Continuous Service or within three (3) months after your Continuous Service
terminates; or
(d) the Expiration Date indicated in your Grant Notice.
8. EXERCISE.
(a) You may exercise your option during its term by delivering a
Notice of Exercise (in a form designated by the Company) together with the
exercise price to the Secretary of the Company, or to such other person as the
Company may designate, during regular business hours, together with such
additional documents as the Company may then require.
(b) By exercising your option you agree that, as a condition to any
exercise of your option, the Company may require you to enter into an
arrangement providing for the payment by you to the Company of any tax
withholding obligation of the Company arising by reason of the exercise of your
option.
(c) TRANSFERABILITY. Your option is not transferable, except (i) by
will or by the laws of descent and distribution, and (ii) to such further extent
as permitted by the Rule as to Use of Form S-8 specified in the General
Instructions of the Form S-8 Registration Statement under the Securities Act.
Your option is exercisable during your life only by you or a transferee
satisfying the above-stated conditions. The right of a transferee to exercise
the transferred portion of your option after termination of your Continuous
Service shall terminate in accordance with your right to exercise your option as
specified in your option. In the event that your Continuous Service terminates
due to your death, your transferee will be treated as a person who acquired the
right to exercise your option by bequest or inheritance. In addition to the
foregoing, the Company may require, as a condition of the transfer of your
option to a trust or by gift, that your transferee enter into an option transfer
agreement provided by, or acceptable to, the Company. The terms of your option
shall be binding upon your transferees, executors, administrators, heirs,
successors, and assigns. Notwithstanding the foregoing, by delivering written
notice to the Company, in a form satisfactory to the Company, you may designate
a third party who, in the event of your death, shall thereafter be entitled to
exercise your option.
9. OPTION NOT A SERVICE CONTRACT. Your option is not an employment or
service contract, and nothing in your option shall be deemed to create in any
way whatsoever any obligation on your part to continue in the employ of the
Company or an Affiliate, or of the Company or an Affiliate to continue your
employment. In addition, nothing in your option shall obligate the Company or an
Affiliate, their respective stockholders, Boards of Directors, Officers or
Employees to continue any relationship that you might have as a Director or
Consultant for the Company or an Affiliate.
10. NOTICES. Any notices provided for in your option or the Plan shall
be given in writing and shall be deemed effectively given upon receipt or, in
the case of notices delivered by mail by the Company to you, five (5) days after
deposit in the United States mail, postage prepaid, addressed to you at the last
address you provided to the Company.
3
<PAGE> 33
11. ACCELERATION OF VESTING AND PERIOD OF EXERCISABILITY FOLLOWING A
CHANGE IN CONTROL. In the event of the occurrence of a Change in Control (as
described in Section 12(c) of the Plan), your option (or any substituted option)
shall, as of the date of such Change in Control vest in full and become fully
exercisable (if applicable) to the extent not previously vested or exercisable,
and shall (notwithstanding Section 8 of this Stock Option Agreement) continue to
be exercisable for a period of twelve (12) months after termination of your
Continuous Service following the Change of Control event or until the Expiration
Date stated in your Grant Notice, whichever period is shorter.
12. GOVERNING PLAN DOCUMENT. Your option is subject to all the
provisions of the Plan, the provisions of which are hereby made a part of your
option, and is further subject to all interpretations, amendments, rules and
regulations which may from time to time be promulgated and adopted pursuant to
the Plan. In the event of any conflict between the provisions of your option and
those of the Plan, the provisions of the Plan shall control.
4
<PAGE> 34
FORM OF
NOTICE OF EXERCISE
Repeater Technologies, Inc.
1150 Morse Avenue
Sunnyvale, CA 94089 Date of Exercise: __________
Ladies and Gentlemen:
This constitutes notice under my nonstatutory stock option that I elect
to purchase the number of shares for the price set forth below.
Stock option dated: _______________
Number of shares as
to which option is
exercised: _______________
Certificates to be
issued in name of: _______________
Total exercise price: $______________
Cash payment delivered
herewith: $______________
[Promissory note delivered
herewith: $______________]
[Value of ________ shares of
REPEATER TECHNOLOGIES, INC. common
stock delivered herewith(1): $______________]
By this exercise, I agree (i) to provide such additional documents as
you may require pursuant to the terms of the Repeater Technologies, Inc. 2000
Equity Incentive Plan, (ii) to provide for the payment by me to you (in the
manner designated by you) of your withholding obligation, if any, relating to
the exercise of this option, and (iii) if this exercise relates to an incentive
stock option, to notify you in writing within fifteen (15) days after the date
of any disposition of any of the shares of Common Stock issued upon exercise of
this option that occurs
- --------------------------
(1) Shares must meet the public trading requirements set forth in the
option. Shares must be valued in accordance with the terms of the option being
exercised, must have been owned for the minimum period required in the option,
and must be owned free and clear of any liens, claims, encumbrances or security
interests. Certificates must be endorsed or accompanied by an executed
assignment separate from certificate.
1.
<PAGE> 35
within two (2) years after the date of grant of this option or within one (1)
year after such shares of Common Stock are issued upon exercise of this option.
I hereby make the following certifications and representations with
respect to the number of shares of Common Stock of the Company listed above (the
"Shares"), which are being acquired by me for my own account upon exercise of
the Option as set forth above:
I acknowledge that the Shares have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and are deemed to
constitute "restricted securities" under Rule 701 and "control securities" under
Rule 144 promulgated under the Securities Act. I warrant and represent to the
Company that I have no present intention of distributing or selling said Shares,
except as permitted under the Securities Act and any applicable state securities
laws.
I further acknowledge that I will not be able to resell the Shares for
at least ninety days (90) after the stock of the Company becomes publicly traded
(i.e., subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934) under Rule 701 and that more restrictive
conditions apply to affiliates of the Company under Rule 144.
I further acknowledge that all certificates representing any of the
Shares subject to the provisions of the Option shall have endorsed thereon
appropriate legends reflecting the foregoing limitations, as well as any legends
reflecting restrictions pursuant to the Company's Articles of Incorporation,
Bylaws and/or applicable securities laws.
I further agree that, if required by the Company (or a representative of
the underwriters) in connection with the first underwritten registration of the
offering of any securities of the Company under the Securities Act, I will not
sell, dispose of, transfer, make any short sale of, grant any option for the
purchase of, or enter into any hedging or similar transaction with the same
economic effect as a sale, any Shares or other securities of the Company held by
me, for a period of time specified by the underwriter(s) (not to exceed one
hundred eighty (180) days) following the effective date of the registration
statement of the Company filed under the Securities Act. I further agree to
execute and deliver such other agreements as may be reasonably requested by the
Company and/or the underwriter(s) that are consistent with the foregoing or that
are necessary to give further effect thereto. In order to enforce the foregoing
covenant, the Company may impose stop-transfer instructions with respect to my
Shares until the end of such period.
Very truly yours,
---------------------------------
2.
<PAGE> 1
EXHIBIT 10.5
REPEATER TECHNOLOGIES, INC.
2000 EMPLOYEE STOCK PURCHASE PLAN
ADOPTED BY THE BOARD OF DIRECTORS FEBRUARY 15, 2000
APPROVED BY STOCKHOLDERS _____, 2000
1. PURPOSE.
(a) The purpose of the Plan is to provide a means by which Employees of
the Company and certain designated Affiliates may be given an opportunity to
purchase shares of the Common Stock of the Company.
(b) The Company, by means of the Plan, seeks to retain the services of
such Employees, to secure and retain the services of new Employees and to
provide incentives for such persons to exert maximum efforts for the success of
the Company and its Affiliates.
(c) The Company intends that the Rights to purchase shares of the Common
Stock granted under the Plan be considered options issued under an "employee
stock purchase plan," as that term is defined in Section 423(b) of the Code.
2. DEFINITIONS.
(a) "AFFILIATE" means any parent corporation or subsidiary corporation,
whether now or hereafter existing, as those terms are defined in Sections 424(e)
and (f), respectively, of the Code.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as amended.
(d) "COMMITTEE" means a Committee appointed by the Board in accordance
with subparagraph 3(c) of the Plan.
(e) "COMMON STOCK" means the Common Stock of Repeater Technologies,
Inc..
(f) "COMPANY" means Repeater Technologies, Inc., a Delaware corporation.
(g) "DIRECTOR" means a member of the Board.
(h) "ELIGIBLE EMPLOYEE" means an Employee who meets the requirements set
forth in the Offering for eligibility to participate in the Offering.
(i) "EMPLOYEE" means any person, including Officers and Directors,
employed by the Company or an Affiliate of the Company. Neither service as a
Director nor payment of a director's fee shall be sufficient to constitute
"employment" by the Company or the Affiliate.
1.
<PAGE> 2
(j) "EMPLOYEE STOCK PURCHASE PLAN" means a plan that grants rights
intended to be options issued under an "employee stock purchase plan," as that
term is defined in Section 423(b) of the Code.
(k) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(l) "FAIR MARKET VALUE" means the value of a security, as determined in
good faith by the Board. If the security is listed on any established stock
exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap Market,
then, except as otherwise provided in the Offering, the Fair Market Value of the
security shall be the closing sales price (rounded up where necessary to the
nearest whole cent) for such security (or the closing bid, if no sales were
reported) as quoted on such exchange or market (or the exchange or market with
the greatest volume of trading in the relevant security of the Company) on the
relevant determination date, as reported in The Wall Street Journal or such
other source as the Board deems reliable, or if such date is not a trading day,
then on the next preceding trading day.
(m) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a
current Employee or Officer of the Company or its parent or subsidiary, does not
receive compensation (directly or indirectly) from the Company or its parent or
subsidiary for services rendered as a consultant or in any capacity other than
as a Director (except for an amount as to which disclosure would not be required
under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act
("Regulation S-K")), does not possess an interest in any other transaction as to
which disclosure would be required under Item 404(a) of Regulation S-K, and is
not engaged in a business relationship as to which disclosure would be required
under Item 404(b) of Regulation S-K; or (ii) is otherwise considered a
"non-employee director" for purposes of Rule 16b-3.
(n) "OFFERING" means the grant of Rights to purchase shares of the
Common Stock under the Plan to Eligible Employees.
(o) "OFFERING DATE" means a date selected by the Board for an Offering
to commence.
(p) "OUTSIDE DIRECTOR" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (within the meaning of
the Treasury regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an "affiliated corporation" receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an "affiliated corporation"
at any time, and is not currently receiving direct or indirect remuneration from
the Company or an "affiliated corporation" for services in any capacity other
than as a Director, or (ii) is otherwise considered an "outside director" for
purposes of Section 162(m) of the Code.
(q) "PARTICIPANT" means an Eligible Employee who holds an outstanding
Right granted pursuant to the Plan or, if applicable, such other person who
holds an outstanding Right granted under the Plan.
(r) "PLAN" means this Repeater Technologies, Inc. Amended and Restated
1997 Employee Stock Purchase Plan.
2.
<PAGE> 3
(s) "PURCHASE DATE" means one or more dates established by the Board
during an Offering on which Rights granted under the Plan shall be exercised and
purchases of shares of the Common Stock carried out in accordance with such
Offering.
(t) "RIGHT" means an option to purchase shares of the Common Stock
granted pursuant to the Plan.
(u) "RULE 16b-3" means Rule 16b-3 of the Exchange Act or any successor
to Rule 16b-3 as in effect with respect to the Company at the time discretion is
being exercised regarding the Plan.
(v) "SECURITIES ACT" means the Securities Act of 1933, as amended.
3. ADMINISTRATION.
(a) The Board shall administer the Plan unless and until the Board
delegates administration to a Committee, as provided in subparagraph 3(c).
Whether or not the Board has delegated administration, the Board shall have the
final power to determine all questions of policy and expediency that may arise
in the administration of the Plan.
(b) The Board (or the Committee) shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:
(i) To determine when and how Rights to purchase shares of the
Common Stock shall be granted and the provisions of each Offering of such Rights
(which need not be identical).
(ii) To designate from time to time which Affiliates of the Company
shall be eligible to participate in the Plan.
(iii) To construe and interpret the Plan and Rights granted under
it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan, in a manner and to the extent it
shall deem necessary or expedient to make the Plan fully effective.
(iv) To amend the Plan as provided in paragraph 14.
(v) To terminate or suspend the Plan as provided in paragraph 16.
(vi) Generally, to exercise such powers and to perform such acts as
it deems necessary or expedient to promote the best interests of the Company and
its Affiliates and to carry out the intent that the Plan be treated as an
Employee Stock Purchase Plan.
(c) The Board may delegate administration of the Plan to a Committee of
the Board composed of two (2) or more members, all of the members of which
Committee may be, in the discretion of the Board, Non-Employee Directors and/or
Outside Directors. If administration is delegated to a Committee, the Committee
shall have, in connection with the administration of the Plan, the powers
theretofore possessed by the Board, including the power to delegate to a
3.
<PAGE> 4
subcommittee of two (2) or more Outside Directors any of the administrative
powers the Committee is authorized to exercise (and references in this Plan to
the Board shall thereafter be to the Committee or such a subcommittee), subject,
however, to such resolutions, not inconsistent with the provisions of the Plan,
as may be adopted from time to time by the Board. The Board may abolish the
Committee at any time and revest in the Board the administration of the Plan.
4. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 13 relating to adjustments
upon changes in securities, the shares of the Common Stock that may be sold
pursuant to Rights granted under the Plan shall not exceed in the aggregate five
hundred thousand (500,000) shares of the Common Stock (the "Reserved Shares").
As of each January 1, beginning on January 1, 2002, and continuing through and
including January 1, 2010, the number of Reserved Shares will be increased
automatically by the lesser of (i) one percent (1%) of the total number of
shares of the Common Stock outstanding on such January 1 or (ii) two hundred
fifty thousand (250,000) shares. Notwithstanding the foregoing, the Board may
designate a smaller number of shares to be added to the share reserve as of a
particular January 1. If any Right granted under the Plan shall for any reason
terminate without having been exercised, the shares of the Common Stock not
purchased under such Right shall again become available for the Plan.
(b) The shares of the Common Stock subject to the Plan may be unissued
shares of the Common Stock or shares of the Common Stock that have been bought
on the open market at prevailing market prices or otherwise.
5. GRANT OF RIGHTS; OFFERING.
The Board may from time to time grant or provide for the grant of Rights
to purchase shares of the Common Stock under the Plan to Eligible Employees in
an Offering on an Offering Date or Dates selected by the Board. Each Offering
shall be in such form and shall contain such terms and conditions as the Board
shall deem appropriate, which shall comply with the requirements of Section
423(b)(5) of the Code that all Employees granted Rights to purchase shares of
the Common Stock under the Plan shall have the same rights and privileges. The
terms and conditions of an Offering shall be incorporated by reference into the
Plan and treated as part of the Plan. The provisions of separate Offerings need
not be identical, but each Offering shall include (through incorporation of the
provisions of this Plan by reference in the document comprising the Offering or
otherwise) the period during which the Offering shall be effective, which period
shall not exceed twenty-seven (27) months beginning with the Offering Date, and
the substance of the provisions contained in paragraphs 6 through 9, inclusive.
6. ELIGIBILITY.
(a) Rights may be granted only to Employees of the Company or, as the
Board may designate as provided in subparagraph 3(b), to Employees of an
Affiliate. Except as provided in subparagraph 6(b), an Employee shall not be
eligible to be granted Rights under the Plan unless, on the Offering Date, such
Employee has been in the employ of the Company or the Affiliate, as the case may
be, for such continuous period preceding such grant as the Board may require,
but
4.
<PAGE> 5
in no event shall the required period of continuous employment be less than
ninety (90) days or equal to or greater than two (2) years; provided, however,
that Employees who are employed by the Company as of the Effective Date of this
Plan who would otherwise be Eligible Employees if not for the required period of
continuous employment with the Company shall be eligible to participate in the
Plan with respect to the first Offering Period without regard to their period of
prior continuous employment with the Company provided that they remain in
continuous employment through the end of the first Offering Period.
(b) The Board may provide that each person who, during the course of an
Offering, first becomes an Eligible Employee will, on a date or dates specified
in the Offering which coincides with the day on which such person becomes an
Eligible Employee or which occurs thereafter, receive a Right under that
Offering, which Right shall thereafter be deemed to be a part of that Offering.
Such Right shall have the same characteristics as any Rights originally granted
under that Offering, as described herein, except that:
(i) the date on which such Right is granted shall be the "Offering
Date" of such Right for all purposes, including determination of the exercise
price of such Right;
(ii) the period of the Offering with respect to such Right shall
begin on its Offering Date and end coincident with the end of such Offering; and
(iii) the Board may provide that if such person first becomes an
Eligible Employee within a specified period of time before the end of the
Offering, he or she will not receive any Right under that Offering.
(c) No Employee shall be eligible for the grant of any Rights under the
Plan if, immediately after any such Rights are granted, such Employee owns stock
possessing five percent (5%) or more of the total combined voting power or value
of all classes of stock of the Company or of any Affiliate. For purposes of this
subparagraph 6(c), the rules of Section 424(d) of the Code shall apply in
determining the stock ownership of any Employee, and stock which such Employee
may purchase under all outstanding rights and options shall be treated as stock
owned by such Employee.
(d) An Eligible Employee may be granted Rights under the Plan only if
such Rights, together with any other Rights granted under all Employee Stock
Purchase Plans of the Company and any Affiliates, as specified by Section
423(b)(8) of the Code, do not permit such Eligible Employee's rights to purchase
shares of the Common Stock or any Affiliate to accrue at a rate which exceeds
twenty five thousand dollars ($25,000) of the fair market value of such shares
of the Common Stock (determined at the time such Rights are granted) for each
calendar year in which such Rights are outstanding at any time.
(e) The Board may provide in an Offering that Employees who are highly
compensated Employees within the meaning of Section 423(b)(4)(D) of the Code
shall not be eligible to participate.
5.
<PAGE> 6
7. RIGHTS; PURCHASE PRICE.
(a) On each Offering Date, each Eligible Employee, pursuant to an
Offering made under the Plan, shall be granted the Right to purchase up to the
number of shares of the Common Stock purchasable either:
(i) with a percentage designated by the Board not exceeding fifteen
percent (15%) of such Employee's Earnings (as defined by the Board in each
Offering) during the period which begins on the Offering Date (or such later
date as the Board determines for a particular Offering) and ends on the date
stated in the Offering, which date shall be no later than the end of the
Offering; or
(ii) with a maximum dollar amount designated by the Board that, as
the Board determines for a particular Offering, (1) shall be withheld, in whole
or in part, from such Employee's Earnings (as defined by the Board in each
Offering) during the period which begins on the Offering Date (or such later
date as the Board determines for a particular Offering) and ends on the date
stated in the Offering, which date shall be no later than the end of the
Offering and/or (2) shall be contributed, in whole or in part, by such Employee
during such period.
(b) The Board shall establish one or more Purchase Dates during an
Offering on which Rights granted under the Plan shall be exercised and purchases
of shares of the Common Stock carried out in accordance with such Offering.
(c) In connection with each Offering made under the Plan, the Board may
specify a maximum number of shares of the Common Stock that may be purchased by
any Participant as well as a maximum aggregate number of shares of the Common
Stock that may be purchased by all Participants pursuant to such Offering. In
addition, in connection with each Offering that contains more than one Purchase
Date, the Board may specify a maximum aggregate number of shares of the Common
Stock which may be purchased by all Participants on any given Purchase Date
under the Offering. If the aggregate purchase of shares of the Common Stock upon
exercise of Rights granted under the Offering would exceed any such maximum
aggregate amount, the Board shall make a pro rata allocation of the shares of
the Common Stock available in as nearly a uniform manner as shall be practicable
and as it shall deem to be equitable.
(d) The purchase price of shares of the Common Stock acquired pursuant
to Rights granted under the Plan shall be not less than the lesser of:
(i) an amount equal to eighty-five percent (85%) of the fair market
value of the shares of the Common Stock on the Offering Date; or
(ii) an amount equal to eighty-five percent (85%) of the fair market
value of the shares of the Common Stock on the Purchase Date.
8. PARTICIPATION; WITHDRAWAL; TERMINATION.
(a) An Eligible Employee may become a Participant in the Plan pursuant
to an Offering by delivering a participation agreement to the Company within the
time specified in the Offering, in such form as the Company provides. Each such
agreement shall authorize payroll
6.
<PAGE> 7
deductions of up to the maximum percentage specified by the Board of such
Employee's Earnings during the Offering (as defined in each Offering). The
payroll deductions made for each Participant shall be credited to a bookkeeping
account for such Participant under the Plan and either may be deposited with the
general funds of the Company or may be deposited in a separate account in the
name of, and for the benefit of, such Participant with a financial institution
designated by the Company. To the extent provided in the Offering, a Participant
may reduce (including to zero) or increase such payroll deductions. To the
extent provided in the Offering, a Participant may begin such payroll deductions
after the beginning of the Offering. A Participant may make additional payments
into his or her account only if specifically provided for in the Offering and
only if the Participant has not already had the maximum permitted amount
withheld during the Offering.
(b) At any time during an Offering, a Participant may terminate his or
her payroll deductions under the Plan and withdraw from the Offering by
delivering to the Company a notice of withdrawal in such form as the Company
provides. Such withdrawal may be elected at any time prior to the end of the
Offering except as provided by the Board in the Offering. Upon such withdrawal
from the Offering by a Participant, the Company shall distribute to such
Participant all of his or her accumulated payroll deductions (reduced to the
extent, if any, such deductions have been used to acquire shares of the Common
Stock for the Participant) under the Offering, without interest unless otherwise
specified in the Offering, and such Participant's interest in that Offering
shall be automatically terminated. A Participant's withdrawal from an Offering
will have no effect upon such Participant's eligibility to participate in any
other Offerings under the Plan but such Participant will be required to deliver
a new participation agreement in order to participate in subsequent Offerings
under the Plan.
(c) Rights granted pursuant to any Offering under the Plan shall
terminate immediately upon cessation of any participating Employee's employment
with the Company or a designated Affiliate for any reason (subject to any
post-employment participation period required by law) or other lack of
eligibility. The Company shall distribute to such terminated Employee all of his
or her accumulated payroll deductions (reduced to the extent, if any, such
deductions have been used to acquire shares of the Common Stock for the
terminated Employee) under the Offering, without interest unless otherwise
specified in the Offering. If the accumulated payroll deductions have been
deposited with the Company's general funds, then the distribution shall be made
from the general funds of the Company, without interest. If the accumulated
payroll deductions have been deposited in a separate account with a financial
institution as provided in subparagraph 8(a), then the distribution shall be
made from the separate account, without interest unless otherwise specified in
the Offering.
(d) Rights granted under the Plan shall not be transferable by a
Participant otherwise than by will or the laws of descent and distribution, or
by a beneficiary designation as provided in paragraph 15 and, otherwise during
his or her lifetime, shall be exercisable only by the person to whom such Rights
are granted.
9. EXERCISE.
(a) On each Purchase Date specified therefor in the relevant Offering,
each Participant's accumulated payroll deductions and other additional payments
specifically
7.
<PAGE> 8
provided for in the Offering (without any increase for interest) will be applied
to the purchase of shares of the Common Stock up to the maximum number of shares
of the Common Stock permitted pursuant to the terms of the Plan and the
applicable Offering, at the purchase price specified in the Offering. No
fractional shares of the Common Stock shall be issued upon the exercise of
Rights granted under the Plan unless specifically provided for in the Offering.
(b) Unless otherwise specifically provided in the Offering, the amount,
if any, of accumulated payroll deductions remaining in any Participant's account
after the purchase of shares of the Common Stock that is equal to the amount
required to purchase one or more whole shares of the Common Stock on the final
Purchase Date of the Offering shall be distributed in full to the Participant at
the end of the Offering, without interest. If the accumulated payroll deductions
have been deposited with the Company's general funds, then the distribution
shall be made from the general funds of the Company, without interest. If the
accumulated payroll deductions have been deposited in a separate account with a
financial institution as provided in subparagraph 8(a), then the distribution
shall be made from the separate account, without interest unless otherwise
specified in the Offering. The amount of accumulated payroll deductions
remaining in any Participant's account that is less than the amount required to
purchase one whole share of Common Stock on the final Purchase Date of the
Offering shall be carried over to the next Offering or shall, if the Participant
requests or does not participate in the next Offering, be refunded.
(c) No Rights granted under the Plan may be exercised to any extent
unless the shares of the Common Stock to be issued upon such exercise under the
Plan (including Rights granted thereunder) are covered by an effective
registration statement pursuant to the Securities Act and the Plan is in
material compliance with all applicable state, foreign and other securities and
other laws applicable to the Plan. If on a Purchase Date in any Offering
hereunder the Plan is not so registered or in such compliance, no Rights granted
under the Plan or any Offering shall be exercised on such Purchase Date, and the
Purchase Date shall be delayed until the Plan is subject to such an effective
registration statement and such compliance, except that the Purchase Date shall
not be delayed more than twelve (12) months and the Purchase Date shall in no
event be more than twenty-seven (27) months from the Offering Date. If, on the
Purchase Date of any Offering hereunder, as delayed to the maximum extent
permissible, the Plan is not registered and in such compliance, no Rights
granted under the Plan or any Offering shall be exercised and all payroll
deductions accumulated during the Offering (reduced to the extent, if any, such
deductions have been used to acquire Shares) shall be distributed to the
Participants, without interest unless otherwise specified in the Offering. If
the accumulated payroll deductions have been deposited with the Company's
general funds, then the distribution shall be made from the general funds of the
Company, without interest. If the accumulated payroll deductions have been
deposited in a separate account with a financial institution as provided in
subparagraph 8(a), then the distribution shall be made from the separate
account, without interest unless otherwise specified in the Offering.
10. COVENANTS OF THE COMPANY.
(a) During the terms of the Rights granted under the Plan, the Company
shall ensure that the number of shares of the Common Stock required to satisfy
such Rights are available.
8.
<PAGE> 9
(b) The Company shall seek to obtain from each federal, state, foreign
or other regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to issue and sell shares of the Common Stock upon
exercise of the Rights granted under the Plan. If, after reasonable efforts, the
Company is unable to obtain from any such regulatory commission or agency the
authority which counsel for the Company deems necessary for the lawful issuance
and sale of shares of the Common Stock under the Plan, the Company shall be
relieved from any liability for failure to issue and sell shares of the Common
Stock upon exercise of such Rights unless and until such authority is obtained.
11. USE OF PROCEEDS FROM SHARES.
Proceeds from the sale of shares of the Common Stock pursuant to Rights
granted under the Plan shall constitute general funds of the Company.
12. RIGHTS AS A STOCKHOLDER.
A Participant shall not be deemed to be the holder of, or to have any of
the rights of a holder with respect to, shares of the Common Stock subject to
Rights granted under the Plan unless and until the Participant's shares of the
Common Stock acquired upon exercise of Rights under the Plan are recorded in the
books of the Company.
13. ADJUSTMENTS UPON CHANGES IN SECURITIES.
(a) If any change is made in the shares of the Common Stock subject to
the Plan, or subject to any Right, without the receipt of consideration by the
Company (through merger, consolidation, reorganization, recapitalization,
reincorporation, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or other transaction not involving the receipt of
consideration by the Company), the Plan will be appropriately adjusted in the
class(es) and maximum number of shares of the Common Stock subject to the Plan
pursuant to subparagraph 4(a), and the outstanding Rights will be appropriately
adjusted in the class(es), number of shares of the Common Stock and purchase
limits of such outstanding Rights. The Board shall make such adjustments, and
its determination shall be final, binding and conclusive. (The conversion of any
convertible securities of the Company shall not be treated as a transaction that
does not involve the receipt of consideration by the Company.)
(b) In the event of: (i) a dissolution, liquidation, or sale of all or
substantially all of the assets of the Company; (ii) a merger or consolidation
in which the Company is not the surviving corporation; or (iii) a reverse merger
in which the Company is the surviving corporation but the shares of the Common
Stock outstanding immediately preceding the merger are converted by virtue of
the merger into other property, whether in the form of securities, cash or
otherwise, then: (1) any surviving or acquiring corporation may assume Rights
outstanding under the Plan or may substitute similar rights (including a right
to acquire the same consideration paid to the Company's stockholders in the
transaction described in this subparagraph 13(b)) for those outstanding under
the Plan, or (2) in the event any surviving or acquiring corporation does not
assume such Rights or substitute similar rights for those outstanding under the
Plan, then, as determined by the Board in its sole discretion, such Rights
9.
<PAGE> 10
may continue in full force and effect or the Participants' accumulated payroll
deductions (exclusive of any accumulated interest which cannot be applied toward
the purchase of shares of the Common Stock under the terms of the Offering) may
be used to purchase shares of the Common Stock immediately prior to the
transaction described above under the ongoing Offering and the Participants'
Rights under the ongoing Offering thereafter terminated.
14. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in paragraph 13 relating to adjustments upon changes
in securities and except as to minor amendments to benefit the administration of
the Plan, to take account of a change in legislation or to obtain or maintain
favorable tax, exchange control or regulatory treatment for Participants or the
Company or any Affiliate, no amendment shall be effective unless approved by the
stockholders of the Company to the extent stockholder approval is necessary for
the Plan to satisfy the requirements of Section 423 of the Code, Rule 16b-3
under the Exchange Act and any Nasdaq or other securities exchange listing
requirements. Currently under the Code, stockholder approval within twelve (12)
months before or after the adoption of the amendment is required where the
amendment will:
(i) Increase the number of shares of the Common Stock reserved for
Rights under the Plan;
(ii) Modify the provisions as to eligibility for participation in
the Plan to the extent such modification requires stockholder approval in order
for the Plan to obtain employee stock purchase plan treatment under Section 423
of the Code or to comply with the requirements of Rule 16b-3; or
(iii) Modify the Plan in any other way if such modification requires
stockholder approval in order for the Plan to obtain employee stock purchase
plan treatment under Section 423 of the Code or to comply with the requirements
of Rule 16b-3.
(b) It is expressly contemplated that the Board may amend the Plan in
any respect the Board deems necessary or advisable to provide Employees with the
maximum benefits provided or to be provided under the provisions of the Code and
the regulations promulgated thereunder relating to Employee Stock Purchase Plans
and/or to bring the Plan and/or Rights granted under it into compliance
therewith.
(c) Rights and obligations under any Rights granted before amendment of
the Plan shall not be impaired by any amendment of the Plan, except with the
consent of the person to whom such Rights were granted, or except as necessary
to comply with any laws or governmental regulations, or except as necessary to
ensure that the Plan and/or Rights granted under the Plan comply with the
requirements of Section 423 of the Code.
15. DESIGNATION OF BENEFICIARY.
(a) A Participant may file a written designation of a beneficiary who is
to receive any shares of the Common Stock and/or cash, if any, from the
Participant's account under the Plan in the event of such Participant's death
subsequent to the end of an Offering but prior to delivery to
10.
<PAGE> 11
the Participant of such shares of the Common Stock and cash. In addition, a
Participant may file a written designation of a beneficiary who is to receive
any cash from the Participant's account under the Plan in the event of such
Participant's death during an Offering.
(b) The Participant may change such designation of beneficiary at any
time by written notice. In the event of the death of a Participant and in the
absence of a beneficiary validly designated under the Plan who is living at the
time of such Participant's death, the Company shall deliver such shares of the
Common Stock and/or cash to the executor or administrator of the estate of the
Participant, or if no such executor or administrator has been appointed (to the
knowledge of the Company), the Company, in its sole discretion, may deliver such
shares of the Common Stock and/or cash to the spouse or to any one or more
dependents or relatives of the Participant, or if no spouse, dependent or
relative is known to the Company, then to such other person as the Company may
designate.
16. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board in its discretion may suspend or terminate the Plan at any
time. Unless sooner terminated, the Plan shall terminate at the time that all of
the shares of the Common Stock subject to the Plan's reserve, as increased
and/or adjusted from time to time, have been issued under the terms of the Plan.
No Rights may be granted under the Plan while the Plan is suspended or after it
is terminated.
(b) Rights and obligations under any Rights granted while the Plan is in
effect shall not be impaired by suspension or termination of the Plan, except as
expressly provided in the Plan or with the consent of the person to whom such
Rights were granted, or except as necessary to comply with any laws or
governmental regulation, or except as necessary to ensure that the Plan and/or
Rights granted under the Plan comply with the requirements of Section 423 of the
Code.
17. EFFECTIVE DATE OF PLAN.
The Plan shall become effective simultaneously with the effectiveness of
the Company's registration statement under the Securities Act with respect to
the initial public offering of shares of the Company's Common Stock (the
"Effective Date"), but no Rights granted under the Plan shall be exercised
unless and until the Plan has been approved by the stockholders of the Company
within twelve (12) months before or after the date the Plan is adopted by the
Board, which date may be prior to the Effective Date.
11.
<PAGE> 12
REPEATER TECHNOLOGIES, INC.
2000 EMPLOYEE STOCK PURCHASE PLAN
OFFERING
ADOPTED FEBRUARY 15, 2000
1. GRANT; OFFERING DATE.
(a) The Board of Directors (the "Board") of Repeater Technologies, Inc.
(the "Company"), pursuant to the Company's Employee Stock Purchase Plan (the
"Plan"), hereby authorizes the grant of rights to purchase shares of the common
stock of the Company ("Common Stock") to all Eligible Employees (an "Offering").
The first Offering shall begin on the effective date of the initial public
offering of the Company's Common Stock and end on April 30, 2002 (the "Initial
Offering"). Further, an Offering shall begin on each May 1 and November 1
thereafter, commencing on November 1, 2000, and shall end on the day prior to
the second anniversary of each such Offering's Offering Date unless sooner
terminated in accordance with the provisions of this Offering or the Plan. The
first day of an Offering is that Offering's "Offering Date."
(b) Notwithstanding the foregoing: (i) if any Offering Date falls on a
day that is not a Trading Day (as defined herein), then such Offering Date shall
instead fall on the next subsequent Trading Day and (ii) if any Purchase Date
falls on a day that is not a Trading Day, then such Purchase Date shall instead
fall on the immediately preceding Trading Day. "Trading Day" shall mean any day
the exchange(s) or market(s) on which the Common Stock is listed, whether it be
any established stock exchange, The Nasdaq National Market, The Nasdaq SmallCap
Market or otherwise, is open for trading.
(c) Except as provided in paragraph 4, "Fair Market Value" shall mean
the closing sales price for the Common Stock (or the closing bid price, if no
sales were reported) as quoted on any established stock exchange or traded on
the Nasdaq National Market or the Nasdaq SmallCap Market and as reported in The
Wall Street Journal or such other source as the Board deems reliable.
(d) Prior to the commencement of any Offering, the Board (or the
Committee described in subparagraph 2(c) of the Plan, if any) may change any or
all terms of such Offering and any subsequent Offerings. The granting of rights
pursuant to each Offering hereunder shall occur on each respective Offering Date
unless, prior to such date (a) the Board (or the Committee) determines that such
Offering shall not occur, or (b) no shares remain available for issuance under
the Plan in connection with the Offering.
(e) Notwithstanding any other provisions of an Offering, if the terms of
an Offering as previously established by the Board would, as a result of a
change to applicable accounting standards, as a result of obtaining shareholder
approval during such Offering for shares of Common Stock that would be issued
under such Offering (but for the provisions of this Section 1(e)), or otherwise,
generate a charge to earnings, such Offering shall terminate effective as of the
earlier of (1) the day prior to the date such change of accounting standards
would otherwise
1.
<PAGE> 13
first apply to the Offering or (2) the day prior to the date upon which the
maximum aggregate number of shares of Common Stock available to be purchased by
all Eligible Employees under such Offering (excluding any additional shares of
Common Stock made available for issuance under the Plan by approval of the
shareholders of the Company during the Offering) exceeds the aggregate number of
whole shares purchasable by all Eligible Employees based upon the aggregate of
such Employees' payroll deductions accumulated pursuant to such Offering (the
"Offering Termination Date"), and such Offering Termination Date shall be the
final Purchase Date of such Offering. A subsequent Offering shall commence on
such date and on such terms as shall be provided by the Board of Directors of
the Company.
2. ELIGIBLE EMPLOYEES.
(a) All employees of the Company and each of its Affiliates (as defined
in the Plan) incorporated in the United States, shall be granted rights to
purchase Common Stock under each Offering on the Offering Date of such Offering,
provided that each such employee otherwise meets the employment requirements of
subparagraph 5(a) of the Plan (an "Eligible Employee"), provided, however, that
otherwise eligible employees with the Company who are employed by the Company on
the date of the Company's initial public offering will be eligible to
participate in the Plan as of the Initial Offering if they remain in employment
with the Company through the relevant Purchase Date of the initial Offering
Period.
Notwithstanding the foregoing, the following employees shall not be
Eligible Employees or be granted rights under an Offering: (i) part-time or
seasonal employees whose customary employment is less than twenty (20) hours per
week or five (5) months per calendar year and (ii) 5% stockholders (including
ownership through unexercised and/or unvested stock options) described in
subparagraph 5(c) of the Plan.
(b) Notwithstanding the foregoing, each person who first becomes an
Eligible Employee during any Offering and at least six (6) months prior to the
final Purchase Date (as defined in paragraph 6 hereof) of the Offering will, on
the next May 1 or November 1 during that Offering coinciding with or immediately
following the date that person first becomes an Eligible Employee, receive a
right under such Offering, which right shall thereafter be deemed to be a part
of the Offering. Such right shall have the same characteristics as any rights
originally granted under the Offering except that:
(1) the date on which such right is granted shall be the "Offering
Date" of such right for all purposes, including determination of the exercise
price of such right; and
(2) the Offering for such right shall begin on its Offering Date and
end coincident with the end of the ongoing Offering.
3. RIGHTS.
(a) Subject to the limitations contained herein and in the Plan, on each
Offering Date each Eligible Employee shall be granted the right to purchase the
number of shares of Common Stock purchasable with up to fifteen percent (15%) of
such employee's Earnings paid during the period of such Offering beginning after
such Eligible Employee first commences participation; provided, however, that no
employee may purchase Common Stock on a particular Purchase
2.
<PAGE> 14
Date that would result in more than fifteen percent (15%) of such employee's
Earnings in the period from the Offering Date to such Purchase Date having been
applied to purchase shares under all ongoing Offerings under the Plan and all
other plans of the Company intended to qualify as "employee stock purchase
plans" under Section 423 of the Internal Revenue Code of 1986, as amended (the
"Code"). For this Offering, "Earnings" means the base salary paid to an employee
(including all amounts elected to be deferred by the employee, that would
otherwise have been paid, under any cash or deferred arrangement established by
the Company), overtime pay, commissions, and bonuses, but excluding other
remuneration paid directly to the employee, profit sharing, the cost of employee
benefits paid for by the Company, education or tuition reimbursements, imputed
income arising under any Company group insurance or benefit program, traveling
expenses, business and moving expense reimbursements, income received in
connection with stock options, contributions made by the Company under any
employee benefit plan, and similar items of compensation.
(b) Notwithstanding the foregoing, the maximum number of shares of
Common Stock an Eligible Employee may purchase on any Purchase Date in an
Offering shall be such number of shares as has a Fair Market Value (determined
as of the Offering Date for such Offering) equal to (x) $25,000 multiplied by
the number of calendar years in which the right under such Offering has been
outstanding at any time, minus (y) the Fair Market Value of any other shares of
Common Stock (determined as of the relevant Offering Date with respect to such
shares) which, for purposes of the limitation of Section 423(b)(8) of the Code,
are attributed to any of such calendar years in which the right is outstanding.
The amount in clause (y) of the previous sentence shall be determined in
accordance with regulations applicable under Section 423(b)(8) of the Code based
on (i) the number of shares previously purchased with respect to such calendar
years pursuant to such Offering or any other Offering under the Plan, or
pursuant to any other Company plans intended to qualify as "employee stock
purchase plans" under Section 423 of the Code, and (ii) the number of shares
subject to other rights outstanding on the Offering Date for such Offering
pursuant to the Plan or any other such Company plan.
(c) The maximum aggregate number of shares available to be purchased by
all Eligible Employees under an Offering shall be the number of shares remaining
available under the Plan on the Offering Date. If the aggregate purchase of
shares of Common Stock upon exercise of rights granted under the Offering would
exceed the maximum aggregate number of shares available, the Board shall make a
pro rata allocation of the shares available in a uniform and equitable manner.
4. PURCHASE PRICE.
The purchase price of the Common Stock under the Offering shall be the
lesser of: (i) eighty-five percent (85%) of the Fair Market Value of the Common
Stock on the Offering Date or (ii) or eighty-five percent (85%) of the Fair
Market Value of the Common Stock on the Purchase Date, in each case rounded up
to the nearest whole cent per share. For the Initial Offering, the Fair Market
Value of the Common Stock at the time when the Offering commences shall be the
price per share at which shares of Common Stock are first sold to the public in
the Company's initial public offering as specified in the final prospectus with
respect to that public offering.
3.
<PAGE> 15
5. PARTICIPATION.
(a) An Eligible Employee may elect to participate in an Offering only at
the beginning of the Offering, or such later date specified in subparagraph
2(b). An Eligible Employee shall become a participant in an Offering by
delivering an enrollment form authorizing payroll deductions. Such deductions
must be either a fixed dollar amount per pay period, up to a maximum dollar
amount which is less than or equal to fifteen percent (15%) of Earnings, or in
whole percentages of Earnings, with a minimum percentage of one percent (1%) and
a maximum percentage of fifteen percent (15%). A participant may not make
additional payments into his or her account. The agreement shall be made on such
enrollment form as the Company provides, and must be delivered to the Company
prior to the date participation is to be effective, unless a later time for
filing the enrollment form is set by the Company for all Eligible Employees with
respect to a given Offering. For the Initial Offering, the time for filing an
enrollment form and commencing participation for individuals who are Eligible
Employees on the Offering Date for the Initial Offering shall be determined by
the Company and communicated to such Eligible Employees.
(b) A participant may decrease his or her participation level during the
course of a six (6) month purchase interval one (1) time, and only by delivering
notice to the Company at least ten (10) days in advance of the Purchase Date in
such form as the Company prescribes; provided that a participant may (i) reduce
his or her deductions to zero percent (0%) upon ten (10) days' prior notice, or
within such shorter period as determined by the Board and communicated to the
participants, by delivering a notice in such form as the Company provides, (ii)
may increase or decrease his or her participation level at any time to become
effective on the day following the next subsequent Purchase Date, or (iii) may
withdraw from an Offering and receive his or her accumulated payroll deductions
from the Offering (reduced to the extent, if any, such deductions have been used
to acquire Common Stock for the participant on any prior Purchase Dates) without
interest, at any time prior to the end of the Offering, excluding only each ten
(10) day period immediately preceding a Purchase Date, by delivering a
withdrawal notice to the Company in such form as the Company provides. A
participant who has withdrawn from an Offering shall not again participate in
such Offering, but may participate in subsequent Offerings under the Plan in
accordance with the terms thereof.
6. PURCHASES.
Subject to the limitations contained herein, on each Purchase Date, each
participant's accumulated payroll deductions (without any increase for interest)
shall be applied to the purchase of whole shares of Common Stock, up to the
maximum number of shares permitted under the Plan and the Offering. "Purchase
Date" shall be defined as each April 30 and October 31 within the Offering. The
Purchase Dates under the Initial Offering shall be October 31 of the year 2000,
April 30 and October 31 of the year 2001 and April 30 of the year 2002.
Notwithstanding the foregoing, if any Purchase Date falls on a day that is not a
Trading Day, then such Purchase Date shall instead fall on the immediately
preceding Trading Day. On a Purchase Date, each participant's purchases will
first be made under the Offering, for which purchases are made on such date,
that results in stock being purchased for such participant at the lowest price
under all Offerings in which such participant then has been granted rights and
under which stock is purchased on such Purchase Date.
4.
<PAGE> 16
7. NOTICES AND AGREEMENTS.
Any notices or agreements provided for in an Offering or the Plan shall
be given in writing, in a form provided by the Company, and unless specifically
provided for in the Plan or this Offering, shall be deemed effectively given
upon receipt or, in the case of notices and agreements delivered by the Company,
five (5) days after deposit in the United States mail, postage prepaid.
8. EXERCISE CONTINGENT ON STOCKHOLDER APPROVAL.
The rights granted under an Offering are subject to the approval of the
Plan by the stockholders as required for the Plan to obtain treatment as a
tax-qualified employee stock purchase plan under Section 423 of the Code and to
comply with the requirements of an available exemption from potential liability
under Section 16(b) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") set forth in Rule 16b-3 promulgated under the Exchange Act.
9. OFFERING SUBJECT TO PLAN.
Each Offering is subject to all the provisions of the Plan, and its
provisions are hereby made a part of the Offering, and is further subject to all
interpretations, amendments, rules and regulations which may from time to time
be promulgated and adopted pursuant to the Plan. In the event of any conflict
between the provisions of an Offering and those of the Plan (including
interpretations, amendments, rules and regulations which may from time to time
be promulgated and adopted pursuant to the Plan), the provisions of the Plan
shall control.
5.
<PAGE> 1
EXHIBIT 10.6
[SOBRATO LOGO]
LEASE BETWEEN
THE SOBRATO 1979 TRUST AND PENINSULA ENGINEERING GROUP, INC.
<TABLE>
<CAPTION>
Section Page #
- ------- ------
<S> <C>
Parties ................................................................. 1
Premises ................................................................ 1
Use ..................................................................... 1
Term and Rental ......................................................... 1
Security Deposit ........................................................ 1
Late Charges ............................................................ 2
Construction and Possession ............................................. 2
Landlord's Obligation to Construct ................................... 2
Contribution to Tenant Improvement Costs ............................. 2
Tenant Improvement Plans and Cost Estimate ........................... 2
Commencement Date .................................................... 2
Acceptance of Possession and Covenants to Surrender ..................... 2
Uses Prohibited ......................................................... 3
Alterations and Additions ............................................... 3
Maintenance of Premises ................................................. 3
Landlord and Tenant's Obligations Regarding Common Area Costs ........ 3
Common Area Costs .................................................... 4
Tenant's Allocable Share ............................................. 4
Waiver of Liability .................................................. 4
Tenant's Obligations ................................................. 5
Hazard Insurance ........................................................ 5
Tenant's Use ......................................................... 5
Tenant's Insurance ................................................... 5
Waiver ............................................................... 6
Taxes ................................................................... 6
Utilities ............................................................... 6
Abandonment ............................................................. 6
Free From Liens ......................................................... 6
Compliance With Governmental Regulations ................................ 7
Toxic Waste and Environmental Damage .................................... 7
Tenant's Responsibility .............................................. 7
Tenant's Indemnity Regarding Hazardous Materials ..................... 7
Environmental Monitoring ............................................. 7
Landlord's Indemnity Regarding Hazardous Materials ................... 8
Indemnity ............................................................... 8
Advertisements and Signs ................................................ 8
Attorney's Fees ......................................................... 8
Tenant's Default ........................................................ 8
Remedies ............................................................. 8
Abandonment .......................................................... 9
No Termination ....................................................... 9
Surrender of Lease ...................................................... 9
This paragraph intentionally left blank ................................. 9
Landlord's Default ...................................................... 9
Notices ................................................................. 10
Entry by Landlord ....................................................... 10
Destruction of Premises ................................................. 10
Destruction by an Insured Casualty ................................... 10
Destruction by an Uninsured Casualty ................................. 10
</TABLE>
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<PAGE> 2
<TABLE>
<S> <C>
Assignment or Sublease .................................................. 11
Consent by Landlord .................................................. 11
Assignment or Subletting Consideration ............................... 11
No Release ........................................................... 12
Effect of Default .................................................... 12
Condemnation ............................................................ 12
Effects of Conveyance ................................................... 12
Subordination ........................................................... 13
Waiver .................................................................. 13
Holding Over ............................................................ 13
Successors and Assigns .................................................. 13
Estoppel Certificates ................................................... 13
This paragraph intentionally left blank ................................. 14
Quiet Enjoyment ......................................................... 14
Brokers ................................................................. 14
Landlord's Liability .................................................... 14
Authority of Parties .................................................... 14
Corporate Authority .................................................. 14
This paragraph intentionally left blank ................................. 14
Miscellaneous Provisions ................................................ 14
Rent ................................................................. 14
Performance by Tenant ................................................ 14
Performance by Landlord .............................................. 14
Interest ............................................................. 14
Rights and Remedies .................................................. 14
Survival of Indemnities .............................................. 15
Severability ......................................................... 15
Choice of Law ........................................................ 15
Time ................................................................. 15
Entire Agreement ..................................................... 15
Representations ...................................................... 15
Headings ............................................................. 15
Exhibits ................................................................ 16
</TABLE>
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<PAGE> 3
[SOBRATO LOGO]
1. PARTIES: THIS LEASE, is entered into on this 7th day of August,
1992, between The Sobrato 1979 Trust, a California general partnership, whose
address is 10600 North DeAnza Boulevard, Cupertino, California, 95014, and
Peninsula Engineering Group, Inc., a California Corporation, whose address is
1091 Industrial Road, San Carlos, California, 94070, hereinafter called
respectively Landlord and Tenant.
2. PREMISES: Landlord hereby leases to Tenant, and Tenant hires from
Landlord those certain Premises with the appurtenances, situated in the City of
Sunnyvale, County of Santa Clara, State of California, and more particularly
described as follows, to-wit:
That certain real property commonly known and designated as 1150 Morse Avenue
consisting of approximately 40,333 rentable square feet of a larger 70,000
square foot freestanding building ("Building") as outlined in red on Exhibit
"A".
3. USE: Tenant shall use the Premises only for the following purposes
and shall not change the use of the Premises without the prior written consent
of Landlord: Office, research, development, testing, light manufacturing,
ancillary warehouse, and related legal uses. Landlord makes no representation or
warranty that any specific use of the Premises desired by Tenant is permitted
pursuant to any Laws.
4. TERM AND RENTAL: The term ("Lease Term") shall be for seventy two
(72) months, commencing, as adjusted pursuant to paragraph 7, on the 1st day of
January, 1993 ("Commencement Date"), and ending on the 31st day of December,
1998, ("Expiration Date"). In addition to all other sums payable by Tenant under
this Lease, Tenant shall pay as base monthly rent ("Base Monthly Rent") for the
Premises the following amounts:
01/01/93 - 12/31/95 $22,586.48 per month
01/01/96 - 12/31/98 $26,619.78 per month
Base Monthly Rent shall be due on or before the first day of each calendar month
during Lease Term. All sums payable by Tenant under this Lease shall be paid in
lawful money of the United States of America, without offset or deduction, and
shall be paid to Landlord at such place or places as may be designated from time
to time by Landlord. Base Monthly Rent for any period less than a calendar month
shall be a pro rata portion of the monthly installment.
5. SECURITY DEPOSIT: Concurrently with Tenant's execution of this
Lease, Tenant has deposited with Landlord the sum of Twenty Six Thousand Six
Hundred Nineteen and 78/100 Dollars ($26,619.78) as a security deposit. If
Tenant defaults with respect to any provisions of this Lease, including but not
limited to the provisions relating to payment of Base Monthly Rent or other
charges, Landlord may, to the extent reasonably necessary to remedy Tenant's
default, use all or any part of said deposit for the payment of Base Monthly
Rent or other charges in default or the payment of any other payment of any
other amount which Landlord may spend or become obligated to spend by reason of
Tenant's default or to compensate Landlord for any other loss or damage which
Landlord may suffer by reason of Tenant's default. If any portion of said
deposit is so used or applied, Tenant shall, within ten (10) days after written
demand therefor, deposit cash with Landlord in an amount sufficient to restore
said deposit to the full amount hereinabove stated and shall pay to Landlord
such other sums as shall be necessary to reimburse Landlord for any sums paid by
Landlord. Said deposit shall be returned to Tenant within thirty (30) days after
the Expiration Date and surrender of
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<PAGE> 4
the Premises to Landlord, less any amount deducted in accordance with this
paragraph, together with Landlord's written notice itemizing the amounts and
purposes for such retention. In the event of termination of Landlord's interest
in this Lease, Landlord shall transfer said deposit to Landlord's successor in
interest.
6. LATE CHARGES: A late charge of ten percent (10%) of the Base Monthly
Rent will be assessed on payments received after the fifth day of the calendar
month excluding Sunday and legal holidays.
IT IS FURTHER MUTUALLY AGREED BETWEEN THE PARTIES AS FOLLOWS:
7. CONSTRUCTION AND POSSESSION:
A. LANDLORD'S OBLIGATION TO CONSTRUCT: The Tenant Improvements shall be
constructed by independent contractors to be employed by and under the
supervision of a General Contractor, in accordance with interior plans prepared
by Dennis Kobza & Associates, to be attached as Exhibit "B" ("Working
Drawings"). Landlord shall construct the Tenant Improvements in accordance with
all existing applicable municipal, local, state and federal laws, statutes,
rules, regulations and ordinances. Landlord shall utilize H & L Construction for
the construction of the Tenant Improvements.
B. CONTRIBUTION TO TENANT IMPROVEMENT COSTS: Landlord shall be
responsible for and shall pay the cost of (i) the Tenant Improvements up to the
amount of Eighty Thousand Dollars ($80,000.00) ("Tenant Improvement Allowance"),
(ii) demising the Building, (iii) bringing the restrooms into compliance with
Title 24 requirements, and (iv) any future expenses which may be required to
meet federal, state, county and city building codes, both at the time of
occupancy and subsequently found to have been omitted following occupancy, such
as, but not limited to the Americans with Disabilities Act (ADA) and Title 24.
Costs in excess of said Tenant Improvement Allowance shall be paid for by Tenant
within fifteen (15) days following the Commencement Date.
C. TENANT IMPROVEMENT PLANS AND COST ESTIMATE: Tenant to supply
Landlord with general improvement information including a space plan (one line
drawing) of Tenant's wall layout, ("Space Plan") by August 31, 1992. Landlord
and Tenant shall approve the Working Drawings and Budget (or modify the same)
within seven (7) days thereafter. In the event (i) Tenant fails to provide the
Space Plan when required above, or (ii) Tenant Fails to approve the Working
Drawings or Budget within seven (7) days as provided above, or (iii) Tenant
makes any changes to the Working Drawings which cause Landlord's construction
schedule to be delayed, the Commencement Date shall occur one (1) day in advance
of Substantial Completion as defined below for each day of delay.
D. COMMENCEMENT DATE: If Landlord, for any reason whatsoever, cannot
deliver possession of the said Premises to Tenant by the Commencement Date, this
Lease shall not be void or voidable, nor shall Landlord be liable to Tenant for
any loss or damage resulting therefrom; but in that event the Commencement Date
and Expiration Date of the Lease and all other dates affected thereby shall be
revised to conform to the date of Landlord's delivery of possession. The Lease
Term shall not commence until substantial completion of the Premises occurs. The
terms "Substantial Completion" and "Substantially Complete" shall mean that (i)
all necessary governmental approvals for occupancy of the Building have been
obtained; (ii) construction of the Premises has been completed in accordance
with the Working Drawings approved by Tenant to an extent that would permit
Tenant to use the Premises for its intended purpose; and (iii) the Premises are
in a "broom clean" finished condition.
8. ACCEPTANCE OF POSSESSION AND COVENANTS TO SURRENDER: By entry
hereunder, Tenant accepts the Premises as being in good and sanitary order,
condition and repair and accepts the Building and the other improvements in
their present condition, except for the "punch list" as set forth on Exhibit
"C", attached hereto.
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<PAGE> 5
The Tenant agrees on Expiration Date, or on the sooner termination of this
Lease, to surrender the Premises to Landlord in good condition and repair,
reasonable wear and tear excepted. "Good condition" shall mean that the interior
walls, floors, suspended ceilings, and carpeting within the Premises will be
cleaned to the same condition as existed at the commencement of the Lease,
normal wear and tear excepted. Tenant agrees, at its sole cost, to remove all
phone and data cabling from the suspended ceiling and repair or replace broken
ceiling tiles, and relevel the ceiling if required. Tenant shall ascertain from
Landlord within thirty (30) days before the Expiration Date whether Landlord
desires to have the Premises or any part or parts thereof restored to their
condition as of the Commencement Date or to cause Tenant to surrender all
Alterations in place to Landlord. If Landlord shall so desire, then Tenant shall
remove such Alterations as Landlord may require and shall repair and restore
said Premises or such part or parts thereof before the Expiration Date at
Tenant's sole cost and expense. Tenant on or before the Expiration Date or
sooner termination of this Lease, shall remove all its personal property and
trade fixtures from the Premises, and all property and fixtures not so removed
shall be deemed to be abandoned by Tenant. If the Premises are not surrendered
at the Expiration Date or sooner termination of this Lease in the condition
required by this paragraph, Tenant shall indemnify, defend, and hold harmless
Landlord against loss or liability resulting from delay by Tenant in so
surrendering the Premises including, without limitation, any claims made by any
succeeding tenant founded on such delay.
9. USES PROHIBITED: Tenant shall not commit, or suffer to be committed,
any waste upon the said Premises, or any nuisance, or other act or thing which
may disturb the quiet enjoyment of any other tenant in or around the Building,
or allow the Premises to be used for any unlawful purpose, or place any loads
upon the floor, walls, or ceiling which endanger the structure, or use any
machinery or apparatus which will in any manner vibrate or shake the Building,
or place any harmful liquids, waste materials, or hazardous materials in the
drainage system of, or upon or in the soils surrounding the Building. No
materials, supplies, equipment, finished products or semi-finished products, raw
materials or articles of any nature or any waste materials, refuse, scrap or
debris shall be stored upon or permitted to remain on any portion of the
Premises outside of the Building proper except in enclosed storage areas without
Landlord's prior approval, which approval may be withheld in its sole
discretion.
10. ALTERATIONS AND ADDITIONS: Tenant shall not make, or suffer to be
made, any alteration or addition to the said Premises ("Alterations"), or any
part thereof, without (i) the written consent of Landlord first had and
obtained, and (ii) delivering to Landlord the proposed architectural and
structural plans for all such Alterations. Any Alterations, except movable
furniture and trade fixtures, shall become at once a part of the realty and
belong to Landlord. Alterations which are not to be deemed as trade fixtures
shall include heating, lighting, electrical systems, air conditioning,
partitioning, carpeting, or any other installation which has become an integral
part of the Premises. After having obtained Landlord's consent, Tenant agrees
that it will not proceed to make such Alterations until (i) Tenant has obtained
all required governmental approvals and permits, and (ii) Tenant has provided
Landlord reasonable security, in form reasonably approved by Landlord, to
protect Landlord against mechanics' lien claims. Tenant further agrees to
provide Landlord (i) written notice of the actual start date of the work, (iii)
a complete set of as-built drawings. All Alterations shall be maintained,
replaced or repaired at Tenant's sole cost and expense.
11. MAINTENANCE OF PREMISES:
A. LANDLORD AND TENANT'S OBLIGATIONS REGARDING COMMON AREA
COSTS: Tenant agrees to reimburse Landlord for the expenses resulting from
Landlord's payment of Common Area Costs as defined in paragraph 11(B) incurred
by Landlord because the cost is not directly allocable to or payable by a single
tenant in the Building or the Project. Tenant agrees to pay Tenant's Allocable
Share as defined in paragraph 11(C) of the Common Area Costs, as additional
rental, within ten (10) days of written invoice from Landlord.
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<PAGE> 6
B. COMMON AREA COSTS: For purposes of calculating Tenant's
Allocable Share of Building and of Project Costs, the term "Common Area Costs"
shall mean all costs and expenses of the nature hereinafter described which are
incurred in connection with ownership and operation of the Building or the
Project in which the Premises are located, as the case may be not directly
allocable to or payable by a single tenant in the Building or the Project,
together with such additional facilities as may be determined by Landlord to be
reasonably desirable or necessary to the ownership and operation of the Building
and/or Project. All costs and expenses shall be determined in accordance with
generally accepted accounting principles which shall be consistently applied
(with accruals appropriate to Landlord's business), including but not limited
to, the following: (i) common area utilities, including water and power,
heating, lighting, air-conditioning, ventilating and Building utilities to the
extent not separately metered; (ii) common area maintenance and service
agreements for the Building or the Project and the equipment therein including,
without limitation, common area janitorial services, alarm and security
services, exterior window cleaning, and maintenance of the sidewalks,
landscaping, waterscape, roof membrane, parking areas, driveways, service areas,
mechanical rooms, elevators, and the building exterior; (iii) insurance premiums
and costs, including without limitation, the premiums and cost of fire, casualty
and liability coverage and rental abatement and earthquake (if commercially
available) insurance applicable to the Building or Project; (iv) repairs,
replacements and general maintenance (excluding repairs and general maintenance
paid by proceeds of insurance or by Tenant or other third parties, and repairs
or alterations attributable solely to tenants of the Building or Project other
than Tenant); and (v) All real estate taxes and assessment installments (special
or general) or other impositions or charges which may be levied on the Premises,
upon the occupancy of the Premises and including any substitute or additional
charges which may be imposed during, or applicable to the Lease Term including
real estate tax increases due to a sale or other transfer of the Premises, as
such taxes are levied or appear on the City and County tax bills and assessment
rolls. This shall be a Net Lease and the Base Monthly Rent shall be paid to
Landlord absolutely net of all costs and expenses. The provision for payment of
Common Area Costs by means of periodic payment of Tenant's Allocable Share of
Building and/or Project Costs are intended to pass on to Tenant and reimburse
Landlord for all costs of operating and managing the Building and/or Project.
C. TENANT'S ALLOCABLE SHARE: For purposes of prorating Common
Area Costs which Tenant shall pay, Tenant's Allocable Share of Building Costs is
computed by multiplying the total Common Area Costs for services shared by the
Building by a fraction, the numerator of which is the rentable square footage of
the Premises and the denominator of which is the total rentable square footage
of the Building (excluding common areas). Tenant's Allocable Share of Project
Costs shall be computed on a shared service by service basis, by multiplying the
total Common Area Costs for services shared by the Building and one or more
buildings in the Project by a fraction, the numerator of which is the rentable
square footage of the Premises and the denominator of which is the total
rentable square footage of the Buildings in the Project which share the
services. It is understood and agreed by Landlord and Tenant that Tenant's
Allocable Share of Building Costs is 57.62% and of Project Costs is 57.62%.
based on 40,333 square feet of the 70,000 square foot Building. It is understood
and agreed that Tenant's obligation to share in Common Area Costs shall be
adjusted to reflect the commencement and termination dates of the Lease Term and
are subject to recalculation in the event of expansion of the Building or
Project.
D. WAIVER OF LIABILITY: Failure by Landlord to perform any
defined services, or any cessation thereof, when such failure is caused by
accident, breakage, repairs, strikes, lockout or other labor disturbances or
labor disputes of any character, or by any other cause, similar or dissimilar,
beyond the reasonable control of Landlord, shall not render Landlord liable in
any respect for damages to either person or property, nor be construed as an
eviction of Tenant, nor cause an abatement of rent nor relieve Tenant from
fulfillment of any covenant or agreement hereof. Should any of the equipment or
machinery utilized in supplying the services listed herein break down, or for
any cause cease to function properly, upon receipt of written notice from Tenant
of any deficiency or failure of any defined Services, Landlord shall use
reasonable
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<PAGE> 7
diligence to repair the same promptly, but Tenant shall have no right to
terminate this Lease, and shall have no claim for rebate of rent or damages, on
account of any interruptions in service occasioned thereby or resulting
therefrom. Tenant waives the provisions of California Civil Code Sections 1941
and 1942 concerning the Landlord's obligation of tenantability and Tenant's
right to make repairs and deduct the cost of such repairs from the rent.
Landlord shall not be liable for a loss of or injury to property, however
occurring, through or in connection with or incidental to furnishing or its
failure to furnish any of the foregoing.
E. TENANT'S OBLIGATIONS: Except as provided in 11(A) above,
Tenant shall, at its sole cost, keep and maintain, repair and replace, said
Premises and appurtenances and every part hereof, including but not limited to,
roof membrane, glazing, sidewalks, plumbing, electrical and HVAC systems, and
all the Tenant Interior Improvements in good and sanitary order, condition, and
repair. Tenant shall provide Landlord with a copy of a service contract between
Tenant and a licensed air-conditioning and heating contractor which contract
shall provide for quarterly maintenance of all air conditioning and heating
equipment at the Premises. Tenant shall pay the cost of all air-conditioning and
heating repairs or replacements which are either excluded from such service
contract or any existing equipment warranties. All wall surfaces and floor tile
are to be maintained in an as good a condition as when Tenant took possession
free of holes, gouges, or defacements.
12. HAZARD INSURANCE:
A. TENANT'S USE: Tenant shall not use, or permit said
Premises, or any part thereof, to be used, for any purpose other than that for
which the said Premises are hereby leased; and no use shall be made or permitted
to be made of the said Premises, nor acts done, which will cause an increase in
premiums or a cancellation of any insurance policy covering said Building, or
any part thereof, nor shall Tenant sell or permit to be kept, used or sold, in
or about said Premises, any article which may be prohibited by the standard form
of fire insurance policies. Tenant shall, at its sole cost and expense, comply
with any and all requirements, pertaining to said Premises, of any insurance
organization or company, necessary for the maintenance of reasonable fire and
public liability insurance, covering said Building and appurtenances.
B. LANDLORD'S INSURANCE: Landlord agrees to purchase and keep
in force fire and extended coverage, and earthquake (at Landlord's election),
and 12 month rental loss insurance covering the Premises in amounts not to
exceed the actual insurable value of the Building as determined by Landlord's
insurance company's appraisers. The Tenant agrees to pay to the Landlord as
additional rent, on demand, the full cost of said insurance as evidenced by
insurance billings to the Landlord, and in the event of damage covered by said
insurance, the amount of any deductible under such policy. Payment shall be due
to Landlord within ten (10) days after written invoice to Tenant.
Notwithstanding the foregoing, Tenant's obligation to pay for the cost of any
earthquake insurance premiums shall be limited to an amount equal or less than
four (4) times the cost of the fire and extended coverage premiums. It is
understood and agreed that Tenant's obligation under this paragraph will be
prorated to reflect the commencement and termination dates of this Lease.
C. TENANT'S INSURANCE: Tenant, at its sole cost, agrees to
insure its personal property and Alterations for their full replacement value
(without depreciation) and to obtain worker's compensation and public liability
and property damage insurance for occurrences within the Premises with a
$3,000,000.00 combined single limit for bodily injury and property damage.
Tenant shall name Landlord and Landlord's lender as an additional insured,
shall deliver a copy of the policies and renewal certificates to Landlord. All
such policies shall provide for thirty (30) days' prior written notice to
Landlord of any cancellation, termination, or reduction in coverage.
Notwithstanding the above, Landlord retains the right to have Tenant provide
other forms of insurance which may be reasonably required to cover future risks.
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D. WAIVER: Landlord and Tenant hereby waive any and all rights
each may have against the other on account of any loss or damage occasioned to
the Landlord or the Tenant as the case may be, or to the Premises or its
contents, and which may arise from any risk covered by their respective
insurance policies, as set forth above. The parties shall use their reasonable
efforts to obtain from their respective insurance companies a waiver of any
right of subrogation which said insurance company may have against the Landlord
or the Tenant, as the case may be.
13. TAXES: Tenant shall be liable and shall pay prior to delinquency,
for all taxes and assessments levied against personal property and trade or
business fixtures, and agrees to pay, as additional rental, all real estate
taxes and assessment installments (special or general) or other impositions
including tax increases due to sale or other transfer of the Premises as they
appear on the City and County tax bills during the Lease Term, and as they
become due. It is understood and agreed that Tenant's obligation under this
paragraph will be prorated to reflect the Commencement and Expiration Dates. In
any time during the Lease Term a tax, excise on rents, business license tax, or
any other tax, however described, is levied or assessed against Landlord, as a
substitute or addition in whole or in part for taxes assessed or imposed on land
or Buildings, Tenant shall pay and discharge his pro rata share of such tax or
excise on rents or other tax before it becomes delinquent, except that this
provision is not intended to cover net income taxes, inheritance, gift or estate
tax imposed upon the Landlord. In the event that a tax is placed, levied, or
assessed against Landlord and the taxing authority takes the position that the
Tenant cannot pay and discharge his pro rata share of such tax on behalf of the
Landlord, then at the sole election of the Landlord, the Landlord may increase
the rental charged hereunder by the exact amount of such tax and Tenant shall
pay such increase as additional rent hereunder.
Notwithstanding the foregoing, if property taxes increase during the lease term
as a result of a reassessment due to a voluntary change of ownership, Tenant's
shall be responsible for payment of the resulting property tax increase as
follows: during the first twelve months, Tenant shall be responsible for payment
of one third (1/3) of the tax increase; during the second twelve months, Tenant
shall be responsible for payment of two thirds (2/3) of the tax increase,
thereafter Tenant shall be responsible for payment of the entire tax increase.
14. UTILITIES: Tenant shall pay directly, or as pro rated by Landlord,
to the providing utility all water, gas, heat, light, power, telephone and other
utilities supplied to the Premises. Landlord shall not be liable for a loss of
or injury to property, however occurring, through or in connection with or
incidental to furnishing or failure to furnish any utilities to the Premises and
Tenant shall not be entitled to abatement or reduction of any portion of the
Base Monthly Rent so long as any failure to provide and furnish the utilities to
the Premises due to any cause beyond the Landlord's reasonable control.
15. ABANDONMENT: Tenant shall not vacate or abandon the Premises at any
time during the Lease Term; and if Tenant shall abandon, vacate or surrender
said Premises, or be dispossessed by process of law, or otherwise, any personal
property belonging to Tenant and left on the Premises shall be deemed to be
abandoned, at the option of Landlord, except such property as may be mortgaged
to Landlord.
16. FREE FROM LIENS: Tenant shall keep the Premises and the Building
free from any liens arising out of any work performed, materials furnished, or
obligations incurred by Tenant or claimed to have been performed for Tenant. In
the event Tenant fails to discharge any such lien within ten (10) days after
receiving notice of the filing, Landlord shall be entitled to discharge such
lien at Tenant's expense and all resulting costs incurred by Landlord, including
attorney's fees shall be due from Tenant as additional rent.
Landlord shall keep the Premises and the Building free from any liens arising
out of any work performed, materials furnished, or obligations incurred by the
Landlord or claimed to have been performed for Landlord. In the event Landlord
fails to discharge any such lien within the (10) days after receiving notice of
the filing, Tenant shall be
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entitled to discharge such lien at Landlord's expense and all resulting costs
incurred by Tenant, including attorney's fees, shall be deducted from Tenant's
Monthly Base Rent.
17. COMPLIANCE WITH GOVERNMENTAL REGULATIONS: Tenant shall, at its sole
cost and expense, comply with all of the requirements of all Municipal, State
and Federal authorities now in force, or which may hereafter be in force,
pertaining to the said Premises, and shall faithfully observe in the use of the
Premises all Municipal ordinances and State and Federal statutes now in force or
which may hereafter be in force, with the exception of those items and
conditions mentioned in paragraph 7B. The judgment of any court of competent
jurisdiction, or the admission of Tenant in any action or proceeding against
Tenant, whether Landlord be a party thereto or not, that Tenant has violated any
such ordinance or statute in the use of the Premises, shall be conclusive of
that fact as between Landlord and Tenant.
18. TOXIC WASTE AND ENVIRONMENTAL DAMAGE:
A. TENANT'S RESPONSIBILITY: Without the prior written consent
of Landlord, Tenant shall not bring, use, or permit upon the Premises, or
generate, emit, or dispose from the Premises any chemicals, toxic or hazardous
gaseous, liquid or solid materials or waste, including without limitation,
material or substance having characteristics of ignitability, corrosivity,
reactivity, or toxicity or substances or materials which are listed on any of
the Environmental Protection Agency's lists of hazardous wastes or which are
identified in Sections 66680 through 66685 of Title 22 of the California
Administrative Code as the same may be amended from time to time ("Hazardous
Materials"). In order to obtain consent, Tenant shall deliver to Landlord its
written proposal describing the toxic material to be brought onto the Premises,
measures to be taken for storage and disposal thereof, safety measures to be
employed to prevent pollution of the air, ground, surface and ground water.
Landlord's approval may be withheld in its reasonable judgment. In the event
Landlord consents to Tenant's use of Hazardous Materials on the Premises, Tenant
represents and warrants that Tenant will (i) adhere to all reporting and
inspection requirements imposed by Federal, State, County or Municipal laws,
ordinances or regulations and will provide Landlord a copy of any such reports
or agency inspections, (ii) obtain and provide Landlord copies of all necessary
permits required for the use and handling Hazardous Materials on the Premises,
(iii) enforce Hazardous Materials handling and disposal practices consistent
with industry standards, and (iv) properly close the facility with regard to
Hazardous Materials including the removal or decontamination of any process
piping, mechanical ducting, storage tanks, containers, or trenches which have
come into contact with Hazardous Materials and obtain a closure certificate from
the local administering agency prior to the Expiration Date. Landlord may
employ, at Tenant's expense, an independent engineer or consultant to
periodically inspect Tenant's operations to verify that Tenant is complying with
its obligations under this paragraph.
B. TENANT'S INDEMNITY REGARDING HAZARDOUS MATERIALS: Tenant
shall comply, at its sole cost, with all laws pertaining to, and shall indemnify
and hold Landlord harmless from any claims, liabilities, costs or expenses
incurred or suffered by Landlord arising from such bringing, using, permitting,
generating, emitting or disposing of Hazardous Materials. Tenant's
indemnification and hold harmless obligations include, without limitation, (i)
claims, liability, costs or expenses resulting from or based upon
administrative, judicial (civil or criminal) or other action, legal or
equitable, brought by any private or public person under common law or under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), the Resource Conservation and Recovery Act of 1980 ("RCRA") or any
other Federal, State, County or Municipal law, ordinance or regulation, (ii)
claims, liabilities, costs or expenses pertaining to the identification,
monitoring, cleanup, containment, or removal of Hazardous Materials from soils,
riverbeds or aquifers including the provision of an alternative public drinking
water source, and (iii) all costs of defending such claims.
C. ENVIRONMENTAL MONITORING: Landlord and its agents shall
have the right, at Landlord's sole cost and expense to inspect, investigate,
sample and/or
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monitor the Premises, including any air, soil, water, groundwater or other
sampling or any other testing, digging, drilling or analysis to determine
whether Tenant is complying with the terms of this paragraph 18. If Landlord
discovers that Tenant is not in compliance with the terms of this paragraph, any
such costs incurred by Landlord, including attorneys' and consultant's fees
shall be due and payable by Tenant to Landlord within five days following
Landlord's written demand therefore.
D. LANDLORD'S INDEMNITY REGARDING HAZARDOUS MATERIALS:
Landlord shall indemnify and hold Tenant harmless for any costs related to the
remediation or removal of Hazardous Materials, as defined by paragraph 18,
existing prior to Tenant's occupancy.
19. INDEMNITY: Tenant hereby waives all claims against Landlord for
damages to goods, wares and merchandise, and all other personal property in,
upon or about said Premises and for injuries to persons in or about said
Premises, from any cause arising at any time except due to the negligence or
willful misconduct of Landlord, and Tenant will hold Landlord exempt and
harmless from any damage or injury to any person, or to the goods, wares and
merchandise and all other personal property of any person, arising from the use
of the Premises by Tenant, or from the failure of Tenant to keep the Premises in
good condition and repair, as herein provided. Further, in the event Landlord is
made party to any litigation due to the acts or omission of Tenant, Tenant will
indemnify and hold Landlord harmless from any such claim or liability including
Landlord's costs and expenses and reasonable attorney's fees incurred in
defending such claims.
20. ADVERTISEMENTS AND SIGNS: Tenant will not place or permit to be
placed, in, upon or about the said Premises any unusual or extraordinary signs,
or any signs not approved by the city or other governing authority. The Tenant
will not place, or permit to be placed, upon the Premises, any signs,
advertisements or notices without the written consent of the Landlord as to
type, size, design, lettering, coloring and location, and such consent will not
be unreasonably withheld. Any sign so placed on the Premises shall be removed by
Tenant, at its expense, prior to the Expiration Date or promptly following the
earlier termination of the lease and Tenant shall repair any damage or injury to
the Premises caused thereby, and if not so removed by Tenant then Landlord may
have same so removed at Tenant's expense.
21. ATTORNEY'S FEES: In case suit should be brought for the possession
of the Premises, for the recovery of any sum due hereunder, or because of the
breach of any other covenant herein, the losing party shall pay to the
prevailing party a reasonable attorney's fee as part of it costs which shall be
deemed to have accrued on the commencement of such action.
22. TENANT'S DEFAULT: The occurrence of any of the following shall
constitute a material default and breach of this Lease by Tenant: a) Any failure
by Tenant to pay the rental or to make any other payment required to be made by
Tenant hereunder provided however, that Tenant may cure such default by payment
to Landlord of the Base Monthly Rent or other sum due within ten (10) days after
receipt by Tenant of written notice specifying Landlord has failed to receive
the amount in question; b) The abandonment or vacation of the Premises by
Tenant; or c) A failure by Tenant to observe and perform any other provision of
this Lease to be observed or performed by Tenant, where such failure continues
for thirty (30) days after written notice thereof by Landlord to Tenant;
provided, however, that if the nature of such default is such that the same
cannot reasonably be cured within such thirty (30) day period Tenant shall not
be deemed to be in default if Tenant shall within such period commence such cure
and thereafter diligently prosecute the same to completion.
A. REMEDIES: In the event of any such default by Tenant, then
in addition to any other remedies available to Landlord at law or in equity,
Landlord shall have the immediate option to terminate this Lease and all rights
of Tenant hereunder by giving written notice of such intention to terminate. In
the event that Landlord shall elect to so terminate this Lease then Landlord may
recover from Tenant: a) the worth at the time
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of award of any unpaid rent which had been earned at the time of such
termination; plus b) the worth at the time of award of the amount by
which the unpaid rent would have been earned after termination until
the time of award exceeds the amount of such rental loss Tenant proves
could have been reasonably avoided; plus c) the worth at the time of
award of the amount by which the unpaid rent for the balance of the
Lease Term after the time of award exceeds the amount of such rental
loss that Tenant proves could be reasonably avoided.
B. ABANDONMENT: In the event of the vacation or
abandonment of the Premises by Tenant or in the event that Landlord
shall elect to re-enter as provided in paragraph 22(B) above or shall
take possession of the Premises pursuant to legal proceeding or
pursuant to any notice provided by law, then if Landlord does not elect
to terminate this Lease as provided in paragraph 22(A) above, then the
provisions of California Civil Code Section 1951.4, as amended from
time to time, shall apply and Landlord may from time to time, without
terminating this Lease, either recover all rental as it becomes due or
relet the Premises or any part thereof for such term or terms and at
such rental or rentals and upon such other terms and conditions as
Landlord in its sole discretion may deem advisable with the right to
make alterations and repairs to the Premises. In the event that
Landlord shall elect to so relet, then rentals received by Landlord
from such reletting shall be applied: first, to the payment of any
indebtedness other than Base Monthly Rent due hereunder from Tenant to
Landlord; second, to the payment of any cost of such reletting; third,
to the payment of the cost of any alterations and repairs to the
Premises; fourth, to the payment of Base Monthly Rent due and unpaid
hereunder; and the residue, if any, shall be held by Landlord and
applied in payment of future Base Monthly Rent as the same may become
due and payable hereunder. Should that portion of such rentals received
from such reletting during any month, which is applied by the payment
of rent hereunder, be less than the rent payable during that month by
Tenant hereunder, then Tenant shall pay such deficiency to Landlord
immediately upon demand therefor by Landlord. Such deficiency shall be
calculated and paid monthly. Tenant shall also pay to Landlord, as soon
as ascertained, any costs and expenses incurred by Landlord in such
reletting or in making such alterations and repairs not covered by the
rentals received from such reletting.
C. NO TERMINATION: No re-entry or taking possession of the
Premises by Landlord pursuant to 22(B) of this Article 22 shall be
construed as an election to terminate this Lease unless a written
notice of such intention be given to Tenant or unless the termination
thereof be decreed by a court of competent jurisdiction.
Notwithstanding any reletting without termination by Landlord because
of any default by Tenant, Landlord may at any time after such reletting
elect to terminate this Lease for any such default.
23. SURRENDER OF LEASE: The voluntary or other surrender of this
Lease by Tenant, or a mutual cancellation thereof, shall not
automatically effect a merger of the Lease with Landlord's ownership of
the Building or Premises. Instead, at the option of Landlord, Tenant's
surrender may terminate all or any existing sublease or subtenancies,
or may operate as an assignment to Landlord of any or all such
subleases or subtenancies, thereby creating a direct Landlord-Tenant
relationship between Landlord and any subtenants.
24. This paragraph intentionally left blank.
25. LANDLORD'S DEFAULT: In the event of Landlord's failure to
perform any of its covenants or agreements under this Lease, Tenant
shall give Landlord written notice of such failure and shall give
Landlord thirty (30) days or such other reasonable opportunity to cure
or to commence to cure such failure prior to any claim for breach or
for damages resulting from such failure. In addition, upon any such
failure by Landlord, Tenant shall give notice by registered or
certified mail to any person or entity with a security interest in the
Premises ("Mortgagee") that has provided Tenant with notice of its
interest in the Premises, and shall provide such Mortgagee a reasonable
opportunity to cure such failure, including such time to obtain
possession of the
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Premises by power of sale or judicial foreclosure, if such should prove
necessary to effectuate a cure. Tenant agrees that each of the
Mortgagees to whom this Lease has been assigned is an expressed third
party beneficiary hereof. Tenant shall not make any prepayment of rent
more than one (1) month in advance without the prior written consent of
such Mortgagee. Tenant waives any right under California Civil Code
Section 1950.7 or any other present or future law to the collection of
any payment or deposit from such Mortgagee or any purchaser at a
foreclosure sale of such Mortgagee's interest unless such Mortgagee or
such purchaser shall have actually received and not refunded the
applicable payment or deposit.
26. NOTICES: All notices, demands, requests, or consents required
to be given under this Lease shall be sent in writing by certified
mail, return receipt requested, or by personal delivery addressed to
the party to be notified at the address for such party specified in
paragraph 1 of this Lease, or to such other place as the party to be
notified may from time to time designate by at least fifteen (15) days
prior notice to the notifying party.
27. ENTRY BY LANDLORD: Tenant shall permit Landlord and his
agents to enter into and upon said Premises at all reasonable times
subject to any security regulations of Tenant for the purpose of
inspecting the same or for the purpose of maintaining the Premises or
for the purpose of making repairs, alterations or additions to any
other portion of said Premises or for the purpose of erecting
additional building(s) and improvements on the land where the Premises
are situated, or on adjacent land owned by Landlord, including the
erection and maintenance of such scaffolding, canopies, fences and
props as may be required without any abatement or reduction of Base
Monthly Rent or without any liability to Tenant for any loss of
occupation or quiet enjoyment of the Premises thereby occasioned; and
Tenant shall permit Landlord and his agents, at any time within one
hundred eighty (180) days prior to the Expiration Date (or at any
time during the Lease if Tenant is in default hereunder), to place
upon the Premises any "For Sale" or "For Lease" signs and exhibit the
Premises to real estate brokers and prospective tenants at reasonable
hours.
28. DESTRUCTION OF PREMISES:
A. DESTRUCTION BY AN INSURED CASUALTY: In the event of a
partial destruction of the Premises by a casualty for which Landlord
has received insurance proceeds sufficient to repair the damage or
destruction during the Lease Term from any cause, Landlord shall
forthwith repair the same, provided such repairs can be made within
one hundred eighty (180) days from the date of receipt of all
necessary governmental approvals necessary under the laws and
regulations of State, Federal, County or Municipal authorities, such
partial destruction shall in no way annul or void this Lease, except
that Tenant shall be entitled to a proportionate reduction of Base
Monthly Rent while such repairs are being made, such proportionate
reduction to be based upon the extent to which the making of such
repairs shall interfere with the business carried on by Tenant in the
Premises, in the mutual reasonable judgment of Landlord and Tenant.
For purposes of this paragraph "partial destruction" shall mean
destruction of no greater than one-third (1/3) of the replacement cost
of the Premises, including the replacement cost of the Tenant
Improvements paid for by Landlord. In the event the Premises are more
than partially destroyed, or in the event the repairs cannot be made
in one hundred eighty (180) days, Landlord or Tenant may elect to
terminate this Lease. Landlord shall not be required to restore
Alterations or replace Tenant's fixtures or personal property. In
respect to any partial destruction which Landlord is obligated to
repair or may elect to repair under the terms of this paragraph, the
provision of Section 1932, Subdivision 2, and of Section 1933,
Subdivision 4, of the Civil Code of the State of California and any
other similarly enacted Statute are waived by Tenant and the
provisions of this paragraph 28 shall govern in the case of such
destruction.
B. DESTRUCTION BY AN UNINSURED CASUALTY: In the event of a
total or partial destruction of the Premises by an uninsured
casualty, the Lease shall automatically terminate, unless (i) Landlord
elects to rebuild, and (ii) the damage can be
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repaired within one hundred eighty (180) days. If Landlord elects to
contribute to payment for an uninsured loss, such contributed amount
shall be amortized over the useful life of the improvements and such
amortization shall be reimbursed by Tenant to Landlord as additional
rent.
29. ASSIGNMENT OR SUBLEASE:
A. CONSENT BY LANDLORD: In the event Tenant desires to
assign this Lease or any interest therein including, without
limitation, a pledge, mortgage or other hypothecation, or sublet the
Premises or any part thereof, Tenant shall deliver to Landlord
executed counterparts of any such agreement and of all ancillary
agreements with the proposed assignee or subtenant, financial
statements, and any additional information as reasonably required to
determine whether it will consent to the proposed assignment or
sublease. The notice shall give the name and current address of the
proposed assignee/subtenant, proposed use of the Premises, rental
rate and current financial statement; and upon request to Tenant,
Landlord shall be given additional information as reasonably required
to determine whether it will consent to the proposed assignment or
sublease. Landlord shall then have a period of thirty (30) days
following receipt of such notice within which to notify Tenant in
writing that Landlord elects (i) to terminate this Lease as to the
space so affected as of the date so specified by Tenant in which
event Tenant will be relieved of all further obligations hereunder as
to such space, (ii) to permit Tenant to assign or sublet such space to
the named assignee/subtenant on the terms end conditions set forth in
the notice, or (iii) to refuse consent. If Landlord should fail to
notify Tenant in writing of such election within said thirty (30) day
period, Landlord shall be deemed to have elected option (ii) above. If
Landlord exercises its option to terminate this Lease in part in the
event Tenant desires to sublet or assign part of the Premises, then
(i) this Lease shall end and expire, with respect to such part of the
Premises, on the date upon which the proposed sublease was to
commence, and (ii) from and after such date, the Base Monthly Rent
and Tenant's allocable share of all other costs and charges shall be
adjusted, based upon the proportion that the rentable area of the
Premises remaining bears to the total rentable area of the Premises.
If Landlord does not exercise its option to terminate this Lease,
Landlord's consent (which must be in writing and in form reasonably
satisfactory to Landlord) to the proposed assignment or sublease shall
not be unreasonably withheld or delayed, provided and upon condition
that: (i) The proposed assignee or subtenant is engaged in a business
that is limited to the use expressly permitted under this Lease; (ii)
The proposed assignee or subtenant is a company with sufficient
financial worth and management ability to undertake the financial
obligation of this Lease, and Landlord has been furnished with
reasonable proof thereof; (iii) The proposed sublease shall be in
form reasonably satisfactory to Landlord; (iv) The amount of the
aggregate rent to be paid by the proposed subtenant is not less than
the then current "Fair Market Value" as defined in paragraph 38 below;
(v) Tenant shall reimburse Landlord on demand for any costs that may
be incurred by Landlord in connection with said assignment or
sublease, including the costs of making investigations as to the
acceptability of the proposed assignee or subtenant and legal costs
incurred in connection with the granting of any requested consent;
and (vi) Tenant shall not have advertised or publicized in any way
the availability of the Premises without prior notice to, and approval
by Landlord.
B. ASSIGNMENT OR SUBLETTING CONSIDERATION: Any rent or other
economic consideration realized by Tenant under any such sublease and
assignment in excess of the rent payable hereunder (including an
allocation of the purchase price attributable to Tenant's leasehold
interest in the event of a sale of the Tenant's business), after the
net unamortized cost of the Tenant Improvements for which Tenant has
itself paid, and reasonable subletting and assignment costs, shall be
divided and paid fifty percent (50%) to Landlord and fifty percent
(50%) to Tenant. Tenant's obligation to pay over Landlord's portion of
the consideration shall constitute an obligation for additional rent
hereunder. The above provisions relating to Landlord's right to
terminate the Lease and relating to the allocation of bonus rent are
independently negotiated terms of the Lease, constitute a material
inducement for the Landlord to enter into the Lease, and are agreed as
between the parties to be commercially reasonable. No assignment or
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subletting by Tenant shall relieve Tenant of any obligation under
this Lease. Any assignment or subletting which conflicts with the
provisions hereof shall be void.
C. NO RELEASE: Any assignment or sublease shall be made only
if and shall not be effective until the assignee or subtenant shall
execute, acknowledge and deliver to Landlord an agreement, in form
and substance satisfactory to Landlord, whereby the assignee or
subtenant shall assume all of the obligations of this Lease on the
part of Tenant to be performed or observed and shall be subject to all
of the covenants, agreements, terms, provisions and conditions
contained in this Lease. Notwithstanding any such sublease or
assignment and the acceptance of rent or additional rent by Landlord
from any subtenant or assignee, Tenant or any guarantor shall and will
remain fully liable for the payment of the rent and additional rent
due, and to become due hereunder, for the performance of all of the
covenants, agreements, terms, provisions and conditions contained in
this Lease on the part of Tenant to be performed and for all acts and
omissions of any licensee, subtenant, assignee or any other person
claiming under or through any subtenant that shall be in violation of
any of the terms and conditions of this Lease, and any such violation
shall be deemed to be a violation by Tenant. Tenant shall further
indemnify, defend and hold Landlord harmless from and against any
and all losses, liabilities, damages, costs and expenses (including
reasonable attorney fees) resulting from any claims that may be made
against Landlord by the proposed assignee or subtenant or by any real
estate brokers or other persons claiming a commission or similar
compensation in connection with the proposed assignment or sublease.
D. EFFECT OF DEFAULT: In the event of Tenant's default,
Tenant hereby assigns all rents due from any assignment or subletting
to Landlord as security for performance of its obligations under this
Lease and Landlord may collect such rents as Tenant's
Attorney-in-Fact, except that Tenant may collect such rents unless a
default occurs as described in paragraph 22 above. The termination of
this Lease due to Tenant's default shall not automatically terminate
any assignment or sublease then in existence. At the election of
Landlord, the assignee or subtenant shall attorn to Landlord and
Landlord shall undertake the obligations of the Tenant under the
sublease or assignment; provided the Landlord shall not be liable for
prepaid rent, security deposits or other defaults of the Tenant to the
subtenant or assignee, or any acts or omissions of Tenant, its agents,
employees or invitees.
30. CONDEMNATION: If any part of the Premises shall be taken for
any public or quasi-public use, under any statute or by right of
eminent domain or private purchase in lieu thereof, and a part
thereof remains which is susceptible of occupation hereunder, this
Lease shall as to the part so taken, terminate as of the date
title shall vest in the condemnor or purchaser, and the Base Monthly
Rent payable hereunder shall be adjusted so that the Tenant shall be
required to pay for the remainder of the Lease Term only such portion
of such rent as the value of the part remaining after such taking
bears to the value of the entire Premises prior to such taking; but in
such event Landlord shall have the option to terminate this Lease as
of the date when title to the part so taken vests in the condemnor or
purchaser. If all of the Premises, or such part thereof be taken so
that there does not remain a portion susceptible for occupation
hereunder, this Lease shall thereupon terminate. If a part or all of
the Premises be taken, all compensation awarded upon such taking shall
go to the Landlord and the Tenant shall have no claim thereto but
Landlord shall cooperate with Tenant to recover compensation for
damage to or taking of any Alterations or for Tenant's moving costs.
Tenant hereby waives the provisions of California Code of Civil
Procedures Section 1265.130 and any other similarly enacted statute
are waived by Tenant and the provisions of this paragraph 30 shall
govern in the case of such destruction.
31. EFFECTS OF CONVEYANCE: The term Landlord as used in this
Lease, means only the owner for the time being of the land and
Building, containing the Premises, so that, in the event of any sale
or other conveyance of said land or Building, or in the event of a
master Lease of the Building, the Landlord shall be and hereby is
entirely freed and relieved of all covenants and obligations of the
Landlord hereunder, and it shall be deemed and construed, without
further agreement between the parties
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and the purchaser at any such sale, or the master tenant of the
Building, that the purchaser or master tenant of the Building has
assumed and agreed to carry out any and all covenants and obligations
of the Landlord hereunder. Landlord shall transfer and deliver
Tenant's security deposit to the purchaser at any such sale or the
master tenant of the Building, and thereupon the Landlord shall be
discharged from any further liability in reference thereto.
32. SUBORDINATION: In the event Landlord notifies Tenant in
writing, this Lease shall be subordinate to any ground Lease, deed of
trust, or other hypothecation for security now or hereafter placed
upon the real property of which the Premises are a part and to any and
all advances made on the security thereof and to renewals,
modifications, replacements and extensions thereof. Tenant agrees to
promptly execute and deliver any documents which may be required to
effectuate such subordination. Notwithstanding such subordination,
Tenant's right to quiet possession of the Premises shall not be
disturbed if Tenant is not in default and so long as Tenant shall pay
the rent and observe and perform all of the provisions of this Lease.
At the request of any lender, Tenant agrees to execute and deliver
any reasonable modifications of this Lease which do not materially
adversely affect Tenant's rights hereunder.
33. WAIVER: The waiver by Landlord of any breach of any term,
covenant or condition, herein contained shall not be deemed to be a
waiver of such term, covenant or condition or any subsequent breach of
the same or any other term, covenant or condition herein contained.
The subsequent acceptance of rent hereunder by Landlord shall not be
deemed to be a waiver of any preceding breach by Tenant of any term,
covenant or condition of this Lease, other than the failure of Tenant
to pay the particular rental so accepted, regardless of Landlord's
knowledge of such preceding breach at the time of acceptance of such
rent. No delay or omission in the exercise of any right or remedy by
Landlord shall impair such right or remedy or be construed as a waiver
thereof by Landlord. No act or conduct of Landlord, including, without
limitation, the acceptance of keys to the Premises shall constitute
acceptance of the surrender of the Premises by Tenant before the
Expiration Date. Landlord's consent to or approval of any act by
Tenant which require Landlord's consent or approvals shall not be
deemed to waive or render unnecessary Landlord's consent to or
approval of any subsequent act by Tenant.
34. HOLDING OVER: Any holding over after the termination or
Expiration Date, shall be construed to be a tenancy from month to
month terminable on thirty (30) days written notice from either party
and Tenant shall pay Base Monthly Rent to Landlord at a rate equal to
the greater of (i) one hundred fifty percent (150%) of the Base
Monthly Rent due in the month preceding the termination or Expiration
Date or (ii) one hundred fifty percent (150%) of the Fair Market
Rental (as defined in paragraph 37). Any holding over shall otherwise
be on the terms and conditions herein specified, except those
provisions relating to the Lease Term and any options to extend or
renew, which provisions shall be of no further force and effect
following the expiration of the applicable exercise period. Tenant
shall indemnify, defend, and hold Landlord harmless from all loss or
liability (including, without limitation, any loss or liability
resulted from any claim against Landlord made by any succeeding
tenant) founded on or resulting from Tenant's failure to surrender the
Premises and losses to Landlord due to lost opportunities to lease the
Premises to succeeding tenants.
35. SUCCESSORS AND ASSIGNS: The covenants and conditions herein
contained shall, subject to the provisions of paragraph 28, apply to
and bind the heirs, successors, executors, administrators and assigns
of all the parties hereto; and all of the parties hereto shall be
jointly and severally liable hereunder.
36. ESTOPPEL CERTIFICATES: Tenant shall at any time during the
Lease Term, within ten (10) days following written notice from
Landlord, execute and deliver to Landlord a statement in writing
certifying that this Lease is unmodified and in full force and effect
(or, if modified, stating the nature of such modification) and the
date to which the rent and other charges are paid in advance, if any,
and acknowledging that there are not, to Tenant's knowledge, any
uncured defaults on the part of Landlord
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hereunder or specifying such defaults if they are claimed. Any such
statement may be conclusively relied upon by any prospective
purchaser or encumbrancer of the Premises. Tenant's failure to
deliver such statement within such time shall be conclusive upon the
Tenant that: (i) this Lease is in full force and effect, without
modification except as may be represented by Landlord; (ii) there are
not uncured defaults in Landlord's performance. Tenant also agrees to
provide the most current three (3) years of audited financial
statements within five (5) days of a request by Landlord for
Landlord's use in financing the Premises with commercial lenders.
37. This paragraph intentionally left blank.
39. QUIET ENJOYMENT: Upon Tenant's faithful and timely
performance of all the terms and covenants of the Lease, Tenant shall
quietly have and hold the Premises for the Lease Term and any
extensions thereof.
40. BROKERS: Tenant represents it has not utilized or
contacted a real estate broker or finder with respect to this Lease
other than Cornish & Carey Commercial and Tenant agrees to indemnify
and hold Landlord harmless against any claim, cost, liability or cause
of action asserted by any other broker or finder claiming through
Tenant.
41. LANDLORD'S LIABILITY: If Tenant should recover a money
judgment against Landlord arising in connection with this Lease, the
judgment shall be satisfied only out of Landlord's interest in the
Premises including the improvements and real property and neither
Landlord or any of its partners, officers, directors or employees
shall be liable personally for any deficiency.
42. AUTHORITY OF PARTIES:
A. CORPORATE AUTHORITY: If Tenant is a corporation, each
individual executing this Lease on behalf of said corporation
represents and warrants that he is duly authorized to execute and
deliver this Lease on behalf of said corporation, in accordance with a
duly adopted resolution of the Board of Directors of said corporation
or in accordance with the by-laws of said corporation, and that this
Lease is binding upon said corporation in accordance with its terms.
43. This paragraph intentionally left blank.
44. MISCELLANEOUS PROVISIONS:
A. RENT: All monetary sums due from Tenant to Landlord under
this Lease shall be deemed to be rent.
B. PERFORMANCE BY TENANT: If Landlord fails to perform any
obligation required under this Lease or by law or government
regulation, Tenant in its sole discretion may, without notice, perform
such obligation, in which event Landlord shall reimburse Tenant within
ten (10) days following Tenant's written notice of such payment.
C. PERFORMANCE BY LANDLORD: If Tenant fails to perform any
obligation required under this Lease or by law or governmental
regulation, Landlord in its sole discretion may without notice
perform such obligation, in which event Tenant shall pay Landlord as
additional rent all sums paid by Landlord in connection with such
substitute performance within ten (10) days following Landlord's
written notice for such payment.
D. INTEREST: All sums due hereunder, including rent and
additional rent, if not paid when due, shall bear interest at the
maximum rate permitted under California law accruing from the date due
until the date paid to Landlord.
E. RIGHTS AND REMEDIES: All rights and remedies hereunder
are
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cumulative and not alternative to the extent permitted by law and are
in addition to all other rights and remedies in law and in equity.
F. SURVIVAL OF INDEMNITIES: All indemnification, defense,
and hold harmless obligations of Landlord and Tenant under the Lease
shall survive the expiration or sooner termination of the Lease.
G. SEVERABILITY: If any term or provision of this Lease is
held unenforceable or invalid by a court of competent jurisdiction, the
remainder of the Lease shall not be invalidated thereby but shall be
enforceable in accordance with its terms, omitting the invalid or
unenforceable term.
H. CHOICE OF LAW: This Lease shall be governed by and
construed in accordance with California law.
I. TIME: Time is of the essence hereunder.
J. ENTIRE AGREEMENT: This instrument (including attached
Exhibits "A", "B", and "C") contains all of the agreements and
conditions made between the parties hereto and may not be modified
orally or in any other manner than by an agreement in writing signed by
all of the parties hereto or their respective successors in interest.
K. REPRESENTATIONS: Tenant acknowledges that neither
Landlord or its affiliates or agents have made any agreements,
representations, warranties or promises with respect to the demised
Premises or the Building of which they are a part, or with respect to
present or future rents, expenses, operations, tenancies or any other
matter. Except as herein expressly set forth herein, Tenant relied on
no statement of Landlord or its agents for that purpose.
L. HEADINGS: The headings or titles to the paragraphs of
this Lease are not a part of this Lease and shall have no effect upon
the construction or interpretation of any part thereof.
IN WITNESS WHEREOF, Landlord and Tenant have executed these presents,
the day and year first above written.
LANDLORD: The Sobrato 1979 Trust TENANT: Peninsula Engineering Group,
a California general partnership a California corporation
Inc.
BY: /s/ JOHN MICHAEL SOBRATO BY: /s/ EDWARD SHERMAN
------------------------- --------------------------
ITS: General Partner ITS: President / CEO
------------------------
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EXHIBIT "A"
PREMISES
[SITE MAP]
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FIRST AMENDMENT TO LEASE
This amendment to lease ("Amendment") is made this 16th day of October, 1998
between Sobrato Interests II, a California limited partnership, having an
address at 10600 N. De Anza Blvd., Suite 200, Cupertino, California 95014
("Landlord") and Repeater Technologies, formerly known as Peninsula Engineering
Group, having its principal place of business at 1150 Morse Avenue, Sunnyvale,
California, 94089 ("Tenant").
WITNESSETH
WHEREAS Landlord and Tenant entered into a lease dated August 7, 1992 ("Lease")
for the premises ("Premises") located at 1150 Morse Avenue in Sunnyvale,
California; and
WHEREAS effective the date of this Amendment, Landlord and Tenant wish to
modify the Lease to: (i) change the Expiration Date specified in Section 4; and
(ii) specify the Base Monthly Rent due for the period from January 1, 1999
through December 31, 2003;
NOW, THEREFORE, in order to effect the intent of the parties as set forth above
and for good and valuable consideration exchanged between the parties, the
Lease is amended as follows:
1. The Expiration Date specified in Lease Section 4 is changed from December
31, 1998 to December 31, 2003.
2. Base Monthly Rent during the period from January 1, 1999 through December
31, 2003 shall be due according to the following schedule:
01/01/1999 through 06/30/2001: $50,013.00 per month
07/01/2001 through 12/31/2003: $53,855.00 per month
3. All defined terms shall have the same meanings as in the Lease, except as
otherwise stated in this Amendment.
IN WITNESS WHEREOF, the parties hereto have set their hands to this Amendment
as of the day and date first above written.
LANDLORD: TENANT:
Sobrato Interests, II, Repeater Technologies, Inc.,
a California limited partnership a California Corporation
By: /s/ JOHN MICHAEL SOBRATO By: /s/ TODD SCHULL
---------------------------------- ----------------------------------
Its: General Partner Its: CFO
---------------------------------
<PAGE> 20
Lease between
The Sobrato 1979 Trust and Peninsula Engineering Group, Inc.
Section Page #
- ------- ------
Parties ...................................................................... 1
Premises ..................................................................... 1
Use .......................................................................... 1
Term and Rental .............................................................. 1
Security Deposit ............................................................. 1
Late Charges ................................................................. 2
Construction and Possession .................................................. 2
Landlord's Obligation to Construct ....................................... 2
Contribution to Tenant Improvement Costs ................................. 2
Tenant Improvement Plans and Cost Estimate ............................... 2
Commencement Date ........................................................ 3
Acceptance of Possession and Covenants to Surrender .......................... 3
Uses Prohibited .............................................................. 3
Alterations and Additions .................................................... 4
Maintenance of Premises ...................................................... 4
Landlord and Tenant's Obligations Regarding Common Area Costs ............ 4
Common Area Costs ........................................................ 4
Tenant's Allocable Share ................................................. 5
Waiver of Liability ...................................................... 5
Tenant's Obligations ..................................................... 5
Hazard Insurance ............................................................. 5
Tenant's Use ............................................................. 5
Landlord's Insurance ..................................................... 6
Tenant's Insurance ....................................................... 6
Waiver ................................................................... 6
Taxes ........................................................................ 6
Utilities .................................................................... 7
Abandonment .................................................................. 7
Free From Liens .............................................................. 7
Compliance With Governmental Regulations ..................................... 7
Toxic Waste and Environmental Damage ......................................... 7
Tenant's Responsibility .................................................. 7
Tenant's Indemnity Regarding Hazardous Materials ......................... 8
Environmental Monitoring ................................................. 8
Indemnity .................................................................... 8
Advertisements and Signs ..................................................... 8
Attorney's Fees .............................................................. 8
Tenant's Default ............................................................. 8
Remedies ................................................................. 9
Right to Re-enter ........................................................ 9
Abandonment .............................................................. 9
No Termination .......................................................... 10
Surrender of Lease .......................................................... 10
Habitual Default ............................................................ 10
Landlord's Default .......................................................... 10
Notices ..................................................................... 11
Entry by Landlord ........................................................... 11
Destruction of Premises ..................................................... 11
Destruction by an Insured Casualty ...................................... 11
Destruction by an Uninsured Casualty .................................... 11
Assignment or Sublease ...................................................... 11
Consent by Landlord ..................................................... 11
Assignment or Subletting Consideration .................................. 12
No Release .............................................................. 12
Effect of Default ....................................................... 13
Condemnation ................................................................ 13
Effects of Conveyance ....................................................... 13
Subordination ............................................................... 14
Waiver ...................................................................... 14
Holding Over ................................................................ 14
Successors and Assigns ...................................................... 14
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Estoppel Certificates ....................................................... 14
This paragraph intentionally left blank ..................................... 15
Options ..................................................................... 15
Quiet Enjoyment ............................................................. 15
Brokers ..................................................................... 15
Landlord's Liability ........................................................ 15
Authority of Parties ........................................................ 15
Corporate Authority ..................................................... 15
Limited Partnerships .................................................... 15
Transportation Demand Management Programs ................................... 15
Miscellaneous Provisions .................................................... 15
Rent .................................................................... 15
Management Fee .......................................................... 15
Performance by Landlord ................................................. 16
Interest ................................................................ 16
Rights and Remedies ..................................................... 16
Survival of Indemnities ................................................. 16
Severability ............................................................ 16
Choice of Law ........................................................... 16
Time .................................................................... 16
Entire Agreement ........................................................ 16
Representations ......................................................... 16
Headings ................................................................ 16
Exhibit "A" ................................................................. 17
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1. PARTIES: THIS LEASE, is entered into on this ____ day of August,
1992, between The Sobrato 1979 Trust, a California general partnership, whose
address is 10600 North DeAnza Boulevard, Cupertino, California, 95014, and
Peninsula Engineering Group, Inc., a California Corporation, whose address is
1091 Industrial Road, San Carlos, California, 94070, hereinafter called
respectively Landlord and Tenant.
2. PREMISES: Landlord hereby leases to Tenant, and Tenant hires from
Landlord those certain Premises with the appurtenances, situated in the City of
Sunnyvale, County of Santa Clara, State of California, and more particularly
described as follows, to-wit:
That certain real property commonly known and designated as 1150 Morse Avenue
consisting of approximately 40,000 rentable square feet of a larger 70,000
square foot freestanding building ("Building") as outlined in red on Exhibit
"A".
3. USE: Tenant shall use the Premises only for the following purposes and
shall not change the use of the Premises without the prior written consent of
Landlord: Office, research, development, testing, light manufacturing, ancillary
warehouse, and related legal uses. Landlord makes no representation or warranty
that any specific use of the Premises desired by Tenant is permitted pursuant to
any Laws.
4. TERM AND RENTAL: The term ("Lease Term") shall be for seventy two
(72) months, commencing, as adjusted pursuant to paragraph 7, on the 1st day of
January, 1993 ("Commencement Date"), and ending on the 31st day of December,
1998, ("Expiration Date"). In addition to all other sums payable by Tenant
under this Lease, Tenant shall pay as base monthly rent ("Base Monthly Rent")
for the Premises the following amounts:
01/01/93 - 12/31/95 $22,400.00 per month
01/01/96 - 12/31/98 $26,400.00 per month
Base Monthly Rent shall be due on or before the first day of each calendar
month during Lease Term. All sums payable by Tenant under this Lease shall be
paid in lawful money of the United States of America, without offset or
deduction, and shall be paid to Landlord at such place or places as may be
designated from time to time by Landlord. Base Monthly Rent for any period less
than a calendar month shall be a pro rata portion of the monthly installment.
Concurrently with Tenant's execution of this Lease, Tenant shall pay to
Landlord the sum of Twenty Two Thousand Four Hundred and No/100 Dollars
($22,400.00) as prepaid rent for the period of January 1, 1993 to January 31,
1993.
5. SECURITY DEPOSIT: Concurrently with Tenant's execution of this Lease,
Tenant has deposited with Landlord the sum of Twenty Six Thousand Four Hundred
and No/100 Dollars ($26,400.00) as a security deposit. If Tenant defaults with
respect to any provisions of this Lease, including but not limited to the
provisions relating to payment of Base Monthly Rent or other charges, Landlord
may, to the extent reasonably necessary to remedy Tenant's default, use all or
any part of said deposit for the payment of Base Monthly Rent or other charges
in default or the payment of any other payment of any other amount which
Landlord may spend or become obligated to spend by reason of Tenant's default
or to compensate Landlord for any other loss or damage which Landlord may
suffer by reason of Tenant's default. If any portion of said deposit is so used
or applied, Tenant shall, within ten (10) days after written demand therefor,
deposit cash with Landlord in an amount sufficient to restore said deposit to
the full amount hereinabove stated and shall pay to Landlord such other sums as
shall be necessary to reimburse Landlord for any sums paid by Landlord. Said
deposit shall be returned to Tenant within thirty (30) days after the
Expiration Date and surrender of the Premises to Landlord, less any amount
deducted in accordance with this paragraph, together with Landlord's written
notice itemizing the amounts and purposes for such retention. In the event of
termination of Landlord's interest in this Lease, Landlord shall transfer said
deposit to Landlord's successor or interest.
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6. LATE CHARGES: Tenant hereby acknowledges that late payment by
Tenant to Landlord of Base Monthly Rent and other sums due hereunder will
cause Landlord to incur costs not contemplated by this Lease, the exact amount
of which will be extremely difficult to ascertain. Such costs include, but are
not limited to, administrative, processing, accounting charges, and late
charges, which may be imposed on Landlord by the terms of any contract,
revolving credit, mortgage or trust deed covering the Premises. Accordingly, if
any installment of Base Monthly Rent or any other sum due from Tenant shall not
be received by Landlord or Landlord's designee when due, Tenant shall pay to
Landlord a late charge equal to five (5%) percent of such overdue amount which
shall be due and payable with the payment then delinquent. Landlord agrees to
waive said late charge in the event the Base Monthly Rent or other sum due is
received within five days after receipt by Tenant of Landlord's notice to quit
or pay rent. The parties hereby agree that such late charge represents a fair
and reasonable estimate of the costs Landlord will incur by reason of late
payment by Tenant. Acceptance of such late charge by Landlord shall in no event
constitute a waiver of Tenant's default with respect to such overdue amount,
nor prevent Landlord from exercising any of the other rights and remedies
granted hereunder. In the event that a late charge is payable hereunder,
whether or not collected, for three (3) consecutive installments of Base
Monthly Rent, then rent shall automatically become due and payable quarterly in
advance, rather than monthly, notwithstanding any provision of this Lease to
the contrary.
IT IS FURTHER MUTUALLY AGREED BETWEEN THE PARTIES AS FOLLOWS:
7. CONSTRUCTION AND POSSESSION:
A. Landlord's Obligation to Construct: The Tenant
Improvements shall be constructed by independent contractors to be employed by
and under the supervision of a General Contractor, in accordance with interior
plans prepared by Dennis Kobza & Associates, to be attached as Exhibit "B"
("Working Drawings"). Landlord shall construct the Tenant Improvements in
accordance with all existing applicable municipal, local, state and federal
laws, statutes, rules, regulations and ordinances.
B. Contribution to Tenant Improvement Costs: Landlord
shall be responsible for and shall pay the cost of (i) the Tenant Improvements
up to the amount of Eighty Thousand Dollars ($80,000.00) ("Tenant Improvement
Allowance"), (ii) demising the Building, (iii) bringing the restrooms into
compliance with Title 24 requirements, and (iv) any future expenses which may
be required, in Landlord's discretion, to bring the Premises into compliance
with ADA. Costs in excess of said Tenant Improvements Allowance, if any, shall
be paid for by Tenant in cash within ten (10) days after Landlord has provided
Tenant with evidence that General Contractors progress payments to
sub-contractors has exceeded said Tenant Improvement budget. All costs for
Tenant Improvements shall be fully documented to and verified by Tenant.
C. Tenant Improvement Plans and Cost Estimate: Tenant to
supply Landlord with general improvement information including a space plan
(one line drawing) of Tenant's wall layout, ("Space Plan") by August 31, 1992.
Based on this information, Landlord shall prepare the final working drawings
("Working Drawings") and budget for the Tenant improvement costs ("Budget")
within fourteen (14) working days of receipt of the Space Plan. Landlord and
Tenant shall approve the Working Drawings and Budget (or modify the same)
within seven (7) days thereafter. In the event the Budget exceed the Tenant
Improvement Allowance, Landlord shall have the right to require Tenant to
deposit cash with Landlord equal to the difference between the Budget and the
Tenant Improvement Allowance. In the event (i) Tenant fails to provide the
Space Plan when required above, or (ii) Tenant fails to approve the Working
Drawings or Budget within seven (7) days as provided above, or (iii) Tenant
makes any changes to the Working Drawings which cause Landlord's construction
schedule to be delayed, the Commencement Date shall occur one (1) day in
advance of Substantial Completion as defined below for each day of delay.
D. Commencement Date: If Landlord, for any reason
whatsoever, cannot deliver possession of the said Premises to Tenant by the
Commencement Date, this Lease shall not be void or voidable, nor shall Landlord
be liable to Tenant for any loss or damage resulting therefrom; but in that
event the Commencement Date and Expiration Date of the Lease and all other
dates affected thereby shall be revised to conform to the date of Landlord's
delivery of possession. The Lease Term shall not commence until substantial
completion of the Premises occurs. The terms "Substantial Completion" and
"Substantially Complete" shall
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mean that (i) all necessary governmental approvals for occupancy of the
Building have been obtained; (ii) construction of the Premises has been
completed in accordance with the Working Drawings approved by Tenant to an
extent that would permit Tenant to use the Premises for its intended purpose;
and (iii) the Premises are in a "broom clean" finished condition.
8. ACCEPTANCE OF POSSESSION AND COVENANTS TO SURRENDER: By entry
hereunder, Tenant accepts the Premises as being in good and sanitary order,
condition and repair and accepts the Building and the other improvements in
their present condition, except for the "punch list" as set forth on Exhibit
"C", attached hereto. The Tenant agrees on Expiration Date, or on the sooner
termination of this Lease, to surrender the Premises to Landlord in good
condition and repair, reasonable wear and tear excepted. "Good condition" shall
mean that the interior walls, floors, suspended ceilings, and carpeting within
the Premises will be cleaned to the same condition as existed at the
commencement of the Lease, normal wear and tear excepted. Tenant agrees, at its
sole cost, to remove all phone and data cabling from the suspended ceiling and
repair or replace broken ceiling tiles, and relevel the ceiling if required.
Tenant shall ascertain from Landlord within thirty (30) days before the
Expiration Date whether Landlord desires to have the Premises or any part or
parts thereof restored to their condition as of the Commencement Date or to
cause Tenant to surrender all Alterations in place to Landlord. If Landlord
shall so desire, then Tenant shall remove such Alterations as Landlord may
require and shall repair and restore said Premises or such part or parts thereof
before the Expiration Date at Tenant's sole cost and expense. Tenant on or
before the Expiration Date or sooner termination of this Lease, shall remove
all its personal property and trade fixtures from the Premises, and all
property and fixtures not so removed shall be deemed to be abandoned by Tenant.
If the Premises are not surrendered at the Expiration Date or sooner
termination of this Lease in the condition required by this paragraph, Tenant
shall indemnify, defend, and hold harmless Landlord against loss or liability
resulting from delay by Tenant in so surrendering the Premises including,
without limitation, any claims made by any succeeding tenant founded on such
delay.
9. USES PROHIBITED: Tenant shall not commit, or suffer to be committed,
any waste upon the said Premises, or any nuisance, or other act or thing which
may disturb the quiet enjoyment of any other tenant in or around the Building or
allow any sale by auction upon the Premises, or allow the Premises to be used
for any unlawful or objectionable purpose, or place any loads upon the floor,
walls, or ceiling which endanger the structure, or use any machinery
or apparatus which will in any manner vibrate or shake the Building, or place
any harmful liquids, waste materials, or hazardous materials in the drainage
system of, or upon or in the soils surrounding the Building. No materials,
supplies, equipment, finished products or semi-finished products, raw materials
or articles of any nature or any waste materials, refuse, scrap or debris shall
be stored upon or permitted to remain on any portion of the Premises outside of
the Building proper without Landlord's prior approval, which approval may be
withheld in its sold discretion.
10. ALTERATIONS AND ADDITIONS: Tenant shall not make, or suffer to be made,
any alteration or addition to the said Premises ("Alterations"), or any part
thereof, without (i) the written consent of Landlord first had and obtained, and
(ii) delivering to Landlord the proposed architectural and structural plans for
all such Alterations. Any Alterations, except movable furniture and trade
fixtures, shall become at once a part of the realty and belong to Landlord.
Alterations which are not to be deemed as trade fixtures shall include heating,
lighting, electrical systems, air conditioning, partitioning, carpeting, or any
other installation which has become an integral part of the Premises. After
having obtained Landlord's consent, Tenant agrees that it will not proceed to
make such alterations until (i) Tenant has obtained all required governmental
approvals and permits, and (ii) Tenant has provided Landlord reasonable
security, in form reasonably approved by Landlord, to protect Landlord against
mechanics' lien claims. Tenant further agrees to provide Landlord (i) written
notice of the actual start date of the work, (iii) a complete set of as-built
drawings. All Alterations shall be maintained, replaced or repaired at Tenant's
sole cost and expense. Tenant acknowledges Landlord's right to and hereby
consents to construction of additional building(s) on the land where the
Premises are located or on adjacent land owned by Landlord.
11. MAINTENANCE OF PREMISES:
A. Landlord and Tenant's Obligations Regarding Common Area Costs:
Tenant agrees to reimburse Landlord for the expenses resulting from Landlord's
payment of
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Common Area Costs as defined in paragraph 11(B) incurred by Landlord because the
cost is not directly allocable to or payable by a single tenant in the Building
or the Project. Tenant agrees to pay Tenant's Allocable Share as defined in
paragraph 11(C) of the Common Area Costs, as additional rental, within ten (10)
days of written invoice from Landlord.
B. Common Area Costs: For purposes of calculating Tenant's Allocable Share
of Building and of Project Costs, the term "Common Area Costs" shall mean all
costs and expenses of the nature hereinafter described which are incurred in
connection with ownership and operation of the Building or the Project in which
the Premises are located, as the case may be not directly allocable to or
payable by a single tenant in the Building or the Project, together with such
additional facilities as may be determined by Landlord to be reasonably
desirable or necessary to the ownership and operation of the Building and/or
Project. All costs and expenses shall be determined in accordance with generally
accepted accounting principles which shall be consistently applied (with
accruals appropriate to Landlord's business), including but not limited to, the
following: (i) common area utilities, including water and power, heating,
lighting, air-conditioning, ventilating and Building utilities to the extent not
separately metered; (ii) common area maintenance and service agreements for the
Building or the Project and the equipment therein including, without limitation,
common area janitorial services, alarm and security services, exterior window
cleaning, and maintenance of the sidewalks, landscaping, waterscape, roof
membrane, parking areas, driveways, service areas, mechanical rooms, elevators,
and the building exterior; (iii) insurance premiums and costs, including without
limitation, the premiums and cost of fire, casualty and liability coverage and
rental abatement and earthquake (if commercially available) insurance applicable
to the Building or Project; (iv) repairs, replacements and general maintenance
(excluding repairs and general maintenance paid by proceeds of insurance or by
Tenant or other third parties, and repairs or alterations attributable solely to
tenants of the Building or project other than Tenant); and (v) all real estate
taxes and assessment installments (special or general) or other impositions or
charges which may be levied on the Premises, upon the occupancy of the Premises
and including any substitute or additional charges which may be imposed during,
or applicable to the Lease Term including real estate tax increases due to a
sale or other transfer of the Premises, as such taxes are levied or appear on
the City and County tax bills and assessment rolls. This shall be a Net Lease
and the Base Monthly Rent shall be paid to Landlord absolutely net of all costs
and expenses. The provision for payment of Common Area Costs by means of
periodic payment of Tenant's Allocable Share of Building and/or Project Costs
are intended to pass on to Tenant and reimburse Landlord for all costs of
operating and managing the Building and/or Project.
C. Tenant's Allocable Share: For purposes of prorating Common Area Costs
which Tenant shall pay, Tenant's Allocable Share of Building Costs is computed
by multiplying the total Common Area Costs for service shared by the Building by
a fraction, the numerator of which is the rentable square footage of the
Premises and the denominator of which is the total rentable square footage of
the Building (excluding common areas). Tenant's Allocable Share of Project Costs
shall be commuted on a shared service by service basis, by multiplying the total
Common Area Costs for services shared by the Building and one or more buildings
in the Project by a fraction, the numerator of which is the rentable square
footage of the Premises and the denominator of which is the total rentable
square footage of the Buildings in the Project which share the services. It is
understood and agreed by Landlord and Tenant that Tenant's Allocable Share of
Building Costs is 57.14% and Project Costs is 57.14%. It is understood and
agreed that Tenant's obligation to share in Common Area Costs shall be adjusted
to reflect the commencement and termination dates of the Lease Term and are
subject to recalculation in the event of expansion of the Building or Project.
D. Waiver of Liability. Failure by Landlord to perform any defined
services, or any cessation thereof, when such failure is caused by accident,
breakage, repairs, strikes, lockout or other labor disturbances or labor
disputes of any character, or by any other cause, similar or dissimilar, beyond
the reasonable control of Landlord, shall not render Landlord liable in any
respect for damages to either person or property, nor be construed as an
eviction of Tenant, nor cause an abatement of rent nor relieve tenant from
fulfillment of any covenant or agreement hereof. Should any of the equipment or
machinery utilized in supplying the services listed herein break down, or for
any cause cease to function properly, upon receipt of written notice from Tenant
of any deficiency or failure of any defined Services, Landlord shall use
reasonable diligence to repair the same promptly, but Tenant shall have no right
to terminate this Lease, and shall have no claim for rebate of rent or damages,
on account of any interruptions in service occasioned thereby or resulting
therefrom. Tenant waives the provisions of California Civil Code Sections 1941
and 1942 concerning the Landlord's
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obligation of tenantability and Tenant's right to make repairs and deduct the
cost of such repairs from the rent. Landlord shall not be liable for a loss of
or injury to property, however occurring, through or in connection with or
incidental to furnishing or its failure to furnish any of the foregoing.
E. Tenant's Obligations: Except as provided in 11(A) above, Tenant
shall, at its sole cost, keep and maintain, repair and replace, said Premises
and appurtenances and every part hereof, including but not limited to, exterior
walls, roof, glazing, sidewalks, parking areas, elevator, plumbing, electrical
and HVAC systems, and all the Tenant Interior Improvements in good and sanitary
order, condition, and repair. Tenant shall provide Landlord with a copy of a
service contract between Tenant and (i) a licensed air-conditioning and heating
contractor which contract shall provide for bi-monthly maintenance of all air
conditioning and heating equipment at the Premises; and (ii) a licensed elevator
maintenance contractor which contract shall provide for monthly maintenance of
all elevator related systems. Tenant shall pay the cost of all air-conditioning,
heating, and elevator equipment repairs or replacements which are either
excluded from such service contract or any existing equipment warranties. All
wall surfaces and floor tile are to be maintained in an as good a condition as
when Tenant took possession free of holes, gouges, or defacements. Tenant agrees
to limit attachments to vinyl demountable wall surfaces exclusively to V-joints.
12. HAZARD INSURANCE:
A. Tenant's Use: Tenant shall not use, or permit said Premises, or
any part thereof, to be used, for any purpose other than that for which the said
Premises are hereby leased; and no use shall be made or permitted to be made of
the said Premises, nor acts done, which will cause an increase in premiums or a
cancellation of any insurance policy covering said Building, or any part
thereof, nor shall Tenant sell or permit to be kept, used or sold, in or about
said Premises, any article which may be prohibited by the standard form of fire
insurance policies. Tenant shall, at its sole cost and expense, comply with any
and all requirements, pertaining to said Premises, of any insurance organization
or company, necessary for the maintenance of reasonable fire and public
liability insurance, covering said Building and appurtenances.
B. Landlord's Insurance: Landlord agrees to purchase and keep in
force fire and extended coverage, earthquake (at Landlord's election), and 12
month rental loss insurance covering the Premises in amounts not to exceed the
actual insurable value of the Building as determined by Landlord's insurance
company's appraisers. The Tenant agrees to pay to the Landlord as additional
rent, on demand, the full cost of said insurance as evidenced by insurance
billings to the Landlord, and in the event of damage covered by said insurance,
the amount of any deductible under such policy. Payment shall be due to Landlord
within ten (10) days after written invoice to Tenant. Notwithstanding the
foregoing, Tenant's obligation to pay for the cost of any earthquake insurance
premiums shall be limited to an amount equal or less than four (4) times the
cost of the fire and extended coverage premiums. It is understood and agreed
that Tenant's obligation under this paragraph will be prorated to reflect the
commencement and termination dates of this Lease.
C. Tenant's Insurance: Tenant, at its sole cost, agrees to insure
its personal property and Alterations for their full replacement value (without
depreciation) and to obtain worker's compensation and public liability and
property damage insurance for occurrences within the Premises with a
$5,000,000.00 combined single limit for bodily injury and property damage.
Tenant shall name Landlord and Landlord's lender as an additional insured, shall
deliver a copy of the policies and renewal certificates to Landlord. All such
policies shall provide for thirty (30) days' prior written notice to Landlord of
any cancellation, termination, or reduction in coverage. Notwithstanding the
above, Landlord retains the right to have Tenant provide other forms of
insurance which may be reasonably required to cover future risks.
D. Waiver: Landlord and Tenant hereby waive any and all rights each
may have against the other on account of any loss or damage occasioned to the
Landlord or the Tenant as the case may be, or to the Premises or its contents,
and which may arise from any risk covered by their respective insurance
policies, as set forth above. The parties shall use their reasonable efforts to
obtain from their respective insurance companies a waiver of any right of
subrogation which said insurance company may have against the Landlord or the
Tenant, as the case may be.
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13. TAXES: Tenant shall be liable and shall pay prior to delinquency, for
all taxes and assessments levied against personal property and trade or
business fixtures, and agrees to pay, as additional rental, all real estate
taxes and assessment installments (special or general) or other impositions or
charges which may be levied on the Premises, upon the occupancy of the Premises
and including any substitute or additional charges which may be imposed during,
or applicable to the Lease Term including real estate tax increases due to a
sale or other transfer of the Premises, as they appear on the City and County
tax bills during the Lease Term, and as they become due. It is understood and
agreed that Tenant's obligation under this paragraph will be prorated to
reflect the Commencement and Expiration Dates. In any time during the Lease
Term a tax, excise on rents, business license tax, or any other tax, however
described, is levied or assessed against Landlord, as a substitute or addition
in whole or in part for taxes assessed or imposed on land or Buildings, Tenant
shall pay and discharge his pro rata share of such tax or excise on rents or
other tax before it becomes delinquent, except that this provision is not
intended to cover net income taxes, inheritance, gift or estate tax imposed
upon the Landlord. In the event that a tax is placed levied, or assessed
against Landlord and the taxing authority takes the position that the Tenant
cannot pay and discharge his pro rata share of such tax on behalf of the
Landlord, then at the sole election of the Landlord, the Landlord may increase
the rental charged hereunder by the exact amount of such tax and Tenant shall
pay such increase as additional rent hereunder.
14. UTILITIES: Tenant shall pay directly to the providing utility all
water, gas, heat, light, power, telephone and other utilities supplied to the
Premises. Landlord shall not be liable for a loss of or injury to property,
however occurring, through or in connection with or incidental to furnishing or
failure to furnish any utilities to the Premises and Tenant shall not be
entitled to abatement or reduction of any portion of the Base Monthly Rent so
long as any failure to provide and furnish the utilities to the Premises due to
any cause beyond the Landlord's reasonable control.
15. ABANDONMENT: Tenant shall not vacate or abandon the Premises at any
time during the Lease Term; and if Tenant shall abandon, vacate or surrender
said Premises, or be dispossessed by process of law, or otherwise, any personal
property belonging to Tenant and left on the Premises shall be deemed to be
abandoned, at the option of Landlord, except such property as may be mortgaged
to Landlord.
16. FREE FROM LIENS: Tenant shall keep the Premises and the Building free
from any liens arising out of any work performed, materials furnished, or
obligations incurred by Tenant or claimed to have been performed for Tenant. In
the event Tenant fails to discharge any such lien within ten (10) days after
receiving notice of the filing, Landlord shall be entitled to discharge such
lien at Tenant's expense and all resulting costs incurred by Landlord,
including attorney's fees shall be due from Tenant as additional rent.
17. COMPLIANCE WITH GOVERNMENTAL REGULATIONS: Tenant shall, at its sole
cost and expense, comply with all of the requirements of all Municipal, State
and Federal authorities now in force, or which may hereafter be in force,
pertaining to the said Premises, and shall faithfully observe in the use of the
Premises all Municipal ordinances and State and Federal statutes now in force
or which may hereafter be in force. The judgment of any court of competent
jurisdiction, or the admission of Tenant in any action or proceeding against
Tenant, whether Landlord be a party thereto or not, that Tenant has violated
any such ordinance or statute in the use of the Premises, shall be conclusive
of that fact as between Landlord and Tenant.
18. TOXIC WASTE AND ENVIRONMENTAL DAMAGE:
A. Tenant's Responsibility: Without the prior written consent of
Landlord, Tenant shall not bring, use, or permit upon the Premises, or
generate, emit, or dispose from the Premises any chemicals, toxic or hazardous
gaseous, liquid or solid materials or waste, including without limitation,
material or substance having characteristics of ignitability, corrosivity,
reactivity, or toxicity or substances or materials which are listed on any of
the Environmental Protection Agency's lists of hazardous wastes or which are
identified in Sections 66680 through 66685 of Title 22 of the California
Administrative Code as the same may be amended from time to time ("Hazardous
Materials"). In order to obtain consent, Tenant shall deliver to Landlord its
written proposal describing the toxic material to be brought onto the Premises,
measures to be taken for storage and disposal thereof, safety measures to be
employed to prevent pollution of the air, ground, surface and ground water.
Landlord's approval may be withheld in its reasonable judgment. In the event
Landlord
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consents to Tenant's use of Hazardous Materials on the Premises, Tenant
represents and warrants that Tenant will (i) adhere to all reporting and
inspection requirements imposed by Federal, State, County or Municipal laws,
ordinances or regulations and will provide Landlord a copy of any such reports
or agency inspections, (ii) obtain and provide Landlord copies of all necessary
permits required for the use and handling Hazardous Materials on the Premises,
(iii) enforce Hazardous Materials handling and disposal practices consistent
with industry standards, and (iv) properly close the facility with regard to
Hazardous Materials including the removal or decontamination of any process
piping, mechanical ducting, storage tanks, containers, or trenches which have
come into contact with Hazardous Materials and obtain a closure certificate
from the local administering agency prior to the Expiration Date. Landlord may
employ, at Tenant's expense, an independent engineer or consultant to
periodically inspect Tenant's operations to verify that Tenant is complying
with its obligations under this paragraph.
B. Tenant's Indemnity Regarding Hazardous Materials: Tenant shall
comply, at its sole cost, with all laws pertaining to, and shall indemnify and
hold Landlord harmless from any claims, liabilities, costs or expenses incurred
or suffered by Landlord arising from such bringing, using, permitting,
generating, emitting or disposing of Hazardous Materials. Tenant's
indemnification and hold harmless obligations include, without limitation, (i)
claims, liability, costs or expenses resulting from or based upon
administrative, judicial (civil or criminal) or other action, legal or
equitable, brought by any private or public person under common law or under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), the Resource Conservation and Recovery Act of 1980 ("RCRA") or any
other Federal, State, County or Municipal law, ordinance or regulation, (ii)
claims, liabilities, costs or expenses pertaining to the identification,
monitoring, cleanup, containment, or removal of Hazardous Materials from soils,
riverbeds or aquifers including the provision of an alternative public drinking
water source, and (iii) all costs of defending such claims.
C. Environmental Monitoring: Landlord and its agents shall have the
right, at Tenant's sole cost and expense to inspect, investigate, sample and/or
monitor the Premises, including any air, soil, water, groundwater or other
sampling or any other testing, digging, drilling or analysis to determine
whether Tenant is complying with the terms of this paragraph 18. If Landlord
discovers that Tenant is not in compliance with the terms of this paragraph, any
such costs incurred by Landlord, including attorneys' and consultants' fees
shall be due and payable by Tenant to Landlord within five days following
Landlord's written demand therefore.
19. INDEMNITY: As a material part of the consideration to be rendered to
Landlord, Tenant hereby waives all claims against Landlord for damages to goods,
wares and merchandise, and all other personal property in, upon or about said
Premises and for injuries to person in or about said Premises, from any cause
arising at any time except due to the negligence or willful misconduct of
Landlord, and Tenant will hold Landlord exempt and harmless from any damage or
injury to any person, or to the goods, wares and merchandise and all other
personal property of any person, arising from the use of the Premises by Tenant,
or from the failure of Tenant to keep the Premises in good condition and repair,
as herein provided. Further, in the event Landlord is made party to any
litigation due to the acts or omission of Tenant, Tenant will indemnify and hold
Landlord harmless from any such claim or liability including Landlord's costs
and expenses and reasonable attorney's fees incurred in defending such claims.
20. ADVERTISEMENTS AND SIGNS: Tenant will not place or permit to be
placed, in, upon or about the said Premises any unusual or extraordinary signs,
or any signs not approved by the city or other governing authority. The Tenant
will not place, or permit to be placed, upon the Premises, any signs,
advertisements or notices without the written consent of the Landlord as to
type, size, design, lettering, coloring and location, and such consent will not
be unreasonably withheld. Any sign so placed on the Premises shall be removed
by Tenant, at its expense, prior to the Expiration Date or promptly following
the earlier termination of the lease and Tenant shall repair any damage or
injury to the Premises caused thereby, and if not so removed by Tenant then
Landlord may have same so removed at Tenant's expense.
21. ATTORNEY'S FEES: In case suit should be brought for the possession of
the Premises, for the recovery of any sum due hereunder, or because of the
breach of any other covenant herein, the losing party shall pay to the
prevailing party a reasonable attorney's fee
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as part of its costs which shall be deemed to have accrued on the commencement
of such action.
22. TENANT'S DEFAULT: The occurrence of any of the following shall
constitute a material default and breach of this Lease by Tenant: a) Any failure
by Tenant to pay the rental or to make any other payment required to be made by
Tenant hereunder provided however, that Tenant may cure such default by payment
to Landlord of the Base Monthly Rent or other sum due within ten (10) days after
receipt by Tenant of written notice specifying Landlord has failed to receive
the amount in question; b) The abandonment or vacation of the Premises by
Tenant; c) A failure by Tenant to observe and perform any other provision of
this Lease to be observed or performed by Tenant, where such failure continues
for thirty (30) days after written notice thereof by Landlord to Tenant;
provided, however, that if the nature of such default is such that the same
cannot reasonably be cured within such thirty (30) day period Tenant shall not
be deemed to be in default if Tenant shall within such period commence such cure
and thereafter diligently prosecute the same to completion; d) The making by
Tenant of any general assignment for the benefit of creditors; the filing by or
against Tenant of a petition to have Tenant adjudged a bankrupt or of a petition
for reorganization or arrangement under any law relating to bankruptcy (unless,
in the case of a petition filed against Tenant, the same is dismissed after the
filing); the appointment of a trustee or receiver to take possession of
substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease, where possession is not restored to Tenant within thirty
(30) days; or the attachment, execution or other judicial seizure of
substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease, where such seizure is not discharged within thirty (30)
days. The notice requirements set forth herein are in lieu of and not in
addition to the notices required by California Code of Civil Procedure Section
1161.
A. Remedies: In the event of any such default by Tenant, then in
addition to any other remedies available to Landlord at law or in equity,
Landlord shall have the immediate option to terminate this Lease and all rights
of Tenant hereunder by giving written notice of such intention to terminate. In
the event that Landlord shall elect to so terminate this Lease then Landlord
may recover from Tenant: a) the worth at the time of award of any unpaid rent
which had been earned at the time of such termination; plus b) the worth at the
time of award of the amount by which the unpaid rent would have been earned
after termination until the time of award exceeds the amount of such rental
loss Tenant proves could have been reasonably avoided; plus c) the worth at the
time of award of the amount by which the unpaid rent for the balance of the
Lease Term after the time of award exceeds the amount of such rental loss that
Tenant proves could be reasonably avoided; plus d) any other amount necessary
to compensate Landlord for all the detriment proximately caused by Tenant's
failure to perform his obligations under this Lease or which in the ordinary
course of things would be likely to result therefrom, and e) at Landlord's
election, such other amounts in addition to or in lieu of the foregoing as may
be permitted from time to time by applicable California law. The term "rent",
as used herein, shall be deemed to be and to mean the minimum monthly
installments of Base Monthly Rent and all other sums required to be paid by
Tenant pursuant to the terms of this Lease, all other such sums being deemed to
be additional rent due hereunder. As used in (a) and (b) above, the "worth at
the time of award" to be computed by allowing interest at the rate of the
discount rate of the Federal Reserve Bank of San Francisco plus five (5%)
percent per annum. As used in (c) above, the "worth at the time of award" to be
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award plus one (1%) percent.
B. Right to Re-enter: In the event of any such default by Tenant,
Landlord shall also have the right with or without terminating this Lease, to
re-enter the Premises and remove all persons and property from the Premises;
such property may be removed and stored in a public warehouse or elsewhere at
the cost of and for the account of Tenant and disposed of by Landlord in any
manner permitted by law.
C. Abandonment: In the event of the vacation or abandonment of the
Premises by Tenant or in the event that Landlord shall elect to re-enter as
provided in paragraph 22(B) above or shall take possession of the Premises
pursuant to legal proceeding or pursuant to any notice provided by law, then if
Landlord does not elect to terminate this Lease as provided in paragraph 22(A)
above, then the provisions of California Civil Code Section 1951.4 as amended
from time to time, shall apply and Landlord may from time to time, without
terminating this Lease, either recover all rental as it becomes due or relet
the Premises or any part thereof for such term or terms and at such rental or
rentals and upon such other terms and conditions as Landlord in its sole
discretion may deem advisable with the right to
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make alterations and repairs to the Premises. In the event that Landlord shall
elect to so relet, then rentals received by Landlord from such reletting shall
be applied: first, to the payment of any indebtedness other than Base Monthly
Rent due hereunder from Tenant to Landlord; second, to the payment of any cost
of such reletting; third, to the payment of the cost of any alterations and
repairs to the Premises; fourth, to the payment of Base Monthly Rent due and
unpaid hereunder; and the residue, if any, shall be held by Landlord and
applied in payment of future Base Monthly Rent as the same may become due and
payable hereunder. Should that portion of such rentals received from such
reletting during any month, which is applied by the payment of rent hereunder,
be less than the rent payable during that month by Tenant hereunder, then
Tenant shall pay such deficiency to Landlord immediately upon demand therefor
by Landlord. Such deficiency shall be calculated and paid monthly. Tenant shall
also pay to Landlord, as soon as ascertained, any costs and expenses incurred
by Landlord in such reletting or in making such alterations and repairs not
covered by the rentals received from such reletting.
D. No Termination: No re-entry or taking possession of the Premises by
Landlord pursuant to 22(B) or 22(C) of this Article 22 shall be construed as an
election to terminate this Lease unless a written notice of such intention be
given to Tenant or unless the termination thereof be decreed by a court of
competent jurisdiction. Notwithstanding any reletting without termination by
Landlord because of any default by Tenant, Landlord may at any time after such
reletting elect to terminate this Lease for any such default.
23. SURRENDER OF LEASE: The voluntary or other surrender of this Lease by
Tenant, or a mutual cancellation thereof, shall not automatically effect a
merger of the Lease with Landlord's ownership of the Building or Premises.
Instead, at the option of Landlord, Tenant's surrender may terminate all or any
existing sublease or subtenancies, or may operate as an assignment to Landlord
of any or all such subleases or subtenancies, thereby creating a direct
Landlord-Tenant relationship between Landlord and any subtenants.
24. HABITUAL DEFAULT: Notwithstanding anything to the contrary contained in
paragraph 22, 22 (A) (B) (C) and (D), the parties hereto agree that if the
Tenant shall have defaulted in the performance of any (but not necessarily the
same) term or condition of this Lease for three or more times during any twelve
month period during the Lease Term hereof, then such conduct shall, at the
election of the Landlord, represent a separate event of default which cannot be
cured by the Tenant. Tenant acknowledges that the purpose of this provision is
to prevent repetitive defaults by the Tenant under the Lease, which work a
hardship upon the Landlord, and deprive the Landlord of the timely performance
by the Tenant hereunder.
25. LANDLORD'S DEFAULT: In the event of Landlord's failure to perform any
of its covenants or agreements under this Lease, Tenant shall give Landlord
written notice of such failure and shall give Landlord thirty (30) days or such
other reasonable opportunity to cure or to commence to cure such failure prior
to any claim for breach or for damages resulting from such failure. In
addition, upon any such failure by Landlord, Tenant shall give notice by
registered or certified mail to any person or entity with a security interest
in the Premises ("Mortgagee") that has provided Tenant with notice of its
interest in the Premises, and shall provide such Mortgagee a reasonable
opportunity to cure such failure, including such time to obtain possession of
the Premises by power of sale or judicial foreclosure, if such should prove
necessary to effectuate a cure. Tenant agrees that each of the Mortgagees to
whom this Lease has been assigned is an expressed third party beneficiary
hereof. Tenant shall not make any prepayment of rent more than one (1) month in
advance without the prior written consent of such Mortgagee. Tenant waives any
right under California Civil Code Section 1950.7 or any other present or future
law to the collection of any payment or deposit from such Mortgagee or any
purchaser at a foreclosure sale of such Mortgagee's interest unless such
Mortgagee or such purchaser shall have actually received and not refunded the
applicable payment or deposit.
26. NOTICES: All notices, demands, requests, or consents required to be
given under this Lease shall be sent in writing by U.S. certified mail, return
receipt requested, or by personal delivery addressed to the party to be
notified at the address for such party specified in paragraph 1 of this Lease,
or to such other place as the party to be notified may from time to time
designate by at least fifteen (15) days prior notice to the notifying party.
27. ENTRY BY LANDLORD: Tenant shall permit Landlord and his agents to enter
into and upon said Premises at all reasonable times subject to any security
regulations of
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Tenant for the purpose of inspecting the same or for the purpose of maintaining
the Premises or for the purpose of making repairs, alterations or additions to
any other portion of said Premises or for the purpose of erecting additional
building(s) and improvements on the land where the Premises are situated, or on
adjacent land owned by Landlord, including the erection and maintenance of such
scaffolding, canopies, fences and props as may be required without any abatement
or reduction of Base Monthly Rent or without any liability to Tenant for any
loss of occupation or quiet enjoyment of the Premises thereby occasioned; and
Tenant shall permit Landlord and his agents, at any time within one hundred and
eighty (180) days prior to the Expiration Date (or at any time during the Lease
if Tenant is in default hereunder), to place upon the Premises any "For Sale"
or "For Lease" signs and exhibit the Premises to real estate brokers and
prospective tenants at reasonable hours.
28. DESTRUCTION OF PREMISES:
A. DESTRUCTION BY AN INSURED CASUALTY: In the event of a partial
destruction of the Premises by a casualty for which Landlord has received
insurance proceeds sufficient to repair the damage or destruction during the
Lease Term from any cause, Landlord shall forthwith repair the same, provided
such repairs can be made within one hundred eighty (180) days from the date of
receipt of all necessary governmental approvals necessary under the laws and
regulations of State, Federal, County or Municipal authorities, such partial
destruction shall in no way annul or void this Lease, except that Tenant shall
be entitled to a proportionate reduction of Base Monthly Rent while such
repairs are being made, such proportionate reduction to be based upon the extent
to which the making of such repairs shall interfere with the business carried on
by Tenant in the Premises, in the reasonable judgment of Landlord. For purposes
of this paragraph "partial destruction" shall mean destruction of no greater
than one-third (1/3) of the replacement cost of the Premises, including the
replacement cost of the Tenant Improvements paid for by Landlord. In the event
the Premises are more than partially destroyed, or in the event the repairs
cannot be made in one hundred eighty (180) days, Landlord or Tenant may elect
to terminate this lease. Landlord shall not be required to restore Alterations
or replace Tenant's fixtures or personal property. In respect to any partial
destruction which Landlord is obligated to repair or may elect to repair under
the terms of this paragraph, the provision of Section 1932, Subdivision 2, and
of Section 1933, Subdivision 4, of the Civil Code of the State of California
and any other similarly enacted statute are waived by Tenant and the provisions
of this paragraph 28 shall govern in the case of such destruction.
B. DESTRUCTION BY AN UNINSURED CASUALTY: In the event of a total or
partial destruction of the Premises by an uninsured casualty, the Lease shall
automatically terminate, unless (i) Landlord elects to rebuild, and (ii) the
damage can be repaired within one hundred eighty (180) days. If Landlord elects
to contribute to payment for an uninsured loss, such contributed amount shall be
amortized over the useful life of the improvements and such amortization shall
be reimbursed by Tenant to Landlord as additional rent together with interest at
the prime rate of Union Bank plus two percent (2%).
29. ASSIGNMENT OR SUBLEASE:
A. CONSENT BY LANDLORD: In the event Tenant desires to assign this
Lease or any interest therein including, without limitation, a pledge, mortgage
or other hypothecation, or sublet the Premises or any part thereof, Tenant
shall deliver to Landlord executed counterparts of any such agreement and of
all ancillary agreements with the proposed assignee or subtenant, financial
statements, and any additional information as reasonably required to determine
whether it will consent to the proposed assignment or sublease. The notice
shall give the name and current address of the proposed assignee/subtenant,
proposed use of the Premises, rental rate and current financial statement; and
upon request to Tenant, Landlord shall be given additional information as
reasonably required to determine whether it will consent to the proposed
assignment or sublease. Landlord shall then have a period of thirty (30) days
following receipt of such notice within which to notify Tenant in writing that
Landlord elects (i) to terminate this Lease as to the space so affected as of
the date so specified by Tenant in which event Tenant will be relieved of all
further obligations hereunder as to such space, (ii) to permit Tenant to assign
or sublet such space to the named assignee/subtenant on the terms and
conditions set forth in the notice, or (iii) to refuse consent. If Landlord
should fail to notify Tenant in writing of such election within said thirty
(30) day period, Landlord shall be deemed to have elected option (ii) above. If
Landlord exercises its option to terminate this Lease in part in the event
Tenant desires to sublet or assign part of the Premises, then (i) this Lease
shall end and expire, with respect to such part
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of the Premises, on the date upon which the proposed sublease was to commence,
and (ii) from and after such date, the Base Monthly Rent and Tenant's allocable
share of all other costs and charges shall be adjusted, based upon the
proportion that the rentable area of the Premises remaining bears to the total
rentable area of the Premises. If Landlord does not exercise its option to
terminate this Lease, Landlord's consent (which must be in writing and in form
reasonably satisfactory to Landlord) to the proposed assignment or sublease
shall not be unreasonably withheld or delayed, provided and upon condition
that: (j) The proposed assignee or subtenant is engaged in a business that is
limited to the used expressly permitted under this Lease; (ii) The proposed
assignee or subtenant is a company with sufficient financial worth and
management ability to undertake the financial obligation of this Lease, and
Landlord has been furnished with reasonable proof thereof; (iii) The proposed
sublease shall be in form reasonably satisfactory to Landlord; (iv) The amount
of the aggregate rent to be paid by the proposed subtenant is not less than the
then current "Fair Market Value" as defined in paragraph 38 below; (v) Tenant
shall reimburse Landlord on demand for any costs that may be incurred by
Landlord in connection with said assignment or sublease, including the costs of
making investigations as to the acceptability of the proposed assignee or
subtenant and legal costs incurred in connection with the granting of any
requested consent; and (vi) Tenant shall not have advertised or publicized in
any way the availability of the Premises without prior notice to, and approval
by Landlord
C. Assignment or Subletting Consideration: Any rent or other
economic consideration realized by Tenant under any such sublease and assignment
in excess of the rent payable hereunder (including an allocation of the purchase
price attributable to Tenant's leasehold interest in the event of a sale of the
Tenant's business), after the net unamortized cost of the Tenant Improvements
for which Tenant has itself paid, and assignment costs, shall be divided and
paid sixty-seven percent (67%) to the Landlord and thirty-three percent (33%) to
Tenant. Tenant's obligation to pay over Landlord's portion of the consideration
shall constitute an obligation for additional rent hereunder. The above
provisions relating to Landlord's right to terminate the Lease and relating to
the allocation of bonus rent are independently negotiated terms of the Lease,
constitute a material inducement for the Landlord to enter into the Lease, and
are agreed as between the parties to be commercially reasonable. No assignment
or subletting by Tenant shall relieve Tenant of any obligation under this Lease.
Any assignment or subletting by Tenant shall relieve Tenant of any obligation
under this Lease. Any assignment or subletting which conflicts with the
provisions hereof shall be void.
C. No Release: Any assignment or sublease shall be made only if and
shall not be effective until the assignee or subtenant shall execute,
acknowledge and deliver to Landlord an agreement, in form and substance
satisfactory to Landlord, whereby the assignee or subtenant shall assume all of
the obligations of this Lease on the part of Tenant to be performed or observed
and shall be subject to all of the covenants, agreements, terms, provisions and
conditions contained in this Lease. Notwithstanding any such sublease or
assignment and the acceptance of rent or additional rent by Landlord from any
subtenant or assignee, Tenant or any guarantor shall and will remain fully
liable for the payment of the rent and additional rent due, and to become due
hereunder, for the performance of all of the covenants, agreements, terms,
provisions and conditions contained in this Lease on the part of Tenant to be
performed and for all acts and omissions of any licensee, subtenant, assignee
or any other person claiming under or through any subtenant that shall be in
violation of any or the terms and conditions of this Lease, and any such
violation shall be deemed to be a violation by Tenant. Tenant shall further
indemnify, defend and hold Landlord harmless from and against any and all
losses, liabilities, damages, costs and expenses (including reasonable attorney
fees) resulting from any claims that may be made against Landlord by the
proposed assignee or subtenant or by any real estate brokers or other persons
claiming a commission or similar compensation in connection with the proposed
assignment or sublease.
D. Effect of Default: In the event of Tenant's default, Tenant
hereby assigns all rents due from any assignment or subletting to Landlord as
security for performance of its obligations under this Lease and Landlord may
collect such rents as Tenant's Attorney-in-Fact, except that Tenant may collect
such rents unless a default occurs as described in paragraph 22 above. The
termination of this Lease due to Tenant's default shall not automatically
terminate any assignment or sublease then in existence. At the election of
Landlord, the assignee or subtenant shall attorn to Landlord and Landlord shall
undertake the obligations of the Tenant under the sublease or assignment;
provided the Landlord shall not be liable for prepaid rent, security deposits
or other defaults of the Tenant to the subtenant or assignee, or any acts or
omissions of Tenant, its agents, employees or invitees.
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<PAGE> 33
30. CONDEMNATION: If any part of the Premises shall be taken for any public
or quasi-public use, under any statute or by right of eminent domain or private
purchase in lieu thereof, and a part thereof remains which is susceptible of
occupation hereunder, this Lease shall as to the part so taken, terminate as of
the date title shall vest in the condemnor or purchaser, and the Base Monthly
Rent payable hereunder shall be adjusted so that the Tenant shall be required to
pay for the remainder of the Lease Term only such portion of such rent as the
value of the part remaining after such taking bears to the value of the entire
Premises prior to such taking; but in such event Landlord shall have the option
to terminate this Lease as of the date when title to the part so taken vests in
the condemnor or purchaser. If all of the Premises, or such part thereof be
taken so that there does not remain a portion susceptible for occupation
hereunder, this Lease shall thereupon terminate. If a part or all of the
Premises be taken, all compensation awarded upon such taking shall go to the
Landlord and the Tenant shall have no claim thereto but Landlord shall cooperate
with Tenant to recover compensation for damage to or taking of any Alterations
or for Tenant's moving costs. Tenant hereby waives the provisions of California
Code of Civil Procedures Section 1265.130 and any other similarly enacted statue
are waived by Tenant and the provisions of this paragraph 30 shall govern in the
case of such destruction.
31. EFFECTS OF CONVEYANCE: The term Landlord as used in this Lease, means
only the owner for the time being of the land and Building, containing the
Premises, so that, in the event of any sale or other conveyance of said land or
Building, or in the event of a master Lease of the Building, the Landlord shall
be and hereby is entirely freed and relieved of all covenants and obligations of
the Landlord hereunder, and it shall be deemed and construed, without further
agreement between the parties and the purchaser at any such sale, or the master
tenant of the Building, that the purchaser or master tenant of the Building has
assumed and agreed to carry out any and all covenants and obligations of the
Landlord hereunder. Landlord shall transfer and deliver Tenant's security
deposit to the purchaser at any such sale or the master tenant of the Building,
and thereupon the Landlord shall be discharged from any further liability in
reference thereto.
32. SUBORDINATION: In the event Landlord notifies Tenant in writing, this
Lease shall be subordinate to any ground Lease, deed of trust, or other
hypothecation for security now or hereafter placed upon the real property of
which the Premises are a part and to any and all advances made on the security
thereof and to renewals, modifications, replacements and extensions thereof.
Tenant agrees to promptly execute and deliver any documents which may be
required to effectuate such subordination. Notwithstanding such subordination,
Tenant's right to quiet possession of the Premises shall not be disturbed if
Tenant is not in default and so long as Tenant shall pay the rent and observe
and perform all of the provisions of this Lease. At the request of any Lender,
Tenant agrees to execute and deliver any reasonable modifications of this Lease
which do not materially adversely affect Tenant's rights hereunder.
33. WAIVER: The waiver by Landlord of any breach of any term, covenant or
condition, herein contained shall not be deemed to be a waiver of such term,
covenant or condition or any subsequent breach of the same or any other term,
covenant or condition herein contained. The subsequent acceptance of rent
hereunder by Landlord shall not be deemed to be a waiver of any preceding breach
by Tenant of any term, covenant or condition of this Lease, other than the
failure of Tenant to pay the particular rental so accepted, regardless of
Landlord's knowledge of such preceding breach at the time of acceptance of such
rent. No delay or omission in the exercise of any right or remedy by Landlord
shall impair such right or remedy or be construed as a waiver thereof by
Landlord. No act or conduct of Landlord, including, without limitation, the
acceptance of keys to the Premises shall constitute acceptance of the surrender
of the Premises by Tenant before the Expiration Date. Landlord's consent to or
approval of any act by Tenant which require Landlord's consent or approvals
shall not be deemed to waive or render unnecessary Landlord's consent to or
approval of any subsequent act by Tenant.
34. HOLDING OVER: Any holding over after the termination or Expiration
Date, shall be construed to be a tenancy from month to month terminable on
thirty (30) days written notice from either party and Tenant shall pay Base
Monthly Rent to Landlord at a rate equal to the greater of (i) one hundred fifty
percent (150%) of the Base Monthly Rent due in the month preceding the
termination or Expiration Date or (ii) one hundred fifty percent (150%) of the
Fair Market Rental (as defined in paragraph 37). Any holding over shall
otherwise be on the terms and conditions herein specified, except those
provisions relating to the Lease Term and any options to extend or renew, which
provisions shall be of no further force and
<PAGE> 34
effect following the expiration of the applicable exercise period. Tenant shall
indemnify, defend, and hold Landlord harmless from all loss or liability
(including, without limitation, any loss or liability resulted from any claim
against Landlord made by any succeeding tenant) founded on or resulting from
Tenant's failure to surrender the Premises and losses to Landlord due to lost
opportunities to lease the Premises to succeeding tenants.
35. SUCCESSORS AND ASSIGNS: The covenants and conditions herein contained
shall, subject to the provisions of paragraph 28, apply to and bind the heirs,
successors, executors, administrators and assigns of all the parties hereto; and
all of the parties hereto shall be jointly and severally liable hereunder.
36. ESTOPPEL CERTIFICATES: Tenant shall at any time during the Lease Term,
within ten (10) days following written notice from Landlord, execute and deliver
to Landlord a statement in writing certifying that this Lease is unmodified and
in full force and effect (or, if modified, stating the nature of such
modification) and the date to which the rent and other charges are paid in
advance, if any, and acknowledging that there are not, to Tenant's knowledge,
any uncured defaults on the part of Landlord hereunder or specifying such
defaults if they are claimed. Any such statement may be conclusively relied upon
by any prospective purchaser or encumbrancer of the Premises. Tenant's failure
to deliver such statement within such time shall be conclusive upon the Tenant
that: (i) this Lease is in full force and effect, without modification except as
may be represented by Landlord; (ii) there are not uncured defaults in
Landlord's performance. Tenant also agrees to provide the most current three (3)
years of audited financial statements within five (5) days of a request by
Landlord for Landlord's use in financing the Premises with commercial lenders.
37. This paragraph intentionally left blank.
38. OPTIONS: All Options provided Tenant in this Lease are personal and
granted to original Tenant and are not exercisable by any third party should
Tenant assign or sublet all or a portion of its rights under this Lease, unless
Landlord consents to permit exercise of any option by any assignee or subtenant,
in Landlord's sole discretion. In the event that Tenant hereunder has any
multiple options to extend this Lease, a later option to extend the Lease cannot
be exercised unless the prior option has been so exercised.
39. QUIET ENJOYMENT: Upon Tenant's faithful and timely performance of all
the terms and covenants of the Lease, Tenant shall quietly have and hold the
Premises for the Lease Term and any extensions thereof.
40. BROKERS: Tenant represents it has not utilized or contacted a real
estate broker or finder with respect to this Lease other than Cornish & Carey
Commercial and Tenant agrees to indemnify and hold Landlord harmless against any
claim, cost, liability or cause of action asserted by any other broker or finder
claiming through Tenant.
41. LANDLORD'S LIABILITY: If Tenant should recover a money judgment
against Landlord arising in connection with this Lease, the judgment shall be
satisfied only out of Landlord's interest in the Premises including the
improvements and real property and neither Landlord or any of its partners,
officers, directors or employees shall be liable personally for any deficiency.
42. AUTHORITY OF PARTIES:
A. CORPORATE AUTHORITY: If Tenant is a corporation, each individual
executing this Lease on behalf of said corporation represents and warrants that
he is duly authorized to execute and deliver this Lease on behalf of said
corporation, in accordance with a duly adopted resolution of the Board of
Directors of said corporation or in accordance with the bylaws of said
corporation, and that this Lease is binding upon said corporation in accordance
with its terms.
B. LIMITED PARTNERSHIPS: If the Landlord herein is a limited
partnership, it is understood and agreed that any claims by Tenant on Landlord
shall be limited to the assets of the limited partnership. And furthermore,
Tenant expressly waives any and all rights to proceed against the individual
partners or the officers, directors or shareholders of any corporate partner,
except to the extent of their interest in said limited partnership.
43. TRANSPORTATION DEMAND MANAGEMENT PROGRAMS Should a
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government agency or municipality require Landlord to institute TDM
(Transportation Demand Management) facilities and/or program, Tenant hereby
agrees that the cost of TDM imposed facilities required on the Premises,
including but not limited to employee showers, lockers, cafeteria, or lunchroom
facilities, shall be included as Tenant Improvement Costs and any ongoing costs
or expenses associated with a TDM program, such as an on-site TDM coordinator,
which are required for the Premises and not provided by Tenant shall be
provided by Landlord with such costs being included as additional rent and
reimbursed to Landlord by Tenant.
44. MISCELLANEOUS PROVISIONS:
A. RENT: All monetary sums due from Tenant to Landlord under this Lease
shall be deemed to be rent.
B. MANAGEMENT FEE: All maintenance and utility services administered
by Landlord and subject to reimbursement by Tenant shall include a property
management fee to Landlord of fifteen percent (15%) of such services.
C. PERFORMANCE BY LANDLORD: If Tenant fails to perform any obligation
required under this Lease or by law or governmental regulation, Landlord in its
sole discretion may without notice perform such obligation, in which event
Tenant shall pay Landlord as additional rent all sums paid by Landlord in
connection with such substitute performance within ten (10) days following
Landlord's written notice for such payment.
D. INTEREST: All sums due hereunder, including rent and additional
rent, if not paid when due, shall bear interest at the maximum rate permitted
under California law accruing from the date due until the date paid to Landlord.
E. RIGHTS AND REMEDIES: All rights and remedies hereunder are
cumulative and not alternative to the extent permitted by law and are in
addition to all other rights and remedies in law and in equity.
F. SURVIVAL OF INDEMNITIES: All indemnification, defense, and hold
harmless obligations of Landlord and Tenant under the Lease shall survive the
expiration or sooner termination of the Lease.
G. SEVERABILITY: If any term or provision of this Lease is held
unenforceable or invalid by a court of competent jurisdiction, the remainder of
the Lease shall not be invalidated thereby but shall be enforceable in
accordance with its terms, omitting the invalid or unenforceable term.
H. CHOICE OF LAW: This Lease shall be governed by and construed in
accordance with California law.
I. TIME: Time is of the essence hereunder.
J. ENTIRE AGREEMENT: This instrument contains all of the agreements
and conditions made between the parties hereto and may not be modified orally
or in any other manner than by an agreement in writing signed by all of the
parties hereto or their respective successors in interest.
K. REPRESENTATIONS: Tenant acknowledges that neither Landlord or its
affiliates or agents have made any agreements, representations, warranties or
promises with respect to the demised Premises or the Building of which they are
a part, or with respect to present or future rents, expenses, operations,
tenancies or any other matter. Except as herein expressly set forth herein,
Tenant relied on no statement of Landlord or its agents for that purpose.
L. HEADINGS: The headings or titles to the paragraphs of this Lease
are not a part of this Lease and shall have no effect upon the construction or
interpretation of any part thereof.
IN WITNESS WHEREOF, Landlord and Tenant have executed these presents, the day
and year first above written.
LANDLORD: The Sobrato 1979 Trust TENANT: Peninsula Engineering Group, Inc.
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<PAGE> 1
EXHIBIT 10.7
CHANGE OF CONTROL AGREEMENT
This CHANGE OF CONTROL AGREEMENT (the "Agreement") is effective as of
November 3, 1999, by and between TIMOTHY A. MARCOTTE (the "Employee") and
REPEATER TECHNOLOGIES, INC. (the "Company"). Certain capitalized terms used in
the Agreement are defined in Section 5 below.
WHEREAS, the Company has employed Employee as the Vice President, Finance
and Chief Financial Officer of the Company.
WHEREAS, the Company and Employee would like to provide for Employee in
case Employee's employment with the Company is terminated after a change of
ownership of the Company.
THEREFORE, in consideration of the mutual covenants herein contained, and
in consideration of the continuing employment of Employee by the Company, the
parties agree as follows:
1. AT-WILL EMPLOYMENT. The Company and Employee acknowledge that Employee's
employment is at will, as defined under applicable law. If Employee's employment
terminates for any reason, Employee shall not be entitled to any payments,
benefits, damages, awards or compensation other than as provided by this
Agreement.
2. TERM. This Agreement shall be effective as of the date first above written,
and shall terminate on the fifth anniversary of such date.
3. EMPLOYEE'S OPTIONS. After a Change of Control (as defined below), Employee's
Options (as defined below) will immediately vest in full.
4. SEVERANCE BENEFITS.
(a) VOLUNTARY RESIGNATION, DEATH, DISABILITY OR TERMINATION FOR JUST
CAUSE. If Employee's employment terminates by reason of Employee's voluntary
resignation (and is not an Involuntary Termination after a Change of Control (as
defined below), death, Disability (as defined below) or if Employee is
terminated for Just Cause (as defined below), then Employee shall not be
entitled to receive severance or other benefits except for those (if any) as may
then be established under the Company's then existing severance and benefits
plans and policies at the time of such termination.
(b) INVOLUNTARY TERMINATION. If, after a Change of Control, Employee's
employment is terminated as a result of Involuntary Termination other than for
Just Cause within one year of such Change of Control (as defined below) of the
Company, then (i) the Company must continue to pay Employee his Base
Compensation in effect immediately prior to the Termination Date for a
six-calendar month period from the Termination Date, (ii) the Company shall
continue to provide to Employee and Employee's family for a six-calendar-month
period from the Termination Date all Company provided insurance benefits in
effect immediately prior to the Termination Date and (iii) the Employee's
Options (as defined below) will become exercisable for a period of 270 days from
the Termination Date.
1.
<PAGE> 2
5. DEFINITION OF TERMS. The following terms referred to in this Agreement shall
have the following meanings:
(a) BASE COMPENSATION. The annual compensation of Employee, which is
$155,000 as of the date of this Agreement, together with any increases in such
compensation that the Board of Directors may grant from time to time, is
referred to in this Agreement as "Base Compensation."
(b) CHANGE OF CONTROL. "Change of Control" means the occurrence of any of
the following events: (i) any "PERSON" (as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended), is or becomes the
"BENEFICIAL OWNER" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing more than 50% of the total
voting power represented by Company's then outstanding voting securities; or
(ii) the shareholders of Company approve a merger or consolidation of Company
with any other corporation, other than a merger or consolidation which would
result in the voting securities of Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than fifty percent (50%) of
the total voting power represented by the voting securities of Company or such
surviving entity outstanding immediately after such merger or consolidation, or
the shareholders of Company approve a plan of complete liquidation of Company or
an agreement for the sale or disposition by Company of all or substantially all
of Company's assets.
(c) DISABILITY. "Disability" shall mean that Employee has been unable to
perform his duties under this Agreement as the result of his incapacity due to
physical or mental illness, and such inability, at least 26 weeks after its
commencement, is determined to be total and permanent by a physician selected by
the Company or its insurers and acceptable to Employee or Employee's legal
representative (such agreement as to acceptability not to be unreasonably
withheld). Termination resulting from Disability may only be effected after at
least 30 days' written notice by the Company of its intention to terminate
Employee's employment. In the event that Employee resumes the performance of
substantially all of his duties hereunder before the termination of his
employment becomes effective, the notice of intent to terminate shall
automatically be deemed to have been revoked.
(d) INVOLUNTARY TERMINATION. "Involuntary Termination" shall mean (i)
termination by the Company other than for Just Cause (as defined below); (ii)
without Employee's express written consent, the assignment to Employee of any
duties or the reduction of Employee's duties, either of which results in a
significant diminution in Employee's position or responsibilities with the
Company in effect immediately prior to such assignment, or the removal of
Employee from such position and responsibilities; (iii) a reduction by the
Company in the Base Compensation of Employee as in effect on the date hereof or
as the same may be increased from time to time, except for across-the-board
salary reductions similarly affecting all senior Employees of the Company; (iv)
a failure by the Company, without Employee's consent, to pay Employee any
portion of Employee's current compensation or to pay to Employee any portion of
an installment of deferred compensation under any deferred compensation program
of the Company, within seven days of the date such compensation is due; (v) a
material reduction by the Company in the kind or level of employee benefits to
which Employee is entitled immediately prior to such reduction with the result
that Employee's overall benefits package is significantly reduced; (vi)
2.
<PAGE> 3
the failure by the Company, without Employee's consent, to continue in effect
any bonus plan to which Employee becomes entitled, or any compensation plan in
which Employee participates which is material to Employee's total compensation
unless an equitable arrangement has been made providing substantially equivalent
benefits on a basis not materially less favorable (both in terms of the amount
of benefits provided and the level of Employee's participation relative to other
participants); and (vii) the relocation of Employee to a facility or a location
more than 50 miles from Employee's then present location, or the requirement for
Employee to commute to a facility or location more than 50 miles from Employee's
present location, without Employee's express written consent.
(e) JUST CAUSE. "Just Cause" shall mean (i) the willful and continued
failure of the Employee to substantially perform his duties with the Company
other than any such failure resulting from his incapacity due to death or
physical or mental illness after a written demand for substantial performance is
delivered to the Employee by the Board of Directors of the Company, which demand
specifically identifies the manner in which the Board of Directors believes that
the Employee has not substantially performed his duties; or (ii) the willful
engaging by the Employee in conduct which is demonstrably and materially
injurious to the Company, monetarily or otherwise. For purposes of this Section
5(e), no act or failure to act by the Employee shall be deemed "willful" unless
done, or omitted to be done, by the Employee not in good faith and without
reasonable belief that his action or omission was in the best interest of the
Company. Notwithstanding the foregoing, Employee shall not be deemed to have
been terminated for Just Cause unless and until there shall have been delivered
to Employee a copy of a resolution duly adopted by the affirmative vote of not
less than a majority of the members of the Board of Directors of the Company at
a meeting called and held for such purpose (after reasonable notice to Employee
and an opportunity for him, together with his counsel, to be heard before the
Board of Directors) finding in the good faith opinion of the Board of Directors
that Employee was guilty of conduct set forth in this Section 5(e) and
specifying the particulars thereof in detail.
(f) OPTIONS. "Options" shall mean options to purchase 180,000 shares of
Common Stock of the Company granted to Employee on November 10, 1999 under the
Company's 1990 Stock Option Plan and the related Stock Option Agreement as well
as any additional options granted to Employee by the Company or any successor
interest to the Company at any time after the date of this Agreement and shall
include any options assumed or substituted by a third party in connection with a
Change of Control of the Company.
(g) TERMINATION DATE. "Termination Date" shall mean (i) if this Agreement
is terminated by the Company for Disability, thirty (30) days after notice of
termination is given to Employee (provided that Employee shall not have returned
to the performance of Employee's duties on a full-time basis during such thirty
(30) day period); (ii) if Employee's employment is terminated by the Company for
any other reason, the date on which a notice of termination is given, unless
otherwise specified in such notice; or (iii) if the Agreement is terminated by
Employee, the date on which Employee delivers the notice of termination to the
Company.
6. LIMITATION ON PAYMENTS. In the event that any benefits or payments received
or to be received by Employee pursuant to this Agreement would (i) constitute a
"parachute payment" within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended (the
3.
<PAGE> 4
"Code"), or any similar or successor provision to 280G; and (ii) but for this
Section 6, be subject to the excise tax imposed by Section 4999 of the Code or
any similar or successor provision to Section 4999 (the "Excise Tax"), then such
payments and benefits (the "Parachute Payments") shall be reduced to the largest
amount which the Employee, in his sole discretion, determines would not result
in any portion of the Parachute Payments being subject to the Excise Tax. The
determination of any required reduction pursuant to this Section 6 (including
the determination as to which specific Parachute Payments shall be reduced)
shall be made by the Employee, and such determination shall be conclusive and
binding upon the Company for all purposes. The Company waives all claims and
rights against the Employee with respect thereto. The Company shall reduce a
Parachute Payment in accordance with Section 6 only upon written notice by
Employee indicating the amount of such reduction, if any.
7. SUCCESSORS.
(a) COMPANY'S SUCCESSORS. Any successor to the Company (whether direct or
indirect and whether by purchase, lease, merger, consolidation, liquidation or
otherwise) to all or substantially all of the Company's business, equity
securities and/or assets shall assume the obligations under this Agreement and
agree expressly to perform the obligations under this Agreement in the same
manner and to the same extent as the Company would be required to perform such
obligations in the absence of a succession. For all purposes under this
Agreement, the term "Company" shall include any successor to the Company's
business, equity securities and/or assets which executes and delivers the
assumption agreement described in this subsection (a) or which becomes bound by
the terms of this Agreement by operation of law.
(b) EMPLOYEE'S SUCCESSORS. The terms of this Agreement and all rights of
Employee hereunder shall inure to the benefit of, and be enforceable by,
Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
8. NOTICE.
(a) GENERAL. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. In the case of Employee, mailed notices
shall be addressed to him at the home address which he most recently
communicated to the Company in writing. In the case of the Company, mailed
notices shall be addressed to its corporate headquarters, and all notices shall
be directed to the attention of its Secretary.
(b) NOTICE OF TERMINATION. Any termination by the Company for Disability
or Just Cause, or by Employee as a result of a voluntary resignation or an
Involuntary Termination shall be communicated by a notice of termination to the
other party hereto given in accordance with this Section 8. Such notice shall
indicate the specific termination provision in this Agreement relied upon, shall
set forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination under the provision so indicated, and shall specify the
termination date.
9. ARBITRATION AND EQUITABLE RELIEF. The Company and Employee agree that any
dispute or controversy arising out of or relating to any interpretation,
construction, performance or
4.
<PAGE> 5
breach of this Agreement shall be settled by arbitration to be held in Santa
Clara County, California, in accordance with the commercial arbitration rules
then in effect of the American Arbitration Association. The decision of the
arbitrators shall be final, conclusive and binding on the parties to the
arbitration. Judgment may be entered on the arbitrators' decision in any court
of competent jurisdiction.
10. MISCELLANEOUS PROVISIONS.
(a) NO DUTY TO MITIGATE. Employee shall not be required to mitigate the
amount of any payment contemplated by this Agreement (whether by seeking new
employment or in any other manner), nor shall any such payment be reduced by any
earnings that Employee may receive from any other source.
(b) WAIVER. No provision of this Agreement shall be modified, waived or
discharged unless the modification, waiver or discharge is agreed to in writing
and signed by Employee and by an authorized officer of the Company (other than
Employee). No waiver by either party of any breach of, or of compliance with,
any condition or provision of this Agreement by the other party shall be
considered a waiver of any other condition or provision or of the same condition
or provision at another time.
(c) WHOLE AGREEMENT. No agreements, representations or understandings
(whether oral or written and whether express or implied) which are not expressly
set forth in this Agreement have been made or entered into by either party with
respect to the subject matter hereof.
(d) CHOICE OF LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California.
(e) SEVERABILITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision hereof, which shall remain in full force and effect.
(f) EMPLOYMENT TAXES. All payments made pursuant to this Agreement
will be subject to withholding of applicable taxes.
(g) COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together will constitute one
and the same instrument.
5.
<PAGE> 6
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer, as of the day and year
first above written.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By: /s/ Kenneth L. Kenitzer
------------------------------------
Title: President and CEO
EMPLOYEE:
/s/ Timothy A. Marcotte
- -------------------------------------------
TIMOTHY A. MARCOTTE
6.
<PAGE> 1
EXHIBIT 10.8
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (the "Agreement") is by and between REPEATER
TECHNOLOGIES, INC., a California corporation having a place of business at 1150
Morse Avenue, Sunnyvale, CA 94089 ("Repeater") and MATTHEW FUERTER, an
individual residing at 2815 Bowlin Avenue, San Ramon, CA 94568 ("Fuerter"),
effective this 12th day of May, 1998 (the "Effective Date").
WHEREAS, Fuerter conceived of and has developed, to some extent prior to
his employment by Repeater, and has subsequently jointly developed as an
employee of Repeater, with Repeater, certain receive diversity inventions
relating to the field of CDMA repeater technology for which a patent application
has been filed ("Delay Combiner System for CDMA Repeaters and Low Noise
Amplifiers," Patent Application No. 09/028434, "the Patent") which are the
subject of a separate Patent Assignment between the parties attached hereto as
Exhibit A (the "Patent Agreement") and also agrees to grant certain licenses
hereunder; and
WHEREAS, Repeater wishes to acknowledge the contribution of Fuerter to
the development of the technology related to the subject matter of the Patent
(the "Receive Diversity Technology") in the form of bonuses as set forth herein;
and
WHEREAS, Repeater wishes also to pay to Fuerter a royalty based on net
receipts from Repeater customers purchasing Repeater's "Diversity Option" which
is based in part on Fuerter's work on behalf of Repeater and the Receive
Diversity Technology;
NOW THEREFORE, in consideration of the mutual obligations specified in
this Agreement, the execution of the Patent Agreement, and the amounts paid to
Fuerter hereunder, the parties agree to the following:
1. COMPENSATION, INCENTIVES AND ROYALTIES. In consideration for the services
rendered to Repeater regarding the Receive Diversity Technology, the assignment
of ownership interests under the Patent Agreement and for the licenses set forth
herein, in addition to Fuerter's normal receipt of salary and benefits, Repeater
agrees to compensate Fuerter as set forth below:
(a) A bonus of Fifty Thousand Dollars ($50,000) to be paid within thirty
(30) days following the Effective Date.
(b) An additional bonus of Fifty Thousand Dollars ($50,000) within
thirty (30) days of receipt of notice by Repeater of the issuance ("Patent
Issuance") of the Patent.
(c) In addition, Fuerter will receive quarterly royalties over the life
of the Patent, except for that portion of the Patent embodying the "Tower Top
Low Noise Amplifier Diversity" technology which shall be the subject of a
separate royalty agreement should Repeater decide to pursue completion of its
development and commercialization thereof (the "Excluded Portion"), as follows:
1.
<PAGE> 2
(i) Until Patent Issuance, seventy-five U.S. dollars
($75.00) per Diversity Option sold;
(ii) After Patent Issuance, three percent (3%) of the Net
Revenue (as defined below) received from sales of units
of the Diversity Option during such calendar quarter or
seventy-five U.S. dollars ($75.00) per Diversity Option
sale, whichever is greater; and
(iii) Five (5) shares of unregistered Repeater common stock
for each unit of Product sold.
(d) Royalties will be payable once per calendar quarter within ninety
(90) days following the end of such calendar quarter in which funds were
actually received and shall be non-refundable once paid. "Net Revenue" means
monies actually received by Repeater in connection with the sale of Diversity
Options, but shall exclude credits, returns, refunds or rebates paid by
Repeater, costs of collection to the extent such costs of collection are not
deducted and retained by any third party prior to payment to Repeater of
applicable invoiced amounts, and any taxes relating to such amounts (exclusive
of any taxes based on Repeater's net income). Royalties and shares owned to
Fuerter for Diversity Options sold prior to the Effective Date shall be paid
within ninety (90) days after the Effective Date.
(e) All payments under subsection (c) above shall cease:
(i) at such time as ten thousand (10,000) Diversity Options
have been shipped; or
(ii) if the Patent's application is rejected by the United
States Patent Office, or the Patent or any portion
thereof is determined to be unenforceable or its
practice is enjoined by any tribunal of competent
jurisdiction.
2. LICENSE. Fuerter hereby grants Repeater an exclusive, perpetual and
irrevocable worldwide license, with right of sublicense, to make, have made,
import, offer to sell and sell products using any and all know-how, processes,
and other methods useful for the practice of the Patent including without
limitation the Excluded Portion, as well as any other intellectual property
rights Fuerter may now have or may hereafter acquire recognized in any
jurisdiction in the world related to the subject matter of the Patent and the
Receive Diversity Technology and agrees not to assert any claim against Repeater
and its licensees with respect to such items, other than claims to enforce the
terms of this Agreement.
3. RESTRICTIONS ON USE. In further consideration for the royalties, Fuerter
agrees that, during the term of this Agreement, he will not license any
intellectual property rights Fuerter may have under or to the Patent or under or
related to the Receive Diversity Technology to any other party without
Repeater's express prior written consent; such consent may be granted or
withheld by Repeater in Repeater's sole discretion.
4. ASSIGNMENT OF REPEATER WORK PRODUCT. Except for Fuerter's rights in the
Patent and in
2.
<PAGE> 3
any technology specifically identified in Fuerter's employment agreement as
owned by Fuerter ("Background Technology"), and except as otherwise set forth in
Section 2 above, Fuerter irrevocably assigns to Repeater all right, title and
interest worldwide in and to all his development and other work product on
behalf of Repeater ("Repeater Work Product"), including without limitation the
Receive Diversity Technology and the Diversity Option, and all applicable
intellectual property rights related to the Repeater Work Product, including
without limitation, copyrights, trademarks, trade secrets, patents, moral
rights, contract and licensing rights (the "Proprietary Rights"). Except as set
forth below, Fuerter retains no rights to use the Repeater Work Product and
agrees not to challenge the validity of Repeater' ownership in the Repeater Work
Product. Fuerter hereby grants to Repeater a non-exclusive, royalty-free,
irrevocable and world-wide right, with rights to sublicense through multiple
tiers of sublicensees, to reproduce, make derivative works of, publicly perform,
publicly display and distribute in any form or medium, whether now known or
later developed, and to make, have made, use, import, offer to sell, and sell
Background Technology and any Prior Work Product incorporated or used in the
Repeater Work Product for the purpose of developing and marketing Repeater
products or otherwise commercializing Repeater' technology, but not for the
purpose of marketing Background Technology or Prior Work Products separate from
Repeater products. Fuerter hereby waives and quitclaims and agrees to waive and
quitclaim in future to Repeater any and all claims of any nature whatsoever,
which Fuerter now or may hereafter have for infringement of any Proprietary
Rights assigned hereunder to Repeater.
5. WAIVER OR ASSIGNMENT OF OTHER RIGHTS. If Fuerter has any rights to the
Repeater Work Product that cannot be assigned to Repeater, Fuerter
unconditionally and irrevocably waives the enforcement of such rights, and all
claims and causes of action of any kind against Repeater with respect to such
rights, and agrees, at Repeater' request and expense, to consent to and join in
any action to enforce such rights. If Fuerter has any right to the Repeater Work
Product that cannot be assigned to Repeater or waived by Fuerter, Fuerter
unconditionally and irrevocably grants to Repeater during the term of such
rights, an exclusive, irrevocable, perpetual, worldwide, fully paid and
royalty-free license, with rights to sublicense through multiple levels of
sublicensees, to reproduce, create derivative works of, distribute, publicly
perform and publicly display by all means now known or later developed, such
rights.
6. ASSISTANCE IN THE ENFORCEMENT OF PROPRIETARY RIGHTS. Fuerter agrees to
cooperate with Repeater or its designee(s) in the procurement and maintenance of
Repeater' rights in the Patent and the Repeater Work Product and to execute,
when requested, any other documents deemed necessary by Repeater to carry out
the purpose of this Agreement. In the event Repeater is unable for any reason,
after reasonable effort, to secure Fuerter's signature on any document needed in
connection with the actions specified above, Fuerter hereby irrevocably
designates and appoints Repeater and its duly authorized officers and agents as
its agent and attorney in fact, which appointment is coupled with an interest,
to act for and in Fuerter's behalf to execute, verify and file any such
documents and to do all other lawfully permitted acts to further the purposes of
the preceding paragraph with the same legal force and effect as if executed by
Fuerter. Fuerter's obligation to assist Repeater with respect to the Patent and
the Proprietary Rights relating to such Repeater Work Product in any and all
countries shall continue beyond the termination of this Agreement, but Repeater
shall compensate Fuerter at a reasonable rate after such termination for
3.
<PAGE> 4
the time actually spent by Fuerter at Repeater' request on such assistance.
7. CONSEQUENTIAL DAMAGES WAIVER. FUERTER MAKES NO WARRANTY OR REPRESENTATIONS
THAT THE RECEIVE DIVERSITY TECHNOLOGY IS PATENTABLE OR DOES NOT INFRINGE ON ANY
EXISTING PATENTS. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY
FOR ANY LOST PROFITS, INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES,
EVEN IF SUCH PARTY HAS BEEN NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES. THE
PARTIES ACKNOWLEDGE THAT THIS LIMITATION OF LIABILITY IS A FUNDAMENTAL BASIS OF
THE BARGAIN BETWEEN THE PARTIES AND THAT IN ITS ABSENCE THE ECONOMIC TERMS OF
THIS AGREEMENT WOULD BE SUBSTANTIALLY DIFFERENT.
8. NO OBLIGATION TO COMMERCIALIZE. Fuerter acknowledges and agrees that Repeater
has no obligation to commercialize the Diversity Option and Repeater may at any
time choose not to commercialize the Diversity Option or any other product under
the license grant.
9. NOTICES. All notices and communications to be given for purposes of this
Agreement shall be validly given, made or served only if in writing and shall be
deemed duly given when posted by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to Repeater:
Repeater Technologies, Inc.
1150 Morese Avenue,
Sunnyvale, CA 94089
If to Fuerter: Matthew Fuerter
2815 Bowlin Avenue
San Ramon, CA 94568
10. GENERAL. Fuerter shall not assign this Agreement without the prior written
consent of Repeater and any purported assignment in violation of this term shall
be void and without effect ab initio. The parties' rights and obligations under
this Agreement will bind and inure to the benefit of their respective
successors, heirs, executors, and administrators and permitted assigns. This
Agreement may not be waived, modified, or amended unless mutually agreed upon in
writing by both parties. In the event any provision of this Agreement is found
to be legally unenforceable, such unenforceability shall not prevent enforcement
of any other provision of this Agreement. This Agreement shall be governed by
the laws of the State of California as between California residents, excluding
its conflicts of laws principles and any action hereunder shall be commenced in
federal court in the Northern District of California or in state court in Santa
Clara county, as appropriate. This Agreement and its Exhibit attached hereto and
hereby incorporated herein constitute the parties' final, exclusive and complete
understanding and agreement with respect to the subject matter hereof, and
supersede all prior and contemporaneous understandings and agreements relating
to its subject matter.
11. NON DEPENDENT ON EMPLOYMENT. This Agreement is separate and distinct from,
and is not dependent upon, the employment relationship between the Parties. The
rights and obligations set
4.
<PAGE> 5
forth in this Agreement shall survive and remain in full force and effect
notwithstanding the resignation, retirement or termination of Fuerter's
employment relationship with Repeater, with or without cause. Nothing in this
Agreement shall change the nature of the employment relationship between the
parties, which shall remain subject to that certain Employment Agreement dated
May 8, 1997.
12. ATTORNEY FEES. In the event of a dispute arising out of or related to this
Agreement or its breach, the prevailing party in any subsequent litigation or
arbitration regarding said dispute shall be entitled to recover his or its costs
incurred in such litigation and/or arbitration, including reasonable attorney
fees.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
REPEATER TECHNOLOGIES, INC. MATTHEW FUERTER
By: /s/ KEN KENITZER By: /s/ MATTHEW FUERTER
------------------------ ---------------------------------
PRESIDENT & CEO ###-##-####
- --------------------------- ---------------------------------
[Title] [Social Security Number]
5.
<PAGE> 6
EXHIBIT A
ATTORNEY DOCKET NO. RPTR0001
ASSIGNMENT
WHEREAS, I, Matthew P. Fuerter, hereinafter referred to as "ASSIGNOR", have
invented certain new and useful improvements, as described and set forth in the
below-identified application for United States Letters Patent:
Title of Invention: DELAY COMBINER SYSTEM FOR COMA REPEATERS AND
LOW NOISE AMPLIFIERS
WHEREAS, Repeater Technologies, a corporation duly organized under and pursuant
to the laws of the State of California, and having its principal place of
business at 1150 Morse Avenue, Sunnyvale, California 94059, hereinafter
referred to as "ASSIGNEE", is desirous of acquiring fifty percent (50%)
undivided, unrestricted interest in the said invention and application and in
any Letters Patent which may be granted with regard to the same:
NOW, THEREFORE, TO ALL WHOM IT MAY CONCERN: Be it known that for good and
valuable consideration, ASSIGNOR has sold, assigned, and transferred, and by
these presence does sell, assign, and transfer unto the said ASSIGNEE, and
ASSIGNEE'S successors and assigns, fifty percent (50%) undivided, unrestricted
interest in and in said invention, said application for United State Letters
Patent and any Letters Patent which may be hereafter granted on the same in the
United States and all countries throughout the world, including any divisions,
renewals, configurations in whole or part, substitutions, conversions, reissues,
revivals, prolongation, or extensions thereof, and fifty-percent (50%) interest
to be held and enjoyed by said ASSIGNEE as fully and exclusively as it would
have been held and enjoyed by said ASSIGNOR had this assignment and transfer not
been made, for all time.
ASSIGNOR further agrees that he will, without charge to said ASSIGNEE, but at
ASSIGNEE's expense, cooperate with ASSIGNEE in the prosecution of said
application and/or applications, execute, certify, acknowledge, and deliver all
such further papers, including applications for Letters Patent and for the
reissue thereof, and instruments of assignment and transfer thereof, and will
perform such other acts as ASSIGNEE may lawfully request, to obtain or maintain
Letters Patent for said Invention and improvement in any and all countries, and
to vest title thereto in said ASSIGNEE, or ASSIGNEE'S successors and assigns.
IN TESTIMONY WHEREOF, ASSIGNOR has here unto signed his name to the assignment
on the date indicated below.
/s/ MATTHEW P. FUERTER
- ----------------------------
Matthew P. Fuerter
On this 19th day of FEB. in the year of 1998, before me, the undersigned notary
public, personally appeared the above-named ASSIGNORS, known to me (or proved
to me on the basis of satisfactory evidence) to be the persons whose names are
subscribed to the within instrument, and acknowledged that they executed the
same.
STATE OF CALIFORNIA )
) ss. See Attached
COUNTY OF CONTRA COSTA ) -----------------------
NOTARY
PUBLIC
<PAGE> 1
EXHIBIT 10.9
REPEATER TECHNOLOGIES, INC.
CONVERTIBLE DEBENTURE
PURCHASE AGREEMENT
NOVEMBER 25, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
1. AGREEMENT TO SELL AND PURCHASE.......................................................1
1.1 Authorization.................................................................1
1.2 Sale and Purchase - Closing...................................................1
1.3 Separate Purchases............................................................2
1.4 Payments......................................................................2
2. CLOSING, DELIVERY AND PAYMENT........................................................2
2.1 Closing.......................................................................2
2.2 Subsequent Sales..............................................................2
2.3 Subsequent Closings...........................................................2
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................................2
3.1 Organization, Good Standing and Qualification.................................3
3.2 Capitalization................................................................3
3.3 Authorization; Binding Obligations............................................3
3.4 Financial Statements..........................................................4
3.5 Agreements; Action............................................................4
3.6 Changes.......................................................................5
3.7 Title to Properties and Assets; Liens, etc....................................6
3.8 Patents and Trademarks........................................................6
3.9 Compliance with Other Instruments.............................................7
3.10 Litigation....................................................................7
3.11 Tax Returns and Payments......................................................7
3.12 Employees.....................................................................7
3.13 Registration Rights...........................................................8
3.14 Compliance with Laws..........................................................8
3.15 Offering Valid................................................................8
3.16 Insurance.....................................................................8
3.17 Shareholders, Directors and Officers; Indebtedness............................8
3.18 Consents......................................................................8
3.19 Environmental and Safety Laws.................................................9
3.20 Composition of Board..........................................................9
</TABLE>
i.
<PAGE> 3
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
3.21 Minute Books..................................................................9
3.22 Qualified Small Business......................................................9
3.23 Full Disclosure...............................................................9
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.....................................9
4.1 Requisite Power and Authority.................................................9
4.2 Consents.....................................................................10
4.3 Investment Representations...................................................10
5. CONDITIONS TO PURCHASERS' OBLIGATIONS AT THE CLOSING................................11
5.1 Representations and Warranties Correct.......................................11
5.2 Covenants....................................................................11
5.3 Compliance Certificates......................................................11
5.4 Amended and Restated Investors Rights Agreement..............................11
5.5 Articles.....................................................................11
5.6 Minimum Investment...........................................................11
5.7 Opinion......................................................................11
5.9 Proceedings and Documents....................................................12
5.10 Qualifications, Legal Investment.............................................12
5.11 Management Rights............................................................12
6. CONDITIONS TO COMPANY'S OBLIGATIONS AT CLOSING......................................12
6.1 Representations Correct......................................................12
6.2 Qualifications, Legal Investment.............................................12
6.3 Covenants....................................................................12
6.4 Articles.....................................................................12
6.5 Minimum Investment...........................................................12
7. COVENANTS...........................................................................13
7.1 Qualified Small Business.....................................................13
7.2 Series DD Preferred..........................................................13
7.3 Vote of Holders of Debentures................................................13
7.4 Waiver of Right of First Refusal.............................................13
</TABLE>
ii.
<PAGE> 4
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
8. MISCELLANEOUS.......................................................................13
8.1 Governing Law................................................................13
8.2 Survival.....................................................................13
8.3 Successors and Assigns.......................................................14
8.4 Entire Agreement.............................................................14
8.5 Separability.................................................................14
8.6 Amendment and Waiver.........................................................14
8.7 Delays or Omissions..........................................................14
8.8 Notices, etc.................................................................14
8.9 Payment of Fees and Expenses.................................................15
8.10 Attorneys' Fees..............................................................15
8.11 Titles and Subtitles.........................................................15
8.12 Counterparts.................................................................15
8.13 Broker's Fees................................................................15
8.14 Parties in Interest..........................................................15
</TABLE>
iii.
<PAGE> 5
REPEATER TECHNOLOGIES, INC.
CONVERTIBLE DEBENTURE
PURCHASE AGREEMENT
THIS CONVERTIBLE DEBENTURE PURCHASE AGREEMENT (the "Agreement") is
entered into as of November 25, 1998, by and among REPEATER TECHNOLOGIES, INC.,
a California corporation (the "Company"), and each of those persons and
entities, severally and not jointly, whose names are listed in the column
entitled "Purchaser" on the Schedule of Purchasers attached hereto as EXHIBIT A
(which persons and entities are hereinafter collectively referred to as
"Purchasers" and each individually as a "Purchaser").
RECITALS
WHEREAS, the Company has authorized the sale and issuance, on the terms
and conditions set forth herein, of up to fifteen million dollars ($15,000,000)
principal amount of convertible debentures (the "Debentures");
WHEREAS, Purchasers desire to purchase the Debentures on the terms and
conditions set forth herein; and
WHEREAS, the Company desires to issue and sell the Debentures to
Purchasers on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises hereinafter set forth, the parties hereto agree as follows:
1. AGREEMENT TO SELL AND PURCHASE.
1.1 AUTHORIZATION. On or prior to the Closing (as defined in Section
2 below), the Company shall have authorized the sale and issuance to Purchasers
of up to fifteen million dollars ($15,000,000) principal amount of Convertible
Debentures (the "Debentures") in the form attached hereto as EXHIBIT B. The
Company has, or prior to the Closing will have, adopted and filed the Amended
and Restated Articles of Incorporation (the "Articles of Incorporation") in
substantially the form attached hereto as EXHIBIT C with the Secretary of State
of the State of California.
1.2 SALE AND PURCHASE - CLOSING. Subject to the terms and conditions
hereof, and in reliance upon the representations, warranties and agreements
contained herein, at the Initial Closing (as hereinafter defined) and any
subsequent Closings, if any, the Company will issue and sell to the Purchasers,
and the Purchasers will buy from the Company, Debentures in the principal amount
specified opposite each Purchaser's name in the column entitled "Debentures,"
respectively, on the Schedule of Purchasers attached hereto as EXHIBIT A, for
the appropriate consideration specified on the Schedule of Purchasers, payable
by check or wire transfer.
1.
<PAGE> 6
1.3 SEPARATE PURCHASES. The Company's agreement with each of the
Purchasers is a separate agreement from the other Purchasers, and the sale of
the Debentures to each of the Purchasers is a separate sale from the other
Purchasers. The Company, in its sole and absolute discretion, reserves the right
to approve or disapprove each investor.
1.4 PAYMENTS. Payment of the Purchase Price shall be made only by
check payable to the Company, wire transfer or cancellation of indebtedness of
the Company. Any Purchaser paying by wire transfer authorizes Cooley Godward LLP
to accept the Purchase Price into its trustee account and to disburse such funds
to the Company upon the Closing.
2. CLOSING, DELIVERY AND PAYMENT.
2.1 CLOSING. The Closing under this Agreement shall take place at
10:00 a.m. on November 25, 1998 (the "Closing Date"), at the offices of Cooley
Godward LLP, Five Palo Alto Square, 3000 El Camino Real, Palo Alto, California
94306, or at such other time or place as the Company may designate (the "Initial
Closing"). At the Closing, subject to the terms and conditions hereof, the
Company will deliver to each Purchaser the Debenture purchased by such Purchaser
from the Company against payment by or on behalf of such Purchaser of the
purchase price set forth opposite such Purchaser's name on EXHIBIT A (the
"Purchase Price").
2.2 SUBSEQUENT SALES. To the extent that the aggregate amount of the
Debentures authorized for sale as described in Section 1.1 hereof is not sold
pursuant to this Agreement, at any time on or before the ninetieth (90th) day
following the Closing, subject to the terms and conditions of this Agreement,
the Company may sell up to all of the amount of such unsold Debentures to such
persons as the Company may determine, upon the same terms as the Debentures
purchased and sold hereunder. Any such sale shall be upon the same terms and
conditions as those contained herein, may occur on one or more occasions and
such persons or entities shall become parties to this Agreement and that certain
Sixth Amended and Restated Investors' Rights Agreement dated of even date
herewith, by and among the Company and the Purchasers, the form of which is
attached hereto as EXHIBIT D (the "Amended Rights Agreement"), and shall have
the rights and obligations of a Purchaser hereunder and thereunder. Such persons
or entities may become parties to such agreements (i)(a) by executing copies of
such agreements which, as of the date hereof, provide for execution by them or
(b) by appending additional signature pages to such agreements containing their
signatures and (ii) by appending additional pages to or revising the Exhibit A
of each such agreement appropriately, and the Company is authorized to effect
any of such alternatives on one or more occasions without the further consent of
the Purchasers, notwithstanding any provision hereof to the contrary.
2.3 SUBSEQUENT CLOSINGS. In the event that there is more than one
closing, the term "Closing" shall apply to each such closing unless otherwise
specified and the term "Debentures" shall apply to all of the Debentures sold
and issued at each such closing.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as set forth on
the Schedule of Exceptions attached hereto as EXHIBIT E, the Company hereby
represents and warrants to each Purchaser as follows:
2.
<PAGE> 7
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of California. The Company has full power and authority to own
and operate its properties and assets, and to carry on its business as presently
conducted and as presently proposed to be conducted. The Company is duly
qualified and is authorized to do business and is in good standing as a foreign
corporation in all jurisdictions in which the nature of its activities and of
its properties (both owned and leased) makes such qualification necessary,
except for those jurisdictions in which failure to do so would not have a
material adverse effect on the Company or its business. The Company has no
subsidiaries or affiliated companies and owns no equity securities of any other
corporation, limited partnership or similar entity.
3.2 CAPITALIZATION. The authorized capital stock of the Company,
immediately prior to the Closing, will consist of 30,000,000 shares of Common
Stock, 2,404,782 shares of which are issued and outstanding, and 14,210,077
shares of Preferred Stock; 1,228,409 shares of which are designated Series AA
Preferred Stock, all of which are issued and outstanding, 5,081,668 shares of
which are designated Series BB Preferred Stock, 4,246,316 of which are issued
and outstanding and 4,600,000 shares of which are designated Series CC Preferred
Stock, 4,402,907 of which are issued and outstanding and 3,300,000 shares of
Series DD Preferred Stock, none of which are issued and outstanding. All shares
of the Company's Common Stock, Series AA Preferred Stock, Series BB Preferred
Stock and Series CC Preferred Stock issued and outstanding immediately prior to
the date hereof have been duly authorized and validly issued and are fully paid
and nonassessable. The rights, preferences, privileges and restrictions of the
Series AA Preferred Stock, Series BB Preferred Stock, Series CC Preferred Stock
and Series DD Preferred Stock are as stated in the Articles of Incorporation. As
of the Initial Closing, each share of Series AA Preferred Stock will be
convertible into Common Stock on approximately a 1.206-for-one basis, and each
share of Series BB Preferred Stock and Series CC Preferred Stock will be
convertible into Common Stock on a one-for-one basis. The shares of Common Stock
issuable upon the conversion of the issued and outstanding shares of Series AA
Preferred Stock, Series BB Preferred Stock and Series CC Preferred Stock have
been duly and validly reserved for issuance and, when issued in accordance with
the Articles of Incorporation, will be validly issued, fully paid and
nonassessable. Other than as set forth on the Schedule of Exceptions, and except
as may be granted pursuant to the Amended Rights Agreement, there are no
outstanding options, warrants, rights (including conversion or preemptive
rights), proxy or shareholder agreements, or agreements of any kind for the
purchase or acquisition from the Company of any of its securities.
3.3 AUTHORIZATION; BINDING OBLIGATIONS. All corporate action on the
part of the Company, its officers, directors and shareholders necessary for the
authorization, sale and issuance of the Debentures pursuant hereto and, subject
to the receipt of appropriate notice or the occurrence of an event upon which
such conversion is required, the Series DD Preferred Stock, issuable upon
conversion of the Debentures (the "Conversion Shares") and the Common Stock
issuable upon conversion thereof (the "Conversion Common") pursuant to the
Articles of Incorporation and for the performance of the Company's obligations
hereunder and under the Debentures and the Amended Rights Agreement has been
taken or will be taken prior to the Closing. The Agreement and the Debentures,
when executed and delivered, will be valid and binding obligations of the
Company enforceable in accordance with their respective terms,
3.
<PAGE> 8
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting enforcement of
creditors' rights; and (ii) as general principles of equity restrict the
availability of equitable remedies. The sale of the Debentures and the
subsequent conversion of Debentures into Conversion Shares and of Conversion
Shares into Conversion Common are not and will not be subject to any preemptive
rights or rights of first refusal that have not been properly waived or complied
with. The Conversion Shares and Conversion Common have been duly authorized by
the Company and when issued in compliance with the provisions of this Agreement,
the Debentures and the Articles of Incorporation, the Conversion Shares and the
Conversion Common will be validly issued, fully paid and nonassessable, and will
be free of any liens or encumbrances; provided, however, that the Debentures,
Conversion Shares and Conversion Common may be subject to restrictions on
transfer under state and/or federal securities laws as set forth herein or as
otherwise required by such laws at the time a transfer is proposed.
3.4 FINANCIAL STATEMENTS. The Company has delivered to each Purchaser
its audited financial statements for the fiscal year ended March 31, 1998, and
unaudited balance sheet as of September 25, 1998, and unaudited statement of
income for the six-month period ending on September 25, 1998 (collectively, the
"Financial Statements"), copies of which are attached hereto as EXHIBIT F. The
Financial Statements are complete and correct in all material respects, have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods indicated, except as
disclosed therein, and present fairly the financial condition and results of
operations of the Company for the periods indicated; provided however, that the
unaudited financial statements are subject to normal recurring year-end audit
adjustments and do not contain all footnotes required under generally accepted
accounting principles.
3.5 AGREEMENTS; ACTION.
(a) Except for agreements explicitly contemplated hereby and
agreements between the Company and its employees with respect to the sale of the
Company's Common Stock, there are no agreements, understandings or proposed
transactions between the Company and any of its officers, directors or
affiliates, or any affiliate or relative thereof.
(b) There are no agreements, understandings, instruments,
contracts, proposed transactions, judgments, orders, writs or decrees to which
the Company is a party or by which it is bound which may involve (i) obligations
(contingent or otherwise) of, or payments to, the Company in excess of $100,000
(other than obligations of, or payments to, the Company arising from purchase or
sale agreements entered into in the ordinary course of business), or (ii) the
license of any patent, copyright, trade secret or other proprietary right to or
from the Company (other than licenses arising from the purchase of "off the
shelf" or other standard products), or (iii) provisions restricting or affecting
the development, manufacture or distribution of the Company's products or
services, or (iv) indemnification by the Company with respect to infringements
of proprietary rights (other than indemnification obligations arising from
purchase or sale agreements entered into in the ordinary course of business).
(c) Since September 25, 1998, the Company has not (i) declared or
paid any dividends, or authorized or made any distribution upon or with respect
to any class or
4.
<PAGE> 9
series of its capital stock, (ii) incurred any indebtedness for money borrowed
or any other liabilities (other than with respect to indebtedness and other
obligations incurred in the ordinary course of business or as disclosed in the
Financial Statements) individually in excess of $100,000 or, in the case of
indebtedness and/or liabilities individually less than $100,000, in excess of
$200,000 in the aggregate, (iii) made any loans or advances to any person, other
than ordinary advances for travel expenses, (iv) repurchased, redeemed or
otherwise acquired any shares of its capital stock or agreed to do so (other
than repurchases of Common Stock from employees or consultants of the Company at
the initial purchase price thereof upon termination of their such person's
services to the Company) or (v) sold, exchanged or otherwise disposed of any of
its assets or rights, other than the disposal of unnecessary equipment or the
sale of its inventory in the ordinary course of business.
(d) For the purposes of subsections (b) and (c) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities the Company has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.
3.6 CHANGES. Since September 25, 1998, there has not been:
(a) Any change in the assets, liabilities, financial condition,
operations or prospects of the Company, other than changes in the ordinary
course of business, none of which individually or in the aggregate has had or is
expected to have a material adverse effect on such assets, liabilities,
financial condition, operations or prospects of the Company;
(b) Any change, except in the ordinary course of business, in the
contingent obligations of the Company by way of guaranty, endorsement,
indemnity, warranty, or otherwise, none of which individually or in the
aggregate has had or is expected to have a material adverse effect on the
assets, liabilities, financial condition, operations or prospects of the
Company;
(c) Any damage, destruction, or loss, whether or not covered by
insurance, materially and adversely affecting the properties or business of the
Company;
(d) Any waiver by the Company of a valuable right or of a
material debt owed to it;
(e) Any direct or indirect loans made by the Company to any
shareholder, employee, officer, or director of the Company, other than advances
made in the ordinary course of business;
(f) Any declaration or payment of any dividend or other
distribution of the assets of the Company;
(g) Any labor organization activity;
5.
<PAGE> 10
(h) Any debt, obligation, or liability incurred, assumed or
guaranteed by the Company, except current liabilities incurred in the ordinary
course of business;
(i) Any change in any material agreement to which the Company is
a party or by which it is bound which materially and adversely affects or, so
far as the Company may now foresee, in the future could materially and adversely
affect the business, assets, liabilities, financial condition, operations or
prospects of the Company, including compensation agreements with the Company's
employees;
(j) Any other event or condition of any character that, either
individually or cumulatively, has materially and adversely affected, or, so far
as the Company may now foresee, in the future could materially and adversely
affect the business, assets, liabilities, financial condition, operations or
prospects of the Company; or
(k) Any agreement on the part of the Company to do any of the
foregoing.
3.7 TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. The Company has good
and marketable title to its properties and assets, including the properties and
assets reflected in the balance sheet as at September 25, 1998 (included in the
Financial Statements), and good title to its leasehold estates, in each case
subject to no mortgage, pledge, lien, lease, encumbrance, or charge, other than
(i) those resulting from taxes which have not yet become delinquent, or (ii)
minor liens and encumbrances which do not materially detract from the value of
the property subject thereto or materially impair the operations of the Company.
3.8 PATENTS AND TRADEMARKS. To the best of the Company's knowledge,
the Company, as of the Closing Date, owns or has sufficient rights to those
trade names, copyrights, trade secrets, information, patents, trademarks,
service marks, licenses, rights and processes necessary for its business as now
conducted and as proposed to be conducted without any conflict with or
infringement of the rights of others. There are no outstanding options,
licenses, or agreements of any kind relating to the foregoing, nor is the
Company bound by or a party to any options, licenses or agreements of any kind
with respect to the patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, proprietary rights and processes of any other person or
entity other than such licenses or agreements arising from the purchase of "off
the shelf" or standard products. To the best knowledge of the Company, the
Company has not violated or infringed or, by conducting its business as
proposed, will violate or infringe any of the patents, trademarks, service
marks, trade names, copyrights or trade secrets or other proprietary rights of
any other person or entity. To the best knowledge of the Company none of the
Company's employees is obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
interfere with the use of his best efforts to promote the interests of the
Company or that would conflict with the Company's business as proposed to be
conducted. To the best knowledge of the Company, neither the execution nor
delivery of this Agreement, nor the carrying on of the Company's business by the
employees of the Company, nor the conduct of the Company's business as proposed,
will conflict with or result in a breach of the terms, conditions or provisions
of, or constitute a default under, any contract, covenant or instrument under
which any of such employees is now obligated. The
6.
<PAGE> 11
Company does not believe that, as the Company's business is currently conducted
or proposed to be conducted, it is or will be necessary to utilize any
inventions of any of its employees (or people it currently intends to hire) made
prior to their employment by the Company.
3.9 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in
violation, breach or default of any term of its Articles of Incorporation or
Bylaws, any mortgage, indenture, contract, agreement, instrument, judgment,
decree, order or, to the best of its knowledge, any statute, rule, or regulation
applicable to the Company or by which the Company or its assets is bound which
would materially and adversely affect the business, assets, liabilities,
financial condition, operations or prospects of the Company, and, to the best of
the Company's knowledge, no event or condition has occurred or exists which,
with the lapse of time or the giving of notice or both would constitute such a
violation, breach or default. The execution, delivery, and performance of and
compliance with this Agreement and the issuance and sale of the Debentures
pursuant hereto and of the Conversion Shares and Conversion Common pursuant to
the Articles of Incorporation, will not result in any such violation, breach or
default or be in conflict with or constitute a default under any such term, or
result in the creation of any mortgage, pledge, lien, encumbrance, or charge
upon any of the properties or assets of the Company.
3.10 LITIGATION. There is no action, suit, proceeding or
investigation pending or currently threatened against the Company which might
result, either individually or in the aggregate, in any material adverse changes
in the assets, liabilities, financial condition, operations, affairs or
prospects of the Company, financially or otherwise, or any change in the current
equity ownership of the Company, nor to the best knowledge of the Company, is
there any basis for the foregoing. The foregoing includes, without limitation,
actions pending or threatened (or any basis therefor known to the Company)
involving the prior employment of any of the Company's employees, their use in
connection with the Company's business of any information or techniques
allegedly proprietary to any of their former employers, or their obligations
under any agreements with prior employers. The Company is not a party or subject
to the provisions of any order, writ, injunction, judgment or decree of any
court or government agency or instrumentality. There is no action, suit,
proceeding or investigation by the Company currently pending or which the
Company intends to initiate.
3.11 TAX RETURNS AND PAYMENTS. The Company has filed or has received
extensions for all tax returns, reports, schedules and other documents which are
required to be filed by it with the Internal Revenue Service or any other
governmental taxing authority. All such tax returns are accurate and complete in
all material respects and all taxes shown to be due and payable on such returns,
any assessments imposed, and all other taxes and estimated payments due and
payable by the Company on or before the Closing have been paid.
3.12 EMPLOYEES. The Company has no collective bargaining agreements
with any of its employees. There is no labor union organizing activity pending
or threatened with respect to the Company. No employee has any agreement or
contract, written or oral, regarding his employment with the Company. To the
best of the Company's knowledge, no employee of the Company, nor anyone with
whom the Company has contracted, is in violation of any term of any employment,
non-compete or non-disclosure contract, inventions agreement, patent disclosure
agreement or any other agreement relating to the right of any such individual to
be
7.
<PAGE> 12
employed by, or to provide services to or contract with, the Company; and, to
the best of the Company's knowledge after due investigation, the continued
employment by the Company of its present employees, and the performance of the
Company's contracts with its independent contractors, will not result in any
such violation. The Company has not received any notice alleging that any such
violation has occurred. Each employee of the Company has executed a Proprietary
Information and Inventions Agreement in the form delivered to the Purchasers.
3.13 REGISTRATION RIGHTS. Except as required pursuant to the Amended
Rights Agreement, the Company is presently not under any obligation, and has not
granted any rights, to register any of the Company's presently outstanding
securities or any of its securities that may hereafter be issued.
3.14 COMPLIANCE WITH LAWS. The Company is not in violation of any
applicable statute, rule, regulation, order or restriction of any domestic or
foreign government or any instrumentality or agency thereof which violation
would materially and adversely affect the business, assets, liabilities,
financial condition, operations or prospects of the Company. No orders,
permissions, consents, approvals or authorizations are required to be obtained
and no registrations, declarations or other documents are required to be filed
in connection with the execution and delivery of this Agreement, the Debentures
and the Amended Rights Agreement and the issuance of the Debentures or the
Conversion Shares or the Conversion Common, except such as has been duly and
validly obtained or filed, or with respect to any filings that must be made
after the Closing, as will be filed in a timely manner.
3.15 OFFERING VALID. Assuming the accuracy of the representations and
warranties of the Purchasers contained in Section 4.3 hereof, the offer, sale
and issuance of the Debentures, the Conversion Shares and Conversion Common will
be exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act") and will have been registered or qualified (or
are exempt from registration and qualification) under the registration, permit
or qualification requirements of all applicable state securities laws. Neither
the Company nor any agent on its behalf has solicited or will solicit any offers
to sell or has offered to sell or will offer to sell all or any part of the
Debentures to any person or persons so as to bring the offer or sale of such
Debentures by the Company to the Purchasers within the registration provisions
of the Securities Act or any state securities laws.
3.16 INSURANCE. The Company has in full force and effect fire,
casualty and products liability insurance policies, with extended coverage,
sufficient in amount to allow it to replace any of its owned or leased
properties which might be damaged or destroyed.
3.17 SHAREHOLDERS, DIRECTORS AND OFFICERS; INDEBTEDNESS. The Company
has no indebtedness to any of its officers, directors or shareholders or to any
member of the immediate family thereof and none of such person is indebted to
the Company, other than travel, relocation, and other expenses which are
advanced and reimbursed in the ordinary course of business and are not material.
To the best of the Company's knowledge, none of the officers or directors or
significant employees or consultants of the Company has, individually or
collectively, directly or indirectly, a material interest in any entity which is
a direct competitor, customer or supplier of (or has any existing contractual
relationship with) the Company, other than shares of publicly traded
corporations held by such persons.
8.
<PAGE> 13
3.18 CONSENTS. No consent, approval, qualification, order or
authorization of, or filing with, any governmental authority or other person is
required in connection with the Company's valid execution, delivery or
performance of this Agreement or the offer, sale or issuance of the Debentures
by the Company, the conversion of the Debentures, the issuance of the Conversion
Shares upon conversion of the Debentures, the issuance of Conversion Common upon
conversion of the Conversion Shares or the consummation of any other transaction
contemplated on the part of the Company hereby, except (a) the filing of the
Amended and Restated Articles of Incorporation with the Secretary of State of
the State of California prior to the Closing, (b) the filing of a notice of
exemption pursuant to Section 25102(f) of the California Corporations Code with
the California Commission of Corporations, which the Company covenants to
complete within fifteen (15) days after the Closing, (c) other post-closing
state securities law filing which the Company covenants to complete on a timely
basis, and (d) a usury permit application to be filed with the California
Department of Corporations pursuant to Section 25113 of the California
Corporations Code prior to the Closing.
3.19 ENVIRONMENTAL AND SAFETY LAWS. The Company is not, to the best
of its knowledge, in violation of any applicable statute, law, or regulation
relating to the environment or occupational health and safety, and no material
expenditures are or will be required in order to comply with any such existing
statute, law or regulation.
3.20 COMPOSITION OF BOARD. As of the date hereof, the Bylaws of the
Company provide that the authorized number of the Board of Directors is a
minimum of five (5) and a maximum of nine (9) directors.
3.21 MINUTE BOOKS. The minute books of the Company contain a complete
summary of all meetings and actions of the Company's Board of Directors and
shareholders since the time of incorporation and accurately reflect all
transactions referred to in such minutes in all material respects.
3.22 QUALIFIED SMALL BUSINESS. The Company qualifies as a Qualified
Small Business as defined in Section 1202(d) of the Internal Revenue Code of
1986, as amended (the "Code").
3.23 FULL DISCLOSURE. Neither this Agreement, the Exhibits hereto nor
any of the documents delivered by the Company or authorized to be delivered on
behalf of the Company by its representatives to Purchasers or their attorneys or
agents in connection herewith or therewith or with the transactions contemplated
hereby or thereby, contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained herein
or therein not misleading. To the best of the Company's knowledge, there are no
facts which (individually or in the aggregate) materially adversely affect the
business, assets, liabilities, financial condition, prospects or operations of
the Company that have not been set forth in the Agreement.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each Purchaser
hereby represents and warrants severally and not jointly to the Company as
follows (such representations and warranties do not lessen or obviate the
representations and warranties of the Company set forth in this Agreement):
9.
<PAGE> 14
4.1 REQUISITE POWER AND AUTHORITY. Purchaser has all necessary power
and authority under all applicable provisions of law to execute and deliver this
Agreement and to carry out its provisions. All action on Purchaser's part
required for the lawful execution and delivery of this Agreement has been or
will be effectively taken prior to the Closing. Upon its execution and delivery,
this Agreement will be a valid and binding obligation of Purchaser, enforceable
in accordance with its terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors' rights; and (ii) as general principles of
equity restrict the availability of equitable remedies.
4.2 CONSENTS. All consents, approvals, orders, authorizations,
registrations, qualifications, designations, declarations or filings with any
governmental authority on the part of Purchaser required in connection with the
consummation of the transactions contemplated in the Agreement have been or
shall have been obtained prior to and be effective as of the Closing.
4.3 INVESTMENT REPRESENTATIONS. Purchaser understands that neither
the Debentures nor the Conversion Shares have been registered under the
Securities Act. Purchaser also understands that the Debentures are being offered
and sold pursuant to an exemption from registration contained in the Securities
Act based in part upon Purchaser's representations contained in the Agreement.
Purchaser hereby represents and warrants to the Company as follows:
(a) PURCHASER BEARS ECONOMIC RISK. Purchaser has substantial
experience in evaluating and investing in private placement transactions of
securities in companies similar to the Company so that it is capable of
evaluating the merits and risks of its investment in the Company and has the
capacity to protect its own interests. Purchaser must bear the economic risk of
this investment indefinitely unless the Debentures (or the Conversion Shares)
are registered pursuant to the Securities Act, or an exemption from registration
is available. Purchaser understands that the Company has no present intention of
registering the Debentures, the Conversion Shares or any shares of its Common
Stock. Purchaser also understands that there is no assurance that any exemption
from registration under the Securities Act will be available and that, even if
available, such exemption may not allow Purchaser to transfer all or any portion
of the Debentures or the Conversion Shares under the circumstances, in the
amounts or at the times Purchaser might propose.
(b) ACQUISITION FOR OWN ACCOUNT. Purchaser is acquiring the
Debentures and the Conversion Shares for Purchaser's own account for investment
only, and not with a view towards their distribution.
(c) PURCHASER CAN PROTECT ITS INTEREST. Purchaser represents that
by reason of its, or of its management's, business or financial experience,
Purchaser has the capacity to protect its own interests in connection with the
transactions contemplated in this Agreement. Purchaser is not a corporation,
trust or partnership specifically formed for the purpose of consummating these
transactions.
(d) ACCREDITED INVESTOR. Purchaser represents that it is an
accredited investor within the meaning of Regulation D under the Securities Act.
10.
<PAGE> 15
(e) COMPANY INFORMATION. Purchaser has received and read the
Financial Statements, has had an opportunity to discuss the Company's business,
management and financial affairs with directors, officers and management of the
Company and has had the opportunity to review the Company's operations and
facilities. Purchaser has also had the opportunity to ask questions of and
receive answers from, the Company and its management regarding the terms and
conditions of this investment.
5. CONDITIONS TO PURCHASERS' OBLIGATIONS AT THE CLOSING. The Purchasers'
obligations to purchase the Debentures at the Closing are subject to the
fulfillment on or prior to the Closing of all of the conditions set forth below
in this Section 5 to the extent not waived by each Purchaser.
5.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made in Section 3 hereof shall be true and correct when made, and
shall be true and correct on the Closing Date with the same force and effect as
if they had been made as of the Closing Date.
5.2 COVENANTS. All covenants, agreements and conditions contained in
this Agreement to be performed by the Company on or prior to the Closing shall
have been performed or complied with in all respects.
5.3 COMPLIANCE CERTIFICATES. The Company shall have delivered to the
Purchasers certificates of the Company, (i) one of which has been executed by
the President and Chief Executive Officer of the Company, dated the date of the
Closing, which certifies to the fulfillment of the conditions specified in
Sections 5.1 and 5.2 of this Agreement and (ii) one of which has been executed
by the Secretary of the Company, dated the date of the Closing, which certifies
as to the fact that true and complete copies of the Company's Articles of
Incorporation, Bylaws and Board of Directors and shareholders resolutions
regarding the sale of the Debentures are attached thereto.
5.4 AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT. The Company and
the Purchasers and the holders of 50% of the outstanding Registrable Securities
as defined in the Fifth Amended and Restated Investors' Rights Agreement, dated
November 26, 1997, by and among the Company and certain of its investors, shall
have entered into the Amended Rights Agreement.
5.5 ARTICLES. The Amendment to the Articles of Incorporation, in
substantially the form attached hereto as EXHIBIT C, shall have been filed with
the Secretary of State of the State of California.
5.6 MINIMUM INVESTMENT. The Company shall have received a minimum
investment of $6,000,000 at the Closing.
5.7 OPINION. The Purchasers shall have received from Cooley Godward
LLP, counsel to the Company, an opinion letter substantially in the form
attached as EXHIBIT G, addressed to them, dated as of the date of the Closing.
11.
<PAGE> 16
5.8 USURY PERMIT. A Usury Permit Application shall have been filed by
the Company.
5.9 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated at the Closing hereby and all
documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to the Purchasers, and the Purchasers shall
have received all such counterpart originals or certified or other copies of
such documents as they may reasonably request.
5.10 QUALIFICATIONS, LEGAL INVESTMENT. All authorizations, approvals,
or permits, if any, of any governmental authority or regulatory body of the
United States or of any state that are required in connection with the lawful
sale and issuance of the Debentures pursuant to this Agreement shall have been
duly obtained and shall be effective on and as of the Closing. At the time of
the Closing, the sale and issuance of the Debentures and the proposed issuance
of the Conversion Shares shall be legally permitted by all laws and regulations
to which the Purchasers and the Company are subject.
5.11 MANAGEMENT RIGHTS. The Company shall execute a Management Rights
Agreement on behalf of Charter Growth Capital, L.P., Charter Growth Capital
Co-Investment Fund, L.P. and CGC Investors, L.P. in the form attached hereto as
EXHIBIT H.
6. CONDITIONS TO COMPANY'S OBLIGATIONS AT CLOSING. The Company's
obligation to sell the Debentures at the Closing is subject to the fulfillment
of the following conditions to the extent not waived by the Company:
6.1 REPRESENTATIONS CORRECT. The representations made by the
Purchasers in Section 4 hereof shall be true and correct when made, and shall be
true and correct on the Closing Date with the same force and effect as if they
had been made as of the Closing Date.
6.2 QUALIFICATIONS, LEGAL INVESTMENT. All authorizations, approvals,
or permits, if any, of any governmental authority or regulatory body of the
United States or of any state that are required in connection with the lawful
sale and issuance of the Debentures pursuant to this Agreement shall have been
duly obtained and shall be effective on and as of the Closing. At the time of
the Closing, the sale and issuance of the Debentures and the proposed issuance
of the Conversion Shares shall be legally permitted by all laws and regulations
to which the Purchasers and the Company are subject.
6.3 COVENANTS. All covenants, agreements and conditions contained in
this Agreement to be performed by the Purchasers on or prior to the Closing
shall have been performed or complied with in all respects.
6.4 ARTICLES. The Articles of Incorporation, in substantially the
form attached hereto as EXHIBIT C, shall have been filed with the Secretary of
State of the State of California.
6.5 MINIMUM INVESTMENT. The Company shall have received a minimum
aggregate investment of $6,000,000 at the Closing.
12.
<PAGE> 17
7. COVENANTS.
7.1 QUALIFIED SMALL BUSINESS. After the Closing Date, the Company
shall (a) not make any purchase of its stock during the one-year period
following the Closing Date having an aggregate value, when added to the
aggregate value of stock purchased by the Company during the one-year period
preceding the Closing Date (in each case determined as of the purchase date),
exceeding 5% of the aggregate value of all of the Company's stock (such value
determined as of the date one year prior to the Closing Date) without having
given the holders of the Series CC and Series DD Preferred prior notice of such
purchase and the opportunity to discuss with the Company means of achieving such
purchase without adversely affecting the qualification of the Series CC and
Series DD Preferred as a "qualified small business stock" set forth in Section
1202(c) of the Code and without such repurchase having been approved by the
Board of Directors, (b) use commercially reasonable efforts to use at least 80%
(by value) of its assets in the active conduct of one or more qualified trades
or businesses for substantially all of the five-year period following the
Closing Date, and (c) not cease to be a C corporation which is an eligible
corporation, as defined by Code Section 1202(e)(4). To the extent not otherwise
prohibited by applicable law or regulatory authorities, the Company will include
in all future stock option and stock purchase agreements providing for the sale
of unvested stock (subject to a right of repurchase) with employees and
consultants a provision that permits the Company to delay any repurchase of
shares under vesting provisions by a period of time sufficient to facilitate
compliance with the covenant contained in clause (a) hereof or to assign its
right to repurchase shares to a third party. Notwithstanding anything to the
contrary in this Section 7.1, the Company shall not be obligated to take any
action or refrain from taking any action which the Company has determined, in
good faith, is not in its best business interests.
7.2 SERIES DD PREFERRED. After the Closing Date, for the purpose of
determining the number of outstanding shares of Series DD Preferred pursuant to
Section 6 of the Articles of Incorporation, the Series DD Preferred issuable
upon conversion of the Debentures shall be deemed to be outstanding as of the
Closing Date.
7.3 VOTE OF HOLDERS OF DEBENTURES. After the Closing Date, if the
Company proposes to amend the Articles of Incorporation, and such amendment
would entitle the Series DD Preferred to a vote if there were shares of Series
DD Preferred outstanding, then the Company shall solicit the consent of the
holders of the Debentures as though such Debentures had been converted to Series
DD Preferred.
7.4 WAIVER OF RIGHT OF FIRST REFUSAL. Each Purchaser hereby waives
its rights under Section 5.1 of the Fifth Amended and Restated Investors' Rights
Agreement to (i) notice of the issuance of the Debentures and (ii) purchase its
pro-rata share of the Debentures.
8. MISCELLANEOUS.
8.1 GOVERNING LAW. This Agreement shall be governed in all respects
by the laws of the State of California.
8.2 SURVIVAL. The representations, warranties, covenants, and
agreements made herein shall survive any investigation made by any Purchaser and
the Closing of the
13.
<PAGE> 18
transactions contemplated hereby. All statements as to factual matters contained
in any certificate or other instrument delivered by or on behalf of the Company
pursuant hereto in connection with the transactions contemplated hereby shall be
deemed to be representations and warranties by the Company hereunder solely as
of the date of such certificate or instrument.
8.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors, and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of the Debentures from time to time.
8.4 ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules
hereto, constitute the full and entire understanding and agreement between the
parties with regard to the subject matter hereof and no party shall be liable or
bound to any other in any manner by any representations, warranties, covenants,
and agreements except as specifically set forth herein.
8.5 SEPARABILITY. In case any provision of the Agreement shall be
invalid, illegal, or unenforceable, the validity, legality, and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
8.6 AMENDMENT AND WAIVER.
(a) This Agreement may be amended or modified only upon the
written consent of the Company and holders of not less than 66% of the Common
Stock issued or issuable hereunder (treated as if the Debentures were converted
into Conversion Shares which were subsequently converted into Common Stock that
has not been sold to the public).
(b) The obligations of the Company and the rights of the holders
of the Debentures and the Conversion Shares under the Agreement may be waived
only with the written consent of the holders of not less than 66% of the Common
Stock issued or issuable hereunder (treated as if the Debentures were converted
into Conversion Shares which were subsequently converted into Common Stock that
has not been sold to the public).
8.7 DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power, or remedy accruing to any Purchaser, upon any breach,
default or noncompliance of the Company under this Agreement, the Debentures the
Amended Rights Agreement or the Articles of Incorporation, shall impair any such
right, power, or remedy, nor shall it be construed to be a waiver of any such
breach, default or noncompliance, or any acquiescence therein, or of or in any
similar breach, default or noncompliance thereafter occurring. It is further
agreed that any waiver, permit, consent, or approval of any kind or character on
any Purchaser's part of any breach, default or noncompliance under this
Agreement, the Debentures or under the Articles of Incorporation or any waiver
on such Purchaser's part of any provisions or conditions of the Agreement must
be in writing and shall be effective only to the extent specifically set forth
in such writing. All remedies, either under this Agreement, the Debentures, the
Articles of Incorporation, by law, or otherwise afforded to Purchasers, shall be
cumulative and not alternative.
14.
<PAGE> 19
8.8 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be sent by registered or
certified mail, return receipt requested, postage prepaid, by means of a
nationally recognized overnight courier service, or by telex or facsimile,
addressed or sent: (a) if to a Purchaser, at such Purchaser's address or
facsimile number as set forth on the Company's records, or at such other address
or facsimile number as such Purchaser shall have furnished to the Company in
writing or (b) if to the Company, at its address or facsimile number as set
forth at the end of this Agreement, or at such other address or facsimile number
as the Company shall have furnished to the Purchasers in writing.
8.9 PAYMENT OF FEES AND EXPENSES. The Company and each Purchaser
shall bear its own expenses incurred on its behalf with respect to this
Agreement and the transactions contemplated thereby; provided, however, that,
subject to and upon the occurrence of the Closing, the Company shall pay the
reasonable legal fees and expenses of Morrison & Foerster LLP in an amount up to
$20,000.
8.10 ATTORNEYS' FEES. If legal action is brought to enforce or
interpret this Agreement, the prevailing party shall be entitled to recover its
reasonable attorneys' fees and legal costs in connection therewith.
8.11 TITLES AND SUBTITLES. The titles of the paragraphs and
subparagraphs of the Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
8.12 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
8.13 BROKER'S FEES. Each party hereto represents and warrants that no
agent, broker, investment banker, person or firm acting on behalf of or under
the authority of such party hereto is or will be entitled to any broker's or
finder's fee or any other commission directly or indirectly in connection with
the transactions contemplated herein. Each party hereto further agrees to
indemnify each other party for any claims, losses or expenses incurred by such
other party as a result of the representation in this Section 8.13 being untrue.
8.14 PARTIES IN INTEREST. None of the provisions of this Agreement is
intended to provide right or remedies to any person or entity other than the
parties hereto and their respective successors and assigns (if any) and except
for rights of Cooley Godward LLP pursuant to Section 1.4.
[the remainder of this page is intentionally blank]
15.
<PAGE> 20
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By: /s/ KEN KENITZER
-----------------------------------
Ken Kenitzer
President
PURCHASER:
BRENTWOOD ASSOCIATES VI, L.P.
BY BRENTWOOD VI VENTURES, L.P., GENERAL PARTNER
By:
-----------------------------------
Name:
Title:
<PAGE> 21
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By:
-----------------------------------
Ken Kenitzer
President
PURCHASER:
BRENTWOOD ASSOCIATES VI, L.P.
BY BRENTWOOD VI VENTURES, L.P., GENERAL PARTNER
By: /s/ JOHN L. WALECKA
-----------------------------------
Name: John L. Walecka
Title: General Partner
<PAGE> 22
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By: /s/ KEN KENITZER
-----------------------------------
Ken Kenitzer
President
PURCHASER:
CHANCELLOR LGT PRIVATE CAPITAL III, L.P.
BY:
BY:
By:
-----------------------------------
Name:
Title:
<PAGE> 23
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By:
-----------------------------------
Ken Kenitzer
President
PURCHASER:
CHANCELLOR PRIVATE CAPITAL OFFSHORE PARTNERS III, L.P.
BY: CPCP Associates, L.P., its General Partner
BY: INVESCO Private Capital, Inc., its General Partner
By: /s/ ALESSANDRO PIOL
-----------------------------------
Name: Alessandeo Piol
Title: Managing Director
<PAGE> 24
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By:
-----------------------------------
Ken Kenitzer
President
PURCHASER:
CHANCELLOR PRIVATE CAPITAL OFFSHORE PARTNERS I, C.V.
BY: Chancellor KME IV Partner, L.P., its Investment General Partner
BY: INVESCO Private Capital, Inc., its General Partner
By: /s/ ALESSANDRO PIOL
-----------------------------------
Name: Alessandro Piol
Title: Managing Director
<PAGE> 25
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By:
-----------------------------------
Ken Kenitzer
President
PURCHASER:
CHANCELLOR PRIVATE CAPITAL OFFSHORE PARTNERS II, L.P.
BY: CPCP Associates, L.P., its Investment General Partner
BY: INVESCO Private Capital, Inc., its General Partner
By: /s/ ALESSANDRO PIOL
-----------------------------------
Name: Alessandro Piol
Title: Managing Director
<PAGE> 26
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By:
-----------------------------------
Ken Kenitzer
President
PURCHASER:
CITIVENTURE 96 PARTNERSHIP, L.P.
BY: INVESCO (NY), INC., as Investment Adviser
By: /s/ ALESSANDRO PIOL
-----------------------------------
Name: Alessandro Piol
Title: Managing Director
<PAGE> 27
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By:
-----------------------------------
Ken Kenitzer
President
PURCHASER:
CHARTER GROWTH CAPITAL, L.P.
By: /s/ KEVIN J. McQUILLAN
-----------------------------------
Name: Kevin J. McQuillan
Title: General Partner
<PAGE> 28
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By:
-----------------------------------
Ken Kenitzer
President
PURCHASER:
CHARTER GROWTH CAPITAL CO-INVESTMENT FUND, L.P.
By: /s/ KEVIN J. McQUILLAN
-----------------------------------
Name: Kevin J. McQuillan
Title: General Partner
<PAGE> 29
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By:
-----------------------------------
Ken Kenitzer
President
PURCHASER:
CGC INVESTORS, L.P.
By: /s/ KEVIN J. McQUILLAN
-----------------------------------
Name: Kevin J. McQuillan
Title: General Partner
<PAGE> 30
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By:
-----------------------------------
Ken Kenitzer
President
PURCHASER:
DIXON R. DOLL AND CAROL DOLL AS TRUSTEES UTA
9-10-92 OF THE DIXON AND CAROL DOLL FAMILY TRUST
By: /s/ D R DOLL, Trustee
-----------------------------------
Name:
Title:
<PAGE> 31
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By:
-----------------------------------
Ken Kenitzer
President
PURCHASER:
DOLL FAMILY PARTNERSHIP
By: /s/ D R DOLL
-----------------------------------
Name:
Title:
<PAGE> 32
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By:
-----------------------------------
Ken Kenitzer
President
PURCHASER:
DMW INVESTORS `95
By: /s/ D R DOLL
-----------------------------------
Name:
Title:
<PAGE> 33
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By:
-----------------------------------
Ken Kenitzer
President
PURCHASER:
HALLADOR VENTURE FUND II, A CALIFORNIA LIMITED PARTNERSHIP
BY Hallador Venture Partners
By: /s/ CHRIS L. BRANSCUM
-----------------------------------
Name:
Title:
Hallador Venture Fund II
By Hallador Venture Ptrs.
By Chris L. Branscum
General Partner
<PAGE> 34
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By:
-----------------------------------
Ken Kenitzer
President
PURCHASER:
HMS GROUP
By: /s/ [SIGNATURE ILLEGIBLE]
-----------------------------------
Name: [NAME ILLEGIBLE]
Title: General Partner
<PAGE> 35
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By:
-----------------------------------
Ken Kenitzer
President
PURCHASER:
INTERNATIONAL SYNERGIES LTD.
By: /s/ D R DOLL
-----------------------------------
Name:
Title: Auth Agent
<PAGE> 36
\
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By:
-----------------------------------
Ken Kenitzer
President
PURCHASER:
J.F. SHEA CO., INC. AS NOMINEE 1990-13
By: /s/ EDMUND H. SHEA, JR.
-----------------------------------
Name: EDMUND H. SHEA, JR.
Title: VICE PRESIDENT
<PAGE> 37
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By:
-----------------------------------
Ken Kenitzer
President
PURCHASER:
NAZEM & COMPANY IV, L.P.
By Nazem & Associates IV, L.P., General Partner
By: /s/ PHILIP BARAK
-----------------------------------
Name: Philip Barak
Title: General Partner
<PAGE> 38
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By:
-----------------------------------
Ken Kenitzer
President
PURCHASER:
OAK INVESTMENT PARTNERS VI, LIMITED PARTNERSHIP
By: /s/ BANDEL CARANO
-----------------------------------
Name:
Title:
MANAGING MEMBER OF OAK ASSOCIATES VI, LLC.
THE GENERAL PARTNER OF
OAK INVESTMENT PARTNERS VI,
LIMITED PARTNERSHIP
<PAGE> 39
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By:
-----------------------------------
Ken Kenitzer
President
PURCHASER:
TRANSATLANTIC VENTURE FUND C.V.
By: /s/ PHILIP BARAK
-----------------------------------
Name: Philip Barak
Title: Investment Manager
<PAGE> 40
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
REPEATER TECHNOLOGIES, INC.
By:
-----------------------------------
Ken Kenitzer
President
PURCHASER:
UNIVERSITY OF MICHIGAN
BUSINESS SCHOOL GROWTH FUND
By: /s/ D R DOLL
-----------------------------------
Name:
Title: Inv Manager
<PAGE> 41
EXHIBIT A
CONVERTIBLE DEBENTURE PURCHASE AGREEMENT
SCHEDULE OF PURCHASERS
NOVEMBER 25, 1998
<TABLE>
<CAPTION>
PURCHASER DEBENTURES
--------- ----------
<S> <C>
Brentwood Associates VI, L.P. $ 99,995.50
Chancellor LGT Private Capital Partners III, L.P. 95,540.50
Chancellor LGT Private Capital Offshore Partners I, C.V 13,491.50
Chancellor LGT Private Capital Offshore Partners II, LP. 172,111.50
Citiventure 96 Partnership Fund, L.P. 386,985.50
Charter Growth Capital, L.P. 1,999,998.00
Charter Growth Capital Co-Investment Fund, L.P. 7,875,004.50
CGC Investors, L.P. 124,998.50
Dixon R. Doll and Carol Doll as Trustees UTA 51,870.50
9-10-92 of the Dixon and Carol Doll Family Trust
Doll Family Partnership 2,959.00
DMW Investors '95 18,524.00
Hallador Venture Fund II, a California Limited Partnership 99,995.50
HMS Group 49,995.00
International Synergies Ltd. 7,403.00
</TABLE>
<PAGE> 42
<TABLE>
<CAPTION>
PURCHASER DEBENTURES
--------- ----------
<S> <C>
J.F. Shea Co., Inc. as Nominee 1990-13 499,999.50
Nazem & Company IV, L.P. 1,123,320.00
Oak Investment Partners VI, Limited Partnership 1,249,996.00
Transatlantic Venture Fund 1,123,320.00
University of Michigan Business School Growth Fund 4,438.50
TOTAL $ 14,999,946.50
</TABLE>
2
<PAGE> 43
EXHIBIT B
THIS SUBORDINATED UNSECURED CONVERTIBLE DEBENTURE HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). NO SALE OR DISPOSITION MAY
BE EFFECTED EXCEPT IN COMPLIANCE WITH RULE 144 UNDER THE ACT OR AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO OR UPON RECEIPT OF AN OPINION OF COUNSEL
FOR HOLDER, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE ACT OR RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE
COMMISSION.
PAYMENT OF THIS DEBENTURE SHALL BE SUBORDINATED PURSUANT TO THE TERMS OF A
SUBORDINATION AGREEMENT (AS DEFINED BELOW) TO BE ENTERED INTO BETWEEN THE HOLDER
(AS DEFINED BELOW), THE COMPANY (AS DEFINED BELOW) AND THE HOLDER OF SENIOR
INDEBTEDNESS.
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA,
EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.
FORM OF
SUBORDINATED UNSECURED
CONVERTIBLE DEBENTURE
CD-<<NUMBER>>
$<<DOLLARAMOUNT>> November 25, 1998
Sunnyvale, California
FOR VALUE RECEIVED, REPEATER TECHNOLOGIES, INC., a California
corporation (the "Company"), unconditionally and without set-off or counterclaim
promises to pay to <<Name>> (the "Holder"), or its assigns, the principal sum of
<<AmountName>> ($<<DollarAmount>>), together with interest from the date of this
Subordinated Unsecured Convertible Debenture (this "Debenture") on the unpaid
principal balance at a rate equal to eight percent (8.0%) per annum, computed on
the basis of the actual number of days elapsed and a year of 360 days. All
unpaid principal, together with any then unpaid and accrued interest and other
amounts payable hereunder, shall be due and payable on the "Maturity Date" which
date shall be the earlier of (i) November 25, 2003, or (ii) when such amounts
are declared due and payable by the Holder or made automatically due and payable
upon or after the occurrence of an Event of Default (as defined below). The
Company agrees it shall use the proceeds of the purchase of this Debenture for
working capital and business expansion purposes only.
1. DEFINITIONS. As used in this Debenture, the following capitalized terms have
the following meanings:
1.1 "ARTICLES" shall mean the Amended and Restated Articles of
Incorporation of the Company as in effect as of the Initial Closing.
<PAGE> 44
1.2 "CHANGE OF CONTROL" means the occurrence after the date hereof of
(a) any Person, or two or more Persons acting in concert, acquiring beneficial
ownership (within the meaning of Rule l3d-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended), directly or
indirectly, or entering into a contract or arrangement which, upon consummation,
will result in their acquisition or control, of or over Equity Securities of the
Company representing greater than fifty one percent (51%) of the combined voting
power of all Equity Securities of the Company entitled to vote in the election
of directors; (b) during any twenty-four month (24) period, individuals who were
directors of the Company on the first day of such period shall, together with
such directors as are approved by the directors who were directors at the
beginning of such period, cease to constitute a majority of the board of
directors of the Company; (c) the sale of all or substantially all of the
assets; or (d) the acquisition of the Company by another entity as set forth in
section 3(c) of Articles.
1.3 "THE COMPANY" includes the corporation initially executing this
Debenture and any Person which shall succeed to or assume the obligations of the
Company under this Debenture.
1.4 "DEBENTURE PURCHASE AGREEMENT" shall mean the Debenture Purchase
Agreement dated of even date herewith between the Company and the Purchasers
identified on Exhibit A thereto.
1.5 "EQUITY SECURITIES" of any Person shall mean (a) all common stock,
preferred stock, participations, shares, or other equity interests in and of
such Person (regardless of how designated and whether or not voting or
non-voting) and (b) all warrants, options and other rights to acquire any of the
foregoing.
1.6 "EVENT OF DEFAULT" has the meaning given in Section 7 hereof.
1.7 "FINANCIAL STATEMENTS" shall mean, with respect to any accounting
period to any Person, statements of operations, retained earnings and cash
flows of such Person for such period, and balance sheets of such Person as of
the end of such period, setting forth in each case in comparative form figures
for the corresponding period in the preceding fiscal year if such period is less
than a full fiscal year or, if such period is a full fiscal year, corresponding
figures from the preceding fiscal year, all prepared in reasonable detail and in
accordance with generally accepted accounting principles. Unless otherwise
indicated, each reference to Financial Statements of any Person shall be deemed
to refer to audited Financial Statements prepared on a consolidated basis.
1.8 "FUNDAMENTAL CHANGE" means with respect to the Company (a) a merger
or consolidation, direct or indirect, whether by operation of law or otherwise,
(b) any liquidation, winding up or dissolution pursuant to section 3(c) of
Articles, (c) any sale of all or substantially all of the assets of the Company.
1.9 "HOLDER" shall mean the Person specified in the introductory
paragraph of this Debenture or any Person who shall at the time be the holder of
this Debenture.
1.10 "INDEBTEDNESS" shall mean and include the aggregate amount of,
without duplication: (a) all obligations for borrowed money, (b) all obligations
evidenced by bonds,
2.
<PAGE> 45
debentures, notes or other similar instruments, (c) all obligations to pay the
deferred purchase price of property or services (other than accounts payable and
current liabilities incurred in the ordinary course of business determined in
accordance with generally accepted accounting principals), (d) all obligations
with respect to capital leases, (e) all guaranty obligations; (f) all
obligations created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person, (g) all
reimbursement and other payment obligations, contingent or otherwise, in respect
of letters of credit.
1.11 "INTELLECTUAL PROPERTY" shall mean all of the Company's right,
title and interest in and to patents, patent rights (and applications therefor),
trademarks and service marks (and applications and registrations therefor),
inventions, copyrights, mask works (and applications and registrations
therefor), trade names, trade styles, software and computer programs, trade
secrets, methods, processes, know how, drawings, specifications, descriptions,
and all memoranda, notes, and records with respect to any research and
development, all whether now owned or subsequently acquired or developed by the
Company.
1.12 "LIEN" shall mean, with respect to any property, any security
interest, mortgage, pledge, lien, claim, charge or other encumbrance in, of, or
on such property or the income therefrom, including, without limitation, the
interest of a vendor or lessor under a conditional sale agreement, capital lease
or other title retention agreement, or any agreement to provide any of the
foregoing and the filing of any financing statement or similar instrument under
the Uniform Commercial Code or comparable law of any jurisdiction.
1.13 "MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on:
(a) the business, assets, operations, or financial condition of the Company; or
(b) the ability of the Company to repay the Indebtedness under this Debenture or
any of the other Transaction Documents.
1.14 "OBLIGATIONS" shall mean and include all loans, advances, debts,
liabilities and obligations, howsoever arising, owed by the Company to the
Holder of every kind and description (whether or not evidenced by any note or
instrument and whether or not for the payment of money), now existing or
hereafter arising under or pursuant to the terms of this Debenture and the other
Transaction Documents, including, all interest, fees, charges, expenses,
attorneys' fees and costs and accountants' fees and costs chargeable to and
payable by the Company hereunder and thereunder, in each case, whether direct or
indirect, absolute or contingent, due or to become due, and whether or not
arising after the commencement of a proceeding under Title 11 of the United
States Code (11 U.S.C. Section 101 et seq.), as amended from time to time
(including post-petition interest) and whether or not allowed or allowable as a
claim in any such proceeding.
1.15 "PERMITTED LIENS" shall mean and include:
(a) liens and security interests existing as of this date and
disclosed in the Schedule attached hereto and incorporated herein by this
reference;
(b) liens for taxes, fees, assessments or other governmental
charges or levies, either not delinquent or being contested in good faith by
appropriate proceedings;
3.
<PAGE> 46
(c) liens and security interests (a) upon or in any property
acquired or held by the Company together with accessions thereto and
replacements and substitutions therefore to secure the purchase price of such
property or indebtedness incurred solely for the purpose of financing the
acquisition of such property and in an amount not greater than the purchase
price thereof (plus taxes, installation and other incidental costs) or (b)
existing on such property at the time of its acquisition, provided that the lien
and security interest is confined solely to the property so acquired and
improvements thereon, and the proceeds of such property;
(d) liens consisting of leases or subleases and licenses and
sublicenses granted to others in the ordinary course of the Company's business
not interfering in any material respect with the business of the Company and any
interest or title of a lessor or licensor under any lease or license, as
applicable;
(e) liens securing claims or demands of materialmen, mechanics,
carriers, warehousemen, landlords and other like persons or entities imposed
without action of such parties, provided that the payment thereof is not yet
required;
(f) liens incurred or deposits made in the ordinary course of the
Company's business in connection with worker's compensation, unemployment
insurance, social security and other like laws;
(g) liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default;
(h) easements, reservations, rights-of-way, restrictions, minor
defects or irregularities in title and other similar charges or encumbrances
affecting real property not interfering in any material respect with the
ordinary conduct of the Company's business;
(i) liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
(j) liens which constitute rights of set-off of a customary nature;
(k) any interest or title of a lessor in equipment subject to any
capitalized lease otherwise permitted hereunder;
(l) any liens arising from the filing of any financing statements
relating to true leases otherwise permitted hereunder;
(m) liens in favor of holders of Senior Indebtedness; and
(n) liens, not otherwise permitted, which liens do not in the
aggregate exceed $100,000 at any time.
1.16 "PERSON" shall mean and include an individual, a partnership, a
corporation (including a business trust), a joint stock company, a limited
liability company, an unincorporated association, a joint venture or other
entity or a governmental authority.
4.
<PAGE> 47
1.17 "PREFERRED STOCK" shall mean and Series AA Preferred Stock, Series
BB Preferred Stock, Series CC Preferred Stock, Series DD Preferred Stock, or any
other series of preferred stock issued by the Company.
1.18 "QUALIFIED PUBLIC OFFERING" shall mean the consummation of a firmly
underwritten public offering on Form S-1 or SB-2 of the Company's Common Stock,
for an aggregate offering price not less than $10,000,000, before deduction for
underwriter commissions and expenses relating to the issuance, and at a public
offering price per share of at least $10.00 (as adjusted for any
recapitalization).
1.19 "RELATED DEBENTURES" shall mean the Subordinated Unsecured
Convertible Debenture dated of even date herewith issued to Purchasers by the
Company.
1.20 "REQUIRED HOLDERS" shall mean at any time Holders then holding
greater than fifty percent (50%) of the aggregate Series DD Preferred issued or
issuable upon conversion of this Debenture and Related Debentures (on an
as-if-converted basis).
1.21 "SENIOR INDEBTEDNESS" shall mean the principal of, unpaid interest
on and other amounts due in connection with the Amended and Restated Loan and
Security Agreement dated March 27, 1995 between the Company and Silicon Valley
Bank and the agreement to be entered into between the Company and Silicon Valley
Bank and/or Greyrock Business Credit in an aggregate principal amount not to
exceed Twelve Million Five Hundred Thousand Dollars ($12,500,000), or any
additional or substitute institutional senior lenders, provided the terms of the
agreement between the Company and the lender are reasonably acceptable to
Required Holders and at an aggregate principal amount not to exceed $12,500,000.
1.22 "SERIES DD PREFERRED" shall mean the Company's presently authorized
Series DD Preferred Stock.
1.23 "SUBORDINATION AGREEMENT" shall mean the Subordination Agreement
to be entered into among the Company, Purchasers and Silicon Valley Bank and/or
Greyrock Business Credit or substitute lender as set forth in SECTION 1.21.
1.24 "SUBSIDIARY" shall mean: (a) any corporation of which more than 50%
of the issued and outstanding Equity Securities having ordinary voting power to
elect a majority of the Board of Directors of such corporation is at the time
directly or indirectly owned or controlled by Company, (b) any partnership,
joint venture, or other association of which more than 50% of the equity
interest having the power to vote, direct or control the management of such
partnership, joint venture or other association is at the time directly or
indirectly owned and controlled by Company (c) any other entity included in the
financial statements of Company on a consolidated basis.
1.25 "SIXTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT" shall mean
the Sixth Amended and Restated Investors' Rights Agreement, dated of even date
herewith between the Company and the Investors listed therein.
1.26 "TRANSACTION DOCUMENTS" shall mean (a) this Debenture and the
Related Debentures; (b) the Subordination Agreement, (c) the Sixth Amended and
Restated Investors'
5.
<PAGE> 48
Rights Agreement, (d) the Convertible Debenture Purchase Agreement; and (e)
amendments, exhibits, and schedules to the foregoing.
All capitalized terms used herein and not otherwise defined herein shall
have the respective meanings given to them in the Debenture Purchase Agreement.
2. SOLVENCY.
The Company represents and warrants to the Holder as of the Initial
Closing that the Company is Solvent (as defined below) and, after the execution
and delivery of the Transaction Documents and the consummation of the
transactions contemplated thereby, each of the Company and its Subsidiaries will
be Solvent. "Solvent" shall mean, with respect to any Person on any date, that
on such date (a) the fair value of the property of such Person is greater than
the fair value of the liabilities (including without limitation, contingent
liabilities) of such Person, (b) the present fair saleable value of the assets
of such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person's ability to pay such debts and
liabilities as they mature and (d) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person's property would constitute unreasonably small capital.
3. INTEREST AND PLACE OF PAYMENT.
Interest on the outstanding principal balance on this Debenture shall be
payable in arrears not later than the first Business Day of each calendar
quarter for the preceding calendar quarter from the date hereof through the
Maturity Date. All amounts payable hereunder shall be payable at the offices
Holder as designated on the signature page hereof, or any other address
designated by Holder.
4. PREPAYMENT.
4.1 PREPAYMENT. No prepayment of this Debenture in whole or in part is
permitted except that, at the option of the Holder, the Company shall repay, in
whole or in part, this Debenture, upon the occurrence of any of the following:
(a) a Change of Control, or (b) subject to SECTION 9.2, the completion of a
Qualified Public Offering, or (c) a Fundamental Change, or joint venture,
liquidation or similar transaction of the Company that affects a material
portion of the assets, business lines of the Company or the ability of the
Company to continue as a viable business, (each a "Mandatory Prepayment Event").
4.2 NOTICE.
(a) In the event that any Mandatory Prepayment Event shall occur or
the Company shall have knowledge of any proposed Mandatory Prepayment Event, the
Company will give written notice (the "Company Notice") of such fact in the
manner provided in Section 4.2(a) hereof to the Holders of the Debentures. The
Company Notice shall be delivered promptly upon receipt of such knowledge by the
Company and in any event no later than ten (10) Business Days following the
occurrence of any Mandatory Prepayment Event. The Company Notice shall (i)
describe the facts and circumstances of such Mandatory Prepayment Event in
reasonable detail, (ii) make reference to this Section 4.2(a) and the right of
the Holders
6.
<PAGE> 49
of the Debentures to require prepayment, in whole or in part, of the Debentures
on the terms and conditions provided for in this Section 4.2(a), (iii) offer in
writing to prepay the outstanding Debentures, together with accrued interest to
the date of prepayment, and (iv) specify a date for such prepayment (the
"Mandatory Prepayment Event Prepayment Date"), which Mandatory Prepayment Event
Prepayment Date shall be not more than 90 days nor less than 30 days following
the date of such the Company Notice. Each Holder of then outstanding Debentures
shall have the right to accept such offer and require prepayment of the
Debentures held by such Holder by written notice to the Company (a "Debenture
Holder Notice") given not later than 20 days after receipt of the Company
Notice. The Company shall on the Mandatory Prepayment Event Prepayment Date
prepay all of the Debentures held by Holders which have so accepted such offer
of prepayment. The prepayment price of the Debentures payable upon the
occurrence of any Mandatory Prepayment Event shall be an amount equal to the
outstanding principal amount of the Debentures so to be prepaid and accrued
interest thereon to the date of such prepayment.
(b) Without limiting the foregoing, notwithstanding any failure on
the part of the Company to give the Company Notice herein required as a result
of the occurrence of a Mandatory Prepayment Event, each Holder of the Debentures
shall have the right on the occurrence of a Mandatory Prepayment Event by
delivery of written notice to the Company to require the Company to prepay, in
whole or in part, and the Company will prepay, such Holder's Debentures,
together with accrued interest thereon to the date of prepayment. Notice of any
required prepayment pursuant to this Section 4.2(b) shall be delivered by any
Holder of the Debentures which was entitled to, but did not receive, such the
Company Notice to the Company after such Holder has actual knowledge of such
Mandatory Prepayment Event. On the date (the "Mandatory Prepayment Event Delayed
Prepayment Date") designated in such Holder's notice (which shall be not more
than 90 days nor less than 30 days following the date of such Holder's notice),
the Company shall prepay all of the Debentures held by such Holder, together
with accrued interest thereon to the date of prepayment. If the Holder of any
Debenture gives any notice pursuant to this Section 4.2(b), the Company shall
give a the Company Notice within three Business Days of receipt of such notice
and identify the Mandatory Prepayment Event Delayed Prepayment Date to all other
Holders of the Debentures and each of such other Holders shall then and
thereupon have the right to accept the Company's offer to prepay the Debentures
held by such Holder and require prepayment of such Debentures by delivery of a
Debenture Holder Notice within 20 days following receipt of such the Company
Notice; provided only that any date for prepayment of such Holder's Debentures
shall be the Mandatory Prepayment Event Delayed Prepayment Date. On the
Mandatory Prepayment Event Delayed Prepayment Date, the Company shall prepay the
Debentures of each Holder thereof which has accepted such offer of prepayment at
a prepayment price equal to the outstanding principal amount of the Debentures
so to be prepaid and accrued interest thereon to the date of such prepayment.
4.3 MATURITY; SURRENDER, ETC. In the case of each complete prepayment of
Debentures pursuant to this Section 4, the principal amount of each Debenture to
be prepaid shall mature and become due and payable on the date fixed for such
prepayment, together with interest on such principal amount accrued to such
date. From and after such date, unless the Company shall fail to pay such
principal amount when so due and payable, together with the interest, interest
on such principal amount shall cease to accrue. Any Debenture prepaid in full
shall be surrendered to the Company and cancelled and shall not be reissued, and
no Debenture shall be issued in lieu of any prepaid principal amount of any
Debenture.
7.
<PAGE> 50
4.4 AFFILIATES. The Company will not and will not permit any affiliate
to purchase, redeem, prepay or otherwise acquire, directly or indirectly, any
of the outstanding Debentures except upon the payment or prepayment of the
Debentures in accordance with the terms of this Debenture and the Debentures.
5. AFFIRMATIVE COVENANTS.
While any amount is outstanding under this Debenture, the Company
covenants that it will do the following:
5.1 COMPLIANCE AND MAINTENANCE OF CORPORATE EXISTENCE. Maintain its
corporate existence and observe and comply in all material respects with all
applicable laws and valid requirements of any governmental authorities relative
to its corporate existence, rights and franchises, to the conduct of its
business and to its property and assets, and shall maintain and keep in full
force and effect all licenses and permits necessary in any material respect to
the proper conduct of its business.
5.2 PROPERTY MAINTENANCE AND INSURANCE. Maintain its properties in good
repair, working order and condition as required for the normal conduct of its
business and shall at all times maintain liability and casualty insurance with
financially sound and reputable insurers in such amounts as the Holder shall
reasonably deem to be adequate. The Company shall furnish to Holder certificates
or other evidence satisfactory to Holder of compliance with the foregoing
insurance provisions.
5.3 TAX. The Company shall pay or cause to be paid all taxes,
assessments, governmental charges on or against it or its properties on or prior
to the time when they become due; provided that this covenant shall not apply to
any tax, assessment or charge that is being contested in good faith by
appropriate proceedings and with respect to which adequate reserves have been
established and are being maintained in accordance with generally accepted
accounting principles if no Lien shall have been filed to secure such tax,
assessment or charge.
5.4 MAINTENANCE OF BOOKS AND RECORDS. The Company shall keep adequate
books and records of account, in which true and complete entries will be made
reflecting all of its business and financial transactions, and such entries will
be made in accordance with generally accepted accounting principles consistently
applied and applicable law.
5.5 NO IMPAIRMENT. The Company will not, by amendment of its Articles or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities, or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company.
5.6 FURTHER ASSURANCE. At any time and from time to time the Company
shall execute and deliver such further instruments and take such further action
as may reasonably be requested by Holder to effect the purposes of this
Debenture.
5.7 ADJUSTMENTS. The Company shall make all adjustments to Series DD
Conversion Price (as defined in the Articles) as if such series of Preferred
Stock had been issued and outstanding from the date of this Debenture.
8.
<PAGE> 51
6. NEGATIVE COVENANTS.
From the date hereof until all Obligations to Holder are paid or
converted pursuant to their terms, without the prior written consent of the
Required Holders, the Company shall not do the following:
6.1 INDEBTEDNESS. Create, incur, assume or permit to exist any
Indebtedness except
(a) trade credit in the ordinary course of business;
(b) Senior Indebtedness, limited to an amount not to exceed Twelve
Million Five Hundred Thousand Dollars ($12,500,000);
(c) Indebtedness pursuant to the Debenture Purchase Agreement;
(d) Contingent obligations of the Company consisting of guarantees
(and other credit support) of the obligations of vendors and suppliers of the
Company in respect of transactions entered into in the ordinary course of
business;
(e) Indebtedness with respect to capital lease obligations;
(f) Indebtedness (other than Senior Indebtedness) related to any
Permitted Liens; and
(g) Extensions, renewals, refunding, refinancings, modifications,
amendments and restatements of any of the items (a) through (f) above except as
to an increase in the maximum amount of Senior Indebtedness pursuant to item
(b), which shall require the approval of Required Holders.
6.2 LIENS. Create, incur, assume or permit to exist any Lien on or with
respect to any of its assets or property of any character, whether now owned or
hereafter acquired, except for Permitted Liens.
6.3 DIVIDENDS, REDEMPTIONS, ETC. Do any of the following in excess of
$250,000 in any fiscal year: (a) pay dividends or make any distributions on its
Equity Securities; (b) purchase, redeem, retire, decease or otherwise acquire
for value any of its Equity Securities; (c) return any capital to any holder of
its Equity Securities; (d) make any distribution of assets, Equity Securities,
obligations or securities to any holder of its Equity Securities; or (e) set
apart any sum for any such purpose; provided, however, that any Subsidiary may
pay cash dividends to the Company.
6.4 ERISA. Permit any retirement plan maintained by it to: (a) engage in
any "prohibited transaction", (b) incur any "accumulated funding deficiency" (as
defined in Section 302 of ERISA) whether or not waived, or (c) terminate any
retirement plan in a manner that could result in the imposition of a Lien or
encumbrance on the assets of the Company or any of its Subsidiaries pursuant to
Section 4068 of ERISA.
9.
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6.5 SERIES DD PREFERRED. Alter any of the rights, preferences or
privileges of the Series DD Preferred as set forth as of the date of this
Debenture in the Articles, or otherwise approve any action listed in Section 6
of the Articles.
7. EVENTS OF DEFAULT.
The occurrence and continuation of any of the following shall constitute
an "Event Of Default" under this Debenture and the other Transaction Documents:
7.1 FAILURE TO PAY. The Company shall fail to pay (a) any principal
payment within fifteen (15) days of the due date, or (b) any interest or other
payment required under the terms of this Debenture or any other Transaction
Document within fifteen (15) days of the due date; or
7.2 BREACHES OF CERTAIN COVENANTS. The Company or any of its
Subsidiaries shall fail to observe or perform any covenant, obligation,
condition or agreement set forth in Sections 5 or 6 of this Debenture; or
7.3 BREACHES OF OTHER COVENANTS. The Company or any of its Subsidiaries
shall fail to observe or perform any other covenant, obligation, condition or
agreement contained in this Debenture or the other Transaction Documents (other
than those specified in Sections 7.1 and 7.2) and (a) such failure shall
continue for fifteen (15) days following the receipt of written notice by the
Company, or (b) if such failure is not curable within such fifteen (15) day
period, but is reasonably capable of cure within forty-five (45) days, either
(i) such failure shall continue for forty-five (45) days or (ii) the Company or
its Subsidiary shall not have commenced a cure in a manner reasonably
satisfactory to the Holder within the initial fifteen (15) day period; or
7.4 REPRESENTATIONS AND WARRANTIES. Any representation, warranty,
certificate, or other statement (financial or otherwise) made or furnished by
the Company to the Holder in writing signed by an officer of the Company in
connection with this Debenture or any of the other Transaction Documents, or as
an inducement to the Holder to enter into this Debenture and the other
Transaction Documents, shall be false, incorrect, incomplete or misleading in
any material respect when made or furnished; or
7.5 OTHER PAYMENT OBLIGATIONS. The Company or any of its Subsidiaries
shall (a)(i) fail to make any payment when due under the terms of any bond,
debenture, note or other evidence of Indebtedness, except the Senior
Indebtedness, to be paid by such Person (excluding this Debenture and the other
Transaction Documents but including any other evidence of Indebtedness of the
Company or any of its Subsidiaries to the Holder) and such failure shall
continue beyond any grace period provided with respect thereto, or (ii) default
in the observance or performance of any other agreement, term or condition
contained in any such bond, debenture, note or other evidence of Indebtedness,
and (b) the effect of such failure or default is to cause the holder or holders
thereof to cause, Indebtedness in an aggregate amount of Two Hundred Thousand
Dollars ($200,000) or more to become due prior to its stated date of maturity;
7.6 SENIOR INDEBTEDNESS PAYMENT OBLIGATIONS. The Company or any of its
Subsidiaries shall (a)(i) fail to make any payment when due under the terms of
any bond, debenture, note or other evidence of Indebtedness related to Senior
Indebtedness, to be paid by such Person and such failure shall continue beyond
any grace period provided with respect
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<PAGE> 53
thereto, or (ii) default in the observance or performance of any other
agreement, term or condition contained in any such bond, debenture, note or
other evidence of Indebtedness related to Senior Indebtedness, and (b) the
effect of such failure or default is to cause the holder or holders thereof to
cause, Indebtedness in an aggregate amount of Two Hundred Thousand Dollars
($200,000) or more to become due prior to its stated date of maturity; or
7.7 VOLUNTARY BANKRUPTCY OR INSOLVENCY PROCEEDINGS. The Company or any
of its Subsidiaries shall (a) apply for or consent to the appointment of a
receiver, trustee, liquidator or custodian of itself or of all or a substantial
part of its property, (b) be unable, or admit in writing its inability, to pay
its debts generally as they mature, (c) make a general assignment for the
benefit of its or any of its creditors, (d) be dissolved or liquidated in full
or in part, (e) become insolvent (as such term may be defined or interpreted
under any applicable statute), (f) commence a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to itself or
its debts under any bankruptcy, insolvency or other similar law now or hereafter
in effect or consent to any such relief or to the appointment of or taking
possession of its property by any official in an involuntary case or other
proceeding commenced against it, or (g) take any action for the purpose of
effecting any of the foregoing; or
7.8 INVOLUNTARY BANKRUPTCY OR INSOLVENCY PROCEEDINGS. Proceedings for
the appointment of a receiver, trustee, liquidator or custodian of the Company
or any of its Subsidiaries or of all or a substantial part of the property
thereof, or an involuntary case or other proceedings seeking liquidation,
reorganization or other relief with respect to the Company or any of its
Subsidiaries or the debts thereof under any bankruptcy, insolvency or other
similar law now or hereafter in effect shall be commenced and an order for
relief entered or such proceeding shall not be dismissed or discharged within
sixty (60) days of commencement; or
7.9 JUDGMENTS. A final judgment or order for the payment of money in
excess of Two Hundred Thousand Dollars ($200,000) (exclusive of amounts covered
by insurance issued by an insurer not an affiliate of the Company) shall be
rendered against the Company or any of its Subsidiaries and the same shall
remain unpaid for a period of thirty (30) days during which execution shall not
be effectively stayed, or any judgment, writ, assessment, warrant of attachment,
or execution or similar process shall be issued or levied against a substantial
part of the property of the Company or any of its Subsidiaries and such
judgment, writ, or similar process shall not be released, stayed, vacated or
otherwise dismissed within thirty (30) days after issue or levy.
8. RIGHTS OF HOLDER UPON DEFAULT.
Upon the occurrence or existence of any Event of Default (other than an
Event of Default referred to in Sections 7.7 and 7.8) and at any time thereafter
during the continuance of such Event of Default, the Holder may, by written
notice to the Company, declare all outstanding Obligations payable by the
Company hereunder to be immediately due and payable without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived, anything contained herein or in the other Transaction Documents to the
contrary notwithstanding. Upon the occurrence or existence of any Event of
Default described in Sections 7.7 and 7.8, immediately and without notice, all
outstanding Obligations payable by the Company hereunder shall automatically
become immediately due and payable, without presentment demand, protest or any
other notice of any kind, all of which are hereby expressly
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waived, anything contained herein or in the other Transaction Documents to the
contrary notwithstanding. In addition to the foregoing remedies, upon the
occurrence or existence of any Event of Default, the Holder may exercise any
other right, power or remedy granted to it by the Transaction Documents or
otherwise permitted to it by law, either by suit in equity or by action at law,
or both.
9. CONVERSION.
9.1 CONVERSION BY HOLDER. At any time prior to the Maturity Date, the
Holder shall have the right, at such Holder's option, to convert this Debenture
in accordance with the terms hereof, in whole or in part, into fully paid and
nonassessable shares of Series DD Preferred. The number of shares of Series DD
Preferred into which this Debenture may be converted shall be determined by
dividing the aggregate amount of this Debenture to be converted by the
Conversion Price (as defined below) in effect at the time of such conversion.
The initial "Conversion Price" shall be equal to $5.50 per share. The Conversion
Price shall be subject to adjustment from time to time pursuant to Section 10
hereof.
9.2 CONVERSION BY THE COMPANY. In the event that the Company completes a
Qualified Public Offering, the Company shall have the right, at the Company's
option, to convert this Debenture, in accordance with the provisions hereof, in
whole or in part, into fully paid and nonassessable shares of Series DD
Preferred. The number of shares of Series DD Preferred into which this Debenture
may be converted shall be determined by dividing the aggregate amount of this
Debenture to be converted by the Conversion Price pursuant to Section 9.1 above,
in effect at the time of such conversion.
9.3 CONVERSION PROCEDURE.
(a) CONVERSION PURSUANT TO SECTION 9.1. Before the Holder shall be
entitled to convert this Debenture into shares of Series DD Preferred, it shall
surrender this Debenture, duly endorsed, at the office of the Company and shall
give written notice, postage prepaid, to the Company at its principal corporate
office, of the election to convert the same pursuant to Section 9.1, and shall
state therein the amount of the unpaid principal amount of this Debenture to be
converted and the name or names in which the certificate or certificates for
shares of Series DD Preferred are to be issued. The Company shall, as soon as
practicable thereafter (but in any event within ten (10) days thereafter), issue
and deliver to the Holder of this Debenture a certificate or certificates for
the number of shares of Series DD Preferred to which the Holder shall be
entitled upon conversion (bearing such legends as are required by applicable
state and federal securities laws), together with a replacement Debenture (if
any principal amount is not converted) and any other securities and property to
which the Holder is entitled upon such conversion under the terms of this
Debenture, including a check payable to Holder for any cash amounts payable as
described in Section 9.4. The conversion shall be deemed to have been made
immediately prior to the close of business on the date of the surrender of this
Debenture, and the Person or Persons entitled to receive the shares of Series DD
Preferred upon such conversion shall be treated for all purposes as the record
holder or holders of such shares of Series DD Preferred as of such date.
(b) CONVERSION PURSUANT TO SECTION 9.2. If this Debenture is
converted by the Company pursuant to Section 9.2 written notice shall be
delivered to the Holder notifying the
12.
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Holder of the conversion to be effected, specifying the Conversion Price, the
principal amount of the Debenture to be converted, the date on which such
conversion is expected to occur and calling upon such Holder to surrender to the
Company, in the manner and at the place designated, the Debenture. Upon such
conversion of this Debenture, the Holder shall surrender this Debenture, duly
endorsed, at the principal office of the Company. At its expense, the Company
shall, as soon as practicable thereafter (but in any event within ten (10) days
thereafter), issue and deliver to such Holder a certificate or certificates for
the number of shares to which Holder shall be entitled upon such conversion
(bearing such legends as are required by applicable state and federal securities
laws), together with any other securities and property to which the Holder is
entitled upon such conversion under the terms of this Debenture, including a
check payable to the Holder for any cash amounts payable as described in Section
9.4. Any conversion of this Debenture pursuant to Section 9.2 shall be deemed to
have been made immediately prior to the closing of the issuance and sale of
shares as described in Section 9.2 and on and after such date the Person
entitled to receive the shares issuable upon such conversion shall be treated
for all purpose as the record Holder of such shares as of such date.
9.4 FRACTIONAL SHARES; INTEREST; EFFECT OF CONVERSION. No fractional
shares shall be issued upon conversion of this Debenture. In lieu of the Company
issuing any fractional shares to the Holder upon the conversion of this
Debenture, the Company shall pay to the Holder an amount equal to the product
obtained by multiplying the Conversion Price by the fraction of a share not
issued pursuant to the previous sentence. In addition, the Company shall pay to
the Holder any interest accrued on the amount converted and on the amount to be
paid by the Company pursuant to the previous sentence.
10. CONVERSION PRICE ADJUSTMENTS.
10.1 ADJUSTMENTS FOR STOCK SPLITS AND SUBDIVISIONS. In the event the
Company at any time or from time to time after the date of issuance hereof fixes
a record date for the effectuation of a split or subdivision of the outstanding
shares of Series DD Preferred or the determination of holders of Series DD
Preferred entitled to receive a dividend or other distribution payable in
additional shares of Series DD Preferred or other securities or rights
convertible into, or entitling the holder thereof to receive directly or
indirectly, additional shares of Series DD Preferred (hereinafter referred to as
"Series DD Preferred Equivalents") without payment of any consideration by such
holder for the additional shares of Series DD Preferred or the Series DD
Preferred Equivalents (including the additional shares of Series DD Preferred
issuable upon conversion or exercise thereof), then, as of such record date (or
the date of such dividend distribution, split or subdivision if no record date
is fixed), the Conversion Price of this Debenture shall be appropriately
decreased so that the number of shares of Series DD Preferred issuable upon
conversion of this Debenture shall be increased in proportion to such increase
of outstanding shares.
10.2 ADJUSTMENTS FOR REVERSE STOCK SPLITS. If the number of shares of
Series DD Preferred outstanding at any time after the date hereof is decreased
by a combination of the outstanding shares of Series DD Preferred then following
the record date of such combination, the Conversion Price for this Debenture
shall be appropriately increased so that the number of shares of Series DD
Preferred issuable on conversion hereof shall be decreased in proportion to such
decrease in outstanding shares.
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10.3 ADJUSTMENTS FOR DILUTING ISSUANCES. In the event the Company shall
Issue Additional Shares of Common Stock (as defined in the Articles), then in
such event, the applicable Conversion Price (as defined in the Articles) shall
be reduced pursuant to Section 4 of the Articles.
10.4 ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE AND SUBSTITUTION. If the
Series DD Preferred issuable upon the conversion of this Debenture is changed
upon the approval of a majority of the holders of Series DD Preferred (on an
as-if-converted basis) into the same or a different number of shares of any
class or classes of stock, whether by recapitalization, reclassification, or
otherwise (other than a subdivision or combination of shares of stock dividend
of a reorganization, merger, consolidation or sale of assets, provided for
elsewhere in this subsection), then, and in any such event, the Holder shall
have the right thereafter to convert this Debenture into the kind and amount of
stock and other securities and property receivable upon such reorganization,
reclassification, or other change by holders of the number of shares of Series
DD Preferred into which this Debenture would have been converted immediately
prior to such reorganization, reclassification, or change.
10.5 CONVERSION OF SERIES DD PREFERRED. Should all of the Company's
Series DD Preferred be, or if outstanding would be, at any time prior to full
payment of this Debenture, converted into shares of the Company's Common Stock
in accordance with Section 4 of the Articles, then this Debenture shall
immediately become convertible into that number of shares of the Company's
Common Stock equal to the number of shares of the Common Stock that would have
been received if this Debenture had been converted in full and the Series DD
Preferred received thereupon had been converted as a result of such event, and
the Conversion Price shall be immediately adjusted to equal the quotient
obtained by dividing (a) the aggregate Conversion Price of the maximum number of
shares of Series DD Preferred into which this Debenture was convertible
immediately prior to such conversion, by (b) the number of shares of Common for
which this Debenture is convertible immediately after such conversion. In any
such event, reference to Series DD Preferred Stock in this Section 10 shall be
deemed to be reference to Common Stock.
10.6 NOTICES OF RECORD DATE, ETC. In the event of:
(a) Any taking by the Company of a record of the holders of any
class of securities of the Company for the purpose of determining the holders
thereof who are entitled to receive any dividend (other than a cash dividend
payable out of earned surplus at the same rate as that of the last such cash
dividend theretofore paid) or other distribution, or any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right; or
(b) Any capital reorganization of the Company, any reclassification
or recapitalization of the capital stock of the Company or any transfer of all
or substantially all of the assets of the Company to any other Person or any
consolidation or merger involving the Company; or
(c) Any voluntary or involuntary dissolution, liquidation or
winding-up of the Company (including any deemed liquidation pursuant to the
Articles),
14.
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the Company will mail to Holder of this Debenture at least twenty (20) days
prior to the earliest date specified above, a notice specifying (i) the date on
which any such record is to be taken for the purpose of such dividend,
distribution or right, and the amount and character of such dividend,
distribution or right; and (ii) the date on which any such reorganization,
reclassification, transfer, consolidation, merger, dissolution, liquidation or
winding-up is expected to become effective and the record date for determining
stockholders entitled to vote thereon.
10.7 RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Company shall at
all times reserve and keep available out of its authorized but unissued shares
of Series DD Preferred solely for the purpose of effecting the conversion of
this Debenture into such number of its shares of Series DD Preferred (and shares
of its Common Stock for issuance on conversion of such Series DD Preferred or
this Debenture following any of the events specified in Section 10.5) as shall
from time to time be sufficient to effect the conversion of the Debenture; and
if at any time the number of authorized but unissued shares of Series DD
Preferred (and shares of its Common Stock for issuance on conversion of such
Series DD Preferred or this Debenture following any of the events specified in
Section 10.5) shall not be sufficient to effect the conversion of the entire
outstanding principal amount of this Debenture, without limitation of such other
remedies as shall be available to the holder of this Debenture, the Company will
take such corporate action as may, in the opinion of counsel, be necessary to
increase its authorized but unissued shares of Series DD Preferred (and shares
of its Common Stock for issuance on conversion of such Series DD Preferred or
this Debenture following any of the events specified in Section 10.5) to such
number of shares as shall be sufficient for such purposes.
11. SUCCESSORS AND ASSIGNS.
Neither this Debenture nor any of the rights, interests or obligations
hereunder may be assigned, in whole or in part, by the Company without the prior
written consent of the Required Holders, except in connection with a merger,
acquisition, consolidation or sale of all or substantially all of the assets of
the Company, if no Event of Default has occurred or is continuing or results
therefrom. Subject to the foregoing, the rights and obligations of the Company
and the Holder shall be binding upon and benefit the successors, assigns, heirs,
administrators and transferees of the parties.
12. WAIVER AND AMENDMENT.
Any provision of this Debenture may be amended, waived or modified upon
the written consent of the Company and Required Holders.
13. NOTICES.
Any notice, request or other communication required or permitted
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered or mailed by registered or certified mail, postage prepaid,
or by a recognized overnight courier or personal delivery, addressed (a) if to
the Holder, at such Holder's address as set forth at the end of this Agreement,
or at such other address as such Holder shall have furnished the Company in
writing, or (b) if to the Company, at its address set forth at the end of this
Agreement, or at such other address as the Company shall have furnished to the
Holder in writing. Any party hereto may by
15.
<PAGE> 58
notice so given change its address for future notice hereunder. Notice shall
conclusively be deemed to have been given when received.
14. PAYMENT.
Payment shall be made in lawful tender of the United States.
15. DEFAULT RATE.
During any period in which an Event of Default has occurred and is
continuing, the Company shall pay interest on the unpaid principal balance
hereof and any accrued but unpaid interest at a rate per annum equal to thirteen
percent (13%).
16. USURY.
Anything in this Debenture to the contrary notwithstanding, the Company
shall never be required to pay interest on this Debenture at a rate in excess of
the Highest Lawful Rate (as hereinafter defined), and if the effective rate of
interest which would otherwise be payable under this Debenture would exceed the
Highest Lawful Rate, or if the maturity of this Debenture is accelerated for any
reason before the Maturity Date or if the Holder shall otherwise receive any
unearned interest or shall receive monies that are deemed to constitute interest
which would increase the effective rate of interest payable under this Debenture
to a rate in excess of the Highest Lawful Rate, or in the event of conversion of
this Debenture prior to the Maturity Date, then (a) the amount of interest which
would otherwise be payable under this Debenture shall be reduced to the maximum
amount allowed under applicable law, and (b) any interest paid by the Company in
excess of the Highest Lawful Rate shall be credited to the principal of this
Debenture. It is further agreed that, without limitation of the foregoing, all
calculations of the rate of interest contracted for, charged, or received by the
Holder under this Debenture that are made for the purpose of determining whether
such rate exceeds the Highest Lawful Rate, shall be made to the extent permitted
by applicable usury laws (now or hereafter enacted), by amortizing, prorating,
and spreading in equal parts during the period of the full stated term of this
Debenture all interest at any time contracted for, charged or received by the
Holder in connection herewith. The "Highest Lawful Rate" shall mean the maximum
rate of interest which the Holder is permitted by applicable law to contract
for, charge, or receive and as to which the Company could not successfully
assert a claim or defense of usury.
17. EXPENSES.
The Company shall pay on demand all reasonable fees and expenses,
including reasonable attorneys' fees and expenses, incurred by the Holder with
respect to the enforcement or attempted enforcement of any of the obligations of
the Company to the Holder under the Transaction Documents or in preserving any
of the Holder's rights and remedies (including, without limitation, all such
fees and expenses incurred in connection with any "workout" or restructuring
affecting the Transaction Documents or the obligations thereunder or any
bankruptcy or similar proceeding involving the Company or any of its
Subsidiaries).
16.
<PAGE> 59
18. REPLACEMENT DEBENTURE.
Upon receipt by the Company of evidence reasonably satisfactory to it of
the ownership of and the loss, theft, destruction or mutilation of any Debenture
and (a) in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to it; or (b) in the case of mutilation, upon surrender thereof;
the Company, at its expense, will execute and deliver in lieu thereof a new
Debenture executed in the same manner as the Debenture being replaced, in the
same principal amount as the unpaid principal amount of such Debenture and dated
the date to which interest shall have been paid on such Note or, if no interest
shall have yet been so paid, dated the date of such Debenture.
19. GOVERNING LAW; INTERPRETATION.
This Debenture and all actions arising out of or in connection with this
Debenture shall be governed by and construed in accordance with the laws of the
State of California, without regard to the conflicts of law provisions of the
State of California or of any other state. If any provision of this Debenture is
held to be invalid or unenforceable by a court of competent jurisdiction, the
other provisions of this Debenture shall remain in full force and effect and
Holder may at any time thereafter require payment in full of all amounts due
hereunder.
20. WAIVER, REPRESENTATION.
Presentment for payment, demand, notice of dishonor, protest, notice of
protest, and stay of execution in connection with the delivery, acceptance,
performance, default or enforcement of the payment of this Debenture are hereby
waived by the Company and its successors and assigns. Neither extension nor
indulgence granted from time to time shall be construed as a novation of this
Debenture or as a reinstatement of the indebtedness evidenced hereby or as a
waiver of the rights of Holder herein. The liability of the Company shall be
unconditional, without regard to the liability of any other party, and shall not
be in any manner affected by any forbearance, partial action or delay on the
part of Holder in regard to the exercise of any right, power or remedy under
this Debenture.
21. SECTION HEADINGS.
The headings of Sections shall not be taken into account in interpreting
the terms of this Debenture.
17.
<PAGE> 60
IN WITNESS WHEREOF, the Company has caused this Debenture to be issued
as of the date first written above.
REPEATER TECHNOLOGIES, INC.,
a California corporation
By:
---------------------------------
Ken Kenitzer, President
1150 Morse Avenue
Sunnyvale, CA 94089
18.
<PAGE> 1
EXHIBIT 16.1
[ERNST & YOUNG LLP LETTERHEAD]
February 25, 2000
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Gentlemen:
We have read the second paragraph under the heading "Change in Independent
Accountants" on page 60 of the Registration Statement of Repeater Technology and
are in agreement with the statements contained in that specific paragraph. We
have no basis to agree or disagree with other statements of the registrant
contained in the Registration Statement.
Ernst & Young LLP
/s/ Ernst & Young LLP
Palo Alto, California
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form S-1 of our
report dated February 18, 2000 relating to the consolidated financial statements
of Repeater Technologies, Inc., which appears in such Registration Statement. We
also consent to the references to us under the headings "Experts" and "Selected
Financial Data" in such Registration Statement.
PricewaterhouseCoopers LLP
San Jose, California
February 25, 2000
2
