<PAGE>
As filed with the Securities and Exchange Commission on May 5, 2000
Registration No. 333-35200
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
WESTERN MULTIPLEX CORPORATION
(Exact name of registrant as specified in its charter)
---------------
Delaware 3679 52-219-8231
(State of Incorporation) (Primary Standard (I.R.S. Employer
Industrial Identification No.)
Classification
Code Number)
1196 Borregas Avenue
Sunnyvale, California 94089
(408) 542-5200
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
---------------
Jonathan N. Zakin
Chief Executive Officer
Western Multiplex Corporation
1196 Borregas Avenue
Sunnyvale, California 94089
(408) 542-5200
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
---------------
Copies to:
William B. Brentani, Esq. Julie T. Spellman, Esq.
Simpson Thacher & Bartlett Cravath, Swaine & Moore
425 Lexington Avenue 825 Eighth Avenue
New York, New York 10017 New York, New York 10019
(212) 455-2000 (212) 474-1000
---------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date 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, other than securities offered only in connection with dividend or
interest reinvestment plans, 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, please 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,
check the following box. [_]
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CALCULATION OF REGISTRATION FEE
<TABLE>
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- ---------------------------------------------------------------------------------------
<CAPTION>
Proposed
Proposed Maximum
Title of Each Class of Maximum Aggregate
Securities to be Amount To Be Offering Price Offering Amount of
Registered Registered Per Unit Price(1) Registration Fee
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A common stock,
par value $.01 per
share................. $115,000,000 $30,360
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) under the Securities Act.
---------------
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 which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The following table sets forth the fees and expenses to be paid by us in
connection with the issuance and distribution for the securities being
registered hereunder. Except for the Securities and Exchange Commission
registration fee and the NASD fee, all amounts are estimates.
<TABLE>
<CAPTION>
Description Amount
----------- -------
<S> <C>
Securities and Exchange Commission registration fee................. $30,360
The Nasdaq National Market listing fee.............................. 81,625
National Association of Securities Dealers, Inc. filing fee......... 12,000
Legal fees and expenses............................................. *
Accounting fees and expenses........................................ *
Printing and engraving fees and expenses............................ *
Blue Sky fees and expenses.......................................... *
Transfer Agent fees and expenses.................................... *
Miscellaneous expenses.............................................. *
-------
Total............................................................. $ *
=======
</TABLE>
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* To be filed by amendment.
Item 14. Indemnification of Directors and Officers.
Reference is made to Section 102(b)(7) of the Delaware General Corporation
Law (the "DGCL"), which enables a corporation in its original certificate of
incorporation or an amendment to its certificate of incorporation to eliminate
or limit the personal liability of a director for monetary damages for
violations of the director's fiduciary duty, except (1) for any breach of a
director's duty of loyalty to the corporation or its stockholders, (2) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (3) pursuant to Section 174 of the DGCL, providing
for liability of directors for unlawful payment of dividends or unlawful stock
purchases or redemption, or (4) for any transaction from which a director
derived an improper personal benefit.
Reference also is made to Section 145 of the DGCL which provides that a
corporation may indemnify any persons, including officers and directors, who
are, or are threatened to be made, parties to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, other than an action by or in the right of the corporation,
by reason of the fact that the person was an officer, director, employee or
agent of the corporation, or is or was serving at the request of the
corporation or other enterprise. The indemnity may include expenses, including
attorneys' fees, judgments, fines and amounts paid in settlement actually and
reasonably incurred by the person in connection with the action, suit or
proceeding, provided the officer, director, employee or agent acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
corporation's best interests and, for a criminal proceeding, had no reasonable
cause to believe that his conduct was unlawful. A Delaware corporation may
indemnify officers and directors in an action by or in the right of the
corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to
be liable to the corporation. Where an officer or director is successful on the
merits or otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses, including attorneys' fees,
which the officer or director actually and reasonably incurred.
The Amended and Restated Certificate of Incorporation (Exhibit 3.1 hereto)
and the Amended and Restated By-Laws (Exhibit 3.2 hereto) of the Registrant
will provide for indemnification of officers and directors to the fullest
extent permitted by applicable law.
II-1
<PAGE>
In addition, the Registrant has also entered into employment agreements
(Exhibits 10.1, 10.3, 10.5, 10.7, 10.9, 10.11 and 10.13 hereto) with some of
its officers and directors which provide for their indemnification with respect
to certain matters. The Underwriting Agreement (Exhibit 1.1 hereto) also will
provide for cross-indemnification among the Registrant and the Underwriters
with respect to certain matters, including matters arising under the Securities
Act. The Registrant has purchased directors' and officers' liability insurance
for all of its directors and executive officers.
Item 15. Recent Sales of Unregistered Securities.
Since January 1, 1997, the Registrant has issued and sold (without payment
of any selling commission to any person) the following unregistered securities:
1. On November 1, 1999, the Registrant issued 80,000,000 shares of our
Class B common stock to GTI Acquisition Corp. in connection with a
recapitalization. These shares replaced the 1,000 shares of common stock
held by GTI Acquisition Corp. immediately prior to the recapitalization.
2. On November 1, 1999, the Registrant issued warrants to purchase a
total of 2,918,400 shares of Class A common stock at an exercise price of
$.50 per share to Seaview Holdings, L.L.C., a wholly-owned affiliate of
Jonathan N. Zakin.
3. On November 1, 1999, the Registrant issued warrants to purchase a
total of 1,451,600 shares of Class A common stock at an exercise price of
$.50 per share to The Michael and Roberta Seedman Revocable Trust, a trust
for which Michael Seedman is both trustee and a beneficiary.
4. From January 1, 2000 through April 30, 2000, the Registrant issued
3,841,351 shares of Class B common stock to WMC Holding Corp. for an
aggregate price of $1,992,175.50.
5. On March 24, 2000, the Registrant issued an aggregate of 692,772
shares of Class A common stock to the shareholders of Ubiquity
Communication, Inc. in connection with the Registrant's acquisition of
Ubiquity Communication, Inc.
All issuances set forth above were private placements, did not involve
public solicitation and were issued pursuant to Section 4(2) of the Securities
Act.
In addition, from January 1, 1997 through April 30, 2000, the Registrant
issued options to purchase an aggregate of 4,878,727 shares of Class A common
stock at a weighted average exercise price of $1.02 per share under the
Registrant's 1999 Western Multiplex Corporation Stock Incentive Plan and the
1997 Stock Option Plan, the 1998 Stock Plan and the 1999 Stock Plan of Ubiquity
Communication, Inc. which the Registrant assumed in connection with its
acquisition of Ubiquity Communication, Inc. All issuances of options described
in this paragraph were issued pursuant to Rule 701 under the Securities Act.
There were no underwriters employed in connection with any of the
transactions set forth in Item 15.
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits:
The following exhibits are filed pursuant to Item 601 of Regulation S-K.
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
----------- ----------------------
<C> <S>
1.1*** Form of Underwriting Agreement.
2.1** Amended and Restated Acquisition Agreement, dated as of September
30, 1999, by and among GTI Acquisition Corp., Glenayre
Technologies, Inc., the Registrant and WMC Holding Corp.
2.2** Amendment to Acquisition Agreement, dated as of October 31, 1999,
by and among GTI Acquisition Corp., Glenayre Technologies, Inc.,
the Registrant and WMC Holding Corp.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
----------- ----------------------
<C> <S>
3.1*** Amended and Restated Articles of Incorporation of the Registrant.
3.2*** Amended and Restated By-laws of the Registrant.
4.1*** Form of Registrant's Class A Common Stock Certificate.
4.2** Stockholders' Agreement, dated as of October 31, 1999, among
Western Multiplex Corporation, WMC Holding Corp., GTI Acquisition
Corp. and Glenayre Technologies, Inc.
5.1*** Opinion of Simpson Thacher & Bartlett as to the legality of the
common stock being registered.
10.1** Employment and Co-Investment Agreement, dated as of October 31,
1999, among Ripplewood Partners L.P., WMC Holding Corp., Seaview
Holdings L.L.C., the Registrant and Jonathan N. Zakin.
10.2** Co-Investment Agreement, dated as of October 31, 1999, among
Ripplewood Partners L.P., WMC Holding Corp., The Michael and
Roberta Seedman Revocable Trust, Michael Seedman and the
Registrant.
10.3** Employment Agreement, dated as of November 1, 1999, by and between
the Registrant and Amir Zoufonoun.
10.4** Subscription and Employee Stockholder's Agreement, dated as of
January 31, 2000, among WMC Holding Corp., the Registrant,
Ripplewood Partners, L.P. and Amir Zoufonoun.
10.5** Employment Agreement, dated as of February 16, 2000, by and
between the Registrant and Nancy Huber.
10.6** Subscription and Employee Stockholder's Agreement, dated as of
February 28, 2000, among WMC Holding Corp., the Registrant,
Ripplewood Partners, L.P. and Nancy Huber.
10.7** Employment Agreement, dated as of May 2, 2000, among the
Registrant and Fred Corsentino.
10.8** Subscription and Employee Stockholder's Agreement, dated as of
February 25, 2000, among WMC Holding Corp., the Registrant,
Ripplewood Partners, L.P. and Fred Corsentino.
10.9** Employment Agreement, dated March 27, 2000, by and between the
Registrant and Joseph Tavormina.
10.10** Subscription and Employee Stockholder's Agreement, dated as of
February 23, 2000, among WMC Holding Corp., the Registrant,
Ripplewood Partners, L.P. and Joseph Tavormina.
10.11** Employment Agreement, dated as of April 14, 2000 by and between
the Registrant and Hanan Cohen.
10.12** Subscription and Employee Stockholder's Agreement, dated as of
January 31, 2000, among WMC Holding Corp., the Registrant,
Ripplewood Partners, L.P. and Hanan Cohen.
10.13** Employment Agreement, dated as of February 28, 2000, by and
between the Registrant and John Saefke.
10.14** Subscription and Employee Stockholder's Agreement, dated as of
January 31, 2000; among WMC Holding Corp., Ripplewood Partners,
L.P. and John Saefke.
10.15** 1999 Western Multiplex Corporation Stock Incentive Plan.
10.16*** Western Multiplex Employee Stock Purchase Plan.
10.17*** Western Multiplex Corporation 2000 Stock Option Plan for Non-
Employee Directors.
10.18*** Stocking Distributor Agreement by and between the Registrant and
Somera Communications Inc.
10.19** Credit Agreement, dated as of November 1, 1999, among the
Registrant, Credit Suisse First Boston as Lead Arranger and as
Agent and the several financial institutions from time to time
party to the agreement.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
----------- ----------------------
<C> <S>
10.20** Assignment and Assumption Agreement, dated October 18, 1999,
between the Registrant and Glenayre Electronics, Inc., including
the Lease, dated July 1, 1996, between Glenayre Electronics, Inc.
and Yercaf N.V.
10.21** Lease, dated February 27, 1998, between Ubiquity Communication,
Inc. and G&W/Copley Redwood Business Park, L.P.
23.1** Consent of Independent Public Accountants.
23.2*** Consent of Simpson Thacher & Bartlett (contained in Exhibit 5.1).
24.1* Power of Attorney (included on signature page to the Registration
Statement).
27.1* Financial Data Schedule, December 31, 1999 and 1998.
</TABLE>
- --------
* Previously filed.
** Filed herewith.
*** To be filed by amendment.
(b) Financial statement schedules:
Schedule II--Valuation and Qualification Accounts and Reserves
Item 17. Undertakings.
(a) The undersigned Registrant hereby undertakes to the underwriters at the
closing specified in the underwriting agreement, certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
(b) Insofar as indemnification for liabilities arising under the Securities
Act 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.
(c) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
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, 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 the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement and any amendments thereto to be signed on
its behalf by the undersigned, thereunto duly authorized, on May 5, 2000.
Western Multiplex Corporation
*
By: _________________________________
Jonathan N. Zakin
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed on May 5, 2000 by the following persons
in the capacities indicated on May 5, 2000:
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
* Chairman, Chief Executive Officer and
___________________________________________ Director (Principal Executive Officer)
Jonathan N. Zakin
* Chief Financial Officer (Principal
___________________________________________ Financial Officer) and Vice President,
Nancy Huber Finance (Principal Accounting Officer)
* President, Chief Operating Officer and
___________________________________________ Director
Amir Zoufonoun
* Director
___________________________________________
Michael Seedman
* Director
___________________________________________
Timothy C. Collins
/s/ Jeffrey M. Hendren Director
___________________________________________
Jeffrey M. Hendren
</TABLE>
/s/ Jeffrey M. Hendren
*By: _________________________
Jeffrey M. Hendren
Attorney-in-Fact
II-5
<PAGE>
Report of Independent Public Accountants on Schedule II
To Western Multiplex Corporation:
We have audited in accordance with auditing standards generally accepted in
the United States, the financial statements of Western Multiplex (a Delaware
corporation) included in this registration statement and have issued our report
thereon dated March 15, 2000. Our audits were made for the purpose of forming
an opinion on the basic financial statements taken as a whole. The schedule
listed in 16(b) above is the responsibility of the Company's management, is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audits of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
/s/ Arthur Andersen LLP
San Jose, California
March 15, 2000
S-1
<PAGE>
Western Multiplex Corporation
Schedule II -- Valuation and Qualifying Accounts and Reserves
(in thousands)
<TABLE>
<CAPTION>
Balance at Additions Balance at
the Beginning of Charged to the End of
the Year Expense Deductions the Year
---------------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Allowance for doubtful
accounts
Year ended December 31,
1997...................... $100 $-- $ -- $100
Year ended December 31,
1998...................... 100 -- -- 100
Year ended December 31,
1999...................... 100 239 -- 339
</TABLE>
S-2
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<C> <S>
1.1*** Form of Underwriting Agreement.
2.1** Amended and Restated Acquisition Agreement, dated as of September
30, 1999, by and among GTI Acquisition Corp., Glenayre
Technologies, Inc., the Registrant and WMC Holding Corp.
2.2** Amendment to Acquisition Agreement, dated as of October 31, 1999,
by and among GTI Acquisition Corp., Glenayre Technologies, Inc.,
the Registrant and WMC Holding Corp.
3.1*** Amended and Restated Articles of Incorporation of the Registrant.
3.2*** Amended and Restated By-laws of the Registrant.
4.1*** Form of Registrant's Class A Common Stock Certificate.
4.2** Stockholders' Agreement, dated as of October 31, 1999, among
Western Multiplex Corporation, WMC Holding Corp., GTI Acquisition
Corp. and Glenayre Technologies, Inc.
5.1*** Opinion of Simpson Thacher & Bartlett as to the legality of the
common stock being registered.
10.1** Employment and Co-Investment Agreement, dated as of October 31,
1999, among Ripplewood Partners L.P., WMC Holding Corp., Seaview
Holdings L.L.C., the Registrant and Jonathan N. Zakin.
10.2** Co-Investment Agreement, dated as of October 31, 1999, among
Ripplewood Partners L.P., WMC Holding Corp., The Michael and
Roberta Seedman Revocable Trust, Michael Seedman and the
Registrant.
10.3** Employment Agreement, dated as of November 1, 1999, by and between
the Registrant and Amir Zoufonoun.
10.4** Subscription and Employee Stockholder's Agreement, dated as of
January 31, 2000, among WMC Holding Corp., the Registrant,
Ripplewood Partners, L.P. and Amir Zoufonoun.
10.5** Employment Agreement, dated as of February 16, 2000, by and
between the Registrant and Nancy Huber.
10.6** Subscription and Employee Stockholder's Agreement, dated as of
February 28, 2000, among WMC Holding Corp., the Registrant,
Ripplewood Partners, L.P. and Nancy Huber.
10.7** Employment Agreement, dated as of May 2, 2000, among the
Registrant and Fred Corsentino.
10.8** Subscription and Employee Stockholder's Agreement, dated as of
February 25, 2000, among WMC Holding Corp., the Registrant,
Ripplewood Partners, L.P. and Fred Corsentino.
10.9** Employment Agreement, dated March 27, 2000, by and between the
Registrant and Joseph Tavormina.
10.10** Subscription and Employee Stockholder's Agreement, dated as of
February 23, 2000, among WMC Holding Corp., the Registrant,
Ripplewood Partners, L.P. and Joseph Tavormina.
10.11** Employment Agreement, dated as of April 14, 2000 by and between
the Registrant and Hanan Cohen.
10.12** Subscription and Employee Stockholder's Agreement, dated as of
January 31, 2000, among WMC Holding Corp., the Registrant,
Ripplewood Partners, L.P. and Hanan Cohen.
10.13** Employment Agreement, dated as of February 28, 2000, by and
between the Registrant and John Saefke.
10.14** Subscription and Employee Stockholder's Agreement, dated as of
January 31, 2000; among WMC Holding Corp., the Registrant,
Ripplewood Partners, L.P. and John Saefke.
10.15** 1999 Western Multiplex Corporation Stock Incentive Plan.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<C> <S>
10.16*** Western Multiplex Employee Stock Purchase Plan.
10.17*** Western Multiplex Corporation 2000 Stock Option Plan for Non-
Employee Directors.
10.18*** Stocking Distributor Agreement by and between the Registrant and
Somera Communications Inc.
10.19** Credit Agreement, dated as of November 1, 1999, among the
Registrant, Credit Suisse First Boston as Lead Arranger and as
Agent and the several financial institutions from time to time
party to the agreement.
10.20** Assignment and Assumption Agreement, dated October 18, 1999,
between the Registrant and Glenayre Electronics, Inc., including
the Lease, dated July 1, 1996, between Glenayre Electronics, Inc.
and Yercaf N.V.
10.21** Lease, dated February 27, 1998, between Ubiquity Communication,
Inc. and G&W/Copley Redwood Business Park, L.P.
23.1** Consent of Independent Public Accountants.
23.2*** Consent of Simpson Thacher & Bartlett (contained in Exhibit 5.1).
24.1* Power of Attorney (included on signature page to the Registration
Statement).
27.1* Financial Data Schedule, December 31, 1999 and 1998.
</TABLE>
- --------
*Previously filed.
**Filed herewith.
***To be filed by amendment.
<PAGE>
EXHIBIT 2.1
AMENDED AND RESTATED ACQUISITION AGREEMENT
BY AND AMONG
GTI ACQUISITION CORP.,
GLENAYRE TECHNOLOGIES, INC.,
WESTERN MULTIPLEX CORPORATION, a California corporation,
WESTERN MULTIPLEX CORPORATION, a Delaware corporation,
AND
WMC HOLDING CORP.
As of September 30, 1999
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS AND CERTAIN RULES OF CONSTRUCTION . . . . . . . 2
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Certain Rules of Construction . . . . . . . . . . . . . . . . . . 8
ARTICLE 2
RECAPITALIZATION; PURCHASE AND SALE OF THE SHARES . . . . . . 8
2.1 Recapitalization; Purchase and Sale of Shares . . . . . . . . . . 8
2.2 The Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.3 Post-Closing Purchase Price Adjustment. . . . . . . . . . . . . . 10
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF GTI AND GLENAYRE. . . . . . 11
3.1 Organization and Qualification. . . . . . . . . . . . . . . . . . 11
3.2 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.3 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.4 No Conflict; Required Filings and Consents. . . . . . . . . . . . 15
3.5 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . 16
3.6 Subsequent Events . . . . . . . . . . . . . . . . . . . . . . . . 16
3.7 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.8 Employees and Fringe Benefit Plans. . . . . . . . . . . . . . . . 19
3.9 Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.10 Personal Property Leases. . . . . . . . . . . . . . . . . . . . . 24
3.11 Lawfully Operating. . . . . . . . . . . . . . . . . . . . . . . . 24
3.12 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.13 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.14 Bank Accounts and Depositories. . . . . . . . . . . . . . . . . . 26
3.15 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.16 Environmental Laws. . . . . . . . . . . . . . . . . . . . . . . . 26
3.17 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.18 Affiliations. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.19 Corporate Name. . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.20 Effect of Transaction . . . . . . . . . . . . . . . . . . . . . . 27
3.21 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.22 Suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.23 Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.24 Private Offering. . . . . . . . . . . . . . . . . . . . . . . . . 28
3.25 Year 2000 Compliance. . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER. . . . . . . . 29
4.1 Organization and Qualification . . . . . . . . . . . . . . . . . 29
4.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.3 No Conflict; Required Filings and Consents. . . . . . . . . . . . 29
4.4 No Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.5 Investment Representations. . . . . . . . . . . . . . . . . . . . 30
4.6 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
<PAGE>
ARTICLE 5
COVENANTS. . . . . . . . . . . . . . . 31
5.1 Covenants of Purchaser, GTI and Glenayre . . . . . . . . . . . . 31
5.2 Covenants of GTI and Glenayre . . . . . . . . . . . . . . . . . . 33
5.3 Covenants of Purchaser. . . . . . . . . . . . . . . . . . . . . . 36
5.4 Certain Benefit Plans . . . . . . . . . . . . . . . . . . . . . . 36
5.5 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.6 Maintenance of Records. . . . . . . . . . . . . . . . . . . . . . 42
5.7 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . 42
5.8 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . 42
5.9 Non-Compete; Non-Solicitation . . . . . . . . . . . . . . . . . 42
ARTICLE 6
CONDITIONS. . . . . . . . . . . . . . . 44
6.1 Conditions to Each Party's Obligation to Close the Transactions 44
6.2 Conditions to Obligations of GTI and Glenayre to Close the
Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . 44
6.3 Conditions to Obligation of Purchaser to Close the Transactions 45
ARTICLE 7
INDEMNIFICATION . . . . . . . . . . . . . 47
7.1 Indemnification by GTI and Glenayre . . . . . . . . . . . . . . . 47
7.2 Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
7.3 Definition of Loss or Losses. . . . . . . . . . . . . . . . . . . 48
7.4 Limitation of GTI's and Glenayre's Liability . . . . . . . . . . 49
7.5 Indemnification by Purchaser. . . . . . . . . . . . . . . . . . . 50
ARTICLE 8
TERMINATION . . . . . . . . . . . . . . 50
8.1 Termination by Mutual Consent . . . . . . . . . . . . . . . . . . 50
8.2 Termination by GTI, Glenayre or Purchaser . . . . . . . . . . . . 50
8.3 Termination by GTI and Glenayre . . . . . . . . . . . . . . . . . 51
8.4 Termination by Purchaser. . . . . . . . . . . . . . . . . . . . . 51
8.5 Effect of Termination and Abandonment . . . . . . . . . . . . . . 51
8.6 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE 9
GENERAL PROVISIONS. . . . . . . . . . . . . 52
9.1 Effectiveness of Representations, Warranties and Covenants. . . . 52
9.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
9.3 Assignment; Binding Effect; Benefit . . . . . . . . . . . . . . . 54
9.4 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . 55
9.5 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
9.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 55
9.7 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . 55
9.8 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . 55
<PAGE>
EXHIBIT 2.1
AMENDED AND RESTATED ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT (this "Agreement") is executed as of
September 30, 1999 by and among GTI ACQUISITION CORP., a Delaware corporation
("Glenayre"); GLENAYRE TECHNOLOGIES, INC., a Delaware corporation ("GTI");
WESTERN MULTIPLEX CORPORATION, a California corporation ("WMC" or "WMC
California"); WESTERN MULTIPLEX CORPORATION, a Delaware corporation ("WMC
Delaware"); and WMC HOLDING CORP., a Delaware corporation ("Purchaser").
STATEMENT OF PURPOSE
Glenayre, a wholly-owned subsidiary of GTI, owns all of the issued
and outstanding capital stock of WMC Delaware, which consists of 80,000,000
shares of Class B Common Stock, par value $.01 per share (the "WMC Delaware
Class B Common Stock").
The parties desire that WMC enter into (i) two term loan facilities
(collectively, the "Term Facilities") under which WMC will borrow the
aggregate principal amount of $22,000,000 (the "Term Borrowing") and (ii) a
$10 million revolving credit facility (the "Revolving Facility") under which
WMC will draw down $2 million at the Closing (the "Drawdown"), in each case
with certain providers of financing arranged by Purchaser and on
substantially the terms set forth in the commitment letter attached as
Exhibit 1 to this Agreement (the "Commitment Letter").
The proceeds from the Term Borrowing shall be used by WMC to redeem
from Glenayre 42,000,000 shares of WMC Delaware Class B Common Stock (the
"Redeemed Shares") for $21,000,000, as a result of which Glenayre shall
continue to hold 38,000,000 shares of WMC Delaware Class B Common Stock
immediately after such redemption (the "Redemption").
Immediately after the Redemption, Glenayre desires to sell to
Purchaser, and Purchaser desires to purchase from Glenayre, 35,955,000 shares
of WMC Delaware Class B Common Stock (the "Purchased Common Shares") on the
terms and subject to the conditions set forth herein, as a result of which
Glenayre shall continue to hold 2,045,000 shares of WMC Delaware Class B
Common Stock (the "Retained Shares").
NOW, THEREFORE, in consideration of the Statement of Purpose and of
the mutual agreements contained herein, the parties hereto do hereby agree as
follows:
<PAGE>
ARTICLE 1
DEFINITIONS AND CERTAIN RULES OF CONSTRUCTION
1.1 Definitions. In addition to any other terms defined elsewhere
in this Agreement, including any Schedule or Exhibit hereto (unless such
Schedule or Exhibit provides for a different definition), as used herein, the
following terms shall have the following meanings:
"Affiliate" means, with respect to any Person, any other Person
that directly or indirectly, through one or more intermediaries, controls or
is controlled by or under common control with, such first Person.
"Assignment" means the Intellectual Property Assignment in the form
of Exhibit 2 to this Agreement.
"Balance Sheet" is defined in Section 3.9(b).
"Blue Sky Laws" means state securities Laws or "blue sky" Laws.
"Business" means all components of and activities related to the
research and development, design, manufacture, marketing, distribution,
servicing and sale of products and equipment, whether in existence or in
development, relating to atmospheric optical (excluding any short-range
communications to a mobile device -e.g., IRDA port communications), microwave
(i.e., carrier frequencies between 1 GHZ and 30 GHZ) and millimeter wave
(i.e., carrier frequencies between 30 GHZ and 300 GHZ) communications
(including unlicensed spread spectrum radio; licensed microwave and
millimeter wave radio, as defined above; and wireless ethernet bridges) and
providing only fixed point-to-point or fixed point to multipoint types of
services, specifically excluding all businesses and related products that are
capable of providing service as a mobile device or to a mobile device, as
carried on by WMC as of the Closing Date or, for purposes of Section 5.9,
during the term of Section 5.9, in all cities, counties, states and countries
in which the business of WMC is now or then being conducted or its products
are now or then being sold.
"Business Day" means any day other than a Saturday, Sunday or legal
holiday in the State of North Carolina or the State of New York.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act, as amended.
"CGCL" means the California General Corporation Law.
"Change in Control," with respect to GTI, means any of the
following:
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(1) the acquisition, directly or indirectly after the Closing
Date, in one or a series of transactions, of 25% or more of GTI's common
stock by any "person" as that term is defined in Section 13(d)(3) of the
Exchange Act (other than an Affiliate of GTI), provided the Board of
Directors of GTI is not opposing such acquisition in a Schedule 14D-9 or
otherwise (for this purpose, if the Board of Directors of GTI initially
opposes such an acquisition but later withdraws its opposition to or
approves, in any manner whatsoever, such acquisition, then such
acquisition shall not be considered to be opposed by the Board of
Directors of GTI for purposes of this proviso);
(2) the consummation of a merger, consolidation, share exchange or
similar transaction of GTI with any other Person, as a result of which
the holders of the voting capital stock of GTI as a group would receive
less than 50% of the voting capital stock of the surviving or resulting
corporation; or
(3) the consummation of an agreement providing for the sale or
transfer (other than as security for obligations of GTI) of
substantially all the assets of GTI to a Person who is not an Affiliate
of GTI.
"Closing" means the consummation of the Transactions.
"Closing Balance Sheet" is defined in Section 2.3(a).
"Closing Date" means the date on which the Closing occurs, which
shall be effective at the close of business on such date.
"Closing Net Worth" means, as of the Closing Date, the excess of
the assets of WMC over the liabilities of WMC determined in accordance with
GAAP (except as otherwise specified in the following sentence), all as shown
on the Closing Balance Sheet (as prepared in accordance with the provisions
of Section 2.3(a)). In determining assets and liabilities hereunder, (i) all
accounting entries shall be taken into account and all known errors and
omissions shall be corrected, in each case to the extent required by GAAP,
(ii) all adjustments (including adjustments for reserves) and
reclassifications required by GAAP shall be made except that no purchase
accounting adjustments arising out of the Transactions shall be made, (iii)
all adjustments to tax assets or tax liabilities that arise due to the
Section 338(h)(10) Election will be excluded, (iv) all tax liabilities for
which GTI is responsible pursuant to Section 5.5 will be excluded, (v) all
intercompany receivables and payables shall be eliminated pursuant to Section
5.2(k), (vi) no effect shall be given to the Transactions or the Financing
and (vii) goodwill shall be eliminated.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Contract" shall mean any contract, instrument, lease, license,
indenture, agreement, option, commitment or other legally binding
arrangement.
"Customer Liens" means warehousemen's or other statutory liens of
which neither of WMC, GTI or Glenayre has actual Knowledge and which have
arisen in the course of (i) WMC loaning inventory (A) to customers while that
customer's equipment is being repaired, (B) to customers or potential
customers as demonstration units, and (C) to WMC's sales representatives as
consignment inventory ((A), (B), (C), collectively, the "Loaned Inventory"),
and (ii) WMC renting Inventory on a temporary basis (the "Rented Inventory").
"Deficiency" shall mean the amount, if any, by which the Closing
Net Worth is less than $12,505,000 as set forth on the Closing Balance Sheet.
"Disclosure Schedules" means the Disclosure Schedules dated the
date of this Agreement and delivered contemporaneously herewith.
"Environmental Laws" means all federal, state, local and foreign
laws, statutes, regulations, ordinances, decrees, judgments or orders and all
common law concerning public health or safety, worker health or safety, or
pollution or protection of the environment, as the foregoing are enacted or
in effect prior to the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"Estimated Closing Net Worth" shall mean the Closing Net Worth as
estimated by GTI in good faith and notified by GTI to Purchaser three
Business Days before the Closing. The Estimated Closing Net Worth can be
represented by a positive or negative number.
"Estimated Deficiency" shall mean the amount, if any, by which the
Estimated Closing Net Worth is less than $12,505,000.
"Estimated Excess" shall mean the amount, if any, by which the
Estimated Closing Net Worth is more than $12,505,000.
"Estimated Purchase Price" is defined in Section 2.1(d).
"Excess" shall mean the amount, if any, by which the Closing Net
Worth is more than $12,505,000 as set forth on the Closing Balance Sheet.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Financial Statements" is defined in Section 3.5.
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"Financing" means the financing required to consummate the
Transactions.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board.
"Glenayre Additional Agreement" is defined in Section 3.3(a).
"Glenayre Electronics" means Glenayre Electronics, Inc., a Colorado
corporation and a wholly-owned subsidiary of GTI.
"Glenayre Electronics Agreements" is defined in Section 3.3(c).
"Glenayre Indemnified Parties" means GTI, Glenayre, Glenayre
Electronics and their respective officers, directors, Affiliates, successors,
permitted assigns and the officers, directors, partners and members of their
respective Affiliates.
"Governmental Authority" means any foreign, federal, state or local
government, political subdivision or governmental or regulatory authority,
agency, board, bureau, commission, instrumentality or court or
quasi-governmental authority.
"GTI Additional Agreements" is defined in Section 3.3(b).
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and all the rules and regulations promulgated thereunder.
"Hazardous Substance" means any material, substance or waste as to
which liability or standards of conduct may be imposed pursuant to
Environmental Laws.
"Indemnity Claim" is defined in Section 7.2(a).
"Knowledge," "Know" or "Known", with respect to matters covered by
a representation, warranty or covenant set forth in this Agreement, means the
current actual knowledge (after inquiry) of the individuals identified on
Schedule 1.1(a) of the Disclosure Schedules as having such Knowledge.
"Law" or "Laws" means any and all statutes, laws, regulations,
ordinances, orders, judgments, decrees and rules of any Governmental
Authority, in each case as amended and in effect from time to time.
"Leases" is defined in Section 3.9(a).
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"License Agreement" means the Intellectual Property License between
Glenayre Electronics and WMC substantially in the form of Exhibit 3 to this
Agreement.
"Liens" means all liens, claims, options, charges, restrictions,
security interests or encumbrances of any kind or defects in title of any
nature whatsoever.
"Loss" or "Losses" is defined in Section 7.3.
"NDA" is defined in Section 9.4.
"Notice of Claim" is defined in Section 7.2(a).
"Old WMC California Shares" is defined in Section 3.2(b).
"Outstanding Tax Claims" means (i) the tax assessment by the State
of Illinois for additional sales tax owed by WMC (which matter is currently
pending before the Illinois Department of Revenue Board of Appeals), (ii) the
Internal Revenue Service demand for the late payment by WMC of employment
taxes due for March 31, 1998, and (iii) the Internal Revenue Service demand
for the late payment by WMC of employment taxes due for March 31, 1999.
"Permitted Liens" means the following:
(1) Liens for ad valorem Taxes not yet due and payable;
(2) mechanics', materialmen's, warehousemen's, carriers' and other
similar Liens which are incurred in the ordinary course of the Business for
amounts which are not delinquent and which are not, individually or in the
aggregate, material to the operation of the Business;
(3) any Liens set forth on Schedule 1.1(b) of the Disclosure
Schedules; and
(4) all minor irregularities, encumbrances, rights-of-way and
other defects of title which do not materially interfere with the present use
of WMC's assets or the Business.
"Person" means an individual, corporation, partnership, limited
liability company, trust, association or other entity, including any
Governmental Authority.
"Purchased Common Shares" is defined in the Statement of Purpose of
this Agreement.
"Purchaser Additional Agreements" is defined in Section 4.2.
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"Purchaser Indemnified Parties" means Purchaser, WMC and their
respective officers, directors, Affiliates, successors and permitted assigns
and the officers, directors, partners and members of their respective
Affiliates.
"Purchase Price" is defined in Section 2.1(d).
"Redeemed Shares" is defined in the Statement of Purpose of this
Agreement.
"Redemption" is defined in the Statement of Purpose of this
Agreement.
"Redemption Price" is defined in Section 2.1(b).
"Retained Shares" is defined in the Statement of Purpose of this
Agreement.
"Section 338(h)(10) Election" is defined in Section 5.5(i).
"Securities Act" means the Securities Act of 1933, as amended.
"Stockholders' Agreement" means the Stockholders' Agreement among
Glenayre, GTI, WMC Delaware and Purchaser substantially in the form of
Exhibit 4 to this Agreement.
"Sunnyvale Lease" means the lease for the Sunnyvale, California
facility operated by WMC.
"Tax" or "Taxes" means any foreign, federal, state or local income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental, customs duties, capital
stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated
or other tax, including any interest, penalty or addition thereto, and any
liability for payment of any of the foregoing as a result of any obligation
to indemnify or otherwise assume or succeed to the liability of another
Person.
"Tax Period" or "Taxable Period" means any period prescribed by any
Governmental Authority, including the United States or any state, local or
foreign government or subdivision thereof, for which a Tax Return is required
to be filed or Tax is required to be paid.
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"Tax Return" means any return, report or information return
required to be filed with any taxing authority with respect to Taxes,
including any amendment thereof.
"Transactions" means the Redemption and the purchase of the
Purchased Common Shares by Purchaser from Glenayre pursuant to the terms of
this Agreement.
"Transition Services Agreement" means the Transition Services
Agreement between GTI and Purchaser in the form of Exhibit 5 hereto.
"Treasury Regulation" means United States Treasury Regulations
promulgated under the Code.
"WMC" or "WMC California" shall mean Western Multiplex Corporation,
a California corporation, and its successors.
"WMC Additional Agreements" is defined in Section 3.3(d).
"WMC Class B Common Stock" means the Class B Common Stock of WMC
Delaware, par value $.01 per share.
"WMC Delaware' shall mean Western Multiplex Corporation, a Delaware
corporation, and its successors.
"WMC Material Adverse Effect" means any change or effect that
(individually or in the aggregate) is or would reasonably be expected to be
materially adverse to the business, operations, results of operations or
condition (financial or otherwise) of WMC taken as a whole, excluding any
changes or effects (1) caused by changes in general economic conditions or
changes generally affecting WMC's industry and not only WMC, (2) reserved for
on the Balance Sheet or, for purposes of Article 7, to be reserved for on
the Closing Balance Sheet, or (3) caused by the Financing.
"WMC Sub" means Western Multiplex International Sales Corporation,
a former interest-charge domestic international sales corporation
incorporated under the Laws of California and a wholly-owned subsidiary of
WMC.
1.2 Certain Rules of Construction. The captions in this Agreement
are for convenience of reference only and in no way define, limit or describe
the scope or intent of any provisions or sections of this Agreement. All
references in this Agreement to Articles or Sections are references to the
Articles or Sections in this Agreement, unless some other reference is clearly
indicated. All accounting terms not specifically defined in this Agreement
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shall be construed in accordance with GAAP. In this Agreement, unless the
context otherwise requires, (1) words describing the singular number shall
include the plural and vice versa, (2) words denoting any gender shall include
all genders and (3) references to "includes" or "including" shall mean
"includes without limitation" or "including without limitation," as applicable,
and (4) "or" is not exclusive.
ARTICLE 2
RECAPITALIZATION; PURCHASE AND SALE OF THE SHARES
2.1 Recapitalization; Purchase and Sale of Shares. At the Closing
and on the terms and subject to the conditions set forth herein, the
following transactions shall be effected:
(a) WMC Delaware shall enter into the Term Facilities and the
Revolving Facility and make the Term Borrowing and the Drawdown.
(b) WMC Delaware shall effect the Redemption for $21,000,000 (the
"Redemption Price"), payable by wire transfer of immediately available funds
to an account designated by Glenayre (such designation to be not less than
two Business Days before the Closing Date). The Redeemed Shares shall be
assigned, transferred and delivered by Glenayre to WMC Delaware upon
redemption free and clear of all Liens.
(c) Glenayre shall sell, transfer, convey and assign to Purchaser,
free and clear of all Liens (other than Liens imposed as a result of actions
by Purchaser and restrictions on transferability imposed by federal and state
securities Laws), and Purchaser shall purchase from Glenayre, all of the
Purchased Common Shares. Purchaser shall pay all transfer Taxes resulting
from the transfer of the Purchased Common Shares to Purchaser.
(d) In consideration for the Purchased Common Shares, and as
payment of the purchase price therefor, Purchaser shall pay to Glenayre, by
wire transfer in immediately available funds to an account designated by
Glenayre (such designation to be not less than two Business Days before the
Closing Date), the sum of $17,977,500, plus the Estimated Excess or minus the
Estimated Deficiency, as the case may be (the "Estimated Purchase Price"),
subject to further adjustment in accordance with Section 2.3 (as so adjusted,
the "Purchase Price").
2.2 The Closing.
(a) The Closing shall be held at the offices of Simpson Thacher &
Bartlett, 3373 Hillview Avenue, Palo Alto, California (or at such other place
as the parties may agree) at 10:00 a.m., local time, (1) as promptly as
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practicable (and in any event within two Business Days) following the day on
which all of the conditions set forth in Article 6 (other than conditions
that by their terms are to be satisfied at the Closing) shall be fulfilled or
waived in accordance herewith or (2) at such other time, date or place as
Glenayre and Purchaser may agree.
(b) At the Closing:
(1) WMC Delaware shall execute the agreements and notes
relating to the Term Facilities and the Revolving Facility and make the
Term Borrowing and the Drawdown.
(2) WMC Delaware shall pay to Glenayre the Redemption Price
as set forth in Section 2.1(b), and Glenayre shall deliver to WMC
Delaware certificates for all of the Redeemed Shares, together with
accompanying stock powers duly endorsed in blank.
(3) Glenayre shall deliver to Purchaser (i) certificates for
all of the Purchased Common Shares, together with accompanying stock
powers duly endorsed in blank, (ii) the certificate referred to in
Section 6.3(a), (iii) the consents referred to in Section 6.3(b), (iv)
the assignment of the Sunnyvale Lease from Glenayre Electronics to WMC,
(v) certified copies of all resolutions adopted by the Board of
Directors of Glenayre, GTI and/or Glenayre Electronics authorizing (as
applicable) the execution, delivery and performance of this Agreement,
the GTI Additional Agreements, the Glenayre Additional Agreement and the
Glenayre Electronics Agreements and the Transactions, (vi) the
resignations of the officers and directors of WMC listed on Schedule 2.2
of the Disclosure Schedules, (vii) the Transition Services Agreement,
duly executed by GTI, (viii) the Stockholders' Agreement, duly executed
by GTI, Glenayre and WMC Delaware, (ix) the License Agreement, duly
executed by Glenayre Electronics and WMC and (x) the Assignment, duly
executed by Glenayre Electronics and WMC.
(4) Purchaser shall (i) pay to Glenayre the Estimated
Purchase Price as provided in Section 2.1(d), (ii) deliver to Glenayre
the certificate referred to in Section 6.2(a), (iii) deliver to Glenayre
certified copies of resolutions adopted by the Board of Directors of
Purchaser authorizing the execution, delivery and performance of this
Agreement and the Purchaser Additional Agreements and the Transactions
and (iv) deliver to Glenayre the Stockholders' Agreement and the
Transition Services Agreement, duly executed by Purchaser.
2.3 Post-Closing Purchase Price Adjustment.
(a) Within 45 days following the Closing Date, Purchaser shall
deliver to Glenayre a consolidated balance sheet of WMC prepared by Purchaser
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(in its final and binding form, the "Closing Balance Sheet") setting forth
the Closing Net Worth as of the close of business on the Closing Date. A
physical inventory shall be conducted by WMC consistent with past practice on
or after the Closing Date for the purpose of preparing the Closing Balance
Sheet, and each of Glenayre and Purchaser and their respective independent
auditors shall have the right to observe the taking of such physical
inventory. Any costs or expenses incurred by WMC in connection with such
taking of physical inventory shall be borne by WMC. The Closing Balance
Sheet shall include all known adjustments required in a year-end closing of
the books (to the extent required by GAAP) and, except as otherwise provided
in the definition of "Closing Net Worth," shall be prepared in accordance
with GAAP applied consistently with the accounting principles, policies and
methodologies used in the preparation of the balance sheet as of December 31,
1998 included in the Financial Statements (to the extent prepared in
accordance with GAAP except as otherwise provided in the definition of
"Closing Net Worth"). During the 20-day period immediately following
Glenayre's receipt of the proposed Closing Balance Sheet, Glenayre and its
representatives shall be permitted to review Purchaser's (and, subject to
execution of customary indemnities, its accountants') working papers related
to the preparation of the Closing Balance Sheet and determination of the
Closing Net Worth. The proposed Closing Balance Sheet shall become final and
binding upon the parties 20 days following Glenayre's receipt thereof, unless
Glenayre shall give written notice of its disagreement (a "Notice of
Disagreement") to Purchaser prior to such date. Any Notice of Disagreement
shall specify in reasonable detail the nature and dollar amount of any
disagreement so asserted. If a timely Notice of Disagreement is received by
Purchaser, then the Closing Balance Sheet (as revised in accordance with
clause (x) or (y) below) shall become final and binding upon the parties on
the earliest of (x) the date the parties resolve in writing any differences
they have with respect to the matters specified in the Notice of Disagreement
or (y) the date all matters in dispute are finally resolved in writing by the
Accounting Firm (as defined below). During the 20 days following delivery of
a Notice of Disagreement, the parties shall seek in good faith to resolve in
writing any differences which they may have with respect to the matters
specified in the Notice of Disagreement. During such period, Purchaser and
its representatives shall be permitted to review Glenayre's (and, subject to
execution of customary indemnities, its accountants') working papers relating
to the Notice of Disagreement. At the end of such 20-day period, the parties
shall submit to PricewaterhouseCoopers L.L.P. (the "Accounting Firm") for
review and resolution of all matters which remain in dispute and which were
properly included in the Notice of Disagreement and the Accounting Firm
shall make a final determination of the Closing Net Worth and the Purchase
Price in accordance with the guidelines and procedures set forth in this
Agreement. The Closing Balance Sheet and the determination of Closing Net
Worth shall become final and binding on the parties on the date the
Accounting Firm delivers its final resolution in writing to the parties
(which final resolution shall be delivered not more than 45 days following
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submission of such disputed matters). The parties agree that judgment may be
entered upon the determination of the Accounting Firm in any court having
jurisdiction over the party against which such determination is to be
entered. The fees and expenses of the Accounting Firm shall be borne by
Purchaser and Glenayre in inverse proportion as they may prevail on matters
resolved by the Accounting Firm, which proportionate allocations shall also
be determined by the Accounting Firm at the time the determination of the
Accounting Firm is rendered on the merits of the matters submitted.
(b) Within three Business Days after the Closing Balance Sheet
becomes final and binding on the parties, Glenayre shall pay to Purchaser or
Purchaser shall pay to Glenayre, as applicable, an amount sufficient to
further adjust the Estimated Purchase Price (up or down as the case may be)
to the amount that would have been paid if the Estimated Excess or Estimated
Deficiency had been equal to the Excess or Deficiency, together with interest
on the amount of such adjustment at a rate equal to the rate of interest from
time to time announced publicly by The Chase Manhattan Bank as its prime
rate, calculated on the basis of the actual number of days elapsed over 365,
from the Closing Date to the date of payment, by wire transfer to Purchaser
or Glenayre, as applicable. Any such payment shall be treated as an increase
or decrease in the Purchase Price (as the case may be) or an adjustment to
the number of Purchased Common Shares in accordance with Section 5.1(g).
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF GTI AND GLENAYRE
GTI and Glenayre hereby represent and warrant to Purchaser that:
3.1 Organization and Qualification. WMC is a corporation duly
organized, validly existing and in good standing under the Laws of the State
of California and has the requisite corporate power and authority to own,
lease and operate its properties, to carry on the Business, to enter into
this Agreement and the WMC Additional Agreements and to consummate the
Transactions. WMC is duly qualified or licensed as a foreign corporation to
do business, and is in good standing, in each jurisdiction where the failure
to be so qualified or licensed would have a WMC Material Adverse Effect. WMC
Delaware is a corporation duly organized, validly existing and in good
standing under the Laws of the State of Delaware and has the requisite
corporate power and authority to own, lease and operate its properties, to
enter into this Agreement and the Stockholders' Agreement and to consummate
the Transactions. WMC Delaware is not qualified or licensed as a foreign
corporation.
3.2 Capitalization. (a) The authorized capital stock of WMC
Delaware consists of 200,000,000 shares of common stock of WMC, consisting of
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100,000,000 shares of Class A Common Stock, par value $.01 per share and
100,000,000 shares of WMC Delaware Class B Common Stock, of which only
80,000,000 Shares of WMC Delaware Class B Common Stock are issued and
outstanding. No shares of Class A Common Stock have been issued. All of the
issued and outstanding shares of WMC Delaware Class B Common Stock have been,
and all of the Redeemed Shares, Purchased Common Shares and Retained Shares
will be, duly authorized and validly issued, are or will be fully paid and
nonassessable, are not or will not be subject to or issued in violation of
any purchase option, call option, right of first refusal, preemptive right,
subscription right or any similar right under any provision of the General
Corporation Law of the State of Delaware, the Articles of Incorporation or
Bylaws of WMC Delaware or any Contract to which WMC Delaware is a party or
otherwise bound and are or will be owned by Glenayre, free and clear of any
Liens except for this Agreement and the Stockholders' Agreement and the
restrictions on transferability imposed by federal and state securities Laws.
Immediately prior to the Closing, Glenayre will be the owner beneficially
and of record of, and have good and valid title to, all the Redeemed Shares,
the Purchased Common Shares and the Retained Shares, and immediately after
the Closing, Glenayre will be the owner beneficially and of record of all the
Retained Shares, in each case free and clear of any Liens, except for the
restrictions on transferability imposed by federal and state securities Laws
and the Stockholders' Agreement. Assuming Purchaser has the requisite power
and authority to be the lawful owner of the Purchased Common Shares, upon
delivery to Purchaser at the Closing of certificates representing the
Purchased Common Shares, duly endorsed by Glenayre for transfer to Purchaser,
and upon Glenayre's receipt of the Purchase Price, good and valid title to
the Purchased Common Shares will pass to Purchaser, free and clear of any
Liens other than those arising from acts of Purchaser or its Affiliates, the
restrictions on transferability imposed by federal and state securities Laws
and the Stockholders' Agreement. Other than this Agreement and upon its
execution the Stockholders' Agreement, the issued and outstanding shares of
WMC Delaware Class B Common Stock, Retained Shares, Redeemed Shares and
Purchased Common Shares are not and will not be subject to any voting trust
agreement or other Contract, including any Contract restricting or otherwise
relating to the voting, dividend rights or disposition of the shares of WMC
Delaware Class B Common Stock, Retained Shares, Redeemed Shares and Purchased
Common Shares. Immediately after the Closing, except for the Purchased
Common Shares and the Retained Shares or any other shares of capital stock of
WMC Delaware which Purchaser causes WMC Delaware to reserve for issuance
(including any such shares issued or reserved for issuance to employees of
WMC Delaware or WMC in connection with or immediately after the Closing),
there will be no shares of capital stock or other equity securities of WMC
Delaware issued, outstanding or reserved for issuance. There are no bonds,
debentures, notes or other indebtedness of WMC Delaware having the right to
vote (or convertible into, or exchangeable for, securities having the right
to vote) on any matters on which holders of WMC Delaware common stock may
vote ("Voting Company Debt"). Except as set forth above, there are no
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options, warrants, rights, convertible or exchangeable securities, "phantom"
stock rights, stock appreciation rights, stock-based performance units, or
Contract of any kind to which WMC Delaware is a party or by which either of
them is bound (i) obligating WMC Delaware to issue, deliver or sell, or cause
to be issued, delivered or sold, additional shares of capital stock or other
equity interests in, or any security convertible or exercisable for or
exchangeable into any capital stock of or other equity interest in, WMC
Delaware or any Voting Company Debt, (ii) obligating WMC Delaware to issue,
grant, extend or enter into any such option, warrant, call, right, security
or Contract or (iii) that give any Person the right to receive any economic
benefit or right similar to or derived from the economic benefits and rights
accruing to holders of WMC Delaware common stock. Other than this Agreement,
there are no outstanding contractual obligations of WMC Delaware to
repurchase, redeem or otherwise acquire any shares of capital stock of WMC
Delaware. WMC Delaware does not own directly or indirectly any interest or
investment in any other Person except for WMC, and WMC Delaware does not have
any obligation to make any additional investments in any Person. Except as
contemplated by this Agreement, since the date of its incorporation, WMC
Delaware has not conducted any business, owned any assets (other than Old WMC
California Shares) or incurred or assumed any liabilities.
(b) The authorized capital stock of WMC consists of 25,000,000
shares of common stock of WMC, of which only 1,000 shares are issued and
outstanding (the "Old WMC California Shares"). All of the Old WMC California
Shares have been duly authorized and validly issued, are fully paid and
nonassessable, are not subject to or issued in violation of any purchase
option, call option, right of first refusal, preemptive right, subscription
right or any similar right under any provision of the CGCL, the Articles of
Incorporation or Bylaws of WMC or any Contract to which WMC is a party or
otherwise bound and are owned by WMC Delaware, free and clear of any Liens.
The Old WMC California Shares are not and will not be subject to any voting
trust agreement or other Contract, including any Contract restricting or
otherwise relating to the voting, dividend rights or disposition of the Old
WMC California Shares. Immediately after the Closing, there will be no
shares of capital stock or other equity securities of WMC California issued,
outstanding or reserved for issuance. There are no bonds, debentures, notes
or other indebtedness of WMC having the right to vote (or convertible into,
or exchangeable for, securities having the right to vote) on any matters on
which holders of WMC common stock may vote ("WMC Voting Debt"). Except as
set forth above, there are no options, warrants, rights, convertible or
exchangeable securities, "phantom" stock rights, stock appreciation rights,
stock-based performance units, or Contract of any kind to which WMC is a
party or by which either of them is bound (i) obligating WMC to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares
of capital stock or other equity interests in, or any security convertible or
exercisable for or exchangeable into any capital stock of or other equity
interest in, WMC or any WMC Voting Debt, (ii) obligating WMC to issue, grant,
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extend or enter into any such option, warrant, call, right, security or
Contract or (iii) that give any Person the right to receive any economic
benefit or right similar to or derived from the economic benefits and rights
accruing to holders of WMC common stock. There are no outstanding contractual
obligations of WMC to repurchase, redeem or otherwise acquire any shares of
capital stock of WMC. WMC does not own directly or indirectly any interest
or investment in any other Person except for WMC's ownership of shares in a
mutual insurance company through its payment of premiums in the ordinary
course of business, and WMC does not have any obligation to make any
additional investments in any Person.
3.3 Authorization.
(a) Glenayre has all necessary corporate power and authority to
execute and deliver this Agreement and the Stockholders' Agreement (the
"Glenayre Additional Agreement") and to perform its obligations hereunder and
thereunder and to consummate the Transactions. The execution and delivery of
this Agreement and the Glenayre Additional Agreement by Glenayre and the
consummation by it of the Transactions have been duly and validly authorized
by all necessary corporate action on the part of Glenayre. This Agreement
has been duly and validly executed and delivered by Glenayre and as of the
Closing it will have duly executed and delivered the Glenayre Additional
Agreement and, assuming the due authorization, execution and delivery of this
Agreement and the Glenayre Additional Agreement by Purchaser, this Agreement
constitutes, and the Glenayre Additional Agreement when executed will
constitute, a legal, valid and binding obligation of Glenayre enforceable
against it in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, reorganization, insolvency, moratorium or
similar Laws affecting creditors' rights generally and by such principles of
equity as may affect the availability of equitable remedies.
(b) GTI has all necessary corporate power and authority to execute
and deliver this Agreement and the Stockholders' Agreement and the Transition
Services Agreement (the "GTI Additional Agreements") and to perform its
obligations hereunder and thereunder and to consummate the Transactions. The
execution, delivery and performance of this Agreement and the GTI Additional
Agreements by GTI and the consummation by it of the Transactions have been
duly and validly authorized by all necessary corporate action on the part of
GTI. This Agreement has been duly and validly executed and delivered by GTI
and as of the Closing it will have executed and delivered and the GTI
Additional Agreements and, assuming the due authorization, execution and
delivery of this Agreement and the GTI Additional Agreements by Purchaser,
this Agreement constitutes, and the GTI Additional Agreements when executed
will constitute, a legal, valid and binding obligation of GTI enforceable
against it in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, reorganization, insolvency, moratorium or
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similar Laws affecting creditors' rights generally and by such principles of
equity as may affect the availability of equitable remedies.
(c) Glenayre Electronics has all necessary corporate power and
authority to execute and deliver the License Agreement and the Assignment
(the "Glenayre Electronics Agreements") and to perform its obligations
thereunder. The execution, delivery and performance of the Glenayre
Electronics Agreements by Glenayre Electronics have been duly and validly
authorized by all necessary corporate action on the part of Glenayre
Electronics. As of the Closing Glenayre Electronics will have executed the
Glenayre Electronics Agreements and assuming the due authorization, execution
and delivery of the Glenayre Electronics Agreements (as applicable) by
Purchaser, each of the Glenayre Electronics Agreements when executed will
constitute a legal, valid and binding obligation of Glenayre Electronics
enforceable against it in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency and other
similar Laws affecting creditors' rights generally and by such principles of
equity as may affect the availability of equitable remedies.
(d) WMC has all necessary corporate power and authority to execute
and deliver this Agreement, the License Agreement and the Assignment (the
"WMC Additional Agreements") and to perform its obligations hereunder and
thereunder. The execution, delivery and performance of this Agreement and the
WMC Additional Agreements by WMC have been duly and validly authorized by all
necessary corporate action on the part of WMC. This Agreement has been duly
and validly executed and delivered by WMC and as of the Closing it will have
duly executed and delivered each of the WMC Additional Agreements, and,
assuming the due authorization, execution and delivery of this Agreement and
the WMC Additional Agreements (as applicable) by Purchaser, this Agreement
constitutes, and each of the WMC Additional Agreements when executed will
constitute, a legal, valid and binding obligation of WMC enforceable against
it in accordance with its terms, except as such enforceability may be limited
by applicable bankruptcy, reorganization, insolvency, moratorium or similar
Laws affecting creditors' rights generally and by such principles of equity
as may affect the availability of equitable remedies.
(e) WMC Delaware has all necessary corporate power and authority
to execute and deliver this Agreement and the Stockholders' Agreement (the
"WMC Delaware Additional Agreements") and to perform its obligations
hereunder and thereunder and to consummate the Transactions. The execution,
delivery and performance of this Agreement and the WMC Delaware Additional
Agreements by WMC Delaware and the consummation by it of the Transactions
have been duly and validly authorized by all necessary corporate action on
the part of WMC Delaware. This Agreement has been duly and validly executed
and delivered by WMC Delaware and as of the Closing it will have duly
executed and delivered each of the WMC Delaware Additional Agreements, and,
assuming the due authorization, execution and delivery of this Agreement and
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the WMC Delaware Additional Agreements (as applicable) by Purchaser, this
Agreement constitutes, and each of the WMC Delaware Additional Agreements
when executed will constitute, a legal, valid and binding obligation of WMC
Delaware enforceable against it in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or similar Laws affecting creditors' rights generally
and by such principles of equity as may affect the availability of equitable
remedies.
3.4 No Conflict; Required Filings and Consents.
(a) Except as set forth on Schedule 3.4 of the Disclosure
Schedules, the execution, delivery and performance of this Agreement by
Glenayre, GTI and WMC do not, the execution, delivery and performance of each
of the GTI Additional Agreements, the Glenayre Additional Agreement, each of
the Glenayre Electronics Agreements and each of the WMC Additional Agreements
by GTI, Glenayre, Glenayre Electronics and WMC (as applicable) will not, and
the consummation by GTI, WMC and Glenayre of the Transactions and compliance
by GTI, WMC, Glenayre and Glenayre Electronics with the terms hereof and
thereof will not, (1) conflict with or violate the Certificate or Articles of
Incorporation or Bylaws of Glenayre, GTI, WMC or Glenayre Electronics, (2)
violate any Law applicable to Glenayre, GTI, WMC or Glenayre Electronics or
their respective properties or assets or (3) result in any breach of or
constitute a default (or any event which, with notice or lapse of time or
both, would become a default) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a material
benefit under, or to increased, additional, accelerated or guaranteed rights
or entitlements of any Person under, or result in the creation of any Lien
(other than a Permitted Lien or as a result of the Stockholders' Agreement)
upon the Old WMC Shares, the Purchased Common Shares, the Redeemed Shares or
any of the properties or assets of Glenayre, GTI, Glenayre Electronics or WMC
under, any provision of or pursuant to any Contract, note, bond, mortgage,
deed of trust, instrument, or obligation to which WMC, Glenayre, GTI or
Glenayre Electronics is a party or by which any of their respective
properties or assets are bound, where in the case of clause (3) it would have
a WMC Material Adverse Effect.
(b) The execution, delivery and performance of this Agreement by
Glenayre, GTI and WMC do not and the execution, delivery and performance of
each of the GTI Additional Agreements, the Glenayre Additional Agreement,
each of the Glenayre Electronics Agreements and each of the WMC Additional
Agreements by Glenayre, Glenayre Electronics and WMC will not, and the
consummation of the Transactions will not, require any consent, approval or
authorization, license, permit or order of or registration, declaration or
filing with or notification to, any Governmental Authority by or with respect
to Glenayre, GTI, Glenayre Electronics or WMC except for (1) applicable
requirements if any, of the Securities Act or Blue Sky Laws, (2) filings
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required to be made by Purchaser and GTI or Glenayre under the HSR Act, (3)
those that may be required solely by reason of the participation of Purchaser
(as opposed to any other third party) in the Transactions, and (4) as
disclosed in Schedule 3.4 of the Disclosure Schedules.
3.5 Financial Statements. Schedule 3.5 of the Disclosure
Schedules contains the unaudited financial statements of WMC as of and for
the years ended December 31, 1997 and December 31, 1998, respectively, and
as of and for the six-month period ended June 30, 1999 (collectively, the
"Financial Statements"). Except as disclosed on Schedule 3.5 of the
Disclosure Schedules, each of the Financial Statements presents fairly in all
material respects the financial position and results of operations of WMC at
the dates and for the fiscal periods then ended in accordance with GAAP
consistently applied (except for the lack of footnotes).
3.6 Subsequent Events. Except as set forth on Schedule 3.6 of the
Disclosure Schedules or reflected on the Balance Sheet, since June 30, 1999
WMC has been operated in the ordinary course and substantially in the same
manner as previously conducted and there has not been:
(a) any WMC Material Adverse Effect;
(b) any dividend paid or other distribution made on or with
respect to WMC's capital stock;
(c) any sale or other disposition of any material assets or
material interests owned or possessed by WMC, other than sales of inventory
occurring in the ordinary course of Business consistent with past practices
and prior periods;
(d) any damage, destruction or loss of such character as to
interfere materially with the continued operation of any part of the Business
(whether or not such loss was insured against);
(e) any borrowings, loans or advances by or to WMC, except for
routine travel advances and intercompany loans which will be eliminated as of
the Closing Date (through treatment as dividends or otherwise);
(f) any change in accounting practices or policies by WMC;
(g) any cancellation by WMC of any material indebtedness owing to
it, or any cancellation or settlement by WMC of any material claims against
others, except for any intercompany loans which are eliminated as of the
Closing Date;
(h) any increase in the compensation, incentive or severance
arrangements or other benefits to any officer or employee of WMC (other than
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any incentive bonuses to be paid by Glenayre or GTI to officers or employees
of WMC in connection with the Transactions); or
(i) any change in method of accounting with respect to Taxes, any
change to a Tax election, any filing of an amended Tax Return, any settlement
or compromise of any proceeding with respect to any material tax liability;
(j) any action by WMC that would result in breach of Section
5.2(6), (13) or (15) if such action were taken after the date of this
Agreement; or
(k) any agreement or commitment by or on behalf of WMC to do or to
take any of the actions referred to above.
3.7 Tax Matters. Except as set forth in Schedule 3.7 of the
Disclosure Schedules:
(a) WMC and any Affiliated Group have filed or caused to be filed
in a timely manner (within any applicable extension periods) all material Tax
Returns required to be filed by applicable Tax Laws. All material Taxes with
respect to Taxable Periods covered by such Tax Returns, and all other
material Taxes for which WMC is or might otherwise be liable for such Taxable
Periods, have been timely paid in full or will be timely paid in full by the
due date thereof and the most recent Financial Statements reflect an adequate
reserve (in accordance with GAAP), other than with respect to deferred Taxes
reflecting the difference between the book and Tax basis in assets and
liabilities, for all Taxes payable by WMC for all Taxable Periods and
portions thereof through the date of such Financial Statements. No Liens
exist for Taxes (other than Liens for Taxes not yet due and payable) with
respect to any of the assets or properties of WMC. For purposes of this
Section 3.7, "Affiliated Group" means any affiliated group, within the
meaning of Section 1504 of the Code, of which WMC is, or since April 25, 1995
has been, a member.
(b) Since April 25, 1995, no Tax Returns of WMC or any Affiliated
Group (with respect to Taxes attributable to WMC) have been examined by the
Internal Revenue Service. No Tax Returns of WMC or any Affiliated Group
(with respect to Taxes attributable to WMC) are currently under audit or
examination by any taxing authority, and no written notice of any such
prospective audit or examination has been received by WMC or any Affiliated
Group.
(c) No deficiency resulting from any audit or examination by any
taxing authority relating to Taxes with respect to WMC remains unpaid.
Glenayre has made available to Purchaser documents setting forth the dates of
the most recent audits or examinations of WMC or any Affiliated Group by any
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taxing authority in respect of Taxes related to WMC for all Taxable Periods
since April 25, 1995.
(d) Except for this Agreement, none of WMC or any Affiliated Group
(i) is party to or bound by any tax-sharing agreement, tax indemnity
obligation or similar agreement, arrangement or practice with respect to
Taxes attributable to WMC (including any advance pricing agreement, closing
agreement or other agreement relating to such Taxes with any taxing
authority), or (ii) has any liability for the Taxes of any other person under
Treasury Regulation Section 1.1502-6(a) (or any similar provision of state,
local or foreign Law), or as a transferee or successor, by contract or
otherwise.
(e) The Financial Statements as of December 31, 1998 properly
reflected all deferred revenue for WMC as of December 31, 1998 in accordance
with GAAP. As of December 31, 1998, none of WMC or any Affiliated Group
shall be required to include in a Taxable Period ending after the Closing
Date taxable income attributable to income of WMC that accrued in a prior
Taxable Period but was not recognized in any prior Taxable Period as a result
of the installment method of accounting, the long-term contract method of
accounting, the cash method of accounting or Section 481 of the Code or any
comparable provision of any other Tax Law, or for any other reason.
(f) None of Glenayre, GTI or any of their Affiliates has made with
respect to WMC or any property held by WMC any consent under Section 341 of
the Code; no property of WMC is "tax exempt use property" within the meaning
of Section 168(h) of the Code; WMC is not a party to any lease made pursuant
to Section 168(f)(8) of the Internal Revenue Code of 1954; and none of the
assets of WMC is subject to a lease under Section 7701(h) of the Code or
under any predecessor section thereof.
(g) None of WMC or any Affiliated Group has currently in effect
any agreements or waivers extending, or having the effect of extending, the
statute of limitations with respect to the assessment or collection of any
Tax with respect to WMC. None of WMC or any Affiliated Group has requested
any extension of time within which to file any Tax Return relating to WMC,
which return has not yet been filed. No power of attorney with respect to
any Taxes is currently in effect with any taxing authority relating to WMC.
(h) WMC and any Affiliated Group have complied in all material
respects with all applicable Laws (or have accrued in accordance with GAAP
any liability for such failure on its books and records) relating to the
payment and withholding of Taxes by WMC (including withholding of Taxes
pursuant to Sections 1441, 1442, 3121 and 3402 of the Code or any comparable
provision of any other Tax Laws).
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(i) WMC has delivered or made available to Purchaser complete and
correct copies of (i) all material separate or pro forma Tax Returns of WMC
since April 25, 1995 and (ii) all material private letter rulings, revenue
agent reports, information document requests, notices of proposed
deficiencies, deficiency notices, protests, petitions, closing agreements,
settlement agreements, pending ruling requests, and any similar documents,
submitted by, received by or agreed to by or on behalf of WMC since April 25,
1995.
(j) Schedule 3.7 of the Disclosure Schedules sets forth each
jurisdiction in which WMC joins or has joined for any Taxable Period ending
after 1995 in the filing of any consolidated, combined or unitary Tax Return.
(k) WMC is not "United States real property holding corporation"
within the meaning of Section 897 of the Code.
(l) Glenayre is not a "foreign person" within the meaning of
Section 1445 of the Code.
(m) Schedule 3.7 of the Disclosure Schedules sets forth, as of
December 31, 1998, the amount of any net operating loss carryforwards of WMC.
The net operating loss carryforwards are not subject to any limitation on use
under Section 382 of the Code or otherwise.
3.8 Employees and Fringe Benefit Plans.
(a) Schedule 3.8(a) of the Disclosure Schedules lists each
material employment, bonus, commission, deferred compensation, pension, stock
option, stock appreciation right, employee stock ownership, profit-sharing,
retirement, medical, vacation, retiree medical, severance pay plan or
arrangement, and each other material agreement or fringe benefit plan or
arrangement contributed to by WMC or under which current or former employees
of WMC are eligible to participate (collectively, the "Plans"). Except as
disclosed in Schedule 3.8(a) of the Disclosure Schedules, none of the Plans
are sponsored or maintained by WMC.
(b) Except as disclosed in Schedule 3.8(b) of the Disclosure
Schedules, WMC has complied in all material respects with all applicable Laws
relating to its employees' employment and/or employment relationships,
including ERISA, employment termination Laws, employment leave Laws, wage and
hour Laws, anti-discrimination Laws, employee safety Laws and workers
compensation Laws.
3.9 Title to Assets
(a) WMC owns no real property. Schedule 3.9(a) of the Disclosure
Schedules lists all leases and subleases (including amendments thereto) of
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real property ("Leased Property") under which WMC is a lessee or sublessee
(the "Leases"). WMC has delivered to the Purchaser true and correct copies
of all Leases. Except as described in Schedule 3.9(a) of the Disclosures
Schedules, WMC has a valid and enforceable leasehold interest under all of
the Leases, subject only to the terms and conditions set forth in the Leases
and except as such enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium or similar Laws affecting creditors'
rights generally and by such principles of equity as may affect the
availability of equitable remedies. WMC is not in default in any material
respect (including any monetary defaults) under any Lease, and there does not
exist any event which, with notice or the lapse of time or both, would
constitute such a default by WMC thereunder. To the Knowledge of GTI,
Glenayre and WMC, except as set forth in Schedule 3.9(a) of the Disclosure
Schedules, the landlord under each Lease is not in default thereunder and
there does not exist any event which with notice or the lapse of time or both
would constitute a default by such landlord thereunder.
(b) WMC has good and valid title to all machinery and equipment,
computers (excluding software and other intellectual property contained
therein), furniture, parts, transportation equipment and other tangible
personal property (other than Inventory) reflected on the balance sheet dated
as of June 30, 1999 included in the Financial Statements (the "Balance
Sheet"), plus any such additional tangible personal property acquired after
June 30, 1999, and less any such tangible personal property disposed of in
the ordinary course of Business after June 30, 1999 (the "Equipment"), in
each case free and clear of all Liens, except for Permitted Liens and those
Liens set forth on Schedule 3.9(b) of the Disclosure Schedules. All the
Equipment has been maintained in all material respects in accordance with the
past practice of WMC and generally accepted industry practice. All leased
personal property of WMC is in all material respects in the condition
required of such property by the terms of the lease applicable thereto during
the term of the lease and upon the expiration thereof.
(c) WMC will have good and valid title to all inventory to be
reflected on the Closing Balance Sheet (the "Inventory"), in each case free
and clear of all Liens, except for Permitted Liens, those Liens set forth on
Schedule 3.9(c) of the Disclosure Schedules and Customer Liens. As of June
30, 1999, the value of Loaned Inventory was less than $450,000 and the value
of the Rented Inventory was less than $45,000. Except as set forth in
Schedule 3.9(c) of the Disclosure Schedules, since June 30, 1999, there have
not been any write-downs of the value of, or establishment of any reserves
against, any inventory, except for write-downs and reserves in the ordinary
course of Business and consistent with past practice which have not had,
either individually or in the aggregate, a WMC Material Adverse Effect.
(d) Except as set forth on Schedule 3.9(d) of the Disclosure
Schedules, all accounts receivable of WMC to be reflected on the Closing
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Balance Sheet (the "Receivables") will have arisen from bona fide
transactions in the ordinary course of Business and will constitute valid and
enforceable claims of WMC. The Receivables will be free and clear of all
Liens, except for Permitted Liens and those Liens set forth on Schedule
3.9(d) of the Disclosure Schedules. Since June 30, 1999, there have not been
any write-offs as uncollectible of any notes or accounts receivable of WMC,
except for write-offs in the ordinary course of Business and consistent with
past practice which have not had, either individually or in the aggregate, a
WMC Material Adverse Effect.
(e) Schedule 3.9(e) of the Disclosure Schedules sets forth, as of
the date of this Agreement, a list of (1) all patents, trademark, service
mark, corporate name, domain name, trade name and copyright registrations,
and all applications for any of the foregoing, owned by WMC or used by WMC in
conducting the Business (the "Registered Intellectual Property"); and (2) all
Contracts of WMC relating to licenses of the WMC Intellectual Property (as
defined below) to third parties other than Contracts entered into in the
ordinary course of the Business. The WMC Intellectual Property owned by WMC
is referred to herein as the "Owned WMC Intellectual Property" and the WMC
Intellectual Property licensed by WMC from other Persons is referred to
herein as the "Licensed WMC Intellectual Property." Except as set forth on
Schedule 3.9(e) of the Disclosure Schedules, WMC owns or has a license to use
the Registered Intellectual Property and all trade secrets, computer
software, technology, know-how and all other intellectual property and other
proprietary rights necessary for the conduct of the Business (collectively,
the "WMC Intellectual Property") without payment to any other Person. Except
as set forth in Schedule 3.9(e) of the Disclosure Schedules, WMC owns and
possesses all right, title and interest in and to the Owned WMC Intellectual
Property free and clear of any Liens except for Permitted Liens. The rights
of WMC under all material Contracts with respect to the Licensed WMC
Intellectual Property are valid and enforceable by WMC in accordance with
their respective terms except as such enforceability may be limited by
applicable bankruptcy, insolvency and other similar Laws affecting creditors'
rights generally and by such principles of equity as may affect the
availability of equitable remedies. Except as set forth in Schedule 3.9(e)
of the Disclosure Schedules, (1) WMC has no claim(s) pending or asserted (or,
to GTI's, Glenayre's and WMC's Knowledge, threatened or unasserted) against
any other Person relating to the WMC Intellectual Property; (2) no other
Person has any claim(s) asserted (or, to GTI's, Glenayre's and WMC's
Knowledge, threatened or unasserted) against WMC relating to the WMC
Intellectual Property; and (3) the Owned WMC Intellectual Property does not
infringe, and to GTI's, Glenayre's and WMC's Knowledge the Business does not
infringe, on any intellectual property owned or controlled by any other
Person.
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(f) Except as set forth in Schedule 3.9(f), Schedule 3.10 or
Schedule 3.17 of the Disclosure Schedules or any agreement which is related
to the Transactions or the Financing, WMC is not a party to or bound by any:
(1) written (or material oral) employment agreement or contract
that has an aggregate future liability for any 12-month period in excess
of $100,000, except for an employment agreement or contract terminable
at will by WMC without cost or penalty in excess of $25,000;
(2) covenant of WMC not to compete or other covenant of WMC
restricting in any material respect the development, manufacture,
marketing, distribution or sale of the products and services of WMC;
(3) agreement, contract or other arrangement with (A) GTI,
Glenayre or any Affiliate of GTI (other than WMC) or (B) any officer,
director or employee of WMC, GTI or any Affiliate of GTI (other than
employment agreements covered by Section 3.9(f)(1) or Plans described on
Schedule 3.8(a) of the Disclosure Schedules);
(4) lease, sublease or similar agreement with any Person (other
than WMC) under which WMC is a lessor or sublessor of, or makes
available for use to any Person (other than WMC), (A) any Leased
Property or (B) any portion of any premises otherwise occupied by WMC;
(5) (A) continuing Contract for the future purchase of materials,
supplies or equipment, (B) management, service, consulting or other
similar type of contract, in any such case which has an aggregate future
liability for any 12-month period to any Person (other than WMC) in
excess of $100,000 and is not terminable by WMC by notice of not more
than 60 days without cost or penalty in excess of $25,000 per agreement
or contract;
(6) material Contract relating in whole or in part to WMC
Intellectual Property (including any license or other agreement under
which WMC is licensee or licensor of any such WMC Intellectual
Property), except for non-disclosure agreements entered into with
employees of WMC in the ordinary course of Business and licenses of WMC
Intellectual Property in connection with the sale of WMC products in the
ordinary course of Business;
(7) Contract under which WMC has borrowed any money from, or
issued any note, bond, debenture or other evidence of indebtedness to,
any Person (other than WMC) or any other note, bond, debenture or other
evidence of indebtedness issued to any Person (other than WMC);
(8) Contract (including so-called take-or-pay or keep-well
agreements) under which (A) any Person (including WMC) has directly or
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indirectly guaranteed indebtedness, liabilities or obligations of WMC or
(B) WMC has directly or indirectly guaranteed indebtedness, liabilities
or obligations of any Person, in each case other than endorsements for
the purpose of collection in the ordinary course of Business;
(9) Contract under which WMC has, directly or indirectly, made any
advance, loan, extension of credit or capital contribution to, or other
investment in, any Person (other than WMC), other than routine travel
advances;
(10) mortgage, pledge, security agreement, deed of trust or other
instrument granting a Lien upon any property or asset of WMC (other than
a Permitted Lien or a Lien disclosed on the Disclosure Schedules);
(11) Contract providing for indemnification of any Person with
respect to liabilities relating to any current or former business of
WMC, other than any indemnification included in sales orders or
Contracts in the ordinary course of Business;
(12) a material Contract not made in the ordinary course of
Business;
(13) a confidentiality agreement, other than confidentiality
agreements entered into by employees of WMC with WMC in the ordinary
course of Business;
(14) a Contract (including a sales order) involving the obligation
of WMC to deliver products or services for payment of more than $100,000
or extending for a term more than 180 days from the date of this
Agreement, in each case unless terminable without material payment or
penalty upon no more than 60 days' notice;
(15) a Contract for the sale of any material asset of WMC (other
than inventory sales in the ordinary course of Business) or the grant of
any preferential rights to purchase any such asset or requiring the
consent of any party to the transfer thereof;
(16) a currency exchange, interest rate exchange, commodity
exchange or similar Contract;
(17) a Contract for any joint venture, partnership or similar
arrangement;
(18) a Contract providing for the services of any dealer,
distributor, sales representative, franchisee or similar representative
involving the payment or receipt over the life of such Contract in
excess of $100,000 by WMC;
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(19) a Contract providing for the provision of advertising
services and involving the payment or receipt over the life of such
Contract in excess of $75,000 by WMC;
(20) any Contract pursuant to which WMC is entitled to receive
aggregate payments thereunder in excess of $100,000 after the date of
this Agreement in any calendar year;
(21) other Contract to which WMC is a party or by or to which it or
any of its assets or business is bound or subject which has an aggregate
future liability to any Person (other than WMC) in excess of $100,000
and is not terminable by WMC by notice of not more than 60 days without
cost or penalty; or
(22) a Contract other than as set forth above to which WMC is a
party or by which it or any of its assets or the Business is bound or
subject that is material to the Business.
Except as set forth in Schedule 3.09(f) or 3.10 of the Disclosure
Schedules, all Contracts required to be listed in the Disclosure Schedules
pursuant to clauses (1) through (22) above (the "Material Contracts") are
valid, binding and in full force and effect and the rights of WMC under all
Material Contracts are valid and enforceable by WMC in accordance with their
respective terms except as such enforceability may be limited by applicable
bankruptcy, insolvency and other similar Laws affecting creditors' rights
generally and by such principles of equity as may affect the availability of
equitable remedies. WMC has performed all material obligations to be
performed by it to date and is not in default in any material respect (nor
does any circumstance exist which, with notice or the passage of time or
both, would result in such a default) under the Material Contracts. To the
Knowledge of GTI, Glenayre and WMC, the other party to each Material Contract
is not in default thereunder in any material respect (nor does any
circumstance exist which with notice or the passage of time or both, would
result in such a default.) None of GTI, Glenayre or WMC has, except as
disclosed in the applicable Disclosure Schedule, received any written notice
of the intention of any party to terminate any Material Contract. Purchaser
has been supplied with a true and correct copy of each of the written
Material Contracts and a general description of all oral Material Contracts.
3.10 Personal Property Leases. Schedule 3.10 of the Disclosure
Schedules sets forth (i) all leases by WMC of tangible personal property to
any other Person and (ii) all leases by WMC of tangible personal property
from any other Person, for each lease under clause (i) or (ii) with a term of
12 months or greater or which include annual payments in excess of $50,000
(collectively, "Personal Property Leases"). The rights of WMC under all
Personal Property Leases are valid and enforceable by WMC in accordance with
their respective terms except as such enforceability may be limited by
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applicable bankruptcy, insolvency and other similar Laws affecting creditors'
rights generally and by such principles of equity as may affect the
availability of equitable remedies and shall be in full force and effect
without penalty in accordance with their terms upon the consummation of the
Transactions. WMC is not in default in any material respect (nor does any
circumstance exist which, with notice or the passage of time or both, would
result in such a default) under the Personal Property Leases. To the
Knowledge of GTI, Glenayre and WMC, the other party to each Personal Property
Lease is not in default thereunder in any material respect (nor does any
circumstance exist which, with notice or the passage of time, or both, would
result in such a default). Purchaser has been supplied with a true and
correct copy of each of the written Personal Property Leases or, in the case
of Personal Property Leases described in Item #1 of Schedule 3.10 of the
Disclosure Schedules the form of such lease attached as Attachment 11 to such
Schedule, and a general description of all material oral Personal Property
Leases.
3.11 Lawfully Operating. Except as set forth on Schedule 3.11 of
the Disclosure Schedules, WMC has complied in all material respects and is in
compliance in all material respects with all Laws applicable to WMC,
including those relating to occupational health and safety. This Section
3.11 does not relate to Environmental Laws. Except as set forth in Schedule
3.11 of the Disclosure Schedules, none of GTI, Glenayre or WMC has received
any written communication during the past two years from a Governmental
Authority that alleges that WMC is not in compliance in any material respect
with any Laws. WMC validly holds and is in compliance in all material
respects with all material permits, licenses, bonds, approvals, franchises,
certificates (including certificates of occupancy), registrations,
accreditations and other governmental authorizations necessary for the
conduct of the Business (collectively, "Permits"). Schedule 3.11 of the
Disclosure Schedules sets forth a true and complete list of all Permits.
None of the Permits are subject to suspension, modification, revocation or
nonrenewal as a result of the execution and delivery of this Agreement, the
WMC Additional Agreements or the Glenayre Additional Agreements or the
consummation of the Transactions. All of the Permits which are held in the
name of any employee, officer, director, stockholder, agent or otherwise on
behalf of WMC shall be deemed included under this warranty.
3.12 Litigation. Except as set forth on Schedule 3.12 of the
Disclosure Schedules, there are no actions, suits, proceedings (including any
arbitration proceedings), judgments, settlements, decrees, injunctions or
orders outstanding, pending or, to GTI's Glenayre's and WMC's Knowledge,
threatened against WMC, or pending or threatened by WMC against any Person,
or which WMC intends to initiate, at law or in equity, or before or by any
Governmental Authority. Except as set forth in Schedule 3.12 of the
Disclosure Schedules, to the Knowledge of GTI, Glenayre and WMC, there are no
unasserted claims of the type that would be required to be disclosed in
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Schedule 3.12 of the Disclosure Schedules if counsel for the claimant had
contacted GTI, Glenayre or WMC and which if asserted would have at least a
reasonable possibility of an adverse determination and would have a WMC
Material Adverse Effect. Except as described on Schedule 3.12 of the
Disclosure Schedules, to GTI's, Glenayre's and WMC's Knowledge, there are no
investigations or claims pending or threatened against WMC before or by any
Governmental Authority. Except as set forth on Schedule 3.12 of the
Disclosure Schedules, neither WMC is not subject to any judgment, order or
decree of any Governmental Authority.
3.13 Labor Matters. WMC is not a party to any collective
bargaining agreement or other contract with a labor union. To the Knowledge
of GTI, Glenayre and WMC, except as set forth on Schedule 3.13 of the
Disclosure Schedules, (i) there is, and during the past two years there has
been, no labor strike, material labor dispute, work stoppage or lockout
pending or, to the Knowledge of GTI, Glenayre and WMC, threatened against
WMC; (ii) no union organizational campaign is in progress with respect to the
employees of WMC and no question concerning representation exists respecting
such employees; (iii) WMC is not engaged in any unfair labor practice; (iv)
there is no unfair labor practice charge or complaint against WMC pending or,
to the Knowledge of GTI, Glenayre and WMC, threatened before the National
Labor Relations Board; (v) there are no pending or, to the Knowledge of GTI,
Glenayre and WMC, threatened charges against WMC before the Equal Employment
Opportunity Commission or any state or local agency responsible for the
prevention of unlawful employment practices; and (vi) none of GTI, Glenayre
or WMC has received written notice during the past two years of the intent of
any Governmental Authority responsible for the enforcement of labor or
employment laws to conduct an investigation of WMC and, to the Knowledge of
GTI, Glenayre and WMC, no such investigation is in progress.
To the Knowledge of GTI, Glenayre and WMC, no employee of WMC is a
party to or bound by any Contract of any nature, or subject to any judgment,
decree or order of any Governmental Authority, that may interfere with the
use of such person's best efforts to promote the interests of WMC or conflict
with the Business or the Transactions if such interference or conflict would
have a WMC Material Adverse Effect. To the Knowledge of GTI, Glenayre and
WMC, no activity of any employee of WMC as or while an employee has caused a
violation of any employment contract, confidentiality agreement, patent
disclosure agreement, or other contract or agreement which would have a WMC
Material Adverse Effect. To the Knowledge of GTI, Glenayre and WMC, neither
the execution and delivery of this Agreement, nor the conduct of the Business
by the employees of WMC will conflict with or result in a breach of the
terms, conditions or provisions of, or constitute a default under, any
Contract under which any such employees are now obligated if such conflict or
breach would have a WMC Material Adverse Effect.
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3.14 Bank Accounts and Depositories. Schedule 3.14 of the
Disclosure Schedules lists (i) all bank and savings accounts, certificates of
deposits, lock boxes, safe deposit boxes and other depositories of WMC and
the names of all Persons authorized to draw or sign thereon or to have access
thereto, (ii) true and correct copies of all corporate borrowing, depository
and transfer resolutions and those Persons entitled to act thereunder and
(iii) a true and correct list of all powers of attorney granted by WMC and
those Persons authorized to act thereunder.
3.15 Brokers. There is no Contract by GTI, Glenayre, WMC or any of
their Affiliates with any Person that may result in the obligation of WMC,
WMC Sub or Purchaser to pay any finder's fees, brokerage or agent's
commissions or other like payments in connection with the Transactions. GTI
has entered into an agreement with Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJ") for investment banking services in connection with the
Transactions, and GTI or Glenayre shall pay, or cause to be paid, all of the
fees and expenses of DLJ in connection therewith.
3.16 Environmental Laws. WMC has complied in all material respects
and are in compliance in all material respects with all Environmental Laws
and WMC holds, and is in compliance in all material respects with, all
environmental permits necessary for the operation of the Business. None of
WMC, Glenayre, GTI or Glenayre Electronics has received any written notice,
claim, report or other information regarding any violation or alleged
violation by WMC of, or liability or alleged liability of WMC under,
Environmental Laws. To the Knowledge of GTI, Glenayre and WMC, there are no
Hazardous Substances on, in, or under any property currently or formerly
owned or operated by WMC and WMC has not treated, stored, disposed of,
arranged for or permitted the disposal of, transported, handled, or released
any Hazardous Substance at any location, or owned or operated any facility
at any location in a manner that has given or would give rise to any
liabilities or investigative, corrective or remedial obligations, of
Purchaser or WMC pursuant to CERCLA or any other Environmental Laws. WMC has
not retained or assumed by contract or operation of law any material
liability or obligation of another Person under any Environmental Law. To
the Knowledge of GTI, Glenayre and WMC, there are no past or present facts,
circumstances or conditions that reasonably could be expected to give rise to
any material liability of WMC under any Environmental Law. All reports,
audits assessments and other similar documents in the possession of GTI,
Glenayre or WMC relating to any material liability of WMC under any
Environmental Law or Hazardous Substance have been provided to Purchaser.
3.17 Insurance. Schedule 3.17 of the Disclosure Schedules contains
a description of each insurance policy maintained by or on behalf of WMC
with respect to its properties, assets and the Business. All such policies
are in full force and effect, all premiums due and payable thereon have been
paid (other than retroactive or retrospective premium adjustments that are
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not yet, but may be, required to be paid with respect to any period ending
prior to the Closing Date under comprehensive general liability and workmen's
compensation insurance policies), and no notice of cancellation or
termination has been received with respect to any such policy which has not
been replaced on substantially similar terms prior to the date of such
cancellation.
3.18 Affiliations. Except as set forth on Schedule 3.18 of the
Disclosure Schedules, there are currently no intercompany Contracts or
services provided to or on behalf of WMC by GTI, Glenayre or any of their
Affiliates and after the Closing neither GTI, Glenayre or any of their
Affiliates will have any interest in any property (real or personal, tangible
or intangible) or contract used in or pertaining to the Business. Neither
Glenayre, GTI nor any of their Affiliates has any direct ownership interest
in any Person with which WMC competes or has a material business
relationship.
3.19 Corporate Name. Except as set forth in Schedule 3.19 of the
Disclosure Schedules, without limiting the generality of Section 3.9(e), to
the Knowledge of GTI, Glenayre and WMC, WMC (i) has the exclusive right to
use its name as the name of a corporation in any jurisdiction in which WMC
does business and (ii) have not received any notice of conflict during the
past two years with respect to the rights of others regarding the corporate
names of WMC. Except as set forth in Schedule 3.19 of the Disclosure
Schedules, to the Knowledge of GTI, Glenayre and WMC, no Person is presently
authorized by GTI, Glenayre or WMC to use the name of WMC. GTI and Glenayre
have previously delivered to Purchaser copies of any Contracts to which any
of them is a party granting any authorizations of the type referred to in the
previous sentence.
3.20 Effect of Transaction. Except as set forth in Schedule 3.20
of the Disclosure Schedules, no creditor, key employee, major customer or
other Person having a material business relationship with WMC has informed
GTI, Glenayre or WMC that such Person intends to change such relationship
because of the Transactions where such change would have an WMC Material
Adverse Effect.
3.21 Disclosure. No representation or warranty of GTI or Glenayre
contained in this Agreement, the Disclosure Schedules or the certificate
referred to in Section 6.2(a) contains or will contain any untrue statement
of a material fact or omits to state any material fact necessary, in light of
the circumstances under which it was or will be made, in order to make the
statements herein or therein not misleading.
3.22 Suppliers. Except as set forth in Schedule 3.22 of the
Disclosure Schedules, between June 30, 1999 and the date of this Agreement,
WMC has not entered into or made any material Contract for the purchase of
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merchandise other than in the ordinary course of Business consistent with
past practice. Except for the suppliers named in Schedule 3.22 of the
Disclosure Schedules, WMC does not have any supplier from whom it purchased
more than 5% of the merchandise which it purchased during its most recent
full fiscal year. Except as set forth in Schedule 3.22 of the Disclosure
Schedules, since June 30, 1999, to the Knowledge of GTI, Glenayre and WMC,
there has not been (i) any material adverse change in the business
relationship of WMC with any supplier of merchandise named in Schedule 3.22
of the Disclosure Schedules or (ii) any material adverse change in the supply
agreements or related arrangements with any such supplier.
3.23 Customers. Except for the customers named in Schedule 3.23 of
the Disclosure Schedules, WMC does not have any customer to whom it made more
than 5% of its sales during its most recent full fiscal year. Except as set
forth in Schedule 3.23 of the Disclosure Schedules, since June 30, 1999, to
the Knowledge of GTI, Glenayre and WMC, there has not been (i) any material
adverse change in the business relationship of WMC with any customer named in
Schedule 3.23, or (ii) any material adverse change in the sales agreements or
related agreements with any such customer. During the past two years, WMC
has received no customer complaints concerning its products and services, nor
has it had any of its products returned by a purchaser thereof, other than
complaints and returns which have not, and are not likely to have,
individually a WMC Material Adverse Effect.
3.24 Private Offering. Neither GTI, Glenayre, WMC, nor any of
their Affiliates nor anyone acting on their behalf has issued, sold or
offered any security of WMC to any Person under circumstances that would
cause the issuance and sale of the Purchased Common Shares, as contemplated
by this Agreement, to be subject to the registration requirements of the
Securities Act. Neither GTI nor Glenayre, WMC, any of their Affiliates nor
anyone acting on their behalf will offer any WMC Common Stock or any part
thereof or any similar securities for issuance or sale to, or solicit any
offer to acquire any of the same from, anyone so as to make the issuance and
sale of the Purchased Common Shares subject to the registration requirements
of Section 5 of the Securities Act. Assuming the representations of
Purchaser contained in Section 4.5 are true and correct, the sale and
delivery of the Purchased Common Shares hereunder are exempt from the
registration and prospectus delivery requirements of the Securities Act.
3.25 Year 2000 Compliance.
(a) Except as set forth in Schedule 3.25 of the Disclosure
Schedules, to the Knowledge of GTI, Glenayre and WMC, all computer systems,
software, hardware, equipment, data bases and related assets ("Systems")
owned or used by the Business are Year 2000 Compliant (as defined below).
Except as set forth in Schedule 3.25 of the Disclosure Schedules, all Systems
developed by WMC and included in the Inventory and products sold by the
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Business are Year 2000 Compliant, and all other Systems included in or used
by such Inventory or products sold by the Business are, to the Knowledge of
GTI, Glenayre and WMC, Year 2000 Compliant.
(b) The Term "Year 2000 Compliant", with respect to a System,
means that such System: (i) is capable of recognizing, processing, managing,
representing, interpreting and manipulating correctly date-related data for
dates earlier and later than January 1, 2000; (ii) has the ability to provide
date recognition for any data element without limitation; (iii) has the
ability to function automatically into and beyond the year 2000 without human
intervention and without any change in operations associated with the advent
of the year 2000; (iv) has the ability to interpret data, dates and time
correctly into and beyond the year 2000; (v) has the ability not to produce
noncompliance in existing data, nor otherwise corrupt such data, into and
beyond the year 2000; (vi) has the ability to process correctly after January
1, 2000, data containing dates before that date; and (vii) has the ability to
recognize all "leap year" dates, including February 29, 2000.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to GTI and Glenayre that:
4.1 Organization and Qualification. Purchaser is a corporation
duly organized, validly existing and in good standing under the Laws of the
State of Delaware and has the requisite corporate power and authority to own,
lease and operate its properties, to carry on its business as it is now being
conducted, to enter into this Agreement and the Purchaser Additional
Agreements and to consummate the Transactions.
4.2 Authorization. Purchaser has all necessary corporate power
and authority to execute and deliver this Agreement and the Stockholders'
Agreement and the Transition Services Agreement (the "Purchaser Additional
Agreements"), to perform its obligations hereunder and thereunder and to
consummate the Transactions. The execution, delivery and performance of this
Agreement and the Purchaser Additional Agreements by Purchaser and the
consummation by Purchaser of the Transactions have been duly and validly
authorized by all necessary corporate action on the part of Purchaser. This
Agreement has been duly and validly executed and delivered by Purchaser and
as of the Closing it will have duly executed and delivered the Purchaser
Additional Agreements, and, assuming the due authorization, execution and
delivery of this Agreement and the Purchaser Additional Agreements (as
applicable) by Glenayre, WMC and GTI, this Agreement constitutes, and the
Purchaser Additional Agreements upon execution will constitute, a legal,
valid and binding obligation of Purchaser enforceable against it in
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accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, reorganization, insolvency, moratorium or similar Laws
affecting creditors' rights generally, and by such principles of equity as
may affect the availability of equitable remedies.
4.3 No Conflict; Required Filings and Consents.
(a) The execution, delivery and performance of this Agreement by
Purchaser do not, the execution and delivery and performance of the Purchaser
Additional Agreements by Purchaser will not and the consummation by Purchaser
of the Transactions and compliance by Purchaser with the terms hereof and
thereof will not, (1) conflict with or violate the Certificate of
Incorporation or Bylaws of Purchaser, (2) violate any Law applicable to
Purchaser or (3) result in any breach of or constitute a default (or any
event which, with notice or the passage of time or both, would result in a
default) under or pursuant to, any material Contract, note, bond, mortgage,
deed of trust, instrument, or obligation to which Purchaser is a party.
(b) The execution, delivery and performance of this Agreement by
Purchaser do not, the execution, delivery and performance of the Purchaser
Additional Agreements will not, and the consummation of the Transactions will
not, require any consent, approval, authorization, license, permit order of,
or registration, declaration or filing with or notification to, any
Governmental Authority by or with respect to Purchaser, except for (1)
applicable requirements, if any, of the Securities Act, or Blue Sky Laws, (2)
filings required to be made by Purchaser and GTI or Glenayre under the HSR
Act and (3) those that may be required solely by reason of the participation
of Glenayre, GTI and WMC (as opposed to any other third party) in the
Transactions.
4.4 No Litigation. As of the date hereof, there are no (i)
outstanding judgments, orders, injunctions or decrees of any Governmental
Authority or arbitration tribunal against Purchaser or any of its Affiliates,
(ii) lawsuits, actions or proceedings pending or, to the knowledge of
Purchaser, threatened against Purchaser or any of its Affiliates, or (iii)
investigations by any Governmental Authority which are, to the knowledge of
Purchaser, pending or threatened against Purchaser or any of its Affiliates,
and which, in the case of each of clauses (i), (ii) and (iii), have a
material adverse effect on the ability of Purchaser to consummate the
Transactions.
4.5 Investment Representations.
(a) Purchaser is acquiring the Purchased Common Shares for
investment purposes only, for its own account for the purpose of investment
and not with a present view for the resale thereof in connection with any
distribution or public offering thereof in violation of the Securities Act.
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(b) Purchaser understands that the Purchased Common Shares have
not been registered under the Securities Act or any Blue Sky Laws and that,
accordingly, the Purchased Common Shares will not be transferable except
pursuant to an exemption from the registration and prospectus delivery
requirements of the Securities Act and any applicable Blue Sky Laws or upon
satisfaction of such requirements.
(c) Purchaser is an "accredited investor" (as such term is defined
in Rule 501 of Regulation D under the Securities Act).
4.6 Brokers. There is no Contract by Purchaser with any Person
that may result in the obligation of GTI or Glenayre to pay any finder's
fees, brokerage or agent's commissions or other like payments in connection
with the Transactions.
ARTICLE 5
COVENANTS
5.1 Covenants of Purchaser, GTI and Glenayre.
(a) During the period from the date hereof and continuing until
the Closing Date (except as expressly contemplated or permitted hereby, or to
the extent Purchaser consents in writing (which consent shall not be
unreasonably withheld or delayed) in the case of GTI's and Glenayre's
obligations and to the extent GTI and Glenayre consent in writing (which
consent shall not be unreasonably withheld or delayed) in the case of
Purchaser's obligations, each of GTI, Glenayre and Purchaser covenants with
the others that, insofar as the obligations relate to it and subject to the
terms and conditions of this Agreement, it shall cooperate and use its
reasonable efforts to cause the conditions to the other party's obligation to
close the Transactions as provided in Article 6 to be fulfilled as
expeditiously as is reasonably practicable.
(b) Purchaser, Glenayre and GTI shall cooperate with each other,
and shall cause their officers, employees, agents, auditors and
representatives to cooperate with each other, for a period of 150 days after
the Closing to ensure the orderly transition of WMC from Glenayre and GTI to
Purchaser and to minimize any disruption to the respective businesses of
Glenayre, GTI, Purchaser or WMC that might result from the Transactions.
After the Closing, upon reasonable written notice, Purchaser, Glenayre and
GTI shall furnish or cause to be furnished to each other and their employees,
counsel, auditors and representatives access, during normal business hours,
such information and assistance relating to WMC as is reasonably necessary
for financial reporting and accounting matters, litigation matters, the
preparation and filing of any Tax Returns, reports or forms or the defense of
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any Tax claim or assessment. Each party shall reimburse the other for
reasonable out-of-pocket costs and expenses incurred in assisting the other
pursuant to this Section 5.1(b). No party shall be required by this Section
5.1(b) to take any action that would unreasonably interfere with the conduct
of its business or unreasonably disrupt its normal operations (or, in the
case of Purchaser, the business or operations of WMC).
(c) Glenayre, GTI and Purchaser agree that, from the date hereof
through the Closing Date, no public release or announcement concerning the
Transactions shall be issued by any party without the prior consent of the
other parties (which consent shall not be unreasonably withheld), except as
such release or announcement may be required by law or the rules or
regulations of any United States or foreign securities exchange, in which
case the party required to make the release or announcement shall allow the
other parties reasonable time to comment on such release or announcement in
advance of such issuance.
(d) Each of Glenayre, GTI and Purchaser shall as promptly as
practicable, but in no event later than five Business Days following the
execution and delivery of this Agreement, file or cause to be filed with the
United States Federal Trade Commission (the "FTC") and the United States
Department of Justice (the "DOJ") the notification and report form, if any,
required for the Acquisition and any supplemental information requested in
connection therewith pursuant to the HSR Act. Any such notification and
report form and supplemental information shall be in substantial compliance
with the requirements of the HSR Act. Each of Purchaser, Glenayre and GTI
shall furnish to the other parties such necessary information and reasonable
assistance as the other may request in connection with its preparation of any
filing or submission which is necessary under the HSR Act. Glenayre, GTI and
Purchaser shall keep each other apprised of the status of any communications
with, and any inquiries or requests for additional information from, the FTC
and the DOJ and shall comply promptly with any such inquiry or request. Each
of Glenayre, GTI and Purchaser shall use its reasonable efforts to obtain any
clearance required under the HSR Act for the Acquisition. Any such
supplemental information shall be in substantial compliance with the HSR Act.
Each party shall bear its own expenses in connection with such filings under
the HSR Act.
(e) On the Closing Date, Glenayre and GTI shall deliver or cause
to be delivered to Purchaser all agreements, documents, books, records and
files, including records and files stored on computer disks or tapes or any
other storage medium (collectively, "Records"), if any, in the possession of
Glenayre and GTI relating to the Business to the extent not then in the
possession of WMC, subject to the following exceptions:
(1) Purchaser recognizes that certain Records may contain
incidental information relating to WMC or may relate primarily to
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subsidiaries or divisions of Glenayre and GTI other than WMC, and that
Glenayre and GTI may retain such Records;
(2) Glenayre and GTI may retain all Records prepared in
connection with the sale of the Purchased Common Shares and the Redeemed
Shares, including bids received from other parties and analyses relating
to WMC; and
(3) Glenayre and GTI may retain any Tax Returns, reports or
forms, and Purchaser shall be provided with copies of such returns,
reports or forms only to the extent that they relate to WMC's separate
returns or separate Tax liability.
(f) WMC shall be permitted to pay any cash dividends or other
distributions in cash to Glenayre prior to the Closing with respect to the
outstanding capital stock of WMC to the extent that cash is accrued on the
books and records of WMC.
(g) The parties shall reasonably cooperate prior to the Closing to
ensure that the Redemption complies with the applicable corporate law
requirements, including (i) making any adjustments in the Redemption Price
and the Purchase Price so long as the economic benefits to Purchaser and
Glenayre, and the relative ownership of WMC stock immediately after the
Closing, remain the same or (ii) causing WMC to re-incorporate in Delaware
if the Redemption would satisfy the statutory requirements of the Delaware
General Corporation Law and the requirements for "recap accounting." The
parties shall also reasonably cooperate to make such other changes in the
Transactions prior to the Closing so long as neither Purchaser nor Glenayre
is adversely affected by any such change.
(h) Except as otherwise provided in the Transition Services
Agreement, Glenayre, GTI and Purchaser agree that GTI and Glenayre shall have
no obligation to continue to provide any insurance coverage for WMC after the
Closing.
5.2 Covenants of GTI and Glenayre. GTI and Glenayre covenant and
agree with Purchaser that during the period from the date hereof and
continuing until the Closing Date (except as expressly contemplated or
permitted hereby or by the other Transactions or the Financing, or to the
extent that Purchaser shall otherwise consent in writing, which consent shall
not be unreasonably withheld or delayed):
(a) WMC shall carry on and conduct the Business only in the
ordinary course in substantially the same manner as previously conducted and
shall use all reasonable efforts consistent with past practices to preserve
intact its present Business organization, maintain its rights and preserve
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its relationships with customers, suppliers, employees and others having
business dealings with it.
(b) GTI and Glenayre shall allow all designated officers,
attorneys, accountants and other representatives of Purchaser access at all
reasonable times during regular business hours to WMC's records and files,
correspondence and properties, as well as to all information relating to
commitments, contracts, titles and financial position, or otherwise
pertaining to the Business, as Purchaser shall reasonably request.
(c) Without limiting the generality of Section 5.2, except as
disclosed in Schedule 5.2(c) of the Disclosure Schedules or as otherwise
specifically contemplated by this Agreement or by the other Transactions or
the Financing, GTI and Glenayre will not and will not permit WMC to:
(1) change any provision of the Articles of Incorporation or
Bylaws of WMC;
(2) except as contemplated by this Agreement with respect to
the Transactions, change the number of shares of the authorized, issued
or outstanding capital stock of WMC, redeem or otherwise acquire any
shares of capital stock of WMC or issue or grant any option, warrant,
right or agreement to purchase the capital stock of WMC;
(3) make any capital expenditures (or enter into any leases
required to be capitalized under GAAP) individually in excess of $50,000
or in the aggregate in excess of $150,000, other than reasonable
expenditures necessary to maintain existing assets in good working order
and repair, reasonable wear and tear excepted;
(4) execute, terminate, cancel or materially amend any
Material Contract or enter into any material commitment or transaction,
in each case not in the ordinary course of Business;
(5) grant any severance or termination pay to any service
provider, except for severance benefits paid to employees of WMC
consistent with WMC's past practices;
(6) abandon, cancel, transfer or dispose of any rights to the
WMC Intellectual Property, in whole or in part, except licenses of WMC
Intellectual Property in connection with the sale of WMC products in the
ordinary course of Business consistent with past practice;
(7) incur any indebtedness for borrowed money or guarantee
any such indebtedness or issue or sell any debt securities or guarantee
any debt securities of others;
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(8) take, or agree (in writing or otherwise) to take, any
action which would make any of the representations or warranties or
covenants of Glenayre or GTI contained in this Agreement materially
untrue or incorrect;
(9) adopt or amend in any material respect any Benefit Plan
or collective bargaining agreement, except as required by Law;
(10) grant to any officer or employee any increase in
compensation or benefits, except in the ordinary course of Business
consistent with past practice or as may be required under existing
agreements and except for any increases for which GTI or Glenayre shall
be solely obligated;
(11) permit any of its assets to become subjected to any Lien
which would have been required to be set forth in Schedules 1.1(a),
3.9(b), 3.9(c), 3.9(d) or 3.9(f) of the Disclosure Schedules if existing
on the date of this Agreement;
(12) cancel any material indebtedness (individually or in the
aggregate) or waive any claims or rights of substantial value;
(13) pay, loan or advance any amount to, or sell, transfer or
lease any of its assets to, or enter into any agreement or arrangement
with, Glenayre, GTI or any of their Affiliates (other than WMC);
(14) make any change in any method of accounting or accounting
practice or policy other than those required by GAAP;
(15) acquire by merging or consolidating with, or by
purchasing a substantial portion of the assets of, or by any other
manner, any business or any Person or division thereof or otherwise
acquire any assets (other than inventory) which are material,
individually or in the aggregate, to WMC;
(16) sell, lease or otherwise dispose of any of its assets
which are material, individually or in the aggregate, to WMC except
sales of inventory in the ordinary course of Business consistent with
past practice;
(17) modify, amend, terminate or permit the lapse of any lease
of real property or any lease of any material personal property, except
modifications or amendments associated with renewals of existing leases
in the ordinary course of Business as to which Purchaser shall be
permitted to participate; or
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(18) agree in writing (or otherwise if legally binding) to do
any of the foregoing.
(d) Without the prior written consent of Purchaser, GTI and
Glenayre shall not knowingly take any action which would cause or would be
reasonably likely to cause any of the conditions to the Transactions set
forth in Article 6 not to be fulfilled.
(e) Glenayre and GTI shall keep confidential, and cause their
Affiliates and instruct their officers, directors, employees and advisors to
keep confidential, all confidential information relating to WMC and the
Business, except as required by Law or administrative process and except for
information which is available to the public on the Closing Date, or
thereafter becomes available to the public other than as a result of a breach
of this Section 5.2(e). The covenant set forth in this Section 5.2(e) shall
terminate five years after the Closing Date.
(f) Glenayre and GTI shall keep, or cause to be kept, all
insurance policies set forth in Schedule 3.17 of the Disclosure Schedules, or
suitable replacements therefor, in full force and effect through the close of
business on the Closing Date.
(g) On the Closing Date, Glenayre and GTI shall, to the extent
permitted under such agreements, assign to Purchaser their rights under all
confidentiality agreements entered into by Glenayre or GTI with any Person in
connection with the proposed sale of WMC to the extent such rights relate to
WMC. Copies of such confidentiality agreements shall be provided to Purchaser
on the Closing Date.
(h) Glenayre and GTI shall have the continuing obligation until
the Closing promptly to supplement or amend the Disclosure Schedules hereto
with respect to any material matter hereafter arising or discovered which, if
existing or known at the date of this Agreement, would have been required to
be set forth or described in such Schedules; provided, however, that (i) no
supplement or amendment to such Schedules shall have any effect for the
purpose of determining the satisfaction of the conditions set forth in
Section 6.3; and (ii) if any supplement or amendment to such Schedule shall
not constitute a condition which permits Purchaser, in its sole and absolute
discretion, to refuse to close the Transactions in accordance with Section
6.3, then such supplement or amendment shall not have any effect for the
purpose of determining the indemnification obligations of Glenayre and GTI
under Article 7.
(i) Glenayre and GTI shall promptly notify Purchaser of, and
furnish Purchaser any information it may reasonably request with respect to,
the occurrence to Glenayre's or GTI's Knowledge of any event or condition or
the existence to Glenayre's or GTI's Knowledge of any fact that would cause
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any of the conditions to Purchaser's obligation to consummate the
Transactions not to be fulfilled.
(j) To the extent permitted by applicable Law, Glenayre and GTI
covenant that all licenses, permits and authorizations which are held in the
name of any employee, officer, director, stockholder, agent or otherwise on
behalf of WMC shall be duly and validly transferred to WMC without
consideration prior to the Closing on or as soon thereafter as practicable,
and that the warranties, representations, covenants and conditions contained
in this Agreement shall apply to the same as if held by WMC as of the date
hereof.
(k) Glenayre and GTI covenant that prior to the Closing Date all
intercompany receivables and payables in respect of WMC shall be eliminated.
(l) Glenayre and GTI agree to cooperate with Purchaser in
obtaining the Financing, including by making officers and employees of WMC
available to meet with prospective Financing sources and causing WMC to
execute and deliver such agreements, consents, certificates, resolutions and
other documents as are true and accurate and necessary or desirable in
connection with the Financing.
5.3 Covenants of Purchaser. Purchaser covenants with GTI and
Glenayre that, during the period from the date hereof and continuing until the
Closing Date (except as expressly contemplated or permitted hereby, or to the
extent that GTI and Glenayre shall otherwise consent in writing, which consent
shall not be unreasonably withheld or delayed), Purchaser shall not knowingly
take any action which would cause or would be reasonably likely to cause any
of the conditions to the Transactions set forth in Article 6 not to be
fulfilled. Purchaser shall promptly notify Glenayre and GTI of, and furnish
Glenayre and GTI any information they may reasonably request with respect to,
the occurrence to Purchaser's knowledge of any event or condition or the
existence to Purchaser's knowledge of any fact that would cause any of the
conditions to Glenayre's and GTI's obligations to consummate the Transactions
not to be fulfilled.
5.4 Certain Benefit Plans.
(a) Purchaser shall provide the employees of WMC with employee
benefits that are substantially equivalent to those provided to other
employees holding similar positions with Purchaser ("Purchaser's Benefit
Plans"). Purchaser shall use reasonable efforts to cause Purchaser's Benefit
Plans to give employees of WMC credit under Purchaser's Benefit Plans (i) for
their service with WMC prior to the Closing Date for purposes of any
eligibility, vesting, waiting periods or pre-existing condition limitations
otherwise applicable under any of Purchaser's Benefit Plans and (ii) for
amounts paid under GTI's employee benefit plans toward any applicable
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deductibles, co-payments and out-of-pocket limits as though such amounts had
been paid in accordance with the terms and conditions of Purchaser's Benefit
Plans.
(b) Glenayre shall cause WMC to withdraw as a participating
"Employer" under (and as defined in) the Glenayre Technologies, Inc. 401(k)
Profit Sharing Plan (the "Glenayre 401(k) Plan"), effective as of the Closing
Date, and from and after the Closing Date, WMC shall have no right, power,
discretion, control or authority over, or any rights or interests in or to,
the Glenayre 401(k) Plan or any of its assets, trusts or other funding media.
Employees of WMC shall be deemed to have separated from service under the
Glenayre 401(k) Plan on the Closing Date and shall be eligible to be paid
their vested benefits in accordance with the terms and provisions of the
Glenayre 401(k) Plan.
(c) All employees of WMC who are participants in the medical care
and dependent care spending account plan maintained by GTI or an Affiliate of
GTI ("Glenayre's Spending Accounts") as of the Closing Date shall become
participants in substantially equivalent medical care and dependent care
spending accounts established for such employees by Purchaser ("Purchaser's
Spending Accounts"). Any elections made by employees of WMC with respect to
Glenayre's Spending Accounts shall remain in effect and no change in
elections shall be effected as a result of such employees' becoming
participants in Purchaser's Spending Accounts. No later than 15 days after
the Closing Date, GTI shall provide Purchaser with information concerning the
amount elected by each employee of WMC to be contributed to each of
Glenayre's Spending Accounts for the plan year of the Closing, the amount of
all benefit payments made to such employees from Glenayre's Spending Accounts
for such plan year until the Closing Date and the outstanding balances in
each of Glenayre's Spending Accounts for each such employee as of immediately
prior to the Closing Date. Not later than 60 days following the Closing
Date, GTI shall transfer, or cause to be transferred, to Purchaser the net
aggregate account balances (positive and negative) in Glenayre's Spending
Accounts for such employees of WMC. In consideration of such transfer,
Purchaser shall pay from Purchaser's Spending Accounts all eligible expenses
incurred during the plan year of the Closing by such employees of WMC
(whether before or after the Closing Date) which are unpaid as of the Closing
Date in accordance with the policies in effect with respect to Purchaser's
Spending Accounts for all participants.
(d) On or as soon as practicable after the Closing Date (but in no
event later than 10 Business Days after the Closing Date), Glenayre shall
make payment to the key employees of WMC, which employees shall be selected
by Glenayre prior to the Closing Date, of bonuses (as previously disclosed to
Purchaser) in respect of such employees' participation in the consummation of
the Transactions.
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(e) As of the Closing Date, WMC shall transfer all assets and
liabilities in respect of all current or former WMC employees who may
participate in the 1999 Deferred Compensation Plan to GTI; thereafter, WMC
shall have no liability under such Deferred Compensation Plan or any other
GTI or Glenayre Plan with respect to any current or former WMC employees,
except as otherwise provided in Section 5.4(c).
5.5 Tax Matters. GTI, Glenayre and Purchaser hereby covenant and
agree as follows with respect to certain Tax matters:
(a) GTI or Glenayre shall be responsible for, shall prepare or
cause to be prepared, and shall timely file or cause to be timely filed, all
Tax Returns of WMC and/or WMC Delaware that are required to be filed on or
prior to the Closing Date; and GTI or Glenayre shall cause WMC and/or WMC
Delaware to pay and be responsible for all Taxes due with respect to such Tax
Returns. GTI and Glenayre shall be responsible for, shall prepare or cause
to be prepared, and shall timely deliver to Purchaser for filing, and
Purchaser shall timely file, with the appropriate taxing authorities, all
separate corporate income and franchise Tax Returns of WMC and/or WMC
Delaware for Taxable Periods ending on or prior to the Closing Date that are
required to be filed after the Closing Date. Purchaser shall be responsible
for all other Tax Returns of WMC and/or WMC Delaware that are required to be
filed after the Closing Date (taking into account extensions); provided,
however, that for any Taxable Period of WMC and/or WMC Delaware that includes
(but does not end on) the Closing Date, Glenayre shall reimburse WMC and/or
WMC Delaware for the Taxes attributable through the Closing Date to the
extent (but only to the extent) not accrued (without taking into account any
accruals for deferred taxes reflecting differences between the tax and book
bases in assets and liabilities) in calculating the Closing Net Worth. WMC
and/or WMC Delaware shall be responsible for the payment of all Taxes accrued
in calculating the Closing Net Worth.
(b) To the extent permitted by Law and consistent with prior year
practice, GTI shall include, or cause to be included, WMC and/or WMC Delaware
in the United States consolidated federal income Tax Returns of GTI and all
other consolidated, combined or unitary income and franchise Tax Returns of
GTI for WMC and/or WMC Delaware's Taxable Periods ending on or prior to the
Closing Date and for that portion of WMC and/or WMC Delaware's then current
Taxable Period that has elapsed as of the Closing Date. GTI and Purchaser
shall, to the extent permitted by applicable Law, elect with the relevant
state taxing authorities where WMC and/or WMC Delaware files a separate
income and franchise Tax Return to close the Taxable Period of WMC and/or WMC
Delaware as of the Closing Date. WMC and/or WMC Delaware shall close its
books as of the close of business on the Closing Date, and Purchaser shall
deliver to GTI within 120 days following the Closing Date all information in
the possession of Purchaser or WMC and/or WMC Delaware that is necessary or
appropriate for GTI to include, or cause to be included, WMC and/or WMC
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Delaware in such consolidated, combined or unitary Tax Returns and for the
preparation of the separate state Tax Returns.
(c) GTI, Glenayre and Purchaser shall reasonably cooperate, and
shall cause their respective officers, employees, agents, auditors and
representatives to reasonably cooperate, in preparing and filing all Tax
Returns (including amended returns and claims for refund), including
maintaining and making available to each other all records necessary in
connection with Taxes and in resolving all disputes and audits with respect
to all Taxable Periods relating to Taxes. Purchaser recognizes that GTI,
Glenayre and their agents and representatives may need access, from time to
time, after the Closing Date, to certain accounting and Tax records and
information held by WMC and/or WMC Delaware to the extent such records and
information pertain to events occurring on or prior to the Closing Date and
were used in the preparation of Tax Returns. Purchaser agrees that (i) from
and after the Closing Date, Purchaser shall, and shall cause WMC and/or WMC
Delaware to, (A) retain and maintain such records until such time as GTI and
Glenayre reasonably agree that such retention and maintenance is no longer
necessary, and (B) allow GTI, Glenayre and their agents and representatives,
at GTI's or Glenayre's expense, to inspect, review, and make copies of such
records as GTI or Glenayre may reasonably deem necessary or appropriate from
time to time, such activities to be conducted during normal business hours,
and (ii) Purchaser shall not, and shall cause each of WMC and/or WMC Delaware
not to, dispose of any of such records without first providing GTI and
Glenayre with an opportunity to take possession of such records or to make
copies thereof prior to any such disposal.
(d) Whenever any taxing authority asserts, or threatens to assert,
a claim, makes or threatens to make, an assessment or otherwise disputes or
affects the Tax reporting position of WMC and/or WMC Delaware for any Taxable
Period ending on or prior to the Closing Date, Purchaser shall promptly
inform GTI and Glenayre in writing provided, GTI and Glenayre have an
indemnification obligation to Purchaser with respect to such Taxes pursuant
to this Agreement. At GTI's and Glenayre's cost and election (which election
shall be exercised by written notice to Purchaser within 30 days after
Purchaser has so informed GTI and Glenayre), GTI, Glenayre or their
Affiliates shall control any proceedings and shall determine whether and when
to settle any such claim; provided, however, that GTI, Glenayre or their
Affiliates shall obtain WMC and/or WMC Delaware's consent (which shall not be
unreasonably withheld or delayed) if such settlement could reasonably be
expected to have the effect of increasing the future Tax liability of
Purchaser or WMC and/or WMC Delaware. GTI and Glenayre agree, or agree to
cause their Affiliates, to consult with Purchaser and keep Purchaser informed
with respect to the status of any discussion, proposal or submission with
respect to any such claim, audit or similar proceeding. If GTI and Glenayre
do not exercise such election to control such proceedings, then Purchaser
shall control such proceedings and shall consult with GTI and Glenayre and
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keep GTI and Glenayre informed with respect to the status of any discussion,
proposal or submission with respect to any such claim, audit or similar
proceeding and shall not agree to any settlement thereof without the prior
written consent of GTI and Glenayre, which consent shall not be unreasonably
withheld.
(e) If there is an audit adjustment with respect to Taxes of WMC
and/or WMC Delaware based on income (including adjustments relating to
deductions or credits) in a pre-Closing Taxable Period that produces a Tax
benefit to Purchaser in a post-Closing Taxable Period, Purchaser shall pay to
GTI an amount equal to Purchaser's Tax benefit.
(f) All refunds or credits of Taxes for or attributable to Taxable
Periods of WMC and/or WMC Delaware ending on or before the Closing Date shall
be for the account of GTI, other than any Tax refunds or credits accrued (i)
in calculating the Closing Net Worth or (ii) attributable to a carryback of a
net operating loss or similar tax attribute to a Post-Closing Taxable Period
of WMC and/or WMC Delaware to the extent permitted by Section 5.5(g), in each
case which will be for the account of Purchaser. Purchaser, GTI or Glenayre,
as the case may be, shall cause to be forwarded to the other party or to
reimburse the other party for any such refunds or credits immediately after
such receipt or realization thereof. All refunds or credits of Taxes for or
attributable to Taxable Periods of WMC and/or WMC Delaware ending after the
Closing Date shall be for the account of Purchaser, and, if GTI or any
Affiliates of GTI receives or realizes any such refund or credit, GTI or such
Affiliate shall forward to Purchaser or reimburse Purchaser for any such
refunds or credits immediately after such receipt or realization thereof by
GTI or such Affiliate.
(g) Purchaser shall not carryback, or cause WMC and/or WMC
Delaware to carryback (and shall make or cause WMC and/or WMC Delaware to
make any available election not to carryback), any net operating loss to any
pre-Closing Taxable Period of WMC and/or WMC Delaware nor shall Purchaser
file any claims for any refunds with respect to any such pre-Closing Taxable
Period for federal or state Taxes with respect to any such net operating
losses, except to the extent required by applicable Law.
(h) All Tax sharing agreements and similar agreements (other than
the provisions of this Agreement) between WMC and/or WMC Delaware and any
other corporation shall be terminated as of the Closing Date, and there shall
be no liability to Purchaser, GTI or Glenayre under any such agreement
following the Closing Date.
(i) GTI and Purchaser shall jointly make an election described in
Section 338(h)(10) of the Code and any corresponding election under state,
local or foreign Tax Laws for which a separate election is permissible with
respect to Purchaser's acquisition of the Purchased Common Shares under this
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Agreement (the "Section 338(h)(10) Election"); provided, however, that no
corresponding election shall be made under the Tax Laws of California. GTI
and Purchaser agree to report the transfers under this Agreement consistent
with the Section 338(h)(10) Election, and shall take no position contrary
thereto unless required to do so by applicable Tax Laws pursuant to a
Determination (as defined by Section 1313(a) of the Code). Purchaser shall
be responsible for the preparation and filing of all returns, documents,
statements or other forms that are required to be submitted to any federal,
state, county or other local Governmental Authority in connection with the
Section 338(h)(10) Election (including any "statement of section 338
election" and the United States Internal Revenue Service Form 8023, together
with any schedules or attachments thereto, that are required pursuant to
Treasury Regulation Section 1.338-1 or 1.338(h)(10)-1) (collectively, the
"Section 338 Forms") in accordance with applicable Tax Laws and the terms of
this Agreement. GTI shall execute and deliver to Purchaser such documents or
forms as are reasonably requested and are required by any Tax Laws to
properly complete the Section 338 Forms, at least 30 days prior to the date
such Section 338 Forms are required to be filed. Purchaser and GTI have
entered into an agreement (the "Allocation Agreement") concerning the
computation of the Aggregate Deemed Sale Price (as defined under applicable
Treasury Regulations) of the assets of WMC and/or WMC Delaware and the
allocation of such Aggregate Deemed Sale Price among such assets. Purchaser
and GTI shall use their best efforts to revise the Allocation Agreement to
the extent necessary to reflect any differences, if any, between the
estimated Closing Balance Sheet and the Closing Balance Sheet no later than
60 days before the last date on which the Section 338(h)(10) Election may be
filed. If, 60 days before the last date on which the Section 338(h)(10)
Election may be filed, Purchaser and GTI have not revised the Allocation
Agreement as described above, any disputed aspects of such revision shall be
resolved before the last date on which the Section 338(h)(10) Election may be
filed by a national or international accounting firm mutually agreed upon by
Purchaser and GTI having no material relationship with either Purchaser or
GTI. The costs, expenses and fees of such accounting firm shall be borne
equally by WMC and/or WMC Delaware and GTI. Purchaser and GTI agree to act
in accordance with the allocations contained in the Allocation Agreement in
any relevant returns or similar filings.
(j) GTI shall be responsible for filing any amended consolidated,
combined or unitary Tax Returns for any Taxable Period ending on or prior to
the Closing Date which are required as a result of examination adjustments
made by the Internal Revenue Service or by the applicable state, local or
foreign taxing authorities for such Taxable Period as finally determined;
provided, however, that no such Tax Return shall be filed without the prior
written consent of Purchaser (which shall not be unreasonably withheld or
delayed) if such Tax Return would have the effect of materially increasing
the Tax liability for WMC and/or WMC Delaware or materially reducing any net
operating loss, net capital loss, investment tax credit, foreign tax credit,
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charitable deduction or other credit or tax attribute of WMC and/or WMC
Delaware which could reduce Taxes of WMC and/or WMC Delaware after the
Closing (including deductions and credits related to alternative minimum
Taxes). For those jurisdictions in which separate Tax Returns are filed by
WMC and/or WMC Delaware, any required amended returns resulting from such
examination adjustments, as finally determined, shall be prepared by GTI and
furnished to WMC and/or WMC Delaware for approval, signature and filing at
least 15 days prior to the due date for filing such Tax Returns.
(k) After the date of this Agreement, none of GTI, Glenayre or WMC
and/or WMC Delaware or any Affiliated Group shall, as to WMC and/or WMC
Delaware, make or change any Tax election, change an annual Tax Accounting
period, adopt or change any Tax election, change an annual Tax Accounting
period, adopt or change any Tax accounting method, file any amended Tax
Return, enter into any closing agreement, settle any Tax Claim or assessment,
surrender any right to claim a refund of Taxes, consent to any extension or
waiver of the statute of limitations period applicable to any Tax claim or
assessment, if any such election, adoption, change, amendment, agreement,
settlement, surrender or consent would have the effect of materially
increasing the Tax liability of WMC and/or WMC Delaware or materially
reducing any net operating loss, net capital loss, investment tax credit,
foreign tax credit, charitable deduction or any other credit or tax attribute
of WMC and/or WMC Delaware which could reduce Taxes of WMC and/or WMC
Delaware after the Closing (including deductions and credits related to
alternative minimum Taxes) without the prior written consent of Purchaser
(which consent shall not be unreasonably withheld or delayed).
(l) GTI agrees that it shall not elect to reattribute to itself
pursuant to Treasury Regulation Section 1.1502-20(g) any net operating loss
carryovers or net capital loss carryovers of WMC and/or WMC Delaware.
(m) GTI agrees to elect to allocate any consolidated limitation
under Section 382 of the Code to WMC and/or WMC Delaware to provide the
maximum use of any net operating loss carryovers of WMC and/or WMC Delaware.
(n) Prior to the Closing, GTI shall cause WMC and/or WMC Delaware
to settle all Outstanding Tax Claims and pay all amounts owing by WMC and/or
WMC Delaware, including interest and penalties, incurred by WMC and/or WMC
Delaware in connection therewith.
5.6 Maintenance of Records Glenayre, GTI and Purchaser each agrees
that it will maintain, or in the case of Purchaser cause WMC to maintain, for
at least six years after the Closing Date (or for such longer period as may be
required by applicable Law) the books, records, and documents of WMC existing
on the Closing Date retained by it or, in the case of Purchaser, retained by
WMC (collectively, "WMC Records"). For so long as each party is required
pursuant to this Section to maintain WMC Records, such party shall or, in the
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case of Purchaser shall cause WMC to, permit the other party, during normal
business hours and upon reasonable prior notice, access to, with the right to
copy at such other party's expense, all WMC Records to the extent related to
the other party's legitimate business purpose.
5.7 Further Assurances. GTI, Glenayre and Purchaser each hereby
covenants and agrees with the others that at any time and from time to time it
will promptly execute and deliver to the other such further assurances,
instruments and documents and take such further action as the other may
reasonably request in order to carry out the full intent and purpose of this
Agreement, including (i) all actions reasonably requested in order to obtain
the Financing contemplated by the Commitment Letter, and (ii) all actions
necessary to obtain, prior to the Closing Date, all licenses, certificates,
permits, consents, approvals, authorizations and orders of Governmental
Authorities and parties to contracts relating to the Business as are
necessary for the consummation of the Transactions. At WMC's request, GTI
shall cause Glenayre Electronics to assign, or enforce for WMC's benefit (at
WMC's sole cost and expense), all rights of WMC under nondisclosure
agreements or international distributor agreements or other agreements, in
each case pertaining to the Business, entered into by GTI or its Affiliates.
5.8 Fees and Expenses. GTI, Glenayre and Purchaser shall each bear
their own respective expenses in connection with the negotiation and
preparation of this Agreement and the consummation of the Transactions,
including the fees and expenses of their respective counsel, investment
bankers, accountants and consultants. WMC shall not pay or agree to pay any
third-party out-of-pocket fees or expenses (other than incidental expenses that
are not material in the aggregate) in connection with the negotiation and
preparation of this Agreement and the consummation of the Transactions or the
Financing.
5.9 Non-Compete; Non-Solicitation.
(a) In further consideration of the Purchase Price to be paid
hereunder (and in recognition of the fact that Glenayre and GTI have had the
opportunity to become familiar with the trade secrets of WMC and other
confidential information of WMC, each of Glenayre and GTI agrees that, until
the third anniversary of the Closing Date (the "Noncompete Period"), neither
it nor any of its Affiliates shall directly or indirectly own any interest
in, manage or control or any Person engaged in, or in any manner engage in,
the Business (or any part of the Business that competes in any material
respect with WMC) anywhere in the world; provided that nothing in this
Section 5.9(a) shall prohibit Glenayre or GTI or their respective Affiliates
from (1) being a passive owner of not more than 5% of the outstanding stock
of any class of a corporation which is publicly traded; (2) engaging in any
business conducted by GTI or any Affiliate of GTI (other than WMC or WMC Sub)
on the Closing Date; (3) depleting its current inventory of satellite
receiver products (less than 70 units in stock) manufactured by GTI or its
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Affiliates; (4) selling products manufactured by third parties that may
compete with the products manufactured or sold by WMC so long as (A) the
products do not bear a Glenayre trademark and (B) such products are sold in
connection with the sale of products by GTI or its Affiliates which are
otherwise permitted by this Section 5.9(a); and (5) engaging in any business
competing with the Business if (A) such competition results from an
acquisition by GTI or any Affiliate of GTI (whether by stock or asset
acquisition, merger, consolidation or otherwise) of the business of another
Person (the portion of such business acquired from such Person that competes
with the Business being referred to herein as the "Acquired Competing
Business"), (B) the net sales derived from such Acquired Competing Business
are less than $25,000,000 during the last 12 months before such acquisition
and constitute 15% or less of the total net sales of the business acquired
from such other Person as of the date of such acquisition and (C) GTI or its
Affiliate promptly offers Purchaser the option to purchase the Acquired
Competing Business from Glenayre or its Affiliate on substantially the same
terms and conditions as Glenayre or its Affiliate acquired the Acquired
Competing Business and if Purchaser does not exercise that option by notice
to Glenayre or its Affiliate within 60 days from receipt by Purchaser of such
offer, Glenayre or its Affiliate shall (i) within 30 days following receipt
by Glenayre of Purchaser's notice, engage a nationally recognized investment
banking firm reasonably acceptable to Purchaser to sell such Acquired
Competing Business, (ii) within 60 days after engaging such firm, distribute
offering materials to prospective purchasers and WMC and (iii) establish as a
preliminary deadline for offers for the Acquired Competing Business a date
which is no later than six months following the engagement of the investment
banking firm, in each case time being of the essence. Nothing shall preclude
WMC from bidding for the Acquired Competing Business in such process. Subject
to the foregoing, Glenayre or its Affiliate shall in any event divest such
Acquired Competing Business within 18 months after the acquisition thereof.
In addition, the restrictions of this Section 5.9(a) shall terminate upon a
Change in Control of GTI.
(b) Prior to the second anniversary of the Closing Date, none of
Glenayre or GTI or their respective Affiliates shall induce or attempt to
induce any employee of WMC to leave the employ of WMC or hire any person who
is employed by WMC as of the Closing Date or who was employed by WMC within
90 days prior to being hired by Glenayre or GTI or their respective
Affiliates, provided that following a Change of Control that occurs before
the second anniversary of the Closing Date, the provisions of this Section
5.9(b) shall continue until the third anniversary of the Closing Date.
(c) If, at the time of enforcement of this Section 5.9, a court
shall hold that the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area and that the court shall
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be allowed to revise the restrictions contained herein to cover the maximum
period, scope and area permitted by Law. Each of Glenayre and GTI agrees
that the restrictions contained in this Section 5.9 are reasonable.
ARTICLE 6
CONDITIONS
6.1 Conditions to Each Party's Obligation to Close the
Transactions. The respective obligation of each party to close the
Transactions shall be subject to the fulfillment at or prior to the Closing
Date of the following conditions, except to the extent that the parties
hereto may mutually waive in writing any one or more thereof in whole or in
part:
(a) There shall not be pending or threatened by any Governmental
Authority any suit, action or proceeding (or by any other Person any suit,
action or proceeding which has a reasonable likelihood of success), (A)
challenging or seeking to restrain or prohibit the Transactions or seeking to
obtain from Purchaser, GTI, Glenayre or WMC and/or WMC Delaware in connection
with the Transactions any damages that are material, (B) seeking to prohibit
or limit the ownership or operation by Purchaser or WMC and/or WMC Delaware
of any material portion of the business or assets of Purchaser or WMC and/or
WMC Delaware, to compel Purchaser or WMC and/or WMC Delaware to dispose of or
hold separate any material portion of the business or assets of Purchaser or
WMC and/or WMC Delaware in each case as a result of the Transactions, (C)
seeking to impose any material limitations on the ability of Purchaser to
acquire or hold, or exercise full rights of ownership of, the Purchased
Common Shares, including the right to vote the Purchased Common Shares on all
matters properly presented to the stockholders of WMC and/or WMC Delaware or
(D) seeking to prohibit Purchaser from effectively controlling in any
material respect the Business.
(b) All consents, authorizations, orders and approvals of any
Governmental Authority or filings or registrations with any Governmental
Authority (including the expiration or termination of the waiting period
under the HSR Act) required in connection with the execution, delivery and
performance of this Agreement or necessary to permit Purchaser and WMC to
conduct the Business following the Closing shall have been obtained or made,
except for filings required to be made after the Closing Date and except
where the failure to have obtained or made any such consent, authorization,
order, approval, filing or registration would not have a WMC Material Adverse
Effect.
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(c) No temporary restraining order, preliminary or permanent
injunction, cease and desist order or other legal prohibition preventing the
purchase and sale of the Purchased Common Shares shall be in effect.
6.2 Conditions to Obligations of GTI and Glenayre to Close the
Transactions. The obligations of GTI and Glenayre to close the Transactions
shall be subject to the fulfillment at or prior to the Closing Date of the
following conditions, except to the extent that GTI and Glenayre may, in their
sole and absolute discretion, waive in writing any one or more thereof in whole
or in part:
(a) The representations and warranties of Purchaser made in this
Agreement qualified as to materiality shall be true and correct, and those
not so qualified shall be true and correct in all material respects, as of
the date hereof and as of the time of the Closing as though made as of such
time, except to the extent such representations and warranties expressly
relate to an earlier date (in which case such representations and warranties
qualified as to materiality shall be true and correct, and those not so
qualified shall be true and correct in all material respects, on and as of
such earlier date). Purchaser shall have performed or complied in all
material respects with all obligations and covenants required by this
Agreement to be performed or complied with by Purchaser by the time of the
Closing. Purchaser shall have delivered to GTI and Glenayre a certificate
dated the Closing Date and signed by an authorized officer of Purchaser
confirming the foregoing.
(b) GTI and Glenayre shall have received from Purchaser certified
copies of resolutions adopted by the Board of Directors of Purchaser
authorizing the execution, delivery and performance of this Agreement and the
Purchaser Additional Agreements and the Transactions.
(c) GTI and Glenayre shall have received the Stockholders'
Agreement, duly executed by Purchaser.
6.3 Conditions to Obligation of Purchaser to Close the Transactions.
The obligations of Purchaser to close the Transactions shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions,
except to the extent that Purchaser may, in its sole and absolute discretion,
waive in writing any one or more thereof in whole or in part:
(a) The representations and warranties of GTI and Glenayre made in
this Agreement qualified as to materiality shall be true and correct, and
those not so qualified shall be true and correct in all material respects, as
of the date hereof and as of the time of the Closing as though made as of
such time, except to the extent such representations and warranties expressly
relate to an earlier date(in which case such representations and warranties
qualified as to materiality shall be true and correct, and those not so
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qualified shall be true and correct in all material respects, on and as of
such earlier date). GTI and Glenayre shall have performed or complied in all
material respects with all obligations and covenants required by this
Agreement to be performed or complied with by GTI and Glenayre by the time of
the Closing. GTI and Glenayre shall each have delivered to Purchaser a
certificate dated the Closing Date and signed by an authorized executive
officer of GTI or Glenayre, as applicable, confirming the foregoing.
(b) All consents from Governmental Authorities or filings or
registrations with any Governmental Authority necessary to permit WMC to
conduct the Business following the Closing and the consents set forth on
Schedule 3.4 of the Disclosure Schedules shall have been obtained or made in
form and substance reasonably satisfactory to Purchaser.
(c) Purchaser shall have received from GTI and Glenayre certified
copies of all resolutions adopted by the Board of Directors of GTI and
Glenayre authorizing the execution, delivery and performance of this
Agreement, the GTI Additional Agreements and the Glenayre Additional
Agreement (as applicable) and the Transactions. Purchaser shall have
received from Glenayre Electronics certified copies of all resolutions
adopted by the Board of Directors of Glenayre Electronics authorizing the
execution, delivery and performance of the Glenayre Electronics Agreements.
Purchaser shall have received from GTI and Glenayre certified copies of all
resolutions adopted by the Board of Directors of WMC Delaware authorizing the
execution, delivery and performance of this Agreement, the WMC Delware
Additional Agreements, the Financing and the Transactions.
(d) Purchaser shall have received from Glenayre the resignations
of the officers and directors of WMC listed on Schedule 2.2 of the Disclosure
Schedules.
(e) WMC and Glenayre Electronics shall have entered into the
Transition Services Agreement.
(f) Purchaser shall have received from Glenayre a certificate in
the form prescribed by Treasury Regulation Section 1.1445-2(b)(2) certifying
that Glenayre is a nonforeign person for purposes of Section 1445 of the
Code.
(g) WMC Delaware shall have received the Term Borrowing and the
Drawdown in accordance with the terms, and subject to the conditions of the
Commitment Letter.
(h) Purchaser shall have received the Stockholders' Agreement,
duly executed by Glenayre, WMC Delaware and GTI.
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(i) Purchaser shall have received reasonable assurances that WMC
Sub is no longer a subsidiary of WMC.
(j) Purchaser shall have received the Assignment and the License
Agreements, each duly executed by Glenayre Electronics and WMC.
(k) WMC shall have been released as a guarantor of any borrowing
or other obligation of GTI, Glenayre or their Affiliates.
(l) The Sunnyvale Lease shall have been assigned from Glenayre
Electronics to WMC, pursuant to an assignment in form and substance
reasonably satisfactory to Purchaser.
ARTICLE 7
INDEMNIFICATION
7.1 Indemnification by GTI and Glenayre. Subject to the limitations
set forth in Section 7.4, GTI and Glenayre shall jointly and severally
indemnify and hold harmless the Purchaser Indemnified Parties from and
against any and all Loss or Losses that any of them shall incur, arising out
of (1) the breach of any representation or warranty made by GTI or Glenayre
in this Agreement; (2) any breach of any covenant to be performed by GTI or
Glenayre under this Agreement; (3) any Taxes imposed on or payable by WMC
which are not accrued (without taking into account any accrual for deferred
taxes reflecting differences between tax and book bases in assets and
liabilities) in calculating the Closing Net Worth (w) with respect to any
Taxable Period or portion thereof that ends on or before the Closing Date,
(x) as a result of the Section 338(h)(10) Election with respect to the
acquisition of the Purchased Common Shares as referred to in Section 5.5(i)
hereof, (y) under Treasury Regulation Section 1.1502-6(a) (or any similar
provision of state, local or foreign Law) by reason of WMC being included in
any consolidated, affiliated, combined or unitary group at any time on or
before the Closing Date as a transferee, by contract or otherwise or (z)
relating to any payments required to be made under any Tax indemnity, Tax
sharing, Tax allocation agreement or similar agreement; or (4) the claim
asserted by Custom Telecommunications, Inc. described in Item #2(d) of
Schedule 3.9(e) of the Disclosure Schedules or (5) the conduct, operation or
ownership of WMC Delaware on and prior to October 25, 1999.
7.2 Procedure.
(a) If any matter shall arise that may give rise to a claim by a
Purchaser Indemnified Party against GTI or Glenayre under the provisions of
Section 7.1 or by a Glenayre Indemnified Party against Purchaser under the
provisions of Section 7.5 (in either case, an "Indemnity Claim"), the party
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or parties claiming indemnification (the "Indemnified Party") shall give
written notice thereof (the "Notice of Claim") to the party or parties
against whom indemnification is claimed (the "Indemnifying Party") as
promptly as reasonably practicable, stating the specific nature of the
Indemnity Claim with reasonable detail as to the alleged basis of the
Indemnity Claim and the Section of this Agreement of which a violation is
alleged, provided, however, that failure to give such notification shall not
affect the indemnification provided hereunder except to the extent (and only
to the extent) the Indemnifying Party shall have been prejudiced as a result
of such failure. Subject to Section 5.5(d), if any Indemnity Claim is based
upon any claim, demand, suit or action of any third party against an
Indemnified Party (a "Third Party Claim"), then the Indemnified Party shall
or, in the event Purchaser is the Indemnified Party shall cause WMC to,
undertake the defense of such Third Party Claim, shall conduct such defense
as would be reasonable and prudent Person to whom no indemnity were available
and shall permit the Indemnifying Party (at its sole expense) to participate
in (but not control) such defense. The Indemnified Party shall periodically
consult with the Indemnifying Party and keep the Indemnifying Party informed
of any settlement negotiations and the status thereof with respect to such
Third Party Claim.
(b) If the Indemnified Party and the Indemnifying Party are unable
to resolve an Indemnity Claim within 45 days after the Indemnifying Party
receives the Notice of Claim, then the Indemnity Claim shall be referred by
Indemnified Party to, and be settled by, binding arbitration in accordance
with the then applicable Rules of Commercial Arbitration of the American
Arbitration Association. The arbitration panel or arbitrator (as applicable)
shall be selected as provided in Section 7.2(c). The arbitration panel or
arbitrator (as applicable) shall determine the amount, if any, of the
Indemnity Claim which is proper. The venue of the arbitral proceedings shall
be in New York, New York. In reaching a decision, the arbitration panel or
arbitrator (as applicable) shall apply the principles of law of a New York
court, in applying New York law, would use in the event of litigation on the
same issues. The arbitration panel or arbitrator (as applicable) shall
permit and facilitate such discovery as any of the parties to the arbitration
shall reasonably request. The decision rendered by the arbitration panel or
arbitrator (as applicable) shall be final and binding on the Indemnified
Party and then Indemnifying Party. Judgment on the award rendered by the
arbitration panel or arbitrator (as applicable) may be entered in any court
having jurisdiction thereof. The fees and expenses incurred in connection
with such arbitration (including attorneys' fees) shall be borne by the
Indemnified Party and the Indemnifying Party in inverse proportion as they
may prevail on matters resolved by such arbitration panel or arbitrator (as
applicable), which proportionate allocations shall also be determined by such
arbitration panel or arbitrator (as applicable) at the time judgment is
rendered thereby.
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(c) If the Indemnified Party and the Indemnifying Party cannot
resolve an Indemnity Claim within the 45-day period specified in Section
7.2(b), then promptly thereafter the Indemnified Party shall name an
individual to serve as an arbitrator on the arbitration panel to determine
the Indemnity Claim and shall give the Indemnifying Party notice thereof;
within 10 days after such notice, the Indemnifying Party shall name a second
individual to serve as an arbitrator on such arbitration panel. If the
Indemnifying Party does not name a second individual to serve on the
arbitration panel within such 10-day period, then the arbitrator named by the
Indemnified Party shall serve as the sole arbitrator. If the individual
named by the Indemnifying Party and the individual named by the Indemnified
Party, respectively, cannot agree on a third member within 10 days, then the
selection of a third individual to serve on the arbitration panel shall be
made by the American Arbitration Association or if the American Arbitration
Association fails to choose an arbitrator within 15 days after request by the
Indemnified Party or the Indemnifying Party, the third arbitrator shall be
appointed upon the application of either the Indemnified Party or the
Indemnifying Party to the United States District Court of the Southern
District of New York, or, in the event the jurisdictional requirements of
such Court are not satisfied, to the State Supreme Court of New York County,
New York.
7.3 Definition of Loss or Losses. For purposes of this Agreement,
"Loss" or "Losses" shall mean any and all liabilities, losses, damages, fees,
fines, Taxes, penalties, costs and expenses (including reasonable
accountants' and attorneys' fees) of every nature and character. The amount
of any indemnified Loss hereunder shall be reduced by the amount of (i)
insurance proceeds net of deductibles actually used and incidental expenses
and premium increases reasonably anticipated to result therefrom, (ii)
proceeds or amounts actually received from third parties directly with
respect to such Loss (regardless of when received), and (iii) any actual Tax
benefits which are currently realizable by the Indemnified Party in
connection with or as a result of such Loss. To the extent such Loss does not
give rise to a currently realizable Tax Benefit, and instead gives rise to a
subsequently realized Tax benefit to the Indemnified Party, such party shall
refund to the Indemnifying Party the amount of such Tax benefit when, as and
if realized. The amount of any indemnifiable Loss hereunder shall also be
increased by the amount of any current Tax cost incurred by the Indemnified
Party arising from the receipt of indemnity payments hereunder. In computing
the amount of any such Tax cost or Tax benefit, the Indemnified Party shall
be deemed to recognize all other items of income, gain, loss, deduction, or
credit before recognizing any item arising from the receipt of any indemnity
payment hereunder or the incurrence or payment of any indemnified Loss. Any
indemnity payment under this Agreement shall be treated as an adjustment to
the Purchase Price for Tax purposes, unless otherwise required by Law.
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7.4 Limitation of GTI's and Glenayre's Liability. Notwithstanding
any provision of the Agreement to the contrary, except in the case of actual
common law fraud on the part of GTI, Glenayre or WMC the liability of GTI and
Glenayre to Purchaser and the Purchaser Indemnified Parties shall be limited
as follows:
(a) After the Closing GTI and Glenayre shall not be liable or
responsible in any manner whatever to Purchaser or the Purchaser Indemnified
Parties, whether for indemnification or otherwise, except for indemnity as
expressly provided in this Article 7, and this Article 7 provides the
exclusive remedy and cause of action of Purchaser or any of the Purchaser
Indemnified Parties against GTI and Glenayre with respect to any matter
arising out of or in connection with this Agreement or the Transactions
(except for equitable relief in the nature of specific performance or
injunctive relief).
(b) GTI and Glenayre shall not have any liability with respect to
any Loss to the extent (and only to the extent) that GTI or Glenayre is
prejudiced as a result of (i) Purchaser's failure to take, or cause to be
taken, such action as may be reasonably necessary under the circumstances to
protect its interests and to otherwise mitigate the Loss, or (ii) Purchaser's
failure to provide GTI and Glenayre with prompt and continuing notice as
provided in Section 5.5(d) or 7.2(a), as applicable.
(c) GTI and Glenayre shall not have any liability for any Loss or
Losses otherwise indemnifiable under Section 7.1(1) or 7.1(4), other than
with respect to breaches of Sections 3.2, 3.3, 3.7 and 3.15, Tax matters
under Section 5.5 and Indemnity Claims under Section 7.1(3), to the extent of
the first $750,000 on a cumulative aggregate basis, of such Loss or Losses.
(d) GTI and Glenayre shall not have any liability to Purchaser
under Section 7.1 for any Loss or Losses, other than with respect to breaches
of Sections 3.2, 3.3, 3.7 and 3.15, Tax matters under Section 5.5 and
Indemnity Claims under Section 7.1(3), on a cumulative aggregate basis, in
excess of 33 1/3% of the total amount of the Purchase Price (as adjusted
pursuant to Section 2.3) and the Redemption Price.
(e) GTI and Glenayre shall not have any liability for any Loss
otherwise indemnifiable under Section 7.1(1), other than with respect to
breaches of Sections 3.2, 3.3, 3.7 and 3.15, Tax matters under Section 5.5
and Indemnity Claims under Section 7.1(3), arising out of any matter
disclosed in all material respects in the Disclosure Schedules or in any
certificate provided by GTI or Glenayre to Purchaser on or before the
Closing.
(f) GTI and Glenayre shall not have any liability for any Loss
otherwise indemnifiable hereunder with respect to which a Notice of Claim has
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not been given to GTI and Glenayre within the applicable time periods set
forth in Section 9.1.
(g) Purchaser shall have no right to indemnification under Section
7.1 with respect to any Loss to the extent that the matter forming the basis
for such Loss was specifically taken into account in the calculation of the
Closing Net Worth (that is, no "double counting").
(h) The limitations of Section 7.4(c), (d) and (e) shall not apply
to breaches of Sections 3.2, 3.3, 3.7 and 3.15, Tax matters under Section 5.5
or Indemnity Claims under Section 7.1(3).
7.5 Indemnification by Purchaser. Purchaser shall indemnify and
hold harmless the Glenayre Indemnified Parties from and against all Loss or
Losses that any of them incur, arising out of (1) the breach of any
representation or warranty made by Purchaser in this Agreement, (2) any
breach of any covenant to be performed by Purchaser under this Agreement or
(3) any liability of GTI or Glenayre Electronics with respect to the
Sunnyvale Lease arising following the Closing with respect to the period
following the Closing.
ARTICLE 8
TERMINATION
8.1 Termination by Mutual Consent. This Agreement may be
terminated and the Transactions may be abandoned at any time prior to the
Closing Date, by the mutual written consent of GTI, Glenayre and Purchaser.
8.2 Termination by GTI, Glenayre or Purchaser. This Agreement may
be terminated and the Transactions may be abandoned by either GTI, Glenayre
or Purchaser if (1) the Transactions shall not have been consummated by
November 15, 1999; provided, however, that the party (or its Affiliates)
seeking to terminate this Agreement pursuant to this clause (1) has not
caused such failure to close by any action or inaction constituting a breach
of any of its representations, warranties, commitments or agreements
contained in this Agreement, or (2) any Governmental Authority shall have
issued an order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the Transactions and such
order, decree, ruling or other action shall have become final and
nonappealable; provided, however, that the party (or its Affiliates) seeking
to terminate this Agreement pursuant to this clause (2) shall have used all
reasonable efforts to remove such order, decree, ruling or action or to enter
into any agreement contemplated by this Agreement to be entered into prior to
the Closing.
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8.3 Termination by GTI and Glenayre. This Agreement may be
terminated and the Transactions may be abandoned at any time prior to the
Closing Date by action or authorization of GTI and Glenayre if (1) there has
been a material breach by Purchaser of any representation or warranty
contained in this Agreement; (2) there has been a material breach of any of
the covenants or agreements set forth in this Agreement on the part of
Purchaser, which breach is not curable or, if curable, is not cured within 30
days after written notice of such breach is given by GTI and Glenayre to
Purchaser; or (3) all of the conditions precedent to Purchaser's obligation
to close the Acquisition shall have been satisfied for at least five Business
Days (other than conditions that by their terms are to be satisfied at the
Closing) but Purchaser shall nevertheless willfully refuse to close the
Transactions for any reason other than those set forth in Sections 8.2 and
8.4.
8.4 Termination by Purchaser. This Agreement may be terminated
and the Transactions may be abandoned at any time prior to the Closing Date
by action or authorization of Purchaser if (1) there has been a breach by GTI
or Glenayre of any representation or warranty contained in this Agreement
which would be reasonably likely to have a WMC Material Adverse Effect; (2)
there has been a material breach of any of the covenants or agreements set
forth in this Agreement on the part of GTI or Glenayre, which breach is not
curable or, if curable, is not cured within 30 days after written notice of
such breach is given by Purchaser to GTI and Glenayre; or (3) all of the
conditions precedent to GTI's and Glenayre's obligations to close the
Transactions shall have been satisfied for at least five Business Days (other
than conditions that by their terms are to be satisfied at the Closing) but
GTI and Glenayre shall nevertheless willfully refuse to close the
Transactions for any reason other than those set forth in Sections 8.1 and
8.3.
8.5 Effect of Termination and Abandonment. Upon termination of
this Agreement pursuant to this Article, this Agreement shall be void and of
no further effect, and there shall be no liability by reason of this
Agreement or the termination thereof on the part of any party hereto or on
the part of the respective directors, officers, employees, agents or
shareholders of any of them, in each case except for the provisions of (i)
the NDA relating to the obligation of Purchaser to keep confidential certain
information and data obtained by it, (ii) Sections 2.1(a) and 5.8 relating to
certain expenses, (iii) Section 5.7 relating to finder's fees and broker's
fees, (iv) Sections 8.1, 8.2, 8.3 and 8.4 and this Section 8.5. Nothing in
this Section 8.5 shall be deemed to release any party from any liability for
any breach by such party of the terms and provisions of this Agreement or to
impair the right of any party to compel specific performance by any other
party of its obligations under this Agreement.
57
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8.6 Extension; Waiver. At any time prior to the Closing Date, GTI
and Glenayre, on the one hand, or Purchaser, on the other hand, may (1)
extend the time for the performance of any of the obligations or other acts
of the other parties hereto, (2) waive any inaccuracies in the
representations and warranties made to such party contained herein or in any
document delivered pursuant hereto and (3) waive compliance with any of the
agreements or conditions for the benefit of such party contained herein. Any
agreement on the part of GTI, Glenayre or Purchaser to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE 9
GENERAL PROVISIONS
9.1 Effectiveness of Representations, Warranties and Covenants.
(a) The representations and warranties in this Agreement shall
survive the Closing as follows:
(1) the representations and warranties set forth in Section
3.7 (Tax Matters) shall expire five years after the Closing Date, but
Indemnity Claims with respect to Taxes may be made under Section 7.1(3)
until the expiration of the 30 day period following the statute of
limitations with respect to matters covered by Section 7.1(3);
(2) the representations and warranties set forth in Section
3.16 (Environmental Laws) shall survive until the expiration of two
years after the Closing Date;
(3) the representations and warranties set forth in Section
3.2 (Capitalization), Section 3.3 (Authorization), Section 3.15
(Brokers), Section 4.2 (Authorization), Section 4.6 (Investment
Representations) and Section 4.7 (Brokers) shall not terminate; and
(4) all other representations and warranties in this
Agreement shall terminate on the later of (A) 60 days after receipt by
the Purchaser of WMC's audited financial statements for the year ended
December 31, 1999 and (B) April 30, 2001;
provided that any representation or warranty in respect of which indemnity
may be sought under Section 7.1 and the indemnity with respect thereto, shall
survive the time at which it would otherwise terminate pursuant to this
Section 9.1 if a Notice of Claim with respect to the inaccuracy or breach or
potential inaccuracy or breach thereof shall have been given to the party
against whom such indemnity may be sought prior to such time.
58
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(b) The covenants and all other agreements in this Agreement shall
survive until the expiration of the applicable statute of limitations with
respect to the liabilities in question.
9.2 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly
given or made as of the date delivered, mailed or transmitted, if delivered
personally or mailed by registered or certified mail (postage prepaid, return
receipt requested) to the parties at the following addresses (or at such
other address for a party as shall be specified by like changes of address)
or sent by electronic transmission to the facsimile numbers specified below:
(a) If to Glenayre:
GTI Acquisition Corp.
One Capital Place
P.O. Box 1034
Grand Cayman, British West Indies
Attention: President
Facsimile No.: (345) 949-8499
with copies to:
Glenayre Technologies, Inc.
5935 Carnegie Boulevard
Charlotte, North Carolina 28209
Attention: President
Facsimile No.: (704) 553-7878
Kennedy Covington Lobdell & Hickman, L.L.P.
Bank of America Corporate Center
100 N. Tryon Street
Suite 4200
Charlotte, NC 28202
Attention: Eugene C. Pridgen
Facsimile No.: (704) 331-7598
(b) If to GTI:
Glenayre Technologies, Inc.
5935 Carnegie Boulevard
Charlotte, North Carolina 28209
Attention: President
Facsimile No.: (704) 553-7878
59
<PAGE>
with a copy to:
Kennedy Covington Lobdell & Hickman, L.L.P.
Bank of America Corporate Center
100 N. Tryon Street
Suite 4200
Charlotte, NC 28202
Attention: Eugene C. Pridgen
Facsimile No.: (704) 331-7598
(c) If to Purchaser:
WMC Holding Corp.
c/o Leeward Technology Partners
101 California Street
Suite 2825
San Francisco, CA 94111
Attention: Jonathan N. Zakin
Facsimile No.: (415) 772-9289
and:
WMC Holding Corp.
c/o Ripplewood Holding LLC
One Rockefeller Plaza
32nd Floor
New York, NY 10020
Attention: Jeff Hendren
Facsimile No.: (212) 218-2778
with a copy to:
Simpson Thacher & Bartlett
3373 Hillview Avenue
Palo Alto, CA 94304
Attention: Daniel Clivner
Facsimile No.: (650) 251-5002
9.3 Assignment; Binding Effect; Benefit. Neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned
by any of the parties hereto without the prior written consent of the other
parties, except that Purchaser may assign this Agreement and its rights and
obligations hereunder in connection with a merger or consolidation involving
WMC or in connection with a sale of stock or assets of WMC or other
disposition of WMC or the Business. Notwithstanding the foregoing, without
the consent of Glenayre and GTI, (a) Purchaser may assign its right to
purchase the Purchased Common Shares or any portion thereof hereunder and its
60
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related obligations hereunder (including with respect to Employees) to an
Affiliate of Purchaser and (b) Purchaser may assign its rights hereunder by
way of security and such secured party may assign such rights by way of
exercise of remedies; provided, however, that no assignment shall limit or
affect the assignor's obligations hereunder. Subject to the preceding
sentences, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. Any attempted assignment in violation of this Section 9.3 shall be
void.
9.4 Entire Agreement. Except for the Non-Disclosure Agreement,
dated as of June 25, 1999, between GTI and Ripplewood Holdings (the "NDA"),
this Agreement (together with the other agreements contemplated hereunder)
and the Disclosure Schedules constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings among the parties with respect thereto.
9.5 Amendment. This Agreement may not be modified or amended,
except by an instrument in writing signed on behalf of Glenayre, GTI and
Purchaser.
9.6 Governing Law. The validity of this Agreement, the
construction of its terms and the determination of the rights and duties of
the parties hereto shall be governed by and construed in accordance with the
laws of the United States and those of the State of New York applicable to
contracts made and to be performed wholly within such state and
without regard to the conflict of laws principles thereof.
9.7 Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all of the
parties hereto.
9.8 Severability. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining
terms and provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
61
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first written above.
GTI ACQUISITION CORP.
By: /s/ John C. Berens
---------------------------
Name: John C. Berens
Title: President
GLENAYRE TECHNOLOGIES, INC.
By: /s/ Clarke H. Bailey
----------------------------
Name: Clarke H. Bailey
Title: Chairman
WESTERN MULTIPLEX CORPORATION, a California corporation
By: /s/ Stanley C. Cipcienski
----------------------------
Name: Stanley C. Cipcienski
Title: Chief Financial Officer
WESTERN MULTIPLEX CORPORATION, a Delaware corporation
By: /s/ Jeffrey M. Hendren
---------------------------
Name: Jeffrey M. Hendren
Title: Secretary
WMC HOLDING CORP.
By: /s/ Jeffrey M. Hendren
--------------------------
Name: Jeffrey M. Hendren
Title: Vice President
<PAGE>
EXHIBIT 2.2
AMENDMENT
TO
ACQUISITION AGREEMENT
AMENDMENT (this "Amendment"), dated as of October 31, 1999, by and
among GTI ACQUISITION CORP., a Delaware corporation ("Glenayre"); GLENAYRE
TECHNOLOGIES, INC., a Delaware corporation ("GTI"); WESTERN MULTIPLEX
CORPORATION, a California corporation ("WMC California"); WESTERN MULTIPLEX
CORPORATION, a Delaware corporation ("WMC Delaware") and WMC HOLDING CORP., a
Delaware corporation ("Purchaser"), to the Acquisition Agreement, dated as of
September 30, 1999, by and among Glenayre, GTI, WMC California and Purchaser
(the "Acquisition Agreement").
STATEMENT OF PURPOSE
Glenayre, GTI, WMC California and Purchaser are parties to the
Acquisition Agreement;
The Acquisition Agreement provided that the parties would
reasonably cooperate prior to the Closing to ensure that the Redemption
complies with the applicable corporate law requirements and requirements for
"recap accounting" treatment, including making appropriate modifications to
the Acquisition Agreement, if necessary;
In connection therewith, Glenayre has contributed 100% of the
capital stock of WMC California to WMC Delaware, a wholly owned subsidiary of
Glenayre, in exchange for 80,000,000 shares of Class B Common Stock, par
value $.01 per share, of WMC Delaware, and the parties desire that the
Transactions (other than the Charter Amendment) shall apply with respect to
the Class B Common Stock of WMC Delaware rather than the common stock of WMC
California, as provided in the Acquisition Agreement;
Glenayre, GTI, WMC California and Purchaser therefore desire to
amend the Acquisition Agreement to reflect the foregoing changes and to add
WMC Delaware as a party thereto.
NOW, THEREFORE, in consideration of the Statement of Purpose and of
the mutual agreements contained herein, the parties hereto do hereby agree as
follows:
<PAGE>
1. Amendment of the Preamble.
-------------------------
a. The Preamble of the Acquisition Agreement is hereby amended in its
entirety to read as follows:
"THIS ACQUISITION AGREEMENT (this "Agreement") is executed as of
September 30, 1999 by and among GTI ACQUISITION CORP., a Delaware
corporation ("Glenayre"); GLENAYRE TECHNOLOGIES, INC., a Delaware
corporation ("GTI"); WESTERN MULTIPLEX CORPORATION, a California
corporation ("WMC" or "WMC California"); WESTERN MULTIPLEX CORPORATION,
a Delaware corporation ("WMC Delaware"); and WMC HOLDING CORP., a
Delaware corporation ("Purchaser")."
b. Except as amended by this Amendment, all references to "WMC" in the
Acquisition Agreement shall be deemed references to "WMC California".
2. Amendment of the Statement of Purpose.
-------------------------------------
a. The Statement of Purpose of the Acquisition Agreement is hereby
amended in its entirety to read as follows:
"Glenayre, a wholly-owned subsidiary of GTI, owns all of the issued and
outstanding capital stock of WMC Delaware, which consists of 80,000,000
shares of Class B Common Stock, par value $.01 per share (the "WMC
Delaware Class B Common Stock").
The parties desire that WMC enter into (i) two term loan facilities
(collectively, the "Term Facilities") under which WMC will borrow the
aggregate principal amount of $22,000,000 (the "Term Borrowing") and
(ii) a $10 million revolving credit facility (the "Revolving Facility")
under which WMC will draw down $2 million at the Closing (the
"Drawdown"), in each case with certain providers of financing arranged
by Purchaser and on substantially the terms set forth in the commitment
letter attached as Exhibit 1 to this Agreement (the "Commitment
Letter").
The proceeds from the Term Borrowing shall be used by WMC to redeem from
Glenayre 42,000,000 shares of WMC Delaware Class B Common Stock (the
"Redeemed Shares") for $21,000,000, as a result of which Glenayre shall
continue to hold 38,000,000 shares of WMC Delaware Class B Common Stock
immediately after such redemption (the "Redemption").
Immediately after the Redemption, Glenayre desires to sell to Purchaser,
and Purchaser desires to purchase from Glenayre, 35,955,000 shares of
WMC Delaware Class B Common Stock (the "Purchased Common Shares") on the
terms and subject to the conditions set forth herein, as a result of
which Glenayre shall continue to hold 2,045,000 shares of WMC Delaware
Class B Common Stock (the "Retained Shares")."
-2-
<PAGE>
3. Amendment of Article 1
----------------------
a. Section 1.1. of the Acquisition Agreement is hereby amended by
deleting the references to "Charter Amendment". Sections 1.1
(Transactions), 3.3(d), 3.4(b)(4), 5.2(c)(1) and 5.8 of the Acquisition
Agreement are hereby amended by deleting the reference to "Charter Amendment"
contained therein.
b. Section 1.1. of the Acquisition Agreement is hereby amended by
deleting the definition of "Old WMC Shares" and inserting in lieu thereof the
following:
"'Old WMC California Shares"is defined in Section 3.2(b)."
c. Section 1.1. of the Acquisition Agreement is hereby amended by
deleting the definition of "Stockholders' Agreement" and inserting in lieu
thereof the following:
"Stockholders' Agreement" means the Stockholders' Agreement among
Glenayre, GTI, WMC Delaware and Purchaser substantially in the
form of Exhibit 4 to this Agreement."
d. Section 1.1 of the Acquisition Agreement is hereby amended by
adding the following definitions, in alphabetical order:
"'WMC" or "WMC California" shall mean Western Multiplex
Corporation, a California corporation, and its successors."
"'WMC Delaware' shall mean Western Multiplex Corporation, a
Delaware corporation, and its successors."
"'WMC Class B Common Stock" means the Class B Common Stock of WMC
Delaware, par value $.01 per share."
4. Amendment of Article 2
----------------------
a. Section 2.1(a) of the Acquisition Agreement is hereby amended in
its entirety to read as follows:
"WMC Delaware shall enter into the Term Facilities and the
Revolving Facility and make the Term Borrowing and the Drawdown."
b. Section 2.1(b) of the Acquisition Agreement is hereby amended in
its entirety to read as follows:
"WMC Delaware shall effect the Redemption for $21,000,000 (the
"Redemption Price"), payable by wire transfer of immediately
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<PAGE>
available funds to an account designated by Glenayre (such
designation to be not less than two Business Days before the
Closing Date). The Redeemed Shares shall be assigned, transferred
and delivered by Glenayre to WMC Delaware upon redemption free and
clear of all Liens."
c. Section 2.1(d) of the Acquisition Agreement is hereby amended by
deleting the reference to "$18,031,000" in the fourth line and inserting in
lieu thereof the number "$17,977,500."
d. Paragraphs (1) and (2) of Section 2.2(b) of the Acquisition
Agreement are hereby amended in their entirety to read as follows:
"(1) WMC Delaware shall execute the agreements and notes
relating to the Term Facilities and the Revolving
Facility and make the Term Borrowing and the Drawdown.
(2) WMC Delaware shall pay to Glenayre the Redemption Price as set
forth in Section 2.1(b), and Glenayre shall deliver to WMC
Delaware certificates for all of the Redeemed Shares, together
with accompanying stock powers duly endorsed in blank."
e. Paragraph (3) of Section 2.2(b) of the Acquisition Agreement is
hereby amended by substituting clause (viii) in its entirety to read as
follows:
"the Stockholders' Agreement, duly executed by GTI, Glenayre and
WMC Delaware,"
5. Amendment of Article 3
----------------------
a. Section 3.1 of the Acquisition Agreement is hereby amended by
adding the following sentence at the end thereof:
"WMC Delaware is a corporation duly organized, validly existing and
in good standing under the Laws of the State of Delaware and has
the requisite corporate power and authority to own, lease and
operate its properties, to enter into this Agreement and the
Stockholders' Agreement and to consummate the Transactions. WMC
Delaware is not qualified or licensed as a foreign corporation."
b. Section 3.2 of the Acquisition Agreement is hereby amended by
adding a new paragraph (a) as follows and renumbering the existing paragraph
as paragraph (b):
-4-
<PAGE>
"The authorized capital stock of WMC Delaware consists of
200,000,000 shares of common stock of WMC, consisting of
100,000,000 shares of Class A Common Stock, par value $.01 per
share and 100,000,000 shares of WMC Delaware Class B Common Stock,
of which only 80,000,000 Shares of WMC Delaware Class B Common
Stock are issued and outstanding. No shares of Class A Common
Stock have been issued. All of the issued and outstanding shares
of WMC Delaware Class B Common Stock have been, and all of the
Redeemed Shares, Purchased Common Shares and Retained Shares will
be, duly authorized and validly issued, are or will be fully paid
and nonassessable, are not or will not be subject to or issued in
violation of any purchase option, call option, right of first
refusal, preemptive right, subscription right or any similar right
under any provision of the General Corporation Law of Delaware, the
Articles of Incorporation or Bylaws of WMC Delaware or any Contract
to which WMC Delaware is a party or otherwise bound and are or will
be owned by Glenayre, free and clear of any Liens except for this
Agreement and the Stockholders' Agreement and the restrictions on
transferability imposed by federal and state securities Laws.
Immediately prior to the Closing, Glenayre will be the owner
beneficially and of record of, and have good and valid title to,
all the Redeemed Shares, the Purchased Common Shares and the
Retained Shares, and immediately after the Closing, Glenayre will
be the owner beneficially and of record of all the Retained Shares,
in each case free and clear of any Liens, except for the
restrictions on transferability imposed by federal and state
securities Laws and the Stockholders' Agreement. Assuming Purchaser
has the requisite power and authority to be the lawful owner of the
Purchased Common Shares, upon delivery to Purchaser at the Closing
of certificates representing the Purchased Common Shares, duly
endorsed by Glenayre for transfer to Purchaser, and upon Glenayre's
receipt of the Purchase Price, good and valid title to the
Purchased Common Shares will pass to Purchaser, free and clear of
any Liens other than those arising from acts of Purchaser or its
Affiliates, the restrictions on transferability imposed by federal
and state securities Laws and the Stockholders' Agreement. Other
than this Agreement and upon its execution the Stockholders'
Agreement, the issued and outstanding shares of WMC Delaware Class
B Common Stock , Retained Shares, Redeemed Shares and Purchased
Common Shares are not and will not be subject to any voting trust
agreement or other Contract, including any Contract restricting or
otherwise relating to the voting, dividend rights or disposition of
the shares of WMC Delaware Class B Common Stock, Retained Shares,
Redeemed Shares and Purchased Common Shares. Immediately after the
Closing, except for the Purchased Common Shares and the Retained
Shares or any other shares of capital stock of WMC Delaware which
Purchaser causes WMC Delaware to reserve for issuance (including
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<PAGE>
any such shares issued or reserved for issuance to employees of WMC
Delaware or WMC in connection with or immediately after the
Closing), there will be no shares of capital stock or other equity
securities of WMC Delaware issued, outstanding or reserved for
issuance. There are no bonds, debentures, notes or other
indebtedness of WMC Delaware having the right to vote (or
convertible into, or exchangeable for, securities having the right
to vote) on any matters on which holders of WMC Delaware common
stock may vote ("Voting Company Debt"). Except as set forth above,
there are no options, warrants, rights, convertible or exchangeable
securities, "phantom" stock rights, stock appreciation rights,
stock-based performance units, or Contract of any kind to which WMC
Delaware is a party or by which either of them is bound (i)
obligating WMC Delaware to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or
other equity interests in, or any security convertible or
exercisable for or exchangeable into any capital stock of or other
equity interest in, WMC Delaware or any Voting Company Debt, (ii)
obligating WMC Delaware to issue, grant, extend or enter into any
such option, warrant, call, right, security or Contract or (iii)
that give any Person the right to receive any economic benefit or
right similar to or derived from the economic benefits and rights
accruing to holders of WMC Delaware common stock. Other than this
Agreement, there are no outstanding contractual obligations of WMC
Delaware to repurchase, redeem or otherwise acquire any shares of
capital stock of WMC Delaware. WMC Delaware does not own directly
or indirectly any interest or investment in any other Person except
for WMC, and WMC Delaware does not have any obligation to make any
additional investments in any Person. Except as contemplated by
this Agreement, since the date of its incorporation, WMC Delaware
has not conducted any business, owned any assets (other than Old
WMC California Shares) or incurred or assumed any liabilities."
c. Section 3.2 of the Acquisition Agreement is hereby amended by
amending new paragraph (b) to read in its entirety as follows:
"The authorized capital stock of WMC consists of 25,000,000 shares
of common stock of WMC, of which only 1,000 shares are issued and
outstanding (the "Old WMC California Shares"). All of the Old WMC
California Shares have been duly authorized and validly issued, are
fully paid and nonassessable, are not subject to or issued in
violation of any purchase option, call option, right of first
refusal, preemptive right, subscription right or any similar right
under any provision of the CGCL, the Articles of Incorporation or
Bylaws of WMC or any Contract to which WMC is a party or otherwise
bound and are owned by WMC Delaware, free and clear of any Liens.
The Old WMC California Shares are not and will not be subject to
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<PAGE>
any voting trust agreement or other Contract, including any
Contract restricting or otherwise relating to the voting, dividend
rights or disposition of the Old WMC California Shares.
Immediately after the Closing, there will be no shares of capital
stock or other equity securities of WMC California issued,
outstanding or reserved for issuance. There are no bonds,
debentures, notes or other indebtedness of WMC having the right to
vote (or convertible into, or exchangeable for, securities having
the right to vote) on any matters on which holders of WMC common
stock may vote ("WMC Voting Debt"). Except as set forth above,
there are no options, warrants, rights, convertible or exchangeable
securities, "phantom" stock rights, stock appreciation rights,
stock-based performance units, or Contract of any kind to which WMC
is a party or by which either of them is bound (i) obligating WMC
to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock or other equity interests
in, or any security convertible or exercisable for or exchangeable
into any capital stock of or other equity interest in, WMC or any
WMC Voting Debt, (ii) obligating WMC to issue, grant, extend or
enter into any such option, warrant, call, right, security or
Contract or (iii) that give any Person the right to receive any
economic benefit or right similar to or derived from the economic
benefits and rights accruing to holders of WMC common stock. There
are no outstanding contractual obligations of WMC to repurchase,
redeem or otherwise acquire any shares of capital stock of WMC.
WMC does not own directly or indirectly any interest or investment
in any other Person except for WMC's ownership of shares in a
mutual insurance company through its payment of premiums in the
ordinary course of business, and WMC does not have any obligation
to make any additional investments in any Person."
d. Section 3.3 of the Acquisition Agreement is hereby amended by
amending the first and second sentences of paragraph (d) to read in their
entirety as follows:
"WMC has all necessary corporate power and authority to execute and
deliver this Agreement, the License Agreement and the Assignment
(the "WMC Additional Agreements") and to perform its obligations
hereunder and thereunder. The execution, delivery and performance
of this Agreement and the WMC Additional Agreements by WMC have
been duly and validly authorized by all necessary corporate action
on the part of WMC."
e. Section 3.3 of the Acquisition Agreement is hereby amended by adding
a new paragraph (e) at the end thereof as follows:
-7-
<PAGE>
"(e) WMC Delaware has all necessary corporate power and authority
to execute and deliver this Agreement and the Stockholders'
Agreement (the "WMC Delaware Additional Agreements") and to perform
its obligations hereunder and thereunder and to consummate the
Transactions. The execution, delivery and performance of this
Agreement and the WMC Delaware Additional Agreements by WMC
Delaware and the consummation by it of the Transactions have been
duly and validly authorized by all necessary corporate action on
the part of WMC Delaware. This Agreement has been duly and validly
executed and delivered by WMC Delaware and as of the Closing it
will have duly executed and delivered each of the WMC Delaware
Additional Agreements, and, assuming the due authorization,
execution and delivery of this Agreement and the WMC Delaware
Additional Agreements (as applicable) by Purchaser, this Agreement
constitutes, and each of the WMC Delaware Additional Agreements
when executed will constitute, a legal, valid and binding
obligation of WMC Delaware enforceable against it in accordance
with its terms, except as such enforceability may be limited by
applicable bankruptcy, reorganization, insolvency, moratorium or
similar Laws affecting creditors' rights generally and by such
principles of equity as may affect the availability of equitable
remedies."
6. Amendment of Article 5
----------------------
a. Section 5.5 of the Acquisition Agreement is hereby amended by
adding the words "and/or WMC Delaware" following each reference to "WMC" in
such Section.
7. Amendment of Article 6
----------------------
a. Section 6.1 of the Acquisition Agreement is hereby amended by
adding the words "and/or WMC Delaware" following each reference to "WMC" in
paragraph (a).
b. Paragraph (c) of Section 6.3 of the Acquisition Agreement is hereby
amended by adding the following sentence at the end thereof:
"Purchaser shall have received from GTI and Glenayre certified
copies of all resolutions adopted by the Board of Directors of WMC
Delaware authorizing the execution, delivery and performance of
this Agreement, the WMC Delware Additional Agreements, the
Financing and the Transactions."
c. Paragraphs (g) and (h) of Section 6.3 of the Acquisition Agreement
are hereby amended in their entirety to read as follows:
-8-
<PAGE>
"(g) WMC Delaware shall have received the Term Borrowing and the
Drawdown in accordance with the terms, and subject to the
conditions of the Commitment Letter.
(h) Purchaser shall have received the Stockholders' Agreement,
duly executed by Glenayre, WMC Delaware and GTI."
8. Amendment of Article 7
----------------------
a. Section 7.1 of the Acquisition Agreement is hereby amended by
adding clause (5) at the end thereof as follows:
"or (5) the conduct, operation or ownership of WMC Delaware on and
prior to October 25, 1999."
b. Section 7.5 of the Acquisition Agreement is hereby amending clause
(3) thereof to read in its entirety as follows:
"(3) any liability of GTI or Glenayre Electronics with respect to
the Sunnyvale Lease arising following the Closing with respect to
the period following the Closing."
9. Amended and Restated Acquisition Agreement.
------------------------------------------
For ease of reference, the parties shall execute and deliver an amended
and restated Acquisition Agreement in the form attached hereto.
10. Definitions.
-----------
Capitalized terms not otherwise defined herein shall have the meaning
ascribed to such terms in the Acquisition Agreement.
11. Counterparts.
------------
This Amendment may be executed in two or more counterparts, and by
different parties on separate counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same instrument.
* * *
-9-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
GTI ACQUISITION CORP.
By: /s/ Jon C. Berens
----------------------------
Name: Jon C. Berens
Title: President
GLENAYRE TECHNOLOGIES, INC.
By: /s/ Clarke H. Bailey
----------------------------
Name: Clarke H. Bailey
Title: Chairman
WESTERN MULTIPLEX CORPORATION, a California
corporation
By: /s/ Stanley Cipcienski
----------------------------
Name: Stanley Cipcienski
Title: Chief Financial Officer
WESTERN MULTIPLEX CORPORATION, a Delaware
corporation
By: /s/ Jeffrey M. Hendren
----------------------------
Name: Jeffrey M. Hendren
Title: Secretary
WMC HOLDING CORP.
By: /s/ Jeffrey M. Hendren
----------------------------
Name: Jeffrey M. Hendren
Title: Vice President
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EXHIBIT 4.2
STOCKHOLDERS' AGREEMENT
among
WESTERN MULTIPLEX CORPORATION,
WMC HOLDING CORP.,
GTI ACQUISITION CORP.
and
GLENAYRE TECHNOLOGIES, INC.
dated as of
October 31, 1999
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TABLE OF CONTENTS
Page
I. INTRODUCTORY MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Construction . . . . . . . . . . . . . . . . . . . . . . . 4
II. TRANSFERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1. Limitations on Transfer . . . . . . . . . . . . . . . . . 4
2.2. Right of First Refusal . . . . . . . . . . . . . . . . . . 5
2.3. Transfers to Affiliates . . . . . . . . . . . . . . . . . 6
2.4. Tag-Along Rights . . . . . . . . . . . . . . . . . . . . . 6
2.5. Drag-Along Rights . . . . . . . . . . . . . . . . . . . . 8
III. REGISTRATION RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.1. Piggyback Rights . . . . . . . . . . . . . . . . . . . . . 9
3.2. Other Registration Related Matters. . . . . . . . . . . . 10
3.3. Indemnification . . . . . . . . . . . . . . . . . . . . . 12
IV. ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . 15
4.1. Right to Purchase Additional Common Stock . . . . . . . . 15
4.2 Transactions With Affiliates . . . . . . . . . . . . . . . 16
4.3 Restrictions on Certain Fees. . . . . . . . . . . . . . . 17
V. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.1. Additional Securities Subject to Agreement . . . . . . . . 17
5.2. Covenant by GTI . . . . . . . . . . . . . . . . . . . . . 17
5.3. Termination . . . . . . . . . . . . . . . . . . . . . . . 17
5.4. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.5. Further Assurances . . . . . . . . . . . . . . . . . . . . 18
5.6. Non-Assignability . . . . . . . . . . . . . . . . . . . . 18
5.7. Amendment; Waiver . . . . . . . . . . . . . . . . . . . . 18
5.8. Third Parties . . . . . . . . . . . . . . . . . . . . . . 18
5.9. Governing Law . . . . . . . . . . . . . . . . . . . . . . 18
5.10. Specific Performance . . . . . . . . . . . . . . . . . . . 18
5.11. Entire Agreement . . . . . . . . . . . . . . . . . . . . . 18
5.12. Titles and Headings . . . . . . . . . . . . . . . . . . . 19
5.13. Severability . . . . . . . . . . . . . . . . . . . . . . . 19
5.14. Counterparts . . . . . . . . . . . . . . . . . . . . . . . 19
5.15. Reporting Requirements . . . . . . . . . . . . . . . . . . 19
5.16. Representations . . . . . . . . . . . . . . . . . . . . . 20
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EXHIBIT 4.2
STOCKHOLDERS' AGREEMENT
STOCKHOLDERS' AGREEMENT, dated as of October 31, 1999 (this
"Agreement"), among Western Multiplex Corporation, a Delaware corporation
(the "Company"), WMC Holding Corp., a Delaware corporation (together with its
successors, "WMC Holding"), GTI Acquisition Corp., a Delaware corporation
(together with its successors, "Glenayre") and Glenayre Technologies, Inc., a
Delaware corporation (together with its successors, "GTI").
RECITALS:
A. The Company, WMC Holding, Glenayre and GTI are parties to an
Acquisition Agreement, dated as of September 30, 1999, as amended and
restated on October 31, 1999 (the "Acquisition Agreement"), pursuant to
which, among other things, the Company will redeem 42,000,000 shares of Class
B Common Stock, par value $.01 per share ("Class B Common Stock"), from
Glenayre (the "Redemption") and WMC Holding will purchase 35,955,000 shares
of Class B Common Stock from Glenayre (the "Stock Purchase");
B. Immediately following the Transactions (as defined herein),
Glenayre will hold 2,045,000 shares of Class B Common Stock and WMC Holding
will hold 35,955,000 shares of Class B Common Stock, and no shares of Class A
Common Stock, par value $.01 per share, will be outstanding; and
C. The parties hereto wish to provide for certain matters
relating to Glenayre's holdings of Class B Common Stock.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto agree as follows:
I. INTRODUCTORY MATTERS
1.1. Defined Terms. In addition to the terms defined elsewhere
herein, the following terms have the following meanings when used herein with
initial capital letters:
"Affiliate" means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such
specified Person; provided, that officers, directors or employees of
the Company will not be deemed to be Affiliates of a stockholder of the
Company for purposes hereof solely by reason of being officers,
directors or employees of the Company.
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"Agreement" means this Agreement, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with
the terms hereof.
"Assumption Agreement" means a writing reasonably satisfactory in
form and substance to Glenayre and the Company whereby a Permitted
Transferee of shares of Common Stock becomes a party to, and agrees to
be bound by, to the same extent as its transferor by the terms of, this
Agreement.
"Board" means the Board of Directors of the Company.
"Business Day" means a day other than a Saturday, Sunday or other
day on which commercial banks in the State of North Carolina or the
State of New York are authorized or required by law to close.
"Class A Common Stock" means the Class A Common Stock of the
Company, par value $.01 per share.
"Class B Common Stock" means the Class B Common Stock of the
Company, par value $.01 per share.
"Common Stock" means the shares of Class A Common Stock and Class B
Common Stock of the Company and any Common Stock issued as (or issuable
upon the conversion or exercise of any warrant, right, option or other
convertible security which is issued as) a dividend or other
distribution with respect to, or in exchange for, or in replacement of,
or by way of a stock split of, such Common Stock.
"Fully Diluted Shares" means the aggregate of (i) the number of
shares of Common Stock issued and outstanding (other than shares of
Common Stock held in the treasury of the Company or held by any
Subsidiary) and (ii) the number of shares of Common Stock issuable upon
(x) the exercise of any then exercisable in-the-money outstanding
options, warrants or similar instruments (other than such instruments
held by the Company or any Subsidiary) and (y) the exercise of any then
exercisable conversion or exchange rights with respect to any
outstanding securities or instruments (other than such securities or
instruments held by the Company or any Subsidiary).
"IPO" means the completion of an initial Public Offering and the
sale to the public of Common Stock by the Company.
"Permitted Transferees" means any Person to whom shares of Common
Stock are Transferred in a Transfer in accordance with Section 2.2 or
2.3 or otherwise not in violation of this Agreement and who is required
to, and does, enter into an Assumption Agreement, and includes any
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Person to whom a Permitted Transferee of Glenayre (or a Permitted
Transferee of a Permitted Transferee) so further Transfers shares of
Common Stock and who is required to, and does, become bound by the terms
of this Agreement.
"Person" means any individual, corporation, limited liability
company, partnership, trust, joint stock company, business trust,
unincorporated association, joint venture, governmental authority or
other legal entity of any nature whatsoever.
"Public Offering" means the sale of shares of any class of the
Common Stock to the public pursuant to an effective registration
statement (other than a registration statement on Form S-4 or S-8 or any
similar or successor form) filed under the Securities Act.
"Registrable Securities" means (i) any Common Stock held by
Glenayre or its Permitted Transferees following the Transactions, (ii)
any Common Stock issued as (or issuable upon the conversion or exercise
of any warrant, right, option or other convertible security which is
issued as) a dividend or other distribution with respect to, or in
exchange for, or in replacement of, such Common Stock, and (iii) any
Common Stock issued by way of a stock split of the Common Stock referred
to in clauses (i) or (ii) or this clause (iii). For purposes of this
Agreement, any Registrable Securities will cease to be Registrable
Securities when (A) a registration statement covering such Registrable
Securities has been declared effective and such Registrable Securities
have been disposed of pursuant to such effective registration statement,
(B) all Registrable Securities may be offered and sold pursuant to Rule
144 (or any similar provision then in effect) under the Securities Act
in a single transaction or series of transactions over a 90-day period,
(C) such Registrable Securities are sold by a Person in a transaction in
which rights under the provisions of this Agreement are not assigned in
accordance with this Agreement, or (D) such Registrable Securities cease
to be outstanding.
"Registration Expenses" means any and all expenses incident to the
performance by the Company of its obligations under Sections 3.1 or 3.2,
including (i) all SEC, stock exchange, National Association of
Securities Dealers, Inc. and other comparable regulatory agencies,
registration and filing fees, (ii) all fees and expenses of the Company
in complying with securities or blue sky laws (including fees and
disbursements of counsel for the underwriters in connection with blue
sky qualifications), (iii) all printing, messenger and delivery expenses
of the Company, (iv) the fees and disbursements of counsel for the
Company and of its independent accountants, including the expenses of
any "cold comfort" letters required by or incident to such performance
and compliance, and (v) fees and disbursements customarily paid by
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issuers of securities (but not underwriters' or sales agents' discounts
or similar compensation).
"Ripplewood" means Ripplewood Holding L.L.C. (or its successor) and
its Affiliates (other than WMC Holding or any employee, officer or
director of WMC Holding or the Company).
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder, as the same may be
amended from time to time.
"Stockholders" means each of the holders of Common Stock.
"Transactions" means the Redemption and the Stock Purchase.
"Transfer" means a transfer, sale, assignment, pledge,
hypothecation or other disposition, whether directly or indirectly
pursuant to the creation of a derivative security, the grant of an
option or other right, the imposition of a restriction on disposition or
voting or transfer by operation of law, or, in the case of GTI, any
change in the beneficial ownership of Glenayre or any other Affiliate of
GTI that is a Stockholder so that such Stockholder is no longer a
wholly-owned Affiliate of GTI.
"WMC Holding Common Stock" means common stock issued by WMC Holding
or issuable upon the conversion or exercise of any warrant, right,
option or other convertible security of WMC Holding or as a dividend or
other distribution with respect to, or in exchange for, or in
replacement of, or by way of a stock split of, such WMC Holding Common
Stock.
1.2. Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual
intent, and no rule of strict construction will be applied against any party.
Unless the context otherwise requires: (a) "or" is not exclusive, (b) words
in the singular include the plural, and in the plural include the singular,
(c) the words "hereof", "herein", and "hereunder" and words of similar import
when used in this Agreement refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Section references are to this
Agreement unless otherwise specified, and (d) references to "includes" or
"including" shall mean "includes without limitation" or "including without
limitation."
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II. TRANSFERS
2.1. Limitations on Transfer. (a) Prior to an IPO, Glenayre and
its Permitted Transferees may not Transfer any shares of Common Stock other
than (i) in connection with a Public Offering effected in accordance with
Section 3.1(a), (ii) in accordance with Section 2.3, 2.4 or 2.5 or (iii)
following the second anniversary hereof, in accordance with Section 2.2.
(b) In the event of any purported Transfer by Glenayre or any of
its Permitted Transferees of any shares of Common Stock in violation of the
provisions of this Agreement, such purported Transfer will be void and of no
effect and the Company will not give effect to such Transfer.
(c) Each certificate representing shares of Common Stock issued to
Glenayre or any of its Permitted Transferees will bear a legend on the face
thereof substantially to the following effect (with such additions thereto or
changes therein as the Company may be advised by counsel are required by law
or necessary to give full effect to this Agreement, the "Legend"):
"THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO A STOCKHOLDERS' AGREEMENT AMONG WESTERN MULTIPLEX CORPORATION ("THE
COMPANY"), WMC HOLDING CORP., GTI ACQUISITION CORP. AND GLENAYRE
TECHNOLOGIES, INC., A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY. NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE
MADE EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SUCH STOCKHOLDERS'
AGREEMENT. THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE OF THIS
CERTIFICATE, AGREES TO BE BOUND BY ALL OF THE PROVISIONS OF SUCH
STOCKHOLDERS' AGREEMENT.
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED
OR OTHERWISE DISPOSED OF UNLESS THEY HAVE BEEN REGISTERED UNDER THAT ACT
OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE."
The Legend will be removed by the Company by the delivery of substitute
certificates without such Legend in the event of (i) a Transfer permitted by
this Agreement and in which the Transferee is not required to enter into an
Assumption Agreement or (ii) the termination of Article II pursuant to the
terms hereof, provided however, that the second paragraph of Legend will only
be removed if at such time it is no longer required for purposes of the
Securities Act and other applicable securities laws.
(d) Except as permitted by Section 2.3, each of Glenayre and its
Permitted Transferees shall have no right to Transfer, and the Company shall
have no obligation to record any purported Transfer, of Class B Common Stock.
The Company shall instead cause all such shares of Class B Common Stock
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proposed to be Transferred to be converted into or exchanged for an equal
number of shares of Class A Common Stock immediately prior to such Transfer
(after giving effect to any adjustment that may be necessary or appropriate
as a result of any conversion or exercise of any warrant, right, option or
other convertible security issuable in respect of Class A Common Stock or
Class B Common Stock or as a dividend or other distribution with respect to,
or in exchange for, or in replacement of, or by way of a stock split of, such
Common Stock). References in Section 2.2 to Transfer Stock, references in
Section 2.4 to Common Stock of the Tagging Stockholder and references in
Section 2.5(a) to Common Stock of Glenayre and its Permitted Transferees
shall be deemed references to Class A Common Stock converted or exchanged
pursuant to this paragraph (d).
2.2. Right of First Refusal. (a) Each of Glenayre and its
Permitted Transferees agrees that, if, following the second anniversary
hereof, such Stockholder (the "Offeree") receives a bona fide offer (a
"Transfer Offer") to purchase all or any portion of the Common Stock (the
"Transfer Stock") then owned by such Offeree from any Person (the "Offeror"),
other than an Affiliate of such Offeree, which such Offeree wishes to accept,
such Offeree shall cause the Transfer Offer to be reduced to writing and
shall provide a written notice (the "Transfer Notice") of such Transfer Offer
to the Company and WMC Holding; provided that, there shall not be more than
three Permitted Transferees pursuant to this Section 2.2. The Transfer
Notice shall also contain an irrevocable offer to sell the Transfer Stock to
the Company for cash and, if the Company shall decline to accept such offer,
WMC Holding or Ripplewood (in the manner set forth below) at a price equal to
the price contained in, and upon the same terms and conditions as the terms
and conditions contained in, the Transfer Offer and shall be accompanied by a
true and complete copy of the Transfer Offer (which shall identify the
Offeror, the Transfer Stock, the price contained in the Transfer Offer and
the other material terms and conditions of the Transfer Offer); provided that
none of Glenayre or any Permitted Transferee shall be entitled to accept any
offer pursuant to this Section 2.2 which provides for any consideration other
than cash, cash equivalents, marketable securities, securities with
registration rights similar to those contemplated in Section 3.1 or
securities which may be Transferred pursuant to Rule 144 or 145 (or any
successor rules) under the Securities Act. At any time within 30 days after
the date of the receipt by the Company and WMC Holding of the Transfer
Notice, the Company shall have the option to exercise its right to purchase
(or assign its right to one of its subsidiaries) or, if the Company and its
subsidiaries shall decline to exercise such option, WMC Holding shall have
the right to exercise such option to purchase (or assign its right to any
party) all of the Transfer Stock covered by the Transfer Offer at the same
price and on the same terms and conditions as the Transfer Offer. If such
election is made, within 15 days after such election, the Company or WMC
Holding or one of their aforementioned assignees shall deliver a certified
bank check or checks in the appropriate amount to such Offeree against
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delivery of certificates or other instruments representing the Transfer
Stock, appropriately endorsed by such Offeree. If the Company or WMC Holding
or one of their aforementioned assignees has not given notice of its
intention to exercise such right to purchase within such 30 day period or has
not tendered the purchase price for such Transfer Stock in the manner set
forth above within such 15 day period, such Offeree shall be free for a
period of 90 days from the end of such 30 day or 15 day period, as the case
may be, to transfer the Transfer Stock to the Offeror on terms which are no
more favorable in any material respect to the Offeror than the terms and
conditions set forth in the Transfer Notice. If for any reason such Offeree
does not Transfer the Transfer Stock to the Offeror on such terms and
conditions, the provisions of this Section 2.2 shall again be applicable to
the Transfer Stock.
(b) The closing of the purchase of the Transfer Stock upon
exercise of the option pursuant to Section 2.2(a) shall take place at the
principal office of the Company on a date specified by the buyer no later
than the last day of the 15 day period after the election is made.
2.3. Transfers to Affiliates. Glenayre and its Permitted
Transferees may Transfer any or all of the shares of Common Stock held by any
of them to any of their respective wholly-owned Affiliates who duly executes
and delivers an Assumption Agreement, provided that in connection therewith
the Company has been furnished with an opinion in form and substance
reasonably satisfactory to the Company of counsel reasonably satisfactory to
the Company that such Transfer is exempt from or not subject to the
provisions of Section 5 of the Securities Act and any other applicable
securities laws.
2.4. Tag-Along Rights. (a) So long as this Agreement remains in
effect, with respect to (i) any proposed Transfer by WMC Holding of shares of
Common Stock owned by WMC Holding to any Person not an Affiliate or officer,
director or employee of WMC Holding or the Company, other than in a Public
Offering or as contemplated by Section 4.2(c), or (ii) any proposed Transfer
by Ripplewood of shares of WMC Holding Common Stock to any Person not an
Affiliate or officer, director or employee of WMC Holding or the Company,
other than in a Public Offering or as contemplated by Section 4.2(c), in each
case whether pursuant to a stock sale, a tender or exchange offer or any
other sale transaction (any such transaction, a "WMC Holding Sale"), WMC
Holding will have the obligation, and each of Glenayre and its Permitted
Transferees will have the right, to require the proposed transferee (a
"Proposed Transferee") to purchase from each of Glenayre and its Permitted
Transferees who exercises its rights under Section 2.4(b) (a "Tagging
Stockholder") a number of shares of Common Stock up to the product (rounded
up to the nearest whole number) of (i) the quotient determined by dividing
(A) the aggregate number of shares of Common Stock owned by such Tagging
Stockholder by (B) the aggregate number of shares of Common Stock owned by
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WMC Holding, the Tagging Stockholder and any other Stockholder entitled to
participate in the WMC Holding Sale, and (ii) in the case of a sale of Common
Stock, the total number of shares of Common Stock proposed to be directly or
indirectly Transferred to the Proposed Transferee or in the case of a sale of
WMC Holding Common Stock, the product of (x) the quotient determined by
dividing the number of shares of WMC Holding Common Stock being Transferred
divided by the total number of shares of WMC Holding Common Stock owned by
Ripplewood at such time, times (y) the aggregate number of shares of Common
Stock of the Company owned by WMC Holding or Ripplewood at such time), upon
the same terms and conditions (including time of payment and form of
consideration) as to be paid and given to WMC Holding (or Ripplewood, as the
case may be); provided, that in order to be entitled to exercise its right to
sell shares of Common Stock to the Proposed Transferee pursuant to this
Section 2.4, each Tagging Stockholder must agree to make to the Proposed
Transferee the same representations, warranties, covenants, indemnities and
agreements as WMC Holding agrees to make in connection with the proposed WMC
Holding Sale so long as they are made severally and not jointly; and
provided, further, that no Tagging Stockholder shall be required to make
representations, warranties or covenants or provide indemnification with
respect to any matter other than its ownership of the shares of Common Stock
to be Transferred, its ability to Transfer such shares free and clear of all
encumbrances and its authority and due authorization to Transfer such shares.
Each Tagging Stockholder will be responsible for its proportionate share of
the costs incurred in connection with the WMC Holding Sale to the extent not
paid or reimbursed by the Company or the Proposed Transferee.
(b) WMC Holding will give notice to each Tagging Stockholder of
each proposed WMC Holding Sale at least 15 Business Days prior to the
proposed consummation of such WMC Holding Sale, setting forth the number of
shares of Common Stock or WMC Holding Common Stock, as the case may be,
proposed to be so Transferred, the name and address of the Proposed
Transferee, the proposed amount and form of consideration (and if such
consideration consists in part or in whole of property other than cash, WMC
Holding will provide such information, to the extent reasonably available to
WMC Holding, relating to such consideration as the Tagging Stockholder may
reasonably request in order to evaluate such non-cash consideration) and
other terms and conditions of payment offered by the Proposed Transferee, and
a representation that the Proposed Transferee has been informed of the
tag-along rights provided for in this Section 2.4. WMC Holding will deliver
or cause to be delivered to each Tagging Stockholder copies of all
transaction documents relating to the proposed WMC Holding Sale as the same
become available. The tag-along rights provided by this Section 2.4 must be
exercised by each Tagging Stockholder within 10 days following receipt of the
notice required by the preceding sentence by delivery of a written notice to
WMC Holding indicating the desire of such Tagging Stockholder to exercise its
rights and specifying the number of shares of Common Stock it desires to
sell. The Tagging Stockholder will be entitled under this Section 2.4 to
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Transfer to the Proposed Transferee the number of shares of Common Stock
calculated in accordance with Section 2.4(a).
(c) If any Tagging Stockholder exercises his, her or its rights
under Section 2.4(a), the closing of the purchase of the Common Stock with
respect to which such rights have been exercised will take place concurrently
with the closing of the sale of Common Stock or WMC Holding Common Stock, as
the case may be, to the Proposed Transferee.
2.5. Drag-Along Rights. (a) So long as this Agreement remains in
effect, if WMC Holding or its stockholders receives an offer from a Person
other than an Affiliate of WMC Holding (a "Third Party") to purchase (other
than in a Public Offering) either (i) at least a majority of the shares of
Common Stock then outstanding or (ii) at least a majority of the shares of
WMC Holding Common Stock then outstanding, and, in either case, such offer is
accepted by WMC Holding or its stockholders, then each of Glenayre and its
Permitted Transferees hereby agrees that, if requested by WMC Holding, it
will Transfer to such Third Party on the same terms and conditions (including
time of payment and form of consideration) as to be paid and given to WMC
Holding or its stockholders, the number of shares of Common Stock equal to
the number of shares of Common Stock owned by it multiplied by the percentage
of the then outstanding shares of Common Stock to which the Third Party offer
is applicable.
(b) WMC Holding will give notice (the "Drag-Along Notice") to each
of Glenayre and its Permitted Transferees of any proposed Transfer giving
rise to the rights of WMC Holding set forth in Section 2.5(a) as soon as
practicable following WMC Holding's or its stockholders' acceptance of the
offer referred to in Section 2.5(a). The Drag-Along Notice will set forth
the number of shares of Common Stock proposed to be so Transferred, the name
and address of the Third Party, the proposed amount and form of
consideration (and if such consideration consists in part or in whole of
property other than cash, WMC Holding will provide such information, to the
extent reasonably available to WMC Holding, relating to such consideration as
Glenayre and its Permitted Transferees may reasonably request in order to
evaluate such non-cash consideration), the number of shares of Common Stock
sought and the other terms and conditions of the offer; provided that none of
Glenayre or any Permitted Transferee shall be obligated to accept pursuant to
this Section 2.5 any consideration other than cash, cash equivalents,
marketable securities, securities with registration rights similar to those
contemplated in Section 3.1 or securities which may be Transferred pursuant
to Rule 144 or 145 (or any successor rules) under the Securities Act. WMC
Holding will endeavor to notify Glenayre and its Permitted Transferees at
least 20 days (and in any event shall notify Glenayre and its Permitted
Transferees at least 10 Business Days) in advance of entering into a
definitive agreement in connection with such offer. In any such agreement,
Glenayre and its Permitted Transferees will be required (i) to make or agree
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to the same representations, warranties and indemnities as WMC Holding so
long as they are made severally and not jointly (provided that Glenayre and
its Permitted Transferees will not be required to make representations,
warranties or covenants or provide indemnification with respect to any matter
other than their respective ownership of the shares of Common Stock to be
Transferred, their respective ability to Transfer such shares free and clear
of all encumbrances and their respective authority and due authorization to
Transfer such shares), and (ii) to pay their proportionate share of the costs
incurred in connection with such WMC Holding Sale to the extent not paid or
reimbursed by the Company or the Transferee or Third Party. If the Transfer
referred to in the Drag-Along Notice is not consummated within 90 days from
the date of the Drag-Along Notice, WMC Holding must deliver another
Drag-Along Notice in order to exercise its rights under this Section 2.5 with
respect to such Transfer or any other Transfer.
III. REGISTRATION RIGHTS
3.1. Piggyback Rights. (a) Each time the Company is planning to
file a registration statement under the Securities Act in connection with the
sale of Common Stock by (i) the Company (other than in connection with a
registration statement on Forms S-4 or S-8 or any similar or successor form)
or (ii) WMC Holding (the Company or WMC Holding in such case, the "Initiating
Party"), the Company will give prompt written notice thereof to Glenayre and
its Permitted Transferees at least 20 Business Days prior to the anticipated
filing date of such registration statement. Upon the written request of
Glenayre and any Permitted Transferee made within 10 Business Days after the
receipt of any such notice from the Company, which request will specify the
Registrable Securities (such securities, together with any other shares of
Common Stock requested to be included in such registration statement by any
other Person pursuant to similar registration rights, the "Piggy-Back
Shares") intended to be disposed of by Glenayre or such Permitted Transferee
in such offering, the Company will use reasonable efforts to effect the
registration under the Securities Act of all Piggy-Back Shares which the
Company has been so requested to register by Glenayre or such Permitted
Transferee to the extent required to permit the disposition of the Piggy-Back
Shares so registered; provided, that (x) if, at any time after giving written
notice of its intention to register any securities and prior to the effective
date of the registration statement filed in connection with such
registration, any Initiating Party determines for any reason not to proceed
with the proposed registration, the Company may at its election give written
notice of such determination to each holder of Piggy-Back Shares and
thereupon will be relieved of its obligation to register any Piggy-Back
Shares in connection with such registration, (y) if such registration
involves an underwritten offering, each such holder must sell its shares to
the underwriters on the same terms and conditions as apply to the Initiating
Parties and (z) the Company shall have no obligation to register Class B
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Common Stock and may instead cause all such shares of Class B Common Stock
that are Piggy-Back Shares to be converted into or exchanged for an equal
number of shares of Class A Common Stock immediately prior to such
registration (after giving effect to any adjustment that may be necessary or
appropriate as a result of any conversion or exercise of any warrant, right,
option or other convertible security issuable in respect of Class A Common
Stock or Class B Common Stock or as a dividend or other distribution with
respect to, or in exchange for, or in replacement of, or by way of a stock
split of, such Common Stock).
(b) If a registration pursuant to this Section 3.1 involves an
underwritten offering and the managing underwriter or underwriters advise the
Company in writing that, in their opinion, (i) the number of securities which
the Initiating Party intends to include in such registration, together with
the Piggy-Back Shares, exceeds the largest number of such securities which
can be sold in such offering without having an adverse effect on such
offering (including, but not limited to, the price at which such securities
can be sold) or (ii) the inclusion of the Piggy-Back Shares in such
registration would have an adverse effect on such offering, then the Company
will include in such registration (A) first, 100% of the securities proposed
to be sold by the Company and (B) second, to the extent that the number of
securities requested to be included in such registration can, in the opinion
of such managing underwriter, be sold without having the adverse effect
referred to above, the number of securities which WMC Holding and the holders
of Piggy-Back Shares have requested to be included in such registration, such
amount to be allocated pro rata among WMC Holding and all such holders on the
basis of the relative number of securities requested to be registered by WMC
Holding and each such holder (provided that any securities thereby allocated
to WMC Holding or any such holder that exceed the request of WMC Holding or
such holder will be reallocated among WMC Holding and the remaining
requesting holders in like manner).
3.2. Other Registration Related Matters. (a) If the Board
determines that the registration and distribution of Registrable Securities
(A) could impede, delay or interfere with any pending material financing,
acquisition, corporate reorganization or other significant transaction
involving the Company or (B) could require disclosure of non-public material
information, the disclosure of which could adversely affect the Company, the
Company will promptly give the requesting holders written notice of such
determination and will be entitled to postpone the filing or effectiveness of
a registration statement for a reasonable period of time not to exceed 180
calendar days in any calendar year (a "Section 3.2(a) Period"); provided,
however, that in connection therewith the Company will be required to deliver
to the requesting holders a general statement, signed by the chief financial
officer of the Company, describing in reasonable detail the reasons for such
postponement or restriction on use and an estimate of the anticipated delay.
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The Company will promptly notify the requesting holders of the expiration or
earlier termination of a Section 3.2(a) Period.
(b) The Company may require any Person that is selling shares of
Common Stock in a Public Offering pursuant to Section 3.1 (each a "Holder")
to furnish to the Company in writing such information regarding such Person
and the distribution of the shares of Common Stock which are included in a
Public Offering as may from time to time reasonably be requested in writing
in order to comply with the Securities Act.
(c) The Company will pay all Registration Expenses in connection
with each registration or proposed registration of Registrable Securities
pursuant to Section 3.1. Notwithstanding the foregoing, (i) the fees or
expenses of counsel to the Holders or of any other expert hired directly by
the Holders will be the sole responsibility of the Holders and (ii) the
Holders will be responsible for their respective pro rata shares (determined
by reference to the number of shares included in the applicable registration)
of all underwriting discounts and commissions and transfer taxes.
(d) No later than ten days before filing any registration
statement or prospectus, or any amendments or supplements thereto, in
connection with any registration or proposed registration of Registrable
Securities pursuant to Sections 3.1, the Company will furnish to counsel of
the Holders copies of all documents proposed to be filed.
(e) The Company will furnish to each Holder such number of copies
of the applicable registration statement and of each amendment or supplement
thereto (in each case including all exhibits), such number of copies of the
prospectus included in such registration statement (including each
preliminary prospectus and summary prospectus), in conformity with the
requirements of the Securities Act, and such other documents as such Holder
may reasonably request in order to facilitate the disposition of Registrable
Securities by such Holder.
(f) The Company will use reasonable efforts to register or qualify
Registrable Securities covered by a registration statement under such other
securities or blue sky laws of such jurisdictions as each Holder reasonably
requests, and do any and all other acts and things which may be reasonably
necessary or advisable to enable such Holder to consummate the disposition in
such jurisdictions of the Registrable Securities owned by such Holder, except
that the Company will not for any such purpose be required to qualify
generally to do business as a foreign corporation in any jurisdiction where,
but for the requirements of this Section 3.2(f), it would not be obligated to
be so qualified, to subject itself to taxation in any such jurisdiction, or
to consent to general service of process in any such jurisdiction.
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(g) The Company will use reasonable efforts to cause the
Registrable Securities covered by a registration statement to be registered
with or approved by such other governmental agencies or authorities as may be
necessary to enable the Holder thereof to consummate the disposition thereof.
(h) The Company will notify each Holder of Registrable Securities
covered by a registration statement, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act promptly after
the Company becomes aware that the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary
to make the statements therein not misleading in the light of the
circumstances then existing, and at the request of any such Holder, prepare
and furnish to such Holder a reasonable number of copies of an amended or
supplemental prospectus as may be necessary so that, as thereafter delivered
to the purchasers of such Registrable Securities, such prospectus will not
include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances than existing.
(i) The Company will enter into such customary agreements
(including an underwriting agreement in customary form) and take such other
actions as sellers of a majority of securities covered by a registration
statement or the underwriters, if any, reasonably request in order to
expedite or facilitate the disposition of such Registrable Securities.
(j) The Company will make available for inspection by any Holder
of Registrable Securities covered by a registration statement, by any
underwriter participating in any disposition to be effected pursuant to such
registration statement and by any attorney, accountant or other agent
retained by any such Holder or any such underwriter, all pertinent financial
and other records, pertinent corporate documents and properties of the
Company, and cause all of the Company's officers, directors and employees to
supply all information reasonably requested by any such Holder, underwriter,
attorney, accountant or agent in connection with such registration statement.
(k) The Company will obtain a "cold comfort" letter or letters
from the Company's independent public accountants in customary form and
covering matters of the type customarily covered by "cold comfort" letters as
the sellers of a majority of the securities covered by the registration
statement reasonably request.
(l) Each Holder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section
3.2(h), such Holder will forthwith discontinue disposition of Registrable
Securities pursuant to the registration statement covering such Registrable
Securities until such Holder's receipt of the copies of the amended or
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supplemented prospectus contemplated by Section 3.2(h) and, if so directed by
the Company, such Holder will deliver to the Company (at the Company's
expense) all copies, other than permanent file copies then in such Holder's
possession, of the prospectus covering such Registrable Securities current at
the time of receipt of such notice. In the event the Company gives any such
notice, the period for which the Company will be required to keep the
registration statement effective will be extended by the number of days
during the period from and including the date of the giving of such notice
pursuant to Section 3.2(h) to and including the date when each Holder has
received the copies of the supplemented or amended prospectus contemplated by
Section 3.2(h).
(m) Each Holder will, in connection with an offering of the
Company's securities, upon the request of the Company or of the underwriters
managing any underwritten offering of the Company's securities, agree in
writing not to effect any sale, disposition or distribution of Registrable
Securities (other than those included in the registration or in a private
sale to a third party that is otherwise in accordance with the terms of this
Agreement if such third party agrees to be bound by this Agreement, including
this clause (m)) without the prior written consent of the managing
underwriter 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.
3.3. Indemnification. (a) Indemnification by the Company. In the
event of any registration of any securities of the Company under the
Securities Act pursuant to Section 3.1, the Company hereby indemnifies and
agrees to hold harmless, to the extent permitted by law, each Holder of
Registrable Securities covered by such registration statement, each Affiliate
of such Holder and their respective directors and officers or general and
limited partners (and the directors, officers, Affiliates and controlling
Persons thereof), each other Person who participates as an underwriter in the
offering or sale of such securities and each other Person, if any, who
controls such Holder or any such underwriter within the meaning of the
Securities Act (collectively, the "Indemnified Parties"), against any and all
losses, claims, damages or liabilities, joint or several, and expenses to
which such Indemnified Party may become subject under the Securities Act,
common law or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof, whether or not
such Indemnified Party is a party thereto) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which such securities were
registered under the Securities Act, any preliminary, final or summary
prospectus contained therein, or any amendment or supplement thereto, or (ii)
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
in the light of the circumstances then existing, and the Company will
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reimburse such Indemnified Party for any legal or other expenses reasonably
incurred by it in connection with investigating or defending any such loss,
claim, liability, action or proceeding; provided, that the Company will not
be liable to any Indemnified Party in any such case to the extent that any
such loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in such
registration statement, in any such preliminary, final or summary prospectus,
or any amendment or supplement thereto in reliance upon and in conformity
with written information with respect to such Indemnified Party furnished to
the Company by such Indemnified Party for use in the preparation thereof; and
provided, further, that the Company will not be liable to any Person who
participates as an underwriter in the offering or sale of Registrable
Securities or any other Person, if any, who controls such underwriter within
the meaning of the Securities Act, under the indemnity agreement in this
Section 3.3 with respect to any preliminary prospectus or the final
prospectus or the final prospectus as amended or supplemented, as the case
may be, to the extent that any such loss, claim, damage or liability of such
underwriter or controlling Person results from the fact that such underwriter
sold Registrable Securities to a Person to whom there was not sent or given,
at or prior to the written confirmation of such sale, a copy of the final
prospectus or of the final prospectus as then amended or supplemented,
whichever is most recent, if the Company has previously furnished copies
thereof to such underwriter. Such indemnity will remain in full force and
effect regardless of any investigation made by or on behalf of such Holder or
any Indemnified Party and will survive the Transfer of such securities by
such Holder.
(b) Indemnification by the Holders and Underwriters. The Company
may require, as a condition to including any Registrable Securities in any
registration statement filed in accordance with Section 3.1, that the Company
shall have received an undertaking reasonably satisfactory to it from the
Holder of such Registrable Securities to indemnify and hold harmless (in the
same manner and to the same extent as set forth in Section 3.3(a)) the
Company, all other Holders or any prospective underwriter, as the case may
be, and any of their respective Affiliates, directors, officers and
controlling Persons, with respect to any statement or alleged statement in or
omission or alleged omission from such registration statement, any
preliminary, final or summary prospectus contained therein, or any amendment
or supplement, if (and only if) such statement or alleged statement or
omission or alleged omission was made in reliance upon and in conformity with
written information with respect to such Holder furnished to the Company by
such Holder expressly for use in the preparation of such registration
statement, preliminary, final or summary prospectus or amendment or
supplement, or a document incorporated by reference into any of the
foregoing. Such indemnity will remain in full force and effect regardless of
any investigation made by or on behalf of the Company or any of the Holders,
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or any of their respective Affiliates, directors, officers or controlling
Persons and will survive the Transfer of such securities by such Holder.
(c) Notices of Claims, Etc. Promptly after receipt by an
indemnified party hereunder of written notice of the commencement of any
action or proceeding with respect to which a claim for indemnification may be
made pursuant to this Section 3.3, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party, give written
notice to the latter of the commencement of such action; provided, that the
failure of the indemnified party to give notice as provided herein will not
relieve the indemnifying party of its obligations under Section 3.3(a) or
3.3(b), except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such action is brought
against an indemnified party, unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist in respect of such claim, the indemnifying party will be
entitled to participate in and to assume the defense thereof, jointly with
any other indemnifying party similarly notified to the extent that it may
wish, with counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof other than
reasonable costs of investigation. If, in such indemnified party's
reasonable judgment, having common counsel would result in a conflict of
interest between the interests of such indemnified and indemnifying parties,
then such indemnified party may employ separate counsel reasonably acceptable
to the indemnifying party to represent or defend such indemnified party in
such action, it being understood, however, that the indemnifying party will
not be liable for the reasonable fees and expenses of more than one separate
firm of attorneys at any time for all such indemnified parties (and not more
than one separate firm of local counsel at any time for all such indemnified
parties) in such action. No indemnifying party will 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 of such claim or
litigation.
(d) Other Indemnification. Indemnification similar to that
specified in this Section 3.3 (with appropriate modifications) will be given
by the Company and each Holder of Registrable Securities with respect to any
required registration or other qualification of securities under any federal
or state law or regulation or governmental authority other than the
Securities Act.
(e) Contribution. If recovery is not available under the
foregoing indemnification provisions of this Section 3.3 for any reason other
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than as expressly specified therein, the parties required to provide
indemnification by the terms thereof will contribute to liabilities and
expenses of the indemnified party except to the extent that contribution is
not permitted under Section 11(f) of the Securities Act. In determining the
amount of contribution to which the respective parties are entitled,
consideration will be given to the relative benefits received by each party
from the offering of the Registrable Securities (taking into account the
portion of the proceeds realized by each), the parties' relative knowledge
and access to information concerning the matter with respect to which the
claim was asserted, the opportunity to correct and prevent any misstatement
or omission and any other equitable considerations appropriate under the
circumstances.
(f) Non-Exclusivity. The obligations of the parties under this
Section 3.4 will be in addition to any liability which any party may
otherwise have to any other party.
IV. ADDITIONAL AGREEMENTS
4.1. Right to Purchase Additional Common Stock. (a) Subject to
paragraph 4.1(d), in the event the Company proposes to issue Common Stock to
WMC Holding, Ripplewood or any other Affiliate of WMC Holding at any time
prior to the second anniversary hereof and that such issuance would have the
effect of reducing Glenayre's and its Permitted Transferees percentage
ownership of the Fully Diluted Shares below the lesser of 5.1% or the
percentage owned by Glenayre and its Permitted Transferees at such time, the
Company hereby grants to Glenayre the right to purchase in lieu of WMC
Holding, Ripplewood or such other Affiliate, in accordance with Section
4.1(b), a number of shares of any Common Stock which the Company issues equal
to the product of (a) the total number of shares of such Common Stock which
the Company issues at such time and (b) a fraction, the numerator of which
shall be the total number of Fully Diluted Shares then outstanding and
beneficially owned by Glenayre, and the denominator of which shall be the
total number of Fully Diluted Shares then outstanding. If Glenayre does not
purchase any or all of its pro rata portion of Common Stock, WMC Holding,
Ripplewood or any other Affiliate of WMC Holding shall be free to purchase
Glenayre's pro rata portion of Common Stock. The rights of Glenayre under
this Section 4.1 shall terminate if unexercised within 20 days after receipt
of the Notice of Issuance referred to in Section 4.1(b).
(b) In the event that the Company proposes to undertake an
issuance that is subject to Glenayre's rights under Section 4.1(a), it shall
give Glenayre written notice (a "Notice of Issuance") of its intention,
describing all material terms of the Common Stock, the price and all material
terms upon which the Company proposes to issue such Common Stock. Glenayre
shall have 20 days from the date of the Notice of Issuance to agree to
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purchase all or any portion of Glenayre's pro rata share of such Common
Stock (as determined pursuant to Section 4.1(a)) for the same consideration,
if such consideration shall consist solely of cash, or for cash, Cash
Equivalents or Marketable Securities having an equivalent value to the
consideration payable by WMC Holding or such other Affiliate of the Company
at the time of payment as determined pursuant to the valuation procedures set
forth in the Notice of Issuance by giving written notice to the Company, with
a copy to WMC Holding, and stating therein the quantity of Common Stock to be
purchased by such Stockholder; provided, however, to the extent a payment of
non-cash consideration by WMC Holding or such other Affiliate of the Company,
as contemplated by this Section 4.1(b), consists of any assets, securities or
capital stock acquired from a non-Affiliate substantially contemporaneously
with such payment, then the value of such assets, securities or capital stock
for purposes of this Section 4.1(b) shall equal the price paid or to be paid
by WMC Holding or such other Affiliate to the non-Affiliate; provided,
further, that any capital stock issued by WMC Holding or such other Affiliate
of the Company to acquire assets, securities or capital stock from a non-
Affiliate shall be valued at the same time as it is valued under the terms of
any agreement with such non-Affiliate.
(c) Except as otherwise agreed by Glenayre and WMC Holding,
the price payable for any shares of Common Stock to be issued by the Company
prior to the first anniversary hereof shall be based upon an equity value for
the Company equal to the Purchase Price for the Purchased Common Shares (as
such terms are defined in the Acquisition Agreement).
(d) It is expected that whenever WMC Holding issues any WMC
Holding Common Stock (or options, warrants or other rights to purchase WMC
Holding Common Stock) following the date hereof, the Company will issue a
equivalent number of shares of Common Stock (or options, warrants or other
rights to purchase Common Stock). Notwithstanding anything to the contrary
contained in Section 4.1, Section 4.1(a),(b) and (c) shall not be applicable
to any such issuance of Common Stock by the Company to WMC Holding in
connection with the issuance by WMC Holding to any officer, director or
employee of WMC Holding or the Company or to any Person not an Affiliate of
Ripplewood, including, without limitation, in connection with any acquisition
by WMC Holding or the Company of assets, securities or capital stock from a
non-Affiliate in which WMC Holding is issuing WMC Holding Common Stock to
such non-Affiliate; provided that WMC shall notify Glenayre in writing of all
material terms of the Common Stock, the price and all material terms upon
which the Company proposes to issue any Common Stock to which the exceptions
set forth in this Section 4.1(d) applies.
4.2. Transactions With Affiliates. (a) Except for
transactions subject to Glenayre's rights under Section 4.1 (which shall be
governed by such Section and not by this Section 4.2(a)), the Company shall
not, and WMC Holding shall not permit the Company to, directly or indirectly,
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enter into any single transaction or series of related transactions with any
Affiliate of the Company (other than the Company or any of its Subsidiaries)
unless such transaction or series of related transactions, including the
issuance of shares of Common Stock to an Affiliate of the Company, is on
terms that are no less favorable to the Company or any such Subsidiary, as
the case may be, than would be available in a comparable transaction or
transactions with an unrelated third party.
(b) WMC Holding and its Affiliates may provide administrative
or cash management services in the ordinary course of the Company's
businesses and may receive compensation therefor and reimbursement for its
costs and expenses in connection therewith on no less favorable terms than
such services are provided to any other Affiliate of WMC Holding.
(c) Notwithstanding anything to the contrary contained in this
Section 4.2, (i) WMC shall have the right to cause the merger of Western
Multiplex Corporation, a California corporation, with and into the Company,
with the Company as the surviving corporation, (ii) WMC shall have the right
to cause the Class B Common Stock to be converted into Class A Common Stock,
and (iii) WMC Holding shall have the right to convert into a limited
liability company and distribute its assets (including the shares of Common
Stock) to its stockholders, merge or consolidate with the Company, with
either party as the surviving corporation, or to cause the liquidation of the
Company and distribution of all of its assets to the Stockholders, or to
amend the certificate of incorporation of the Company to provide for the
conversion of all shares of Common Stock into shares of WMC Holding Common
Stock, or any similar transaction that combines the ownership of WMC Holding
and the Company, in the case of (i), (ii) and (iii), without Glenayre's
consent or affirmative vote; provided that, the rights and ownership interest
of Glenayre are not adversely affected by any such transaction (except that
to the extent WMC Holding ceases to exist, the obligations of WMC Holding set
forth in Article III shall be assumed only by Ripplewood and not the other
shareholders of WMC Holding, and except for the difference in the votes per
share of Class A Common Stock and Class B Common Stock); and provided,
further, that WMC Holding shall notify Glenayre in writing of all material
terms of any such transaction to which this Section 4.2(c) applies no less
than 20 days prior to effecting any such transaction.
4.3. Restrictions on Certain Fees. Except as previously
disclosed to Glenayre, neither WMC Holding nor any other Affiliate of WMC
Holding (other than the Company) shall accept from the Company, and the
Company shall not pay to WMC Holding or any other Affiliate of the Company
(other than the Company), any management, consulting, investment banking or
similar fee without the prior written consent of Glenayre, which shall not be
unreasonably withheld.
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V. MISCELLANEOUS
5.1. Additional Securities Subject to Agreement. Each of Glenayre
and its Permitted Transferees agrees that any other equity securities of the
Company which it hereafter acquires by means of a stock split, stock
dividend, or distribution will be subject to the provisions of this Agreement
to the same extent as if held on the date hereof.
5.2. Covenant by GTI. GTI hereby covenants to cause Glenayre and
any other Stockholder that is an Affiliate of GTI to comply with the terms of
this Agreement and not to take any action directly or indirectly through any
Affiliate that is expressly prohibited by this Agreement or has the purpose
or effect of circumventing the express terms of this Agreement.
5.3. Termination. The provisions of this Agreement specified below
will terminate and be of no further force and effect (other than with respect
to prior breaches) as follows: (i) with respect to Sections 2.1, 2.2, 2.3,
2.4, 2.5, 5.15 and Article IV upon completion of an IPO; (ii) with respect to
Sections 3.1 and 3.2 and Article IV, at such time as Glenayre or any of its
Permitted Transferees owns no Registrable Securities; (iii) with respect to
Section 3.3, upon the expiration of the applicable statutes of limitations;
and (iv) with respect to all other Sections of this Agreement, at such time
as all Sections of this Agreement other than such other Sections have
terminated.
5.4. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by courier service, by cable, by telecopy, by telegram, by telex or
registered or certified mail (postage prepaid, return receipt requested) to
the respective parties at the addresses set forth in Section 9.2 of the
Acquisition Agreement (or at such other address for a party as shall be
specified in a notice given in accordance with this Section 5.4).
5.5. Further Assurances. The parties hereto will sign such further
documents, cause such meetings to be held, resolutions passed, exercise their
votes and do and perform and cause to be done such further acts and things as
may be necessary in order to give full effect to this Agreement and every
provision hereof.
5.6. Non-Assignability. This Agreement will inure to the benefit
of and be binding on the parties hereto and their respective successors and
permitted assigns. This Agreement may not be assigned by any party hereto
without the express prior written consent of the other parties, and any
attempted assignment, without such consents, will be null and void; provided,
however, that WMC Holding may assign or delegate its rights hereunder to any
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Affiliate of WMC Holding so long as such Affiliate executes and delivers to
the Company an Assumption Agreement satisfactory to the Company.
5.7. Amendment; Waiver. This Agreement may be amended,
supplemented or otherwise modified only by a written instrument executed by
the parties hereto. No waiver by any party of any of the provisions hereof
will be effective unless explicitly set forth in writing and executed by the
party so waiving. Except as provided in the preceding sentence, no action
taken pursuant to this Agreement, including any investigation by or on behalf
of any party, will be deemed to constitute a waiver by the party taking such
action of compliance with any covenants or agreements contained herein. The
waiver by any party hereto of a breach of any provision of this Agreement
will not operate or be construed as a waiver of any subsequent breach.
5.8. Third Parties. This Agreement does not create any rights,
claims or benefits inuring to any person that is not a party hereto nor
create or establish any third party beneficiary hereto.
5.9. Governing Law. This Agreement will be governed by, and
construed in accordance with, the laws of the State of New York.
5.10. Specific Performance. Without limiting or waiving in any
respect any rights or remedies of the parties hereto under this Agreement now
or hereinafter existing at law or in equity or by statute, each of the
parties hereto will be entitled to seek specific performance of the
obligations to be performed by the other in accordance with the provisions of
this Agreement.
5.11. Entire Agreement. This Agreement sets forth the entire
understanding of the parties hereto with respect to the subject matter
hereof.
5.12. Titles and Headings. The section headings contained in
this Agreement are for reference purposes only and will not affect the
meaning or interpretation of this Agreement.
5.13. Severability. If any provision of this Agreement is
declared by any court of competent jurisdiction to be illegal, void or
unenforceable, all other provisions of this Agreement will not be affected
and will remain in full force and effect.
5.14. Counterparts. This Agreement may be executed in any
number of counterparts, each of which will be deemed to be an original and
all of which together will be deemed to be one and the same instrument.
5.15. Reporting Requirements. (a) So long as the Company is
not subject to the reporting requirements under Section 12 or 15 of the
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Securities Exchange Act of 1934, as amended, as promptly as practicable, but
in no event later than 120 days after the end of each fiscal year ending
after the date hereof or 60 days after the end of each fiscal quarter ending
after the date hereof, as the case may be, the Company shall furnish to
Glenayre true and correct copies of (i) in the case of any such fiscal year,
the audited consolidated balance sheets and the related audited consolidated
statements of income and cash flows of the Company and its subsidiaries as of
the last day of and for the fiscal year then ended, together with the
accompanying report of the Company's auditors thereon, and (ii) to the extent
available, in the case of each fiscal quarter, the unaudited consolidated
balance sheets and related unaudited consolidated statements of income and
cash flows of the Company and its subsidiaries for the fiscal quarter then
ended, which financial statements shall be prepared in accordance with United
States generally accepted accounting principles (in each case, together with
any notes relating thereto); provided, that notwithstanding the foregoing,
for so long as Glenayre and its Permitted Transferees own shares of Common
Stock, the Company shall deliver to Glenayre and each of its Permitted
Transferees true and complete copies of such financial and other information
as is provided from time to time to any financing source of the Company or
WMC Holding and, provided, further, that if the Company ceases to be required
to provide financial and other information to its financing sources during
such time, the Company shall nonetheless thereafter continue to provide to
Glenayre such financial and other information in the form and on the schedule
previously provided to such financing sources.
(b) In the event that the Company is not preparing financial
statements described in clause (ii) of paragraph (a) above, then as promptly
as practicable, the Company will deliver to Glenayre true and complete copies
of such other regularly-prepared financial statements, reports and analyses
as may be prepared by the Company or any subsidiary thereof relating to the
business or operations of the Company or any subsidiary thereof.
(c) Glenayre agrees to keep confidential all nonpublic information
made available to Glenayre pursuant to this Section 5.15; provided, however,
that Glenayre will not be required to maintain as confidential any such
information that (a) becomes generally available to the public other than as
a result of a disclosure by Glenayre or (b) is required to be disclosed
pursuant to the terms of a valid subpoena or order by governmental authority
or other legal requirement.
5.16. Representations. Each of the parties hereto represents
that this Agreement has been duly executed and delivered by such party and
constitutes a legal, valid and binding obligation of such party enforceable
against it in accordance with the terms of this Agreement.
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IN WITNESS WHEREOF, each of the undersigned has executed this
Agreement or caused this Agreement to be executed on its behalf as of the
date first written above.
WESTERN MULTIPLEX CORPORATION
By: /s/ Jeffrey M. Hendren
-----------------------------
Name: Jeffrey M. Hendren
Title: Secretary
WMC HOLDING CORP.
By: /s/ Jeffrey M. Hendren
-----------------------------
Name: Jeffrey M. Hendren
Title: Vice President
GTI ACQUISITION CORP.
By: /s/ John C. Berens
-------------------------
Name: John C. Berens
Title: President
GLENAYRE TECHNOLOGIES, INC.
By: /s/ Clarke H. Bailey
-----------------------------
Name: Clarke H. Bailey
Title: Chairman
Stockholders Agreement
<PAGE>
EXHIBIT 10.1
Amended and Restated EMPLOYMENT AND CO-
INVESTMENT AGREEMENT dated as of October 31, 1999, among
Ripplewood Partners L.P., a Delaware limited partnership
(together with its successors and permitted assigns,
"Ripplewood"), WMC Holding Corp., a Delaware corporation
(together with its successors and permitted assigns,
"WMC"), SEAVIEW HOLDINGS, L.L.C., a Delaware limited
liability company (together with its successors and any of
its Permitted Transferees who acquire shares of Common
Stock pursuant to Section 6.01, "Seaview"), JONATHAN N.
ZAKIN ("Zakin") and WESTERN MULTIPLEX CORPORATION, a
Delaware corporation (together with its successors and
permitted assigns, "Western Multiplex").
WHEREAS, WMC, Western Multiplex Corporation, a California
corporation, GTI Acquisition Corp. and Glenayre Technologies, Inc. have
entered into a Redemption, Stock Purchase and Recapitalization Agreement (as
amended, supplemented or otherwise modified from time to time, the
"Redemption and Purchase Agreement");
WHEREAS, subject to the terms and conditions of the Redemption and
Purchase Agreement WMC will acquire a controlling interest in Western
Multiplex;
WHEREAS, WMC wishes to employ Zakin, and Zakin wishes to accept
such employment, on the following terms and conditions;
WHEREAS, Zakin directly or indirectly owns all of the outstanding
equity of Seaview;
WHEREAS, Seaview wishes to purchase 1,900,000 shares of Class A
Common Stock, par value $.01 per share, of WMC (the "WMC Class A Common
Stock"); and
WHEREAS, Ripplewood will acquire shares of Class B Common Stock,
par value $.01 per share, of WMC (the "WMC Class B Common Stock" and,
collectively with the WMC Class A Common Stock, "WMC Common Stock");
WHEREAS, Western Multiplex will issue to Seaview warrants to
purchase an aggregate amount of 1,900,000 shares of Class A Common Stock, par
value $.01 per share, of Western Multiplex (the "MUX Class A Common Stock"
and, collectively with the shares of Class B Common Stock, par value $.01 per
share, of Western Multiplex, the "MUX Common Stock");
WHEREAS, Ripplewood, WMC, Seaview, Zakin and Western Multiplex wish
to make certain agreements with respect to Ripplewood's and Seaview's
investment in the WMC Common Stock and the MUX Common Stock (collectively,
<PAGE>
the "Common Stock"), Seaview's investments in warrants to acquire MUX Common
Stock and Zakin's employment by WMC.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, Ripplewood, WMC, Seaview, Zakin
and Western Multiplex agree as follows:
SECTION 1.01. Employment of Zakin. (a) Agreement to Employ. WMC
and Western Multiplex each agree to employ Zakin, and Zakin hereby accepts
employment by WMC and Western Multiplex, on the terms and conditions
contained in this Agreement.
(b) Term of Employment. The employment of Zakin pursuant hereto
shall commence on the Closing Date (as defined in the Redemption and Purchase
Agreement) and shall remain in effect until terminated pursuant to Section
11.01 (the "Employment Term").
(c) Position and Responsibilities. During the Employment Term,
Zakin shall serve as Chief Executive Officer of WMC and Western Multiplex and
Co-Chairman of WMC's and Western Multiplex's Boards of Directors. During the
Employment Term, Zakin shall be employed on a part-time basis and shall
devote such portion of his time and effort as he in good faith reasonably
deems necessary to the performance of his duties as the Co-Chairman and Chief
Executive Officer of WMC and Western Multiplex. Zakin is not obligated to
devote any specified minimum portion of his time to the performance of such
services, and, subject to Section 3.01, Zakin may engage in other businesses
and activities; provided, however, that if Ripplewood provides Zakin with
notice that it has reasonably determined, in good faith, that Zakin is not
devoting sufficient time and effort to the performance of such services and
duties, and Zakin and Ripplewood do not, through good faith negotiation,
mutually agree upon a reallocation of Zakin's time and effort with respect to
such services and duties within the 10 day period following Zakin's receipt
of such notice, Zakin's employment hereunder may be terminated for "cause"
pursuant to Section 11.01(a). Zakin's duties hereunder shall be performed at
such place or places as the interests, needs, businesses or opportunities of
WMC and Western Multiplex shall require.
(d) Compensation and Benefits.
(i) During the term of Zakin's employment by Wester Multiplex,
Western Multiplex shall pay Zakin a salary ("Salary") at the rate of $50,000
per annum for the year commencing on the beginning of the Employment Term.
Salary shall be payable in accordance with the ordinary payroll practices of
Western Multiplex and shall be subject to applicable withholding and payroll
taxes. Upon termination of Zakin's employment by Western Multiplex for any
reason (including, without limitation, death or disability), Zakin shall be
entitled to receive his accrued Salary through the date of such termination
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only and shall not be entitled to any additional payments in respect of his
Salary.
(ii) Other than Salary described in clause (i) of this Section
1.01(d), Zakin shall not be entitled to receive any compensation or benefits
from Ripplewood, WMC, Western Multiplex or any of their Affiliates as a
consequence of such employment. "Affiliate" shall mean, with respect to any
person, any other person that directly or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common control
with, such person. For purposes of the foregoing sentence, "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with"), as used with respect to any person, means the direct
or indirect possession of the power to direct or cause the direction of the
management or policies of such person, whether through the ownership of
voting securities, by contract or otherwise.
2.01. Equity Investment. (a) (i) Subject only to the
satisfaction of the conditions precedent set forth in clauses (ii) and (iii)
below, WMC hereby agrees to issue and sell to Seaview, and Seaview hereby
agrees to purchase from WMC, immediately prior to the Closing (as defined in
the Redemption and Purchase Agreement), 1,900,000 shares of WMC Class A
Common Stock at a price of $.50 per share in cash. At the closing of the
purchase and sale of the shares of WMC Class A Common Stock pursuant to this
Section 2.01(a) (the "Common Stock Closing"), Seaview shall transfer to an
account designated by WMC $950,000 in cash in immediately available funds and
WMC shall deliver to Seaview a duly executed stock certificate evidencing
1,900,000 shares of WMC Class A Common Stock.
(ii) The obligation of Seaview to purchase the 1,900,000 shares of
WMC Class A Common Stock pursuant to clause (i) above is subject only to the
following: (A) the representations and warranties of WMC contained in
Section 13.01(a) shall be true and correct in all material respects as of the
date hereof and as of the Closing Date, (B) WMC shall have delivered to
Seaview a certificate of the Vice President of WMC to the effect that the
transactions to occur on the Closing Date under the Redemption and Purchase
Agreement will occur immediately after the Common Stock Closing on
substantially the same terms reflected in the Redemption and Purchase
Agreement and that WMC has not knowingly waived in any material respect any
material closing conditions under the Redemption and Purchase Agreement, and
(C) definitive agreements shall have been executed providing for the
financing contemplated by the Commitment Letter (as defined in the Redemption
and Purchase Agreement) on substantially the same terms set forth in the
Commitment Letter.
(iii) The obligation of WMC to issue and sell the 1,900,000 shares
of WMC Class A Common Stock pursuant to clause (i) above is subject only to
the following: (A) the representations and warranties of Seaview contained
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in Section 13.01(b) shall be true and correct in all material respects as of
the date hereof and as of the Closing Date and (B) all conditions precedent
to the Closing under the Redemption and Purchase Agreement shall have been
satisfied or waived by the applicable parties to the Redemption and Purchase
Agreement.
(b) Subject to the Common Stock Closing simultaneously occurring,
Western Multiplex hereby agrees to issue to Seaview at the Common Stock
Closing warrants (the "Initial Warrants") to purchase 1,140,000 shares of MUX
Class A Common Stock. The Initial Warrants will be in the form of Exhibit A
hereto.
(c) Subject to the Common Stock Closing simultaneously occurring,
Western Multiplex hereby agrees to issue to Seaview at the Common Stock
Closing warrants (the "5x Warrants") to purchase 505,400 shares of MUX Class
A Common Stock. The 5x Warrants will be in the form of Exhibit B hereto.
(d) Subject to the Common Stock Closing simultaneously occurring,
Western Multiplex hereby agrees to issue to Seaview at the Common Stock
Closing warrants ( the "10x Warrants," and, collectively with the Initial
Warrants and the 5x Warrants, the "Warrants") to purchase 1,273,000 shares of
MUX Class A Common Stock. The 10x Warrants will be in the form of Exhibit C
hereto.
(e) With respect to Seaview's (and, indirectly, Zakin's) equity
investment in WMC and Western Multiplex, the provisions of this Section 2.01
are in lieu of the investment rights of Zakin contained in Section 5.01 of
the Agreement dated as of June 16, 1998 (the "Prior Agreement"), among
Leeward Technology Partners L.L.C., Ripplewood Holdings L.L.C., Zakin and
Leeward Management, Inc. and Zakin acknowledges and agrees that except as set
forth in this Agreement he has no further investment rights with respect to
WMC and Western Multiplex.
(f) Zakin agrees to cause Seaview to perform its obligations under
Section 2.01(a).
SECTION 3.01. Exclusive Basis, Nonsolicitation. The provisions of
Section 7.01 of the Prior Agreement shall apply and WMC shall be an "Acquired
Company" (as defined therein). During the Employment Term and for one year
thereafter, Zakin shall not, and shall cause his Affiliates not to, directly
or indirectly (other than as an employee of or consultant to WMC and/or
Western Multiplex):
(a) solicit or attempt to solicit any business from any of WMC or
Western Multiplex (or any of their respective subsidiaries') customers or
clients, including, without limitation, actively sought prospective customers
or clients, for purposes of providing products or services that are
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competitive with WMC's or Western Multiplex's (or any of their respective
subsidiaries') products or services; or
(b) (i) solicit for employment or for use as a consultant any
employees of Ripplewood, WMC, Western Multiplex or any of their respective
Affiliates, (ii) solicit or encourage any employee of Ripplewood, WMC,
Western Multiplex or any of their respective Affiliates to leave the
employment of Ripplewood, WMC, Western Multiplex or any such Affiliate or
(iii) otherwise intentionally interfere with the relationship of Ripplewood,
WMC Western Multiplex or any of their Affiliates with any person or entity
who or which is employed by or otherwise engaged to perform services for
Ripplewood, WMC, Western Multiplex or any such Affiliate. The provisions of
this Section 3.01(b) shall not prevent Zakin or any of his Affiliates from
hiring any person who contacts Zakin or such affiliate on a non-solicited
basis or who responds to a help wanted or similar ad not specifically
targeted to such person.
SECTION 4.01. Confidential Information. During the term of this
Agreement and for one year thereafter, except as may be required by law,
Zakin shall not, and shall cause his Affiliates not to, use or disclose, or
knowingly permit any representative of Zakin or any of his Affiliates to use
or disclose any information (whether or not in written form) which relates to
Ripplewood, WMC, Western Multiplex or any of their Affiliates or any of their
respective businesses or products or this Agreement and which is not known to
the public generally, except in the conduct of the business of WMC.
SECTION 5.01. Option to Purchase Shares and Warrants. (a) If
Zakin's employment is terminated pursuant to Section 11.01(a) or (c), WMC and
Western Multiplex , jointly and severally, shall have an option to purchase
all or any portion of (i) the Common Stock (the "Shares") then held by
Seaview at a purchase price equal to the Fair Market Value of such Shares
(determined in accordance with Section 5.01(b)) as of the date of such
termination and (ii) the Warrants that have not terminated and are then held
by Seaview at a purchase price equal to the product of (x) the Fair Market
Value per Share (determined in accordance with Section 5.01(b)) as of the
date of such termination) minus the exercise price per share of Common Stock
pursuant to the Warrants being purchased multiplied by (y) the number of
shares of Common Stock issuable upon exercise of the Warrants being
purchased. WMC or Western Multiplex, as the case may be, shall within 90
days of such date of termination give notice in writing to Seaview of its
election to exercise or not to exercise such option, which notice shall set
forth the portion, if any, of the Shares and Warrants that WMC or Western
Multiplex elects to purchase. The purchase of the Shares and Warrants shall
take place at the principal office of Ripplewood, located at One Rockefeller
Plaza, New York, New York, on the date specified by WMC (not later than the
later of (x) the twentieth business day following the receipt by Seaview of
the required notice from WMC and (y) the satisfaction of any legal
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<PAGE>
requirements to the purchase of the Shares and Warrants). The consideration
for the purchase of the Shares and Warrants shall be paid by delivery to
Seaview of a certified or bank check made payable to Seaview or by wire
transfer of immediately available funds to a bank account designated by
Seaview, against delivery of certificates or other instruments representing
the Shares and Warrants so purchased, appropriately endorsed by the owner
thereof, free and clear of all security interests, liens, claims,
encumbrances, charges, options, restrictions on transfer, proxies and voting
and other agreements of whatever nature. WMC and Western Multiplex may
assign their rights under this Section 5.01 to any person.
(b) (i) If a determination of the Fair Market Value of the Shares
is required by this Agreement when there is no public trading market for the
Shares, such "Fair Market Value" shall be such amount as is determined to be
the fair market value of the Shares as of the date such Fair Market Value is
required to be determined hereunder as determined by (x) Seaview and WMC
through good faith negotiations; (y) an investment banking firm of national
reputation mutually acceptable to both Seaview and WMC, if Seaview and WMC do
not agree upon the Fair Market Value of such Shares within 30 days after the
date as of which such Fair Market Value is to be determined; or (z) an
investment banking firm of national reputation selected by two investment
banking firms of national reputation (one of which shall be chosen by Seaview
and one of which shall be chosen by WMC), if Seaview and WMC do not mutually
agree upon an investment banking firm to determine the Fair Market Value of
the Shares pursuant to clause (y) above within 10 days after the expiration
of the 30-day period referred to in clause (y) above. In making a
determination of such Fair Market Value, due consideration shall be given to
such factors as are deemed appropriate, including, without limitation, the
earnings and other financial and operating information of WMC and its
subsidiaries in recent periods, its potential value and that of its
subsidiaries as a whole, its future prospects and that of its subsidiaries
and the industries in which they compete, its history and management and that
of its subsidiaries, the general condition of the securities markets and the
fair market value of securities of privately owned companies (with transfer
restrictions) engaged in businesses similar to those of WMC and its
subsidiaries. The Fair Market Value shall be determined assuming that all
Warrants that have not terminated are then exercisable and assuming that all
Class B Common Stock has been voluntarily converted to Class A Common Stock.
The Fair Market Value as determined by the foregoing procedure shall be
binding and conclusive upon the parties hereto.
(ii) If a determination of the Fair Market Value of the Shares is
required by this Agreement when there is a public trading market for the
Shares, such "Fair Market Value" shall mean the average daily closing sales
price of the Shares for the ten consecutive trading days preceding the date
the Fair Market Value of the Shares is required to be determined hereunder.
The closing price for each day shall be the last reported sales price regular
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way or, in case no such reported sale takes place on such day, the average of
the reported closing bid and asked prices regular way, in either case on the
principal national securities exchange on which the Shares are listed and
admitted to trading, or, if not listed and admitted to trading on any such
exchange on the NASDAQ National Market System, or, if not quoted on the
National Market System, the average of the closing bid and asked prices in
the over-the-counter market as furnished by any New York Stock Exchange
member firm selected from time to time by Western Multiplex's Board of
Directors for that purpose.
SECTION 6.01. Transfers. (a) Defined Terms. The following terms
shall have the following meanings:
"Involuntary Transfer" means any Transfer by Ripplewood or Seaview
of any shares of Common Stock or any Warrant, or of any beneficial ownership
thereof, upon death, appointment of a guardian, default, foreclosure,
forfeit, bankruptcy (voluntary or involuntary), court order, levy of
attachment, execution or otherwise than voluntarily by the Transferor;
provided, that a Transfer required pursuant to Section 6.01(g) shall not be
deemed an Involuntary Transfer.
"Permitted Transferee" means, (i) with respect to Ripplewood, (A)
any Affiliate of Ripplewood Holdings L.L.C. ("Ripplewood Holdings"), (B) a
shareholder, partner, member or employee of Ripplewood Holdings or any
Affiliate of Ripplewood Holdings or (C) an employee, director or officer of
WMC or Western Multiplex or any subsidiary of WMC or Western Multiplex (up to
an aggregate of 5% of the outstanding Common Stock) and (ii) with respect to
Seaview, (x) Zakin, (y) a trust of which the beneficiaries consist solely of
Zakin, Zakin's spouse or former spouse or Zakin's children or (z) any
corporation, partnership, limited liability company or other entity all of
the equity interests of which are, and will at all times continue to be,
directly or indirectly owned solely by Zakin; provided, that such transferee
is (or becomes at the time of such Transfer) a party hereto.
"Person" means any individual, corporation, partnership, trust,
association, limited liability company, joint venture, joint-stock company or
any other entity or organization, including, without limitation, a government
or governmental agency.
"Third Party Purchaser" means, with respect to any proposed sale of
shares of Common Stock by Ripplewood or Seaview, a Person other than a
Permitted Transferee, who offers to purchase from Ripplewood or Seaview, as
the case may be, such shares pursuant to a bona fide written offer.
"Transfer" means any transfer, sale, conveyance, assignment, gift,
hypothecation, pledge or other disposition, whether voluntary or by operation
of law, of a share of Common Stock or any Warrant.
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"Transferee" means the transferee in a Transfer.
"Transferor" means the transferor in a Transfer.
"Unrestricted Shares" means shares of Common Stock previously (i)
Transferred by Ripplewood or any of its Permitted Transferees in a
transaction subject to Section 6.01(f) or (ii) Transferred by Seaview or any
of its Permitted Transferees pursuant to Section 6.01(f).
(b) Generally. Neither Ripplewood nor Seaview may Transfer all or
any portion of its shares of Common Stock or any Warrant, or any beneficial
ownership thereof, unless (A) such Transfer is in accordance with this
Section 6.01, (B) the Transferee executes and delivers a counterpart of the
signature page of this Agreement (or other appropriate assumption agreement)
in which the Transferee agrees to be bound by the provisions of this
Agreement to the same extent as the Transferor, (C) the Transferee executes
and delivers any other agreements, documents or instruments reasonably
specified by WMC's Board of Directors (in the case of a Transfer of WMC
Common Stock) or Western Multiplex's Board of Directors (in the case of a
Transfer of Warrants or Western Multiplex Common Stock) (in each case, which
shall be uniformly and consistently applied to all transfers by Ripplewood
and Seaview) and (D) such transfer is pursuant to an effective registration
statement under the Securities Act of 1933, as amended (the "Securities Act")
or a valid exemption from registration under the Securities Act and in
compliance with all applicable state and foreign securities laws. Any
Transfer made in violation of this Section 6.01(b) shall be null and void and
shall be subject to Section 6.01(e).
(c) Transfers by Ripplewood. (i) Subject to Section 6.01(b) and,
with respect to a Transfer by Ripplewood or any of its Permitted Transferees
to any Person other than a Permitted Transferee of Ripplewood, Section
6.01(f), Ripplewood (and its Permitted Transferees) shall have the right to
Transfer at any time all or any portion of its shares of Common Stock
(including, without limitation, any beneficial ownership thereof) to any
Person without the prior consent of any Person.
(ii) Subject to Section 6.01(b), any Unrestricted Shares may be
Transferred to any Person without the consent of any other Person and any
such Transfer will not be subject to Section 6.01(b).
(d) Transfers by Zakin. (i) Subject to Section 6.01(b), Seaview
(and its Permitted Transferees) shall have the right to Transfer at any time
all or any portion of its (or its Permitted Transferees') shares of Common
Stock and Warrants (including, without limitation, any beneficial ownership
thereof) to any of its Permitted Transferees without the prior consent of any
Person.
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(ii) Seaview (and its Permitted Transferees) shall not have the
right to Transfer all or any portion of its (or its Permitted Transferees')
shares of Common Stock or Warrants (including, without limitation, any
beneficial ownership thereof) to any Person other than Ripplewood, WMC or
Western Multiplex except in accordance with Section 6.01(b) and (A) pursuant
to Section 6.01(d)(i), (f), (g), (h) or (B) with the prior written consent of
WMC's Board of Directors and Ripplewood.
(iii) Without the prior written consent of Ripplewood, Seaview (and
its Permitted Transferees) shall not have the right to Transfer to any Person
(other than a Permitted Transferee who complies with Sections 6.01(b)(B) and
(C)) all or any portion of its (or its Permitted Transferees') 10x Warrants,
5x Warrants or shares of Common Stock issued upon exercise of the 10x
Warrants or the 5x Warrants except (x) pursuant to Section 6.01(g) or
6.01(f), or (y) after the earlier of (A) such time as Ripplewood and its
Permitted Transferees have Transferred to Persons who are not Permitted
Transferees of Ripplewood an aggregate of two-thirds of the shares of Common
Stock issued to Ripplewood and its Permitted Transferees, or (B) two years
after a Triggering Event (as defined in the 5x Warrants and the 10x Warrants)
described in clause (1) of the definition thereof.
(e) Involuntary and Impermissible Transfers. If an Involuntary
Transfer or a Transfer in violation of this Agreement shall occur with
respect to Seaview and, in the case of a Transfer in violation of this
Agreement, such violation has not been cured within 30 days after notice to
the applicable Transferor or Transferee, WMC shall give notice to Ripplewood
offering Ripplewood the right, exercisable by delivery of written notice to
the Transferee with respect to such Involuntary Transfer or Transfer within
90 days following the day on which such notice is given, to purchase all the
shares of Common Stock and/or Warrants acquired by such Transferee at a
purchase price equal to, in the case of an Involuntary Transfer, 100% or, in
the case of a Transfer in violation of this Agreement, 90% of the purchase
price determined pursuant to Section 5.01(a) as if such transfer were a
termination of Zakin's employment for cause. The closing date of any
purchase described in this Section 6.01(e) shall be on the date specified by
WMC that shall not be later than the 30th day after a determination of the
Fair Market Value of the shares of Common Stock to be purchased is made.
Ripplewood may assign its rights under this Section 6.01(e) to any person.
(f) Tag-Along Rights. (i) If Ripplewood or its Permitted
Transferee desire to Transfer any portion of its shares of WMC Common Stock
to a prospective Transferee (or Transferees) other than to a Permitted
Transferee of Ripplewood, Ripplewood or its Permitted Transferee shall, as a
condition to such Transfer, (A) provide a notice to Seaview in writing (a
"Tag-Along Notice") of the material terms of the proposed Transfer at least
14 days prior to such Transfer and (B) permit Seaview and its Permitted
Transferees (or cause Seaview and its Permitted Transferees to be permitted)
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to sell (either to the prospective Transferee of Common Stock or to another
financially reputable Transferee reasonably acceptable to Seaview) the same
portion of its outstanding shares of Common Stock and Section 6.01(f) Vested
Warrants (as defined below) on the same terms and conditions, subject to the
same agreements and at the same price as the sale by Ripplewood or its
Permitted Transferees (in each case subject to Section 6.01(f)(iii)), which
sale shall take place on the date Ripplewood's (or its Permitted
Transferee's) shares of Common Stock (or such portion) are Transferred to
such Transferee (or Transferees). To calculate the number of outstanding
shares of Common Stock and Section 6.01(f) Vested Warrants that Seaview and
its Permitted Transferees can sell for the purposes of clause (i)(B) of this
Section 6.01(f), WMC and Western Multiplex shall be treated as a single
entity such that Seaview and its Permitted Transferees will be able to sell
the product of (x) a fraction, the numerator of which is the number of shares
of WMC Common Stock being sold by Ripplewood, and the denominator of which is
the total number of shares of WMC Common Stock owned by Ripplewood,
multiplied by (y) the total number of shares of Common Stock and Section
6.01(f) Vested Warrants owned by Seaview and its Permitted Transferees (e.g.,
if Ripplewood is selling 75% of its interest in WMC Common Stock, Seaview and
its Permitted Transferees will be able to include 75% of their total
ownership of Common Stock and Section 6.01(f) Vested Warrants, calculated as
though WMC and Western Multiplex are a single entity). Should Seaview and/or
its Permitted Transferees exercise their rights pursuant to this Section
6.01(f) (i), Seaview and/or its Permitted Transferees shall be required to
Transfer Common Stock and Section 6.01(f) Vested Warrants held by them in the
following order of priority: (1) first, shares of Common Stock (until the
Transferor holds no shares of Common Stock), (2) second, Initial Warrants
(until the Transferor holds no Initial Warrants), (3) third, 5x Warrants
(until the Transferor hold no 5x Warrants), and (4) fourth, 10x Warrants.
Seaview and its Permitted Transferees shall have ten days from the date of
receipt of a Tag-Along Notice to exercise its right to sell pursuant to this
Section 6.01(f)(i) by delivering written notice to Ripplewood of its intent
to exercise such right. Seaview's and its Permitted Transferees' right to
sell in such transaction pursuant to the above shall terminate if not
exercised within such ten-day period. If Seaview or its Permitted Transferee
elects to exercise its right to sell pursuant to the above, it shall share,
on a pro rata basis, the legal, investment banking and other expenses of
Ripplewood or the Permitted Transferee incurred in connection with such
Transfer. For purposes hereof, "Section 6.01(f) Vested Warrants" means
Warrants that are then exercisable or which would become exercisable upon
completion of the transactions subject to this Section 6.01(f).
(ii) If WMC sells any portion or all of its interest in Western
Multiplex, WMC shall, as a condition to such Transfer, (A) provide a notice
to Seaview in writing (a "MUX Sale Tag-Along Notice") of the material terms
of the proposed Transfer at least 14 days prior to such Transfer and (B)
permit Seaview and its Permitted Transferees (or cause Seaview and its
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Permitted Transferees to be permitted) to sell (either to the prospective
Transferee of Common Stock or to another financially reputable Transferee
reasonably acceptable to Seaview) a number of its outstanding shares of MUX
Common Stock and Section 6.01(f) Vested Warrants equal to (x) the percentage
of the outstanding shares of MUX Common Stock owned by WMC that are being
sold by WMC (e.g. if there are 2,000 shares of MUX Common Stock outstanding
of which WMC owns 1,800 shares and WMC is selling 180 shares, the percentage
under this clause (x) will be 10%) multiplied by (y) the number of shares of
MUX Common Stock and 6.01(f) Vested Warrants owned by Seaview or such
Permitted Transferee. Subject to Section 6.01(f)(iii) any such sale shall be
on the same terms and conditions, subject to the same agreements and at the
same price as the sale by WMC, which sale shall take place on the date WMC's
shares of MUX Common Stock (or such portion) are Transferred to such
Transferee (or Transferees). Should Seaview and/or its Permitted Transferees
exercise their rights pursuant to this Section 6.01(f), Seaview and/or its
Permitted Transferees shall be required to Transfer MUX Common Stock and
Section 6.01(f)(ii) Vested Warrants held by them in the following order of
priority: (1) first, shares of MUX Common Stock (until the Transferor holds
no shares of Common Stock), (2) second, Initial Warrants (until the
Transferor holds no Initial Warrants), (3) third, 5x Warrants (until the
Transferor hold no 5x Warrants), and (4) fourth, 10x Warrants. Seaview and
its Permitted Transferees shall have ten days from the date of receipt of a
MUX Sale Tag-Along Notice to exercise its right to sell pursuant to this
Section 6.01(f)(ii) by delivering written notice to WMC of its intent to
exercise such right. Seaview's and its Permitted Transferees' right to sell
in such transaction pursuant to the above shall terminate if not exercised
within such ten-day period. If Seaview or its Permitted Transferee elects to
exercise its right to sell pursuant to the above, it shall share, on a pro
rata basis, the legal, investment banking and other expenses of WMC incurred
in connection with such Transfer.
(iii) Anything in the foregoing to the contrary notwithstanding,
upon any sale of Warrants pursuant to this Section 6.01(f), Seaview and/or
its Permitted Transferees shall be entitled to receive a price per Warrant
equal to the greater of (A) the product of (x) the number of shares of Common
Stock issuable upon exercise of such Warrants multiplied by (y) the
difference between (1) the price per share to be receive by Ripplewood, its
Permitted Transferee or WMC (as applicable) as a result of such sale, and (2)
the exercise price per share of the Warrants, and (B) zero.
(g) Drag-Along Rights. (i) So long as Seaview and its Permitted
Transferees do not own in the aggregate at least 50% more shares of Common
Stock than Ripplewood and its Permitted Transferees own in the aggregate, if
at any time Ripplewood and/or its Permitted Transferees desire to Transfer
all or any portion of its shares of Common Stock to any Third Party Purchaser
(or Third Party Purchasers), Ripplewood and its Permitted Transferees shall
have the right to require that Seaview and its Permitted Transferees Transfer
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the same portion of their shares of Common Stock and Section 6.01(g) Vested
Warrants (as defined below) to such Third Party Purchaser (or Third Party
Purchasers) on the same terms and conditions, subject to the same agreements
and at the same price as the sale by Ripplewood and/or its Permitted
Transferees (in each case subject to Section 6.01(f)(iii)). To calculate the
number of outstanding shares of Common Stock and Section 6.01(g) Vested
Warrants that Seaview and its Permitted Transferees can be required to sell
pursuant to this Section 6.01(g)(i), WMC and Western Multiplex shall be
treated as a single entity such that Seaview and its Permitted Transferees
can be required to sell the product of (x) a fraction, the numerator of which
is the number of shares of WMC Common Stock being sold by Ripplewood, and the
denominator of which is the total number of shares of WMC Common Stock owned
by Ripplewood, multiplied by (y) the total number of shares of Common Stock
and Section 6.01(g) Vested Warrants owned by Seaview and its Permitted
Transferees (e.g. if Ripplewood is selling 75% of its interest in WMC Common
Stock, Ripplewood and its Permitted Transferees will have the right to
require that Seaview and its Permitted Transferees transfer 75% of their
total ownership of Common Stock and Section 6.01(f) Vested Warrants,
calculated as though WMC and Western Multiplex are a single entity). Should
Ripplewood and/or its Permitted Transferees exercise their rights pursuant to
this Section 6.01(g)(i), Seaview and/or its Permitted Transferees shall be
required to Transfer Common Stock and Section 6.01(g) Vested Warrants held by
them in the following order of priority: (1) first, shares of Common Stock
(until the Transferor holds no shares of Common Stock), (2) second, Initial
Warrants (until the Transferor holds no Initial Warrants), (3) third, 5x
Warrants (until the Transferor holds no 5x Warrants), and (4) fourth, 10x
Warrants. Ripplewood shall provide a notice to Seaview in writing (a "Drag-
Along Notice") of such sale at least 10 days prior to such Transfer, and the
Drag-Along Notice shall identify such Third Party Purchaser (or Third Party
Purchasers), all material terms of the sale and the date of closing. Upon
the closing of any sale by Ripplewood and/or its Permitted Transferees of all
(or such portion) of its shares of Common Stock as described in a Drag-Along
Notice, such Third Party Purchaser (or Third Party Purchasers) shall pay to
Seaview and/or its Permitted Transferees the consideration payable to Seaview
and/or its Permitted Transferees in connection with such sale of all (or such
portion) of its shares of Common Stock or Warrants to such Third Party
Purchaser (or Third Party Purchasers), net of Seaview's and/or its Permitted
Transferees' proportionate share of the legal, investment banking and other
expenses of Ripplewood and/or its Permitted Transferees incurred in
connection with such sale, and Seaview's and/or its Permitted Transferees'
shares of Common Stock or Warrants (or such portion) shall be deemed
Transferred to such Third Party Purchaser (or Third Party Purchasers). For
purposes hereof, Section 6.01(g) "Vested Warrants" means Warrants that are
then exercisable or which would become exercisable upon completion of the
transactions subject to this Section 6.01(g).
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(ii) So long as Seaview and its Permitted Transferees do not own
in the aggregate at least 50% more shares of Common Stock than Ripplewood and
its Permitted Transferees own in the aggregate, if at any time WMC desires to
Transfer all or any portion of its shares of MUX Common Stock to any Third
Party Purchaser (or Third Party Purchasers), WMC shall have the right to
require that Seaview and its Permitted Transferees Transfer the same portion
of their shares of MUX Common Stock and Section 6.01(g) Vested Warrants to
such Third Party Purchaser (or Third Party Purchasers) on the same terms and
conditions, subject to the same agreements and at the same price as the sale
by WMC. Should WMC exercise its rights pursuant to this Section 6.01(g)(ii),
Seaview and or its Permitted Transferees shall be required to Transfer MUX
Common Stock and Section 6.01(g) Vested Warrants held by them in the
following order of priority: (1) first, shares of MUX Common Stock (until
the Transferor holds no shares of MUX Common Stock), (2) second, Initial
Warrants (until the Transferor holds no Initial Warrants), (3) third, 5x
Warrants (until the Transferor holds no 5x Warrants), and (4) fourth, 10x
Warrants. WMC shall provide a notice to Seaview in writing (a "MUX Sale
Drag-Along Notice") of such sale at least 10 days prior to such Transfer, and
the MUX Sale Drag-Along Notice shall identify such Third Party Purchaser (or
Third Party Purchasers), all material terms of the sale and the date of
closing. Upon the closing of any sale by WMC of all (or such portion) of its
shares of MUX Common Stock as described in a MUX Sale Drag-Along Notice, such
Third Party Purchaser (or Third Party Purchasers) shall pay to Seaview and/or
its Permitted Transferees the consideration payable to Seaview and/or its
Permitted Transferees in connection with such sale of all (or such portion)
of its shares of MUX Common Stock or Warrants to such Third Party Purchaser
(or Third Party Purchasers), net of Seaview's and/or its Permitted
Transferees' proportionate share of the legal, investment banking and other
expenses of WMC incurred in connection with such sale, and Seaview's and/or
its Permitted Transferees' shares of MUX Common Stock or Warrants (or such
portion) shall be deemed Transferred to such Third Party Purchaser (or Third
Party Purchasers).
(iii) Anything in the foregoing to the contrary notwithstanding,
upon any sale of Warrants pursuant to this Section 6.01(g), Seaview and/or
its Permitted Transferees shall be entitled to receive a price per Warrant
equal to the greater of (1) the product of (A) the number of shares of Common
Stock issuable upon exercise of such Warrants multiplied by (B) the
difference between (x) the price per share to be received by Ripplewood or
its Permitted Transferee or WMC (as applicable) as a result of such sale, and
(y) the exercise price per share of the Warrants, and (2) zero.
(h) At any time after an initial public offering of Common Stock,
Seaview will have the right to make written demands upon either of WMC or
Western Multiplex or both to register its Common Stock; provided that Seaview
shall be entitled to exercise its rights under this Section 6.01(h) on only
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two occasions. Ripplewood and its Permitted Transferees and WMC (in the case
of any sale of MUX Common Stock) will have the right to have its Common Stock
registered pro rata with Seaview's at the same time Seaview's Common Stock is
registered in accordance with the immediately preceding sentence. Seaview
will have the right to choose the managing underwriter of any such offering;
provided that such managing underwriter is reasonably satisfactory to
Ripplewood. WMC and/or Western Multiplex (as applicable) will be entitled to
postpone any demand registration by Seaview if such offering will interfere
with a pending financing, merger, sale of assets, recapitalization or other
similar corporate action of WMC and/or Western Multiplex (as applicable) or
an offering of Common Stock owned by Ripplewood or its Permitted Transferees
or WMC. WMC or Western Multiplex (as applicable) will pay all fees
(excluding any underwriter discount) and expenses in connection with a demand
registration by Seaview. In addition, Seaview will have the right to have
its Common Stock registered pro rata with Ripplewood (x) at any time any
public offering of Common Stock is made by Western Multiplex or WMC or (y) if
Ripplewood makes a demand upon Western Multiplex or WMC to register its
Common Stock. Such registration rights will be on customary terms and
conditions (including, without limitation, customary cut back and lock-up
provisions) established in good faith by Western Multiplex's or WMC's Board
of Directors and Ripplewood and applicable to Ripplewood. Subject to Section
6.01(d)(iii), at any time and from time to time after an initial public
offering by WMC, Seaview will have the right to sell to Western Multiplex any
shares of Common Stock. Seaview can exercise such right by delivering notice
to Western Multiplex and the closing of such sale will occur 10 business days
after delivery of such notice, unless the aggregate purchase price exceeds
$2.5 million, in which case Western Multiplex will have the right to postpone
the purchase for an additional 20 days. The purchase price per share will
equal the average closing price for the WMC Common Stock on the principal
trading exchange on which the WMC Common Stock is traded during the five
business days prior to delivery by Seaview of such notice (as equitably
adjusted to the extent that the number of outstanding shares of WMC Common
Stock does not equal the number of outstanding shares of MUX Common Stock
held by WMC). WMC and Western Multiplex shall be jointly and severally
liable for Western Multiplex's obligation to purchase Seaview's shares of
Common Stock pursuant to this Section 6.01(h).
(i) Ownership of Seaview and Certain Permitted Transferees. Zakin
agrees that for as long as Seaview or any Permitted Transferee of Zakin
described in (ii)(y) of the definition of Permitted Transferee hold any
Warrants or shares of Common Stock the Transfer of which are restricted by
Section 6.01(d), Zakin will directly or indirectly be the sole beneficial
owner of all of the equity of Seaview and/or such Permitted Transferee (as
applicable).
SECTION 7.01. Legend. Each of Ripplewood and Seaview agrees that
any and all certificates representing shares of WMC Common Stock will have
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inscribed conspicuously on the front or back of such certificates the
following legend: "The shares of Common Stock, par value $.01 per share, of
WMC Holding Corp. represented by this certificate are subject to one or more
agreements among shareholders or agreements between shareholders and WMC
Holding Corp. and may not be sold or otherwise transferred except in
accordance therewith. Copies of such agreement or agreements may be obtained
at the principal executive offices of WMC Holding Corp." Each of Ripplewood
and Seaview agrees that any and all certificates representing shares of MUX
Common Stock will have inscribed conspicuously on the front or back of such
certificates the following legend: "The shares of Common Stock, par value
$.01 per share, of Western Multiplex Corporation represented by this
certificate are subject to one or more agreements among shareholders or
agreements between shareholders and Western Multiplex Corporation and may not
be sold or otherwise transferred except in accordance therewith. Copies of
such agreement or agreements may be obtained at the principal executive
offices of Western Multiplex Corporation."
SECTION 8.01. Voting Agreements and Directors. (a) From and
after the date hereof, so long as Seaview and its Permitted Transferees do
not own in the aggregate at least 50% more shares of Common Stock than
Ripplewood and its Permitted Transferees own in the aggregate, Seaview and
its Permitted Transferees: (i) shall vote all of the shares of Common Stock
held by them (including, without limitation, shares acquired after the date
hereof) in the same manner as the shares of Common Stock held by Ripplewood
or WMC (in the case of MUX Common Stock) are voted on all matters acted upon
at any annual or special meeting of shareholders or by written consent in
lieu of a meeting and (ii) irrevocably constitutes and appoints the Person
who is at the time the Senior Managing Director and Chief Executive Officer
of Ripplewood Holding his proxy to vote all of the shares of Common stock
held by Seaview or such Permitted Transferee in the same manner as the shares
of Common Stock held by Ripplewood or WMC (in the case of MUX Common Stock)
are voted on all matters acted upon at any annual or special meeting of
shareholders or by written consent in lieu of a meeting; provided that this
Section 8.01(a) shall be inapplicable with respect to any matters which would
both adversely affect the rights of the shares of Common Stock held by
Seaview or such Permitted Transferee and treat Seaview or such Permitted
Transferee differently from other holders of shares of Common Stock (it being
understood that a conversion of WMC to a limited liability company will not
be deemed to adversely affect the rights of Seaview or such Permitted
Transferee and Seaview and its Permitted Transferees hereby agree that their
shares of Common Stock will be voted in favor of any such action). The
voting agreements and proxies granted pursuant to this Section 8.01(a) are
coupled with an interest and shall be valid for the term of this Agreement.
Seaview represents that it has not granted and is not party to any proxy,
voting trust or other agreement which in each case is inconsistent with or
conflicts with the provisions of this Agreement, and Seaview and its
Permitted Transferees shall not grant any proxy or become a party to any
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voting trust or other agreement which in each case is inconsistent with or
conflicts with the provisions of this Agreement.
(b) Each of Ripplewood and Seaview will have the right to nominate
such number of members of each of WMC's and Western Multiplex's Board of
Directors as reflects the percentage of the outstanding Common Stock
(calculated as though WMC and Western Multiplex are a single entity) owned by
(x) Ripplewood and its Permitted Transferees and Seaview, respectively (such
number to be rounded to the whole number closest to such percentage of the
total number of members of WMC's Board of Directors); provided that Seaview
will be entitled to nominate at least one member to each of WMC's and Western
Multiplex's Board of Directors; provided further that, so long as Seaview and
its Permitted Transferees do not own at least 50% more of the Common Stock
(calculated as though Western Multiplex and WMC are a single entity) than
Ripplewood and its Permitted Transferees own, Ripplewood will have the right
to nominate the majority of the members of each of WMC's and Western
Multiplex's Board of Directors. It is presently contemplated that the each
of the Boards of Directors of WMC and Western Multiplex at the Closing will
consist of Zakin, Michael Seedman, two designees of Ripplewood and the
President of Western Multiplex.
SECTION 9.01. Preemptive Rights. (a) Except for (i) issuances of
pro rata dividends to all holders of Common Stock, (ii) stock issued to
employees, officers or directors of WMC or its subsidiaries (including,
without limitation, Western Multiplex) in connection with management options
or incentive plans approved by WMC's Board of Directors, (iii) stock issued
in connection with any merger, acquisition, business combination, joint
venture, partnership or limited liability company of WMC or its subsidiaries
(including, without limitation, Western Multiplex), (iv) issuances pursuant
to the exercise of the Warrants or pursuant to the exercise, conversion or
exchange of any security whose issuance was subject to this Section 9.01(a),
Ripplewood and Seaview and their respective Permitted Transferees, in order
to enable them to maintain their respective fully diluted percentage
ownership of the Common Stock (calculated as though WMC and Western Multiplex
are a single entity), shall have preemptive rights, as hereinafter set forth,
to purchase any capital stock (subject to the proviso below), including any
warrants or securities convertible into capital stock, of WMC hereafter
issued by WMC so that each of Ripplewood and Seaview and their respective
Permitted Transferees shall hereafter be entitled to acquire a percentage of
capital stock which is hereafter issued equal to the same percentage of the
issued and outstanding Common Stock (calculated as though WMC and Western
Multiplex are a single entity) as is held by such holder immediately prior to
the date on which the capital stock is to be issued, provided, however, that
any shares of Common Stock or warrants or securities convertible into Common
Stock purchased by Ripplewood and its Permitted Transferees pursuant to this
Section 9.01(a) shall be shares of or warrants or securities convertible into
WMC Class B Common Stock and any shares of capital stock or warrants or
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securities convertible into capital stock purchased by Seaview and its
permitted transferees pursuant to this Section 9.01(a) shall be shares of or
warrants or securities convertible into WMC Class A Common Stock. As used
herein, "issue" (and variations thereof) includes sales and transfers by WMC
of treasury shares.
(b) WMC shall, before issuing any additional capital stock (other
than in accordance with the exceptions referred to in Section 9.01(a)
hereof), give written notice thereof to Ripplewood and Seaview. Such notice
shall specify what type of instrument WMC intends to issue and the
consideration which WMC intends to receive therefor. For a period of twenty
(20) days following receipt by Ripplewood and Seaview of such notice, WMC
shall be deemed to have irrevocably offered to sell to each of them and their
respective Permitted Transferees a sufficient number of shares of such
capital stock so that each such holder, if such holder elects to acquire such
shares as hereinafter set forth, shall be capable of acquiring the same
percentage of shares of WMC Common Stock as the percentage of outstanding
Common Stock beneficially owned by such holder at the time of such notice.
In the event any such offer is accepted, in whole or in part, by a holder,
WMC shall sell such shares (which number may be adjusted downward on a pro
rata basis if the original numbers of shares proposed to be issued is
reduced) to such holder for the consideration and on the terms set forth in
WMC's notice (given under the first two sentences of this paragraph). In the
event that Ripplewood or Zakin or any of their respective Permitted
Transferees elects not to, or fails to, exercise its rights under this
Section 9.01 within the twenty (20) day period, then WMC may issue the shares
of capital stock offered to, but not purchased by, such holder to third
persons but only for the same consideration set forth in WMC's notice (given
under the first two sentences of this paragraph) and no later than sixty (60)
days after the expiration of such twenty day period. The closing for such
transaction shall take place as proposed by WMC with respect to the shares of
capital stock proposed to be issued, at which closing WMC shall deliver
certificates for the shares of capital stock or other securities in the
respective names of the purchasers against receipt of the consideration
therefor.
SECTION 10.01. Indemnification. (a) Scope. (i) General Rule.
To the fullest extent permitted by law, WMC shall indemnify Zakin on an
after-tax basis against any liability incurred in connection with any
proceeding in which Zakin may be involved as a party or otherwise by reason
of the fact that Zakin is or was serving in an indemnified capacity,
including, without limitation, liabilities resulting from any actual or
alleged breach or neglect of duty, error, misstatement or misleading
statement or act giving rise to strict or products liability; provided that
no indemnity shall be payable hereunder against any liability incurred by
Zakin by reason of (i) Zakin's fraud, wilful violation of law, gross
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negligence, breach of this Agreement or bad faith or (ii) the receipt by
Zakin from WMC of a personal benefit to which Zakin is not legally entitled.
(ii) Partial Payment. If Zakin is entitled to indemnification in
respect of a portion, but not all, of any liabilities to which Zakin may be
subject, WMC shall indemnify Zakin to the maximum extent legally permissible
for such liabilities.
(iii) Presumption. The termination of a proceeding by judgment,
order, settlement or conviction or upon a plea of nolo contendere or its
equivalent shall not of itself create a presumption that the indemnified
representative is not entitled to indemnification under this Section
10.01(a).
(iv) Definitions. For purposes of this Section 10.01: (i)
"indemnified capacity" means any and all past, present and future service by
Zakin in one or more capacities as a director, officer, manager, employee or
agent of WMC or Western Multiplex, or, at the request of WMC or Western
Multiplex, as a member, director, officer, manager, employee, agent,
fiduciary or trustee of another corporation, limited liability company,
partnership, joint venture, trust, employee benefit plan or other entity or
enterprise, (ii) "liability" means any damage, judgment, amount paid in
settlement, fine, penalty, punitive damages, excise tax assessed with respect
to any employee benefit plan, or cost or expense of any nature (including,
without limitation, attorneys' fees and disbursements) and (iii) "proceeding"
means any threatened, pending or completed action, suit, appeal or other
proceeding of any nature, whether civil, criminal, administrative or
investigative, whether formal or informal, and whether brought by or in the
right of WMC or Western Multiplex, its shareholders or otherwise.
(b) Advancing Expenses. To the fullest extent permitted by law,
WMC shall pay the expenses (including, without limitation, attorneys' fees
and disbursements) incurred in good faith by Zakin in advance of the final
disposition of a proceeding upon receipt of an undertaking by or on behalf of
Zakin to repay the amount if it is ultimately determined that Zakin is not
entitled to be indemnified by WMC pursuant to this Section 10.01.
(c) Securing of Indemnification Obligations. To further effect,
satisfy or secure the indemnification obligations provided in this Section
10.01 or otherwise, WMC may maintain insurance, obtain a letter of credit,
act as self-insurer, create a reserve, trust, escrow, cash collateral or
other fund or account, enter into indemnification agreements, pledge or grant
a security interest in any assets or properties of WMC, or use any other
mechanism or arrangement whatsoever in such amounts, at such costs, and upon
such other terms and conditions as WMC's Board of Directors shall deem
appropriate.
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(d) Scope. The rights granted by this Section 10.01 shall not be
deemed exclusive of any other rights to which those seeking indemnification,
contribution or advancement of expenses may be entitled under any statute,
agreement, vote of shareholders or disinterested shareholders or otherwise,
both as to action in an indemnified capacity and as to action in any other
capacity. The indemnification, contribution and advancement of expenses
provided by or granted pursuant to this Section 10.01 shall continue as to
Zakin after he has ceased to be a director, officer and employee of WMC in
respect of matters arising prior to such time, and shall inure to the benefit
of the successors, heirs, executors, administrators and personal
representatives of Zakin.
(e) D&O Insurance. WMC and Western Multiplex shall provide
directors' and officers' liability insurance to Zakin in his capacity as a
director and officer of WMC and Western Multiplex under the same insurance
policy covering Ripplewood designees to the Board of Directors of WMC and
Western Multiplex, or under a different policy providing the same level of
coverage as such policy.
SECTION 11.01. Termination of Zakin's Employment. Zakin's
employment shall terminate:
(a) upon written notice by WMC or Western Multiplex to Zakin of
WMC's termination of Zakin's employment hereunder for "cause", which
shall exist upon the occurrence of any of the following: (i) Zakin is
convicted of, pleads guilty to, confesses to, or enters a plea of nolo
contendere to, any felony or any crime that involves moral turpitude or
any act of fraud, misappropriation or embezzlement; (ii) Zakin has
engaged in a fraudulent act to the damage or prejudice of Ripplewood,
WMC, Western Multiplex or any of their respective Affiliates; (iii) any
act or omission by Zakin involving malfeasance or gross negligence in
the performance of Zakin's duties hereunder and, within 30 days after
written notice from WMC of any such act or omission, Zakin has not
corrected such act or omission; (iv) Zakin otherwise fails to comply
with the terms of this Agreement or deviates from any written policies
or directives of the WMC Board of Directors and, within 30 days after
written notice from WMC of such failure or deviation, Zakin has not
corrected such failure or deviation; (v) the death of Zakin; (vi) Zakin
becomes mentally or physically disabled (as reasonably determined by an
independent physician selected by WMC); or (vii) as provided in Section
1.01(c) of this Agreement;
(b) upon 60 days prior written notice by WMC or Western Multiplex
to Zakin of WMC's termination of Zakin's employment hereunder (other
than for cause pursuant to Section 11.01(a)); or
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(c) upon 60 days prior written notice by Zakin to WMC or Western
Multiplex of Zakin's termination of his employment hereunder.
(d) upon termination of Zakin's employment with WMC or Western
Multiplex pursuant to Section 11.01(a), (b) or (c), Zakin's employment with
the other company (i.e. Western Multiplex or WMC) shall automatically
terminate and be deemed terminated pursuant to such same Section.
SECTION 12.01. Termination. This Agreement (other than Sections
3.01, 4.01 and 10.01) shall terminate when Seaview no longer owns any shares
of Common Stock or any Warrants; provided that Seaview disposes of all of its
shares of Common Stock in accordance with the terms of this Agreement.
Notwithstanding the foregoing, Sections 5.01(a), 6.01 (other than Sections
6.01(b)(D), 6.01(d)(iii) and 6.01(h)) and 9.01 of this Agreement shall
terminate upon an initial public offering of the Common Stock.
SECTION 13.01. Representation and Warranties.
(a) Seaview Representations and Warranties. Seaview represents
and warrants to Ripplewood and WMC:
(i) Seaview acknowledged that the Common Stock and the Warrants
are subject to the restrictions on transferability contained in this
Agreement, and the Common Stock and Warrants cannot be transferred, sold or
otherwise disposed of, except in accordance with such restrictions and that
any transfer that does not comply with such restrictions shall be void and
shall not bind WMC.
(ii) Seaview acknowledges that he has been advised that (i) a
restrictive legend in the form heretofore set forth shall be placed on the
certificates representing the Common Stock and that a restrictive legend in
the form set forth in the Warrants is contained therein and (ii) a notation
shall be made in the appropriate records of WMC indicating that the Common
Stock and Warrants are subject to restrictions on transfer and appropriate
stop transfer restrictions will be issued to WMC's transfer agent with
respect to the Common Stock. Seaview also acknowledges that (1) the Common
Stock and the Warrants must be held indefinitely and Seaview must continue to
bear the economic risk of the investment in the Common Stock and the Warrants
unless a transfer or exercise, as the case may be, is permitted under the
terms of this Agreement, (2) when and if shares of the Common Stock may be
disposed of pursuant to the terms hereof without registration in reliance on
Rule 144 of the rules and regulations promulgated under the Securities Act,
such disposition can be made only in limited amounts in accordance with the
terms and conditions of such Rule and (3) if the Rule 144 exemption is not
available, sale without registration will require compliance with some other
exemption under the Act.
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(iii) Seaview further represents and warrants that with respect to
the Common Stock and Warrants to be purchased hereunder (i) Seaview is an
"Accredited Investor" (as such term is defined in Rule 501(a) promulgated
under the Securities Act), (ii) Seaview has been given the opportunity to
obtain any additional information or documents and to ask questions and
receive answers about such documents, WMC and the business and prospects of
the WMC as Seaview deems necessary to evaluate the merits and risks related
to an investment in the Common Stock and Warrants, and no representations
concerning such matters or any other matters have been made to Seaview except
as set forth in this Agreement, (iii) Seaview's net worth and financial
condition is such that Seaview can afford to bear the economic risk of
holding the unregistered Common Stock and Warrants for an indefinite period
of time and has adequate means for providing for Seaview's current needs and
contingencies, (iv) Seaview can afford to suffer a complete loss of Seaview's
investment in the Common Stock and Warrants, (v) all information which
Seaview has provided to WMC concerning Seaview and Seaview's financial
position is correct and complete in all material respects as of the date of
this Agreement, (vi) Seaview understands and has taken cognizance of all risk
factors related to the purchase of the Common Stock and Warrants, (vii)
Seaview's knowledge and experience in financial and business matters are such
that Seaview is capable of evaluating the merits and risks of the purchase of
the Common Stock and Warrants as contemplated by this Agreement and (viii)
Seaview is acquiring the Common Stock and Warrants for Seaview's own account.
(iv) Seaview has all requisite legal capacity to acquire and hold
the Common Stock and Warrants and to execute, deliver and comply with the
terms of each of the documents required to be executed and delivered by
Seaview in connection with the purchase of Common Stock and Warrants. The
execution and delivery by Seaview, and compliance by Seaview with, this
Agreement, and each other document required to be executed and delivered by
Seaview in connection with the purchase of Common Stock and Warrants does not
conflict with, or constitute a default under, any instruments governing
Seaview, any law, regulation or order, or any agreement to which Seaview is a
party or by which Seaview is bound. This Employment and Co-Investment
Agreement has been duly executed by Seaview and constitutes a valid and
legally binding agreement of Seaview.
(b) WMC Representations and Warranties. WMC represents and
warrants to Seaview:
(i) This Agreement has been duly authorized, executed and
delivered by Ripplewood and WMC. The execution and delivery by Ripplewood
and WMC, and compliance by Ripplewood and WMC with, this Agreement, and each
other document required to be executed and delivered by Ripplewood and WMC in
connection with the purchase of Common Stock and Warrants does not conflict
with, or constitute a default under, any instruments governing Ripplewood or
WMC, as the case may be, any law, regulation or order, or any agreement to
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which Ripplewood or WMC, as the case may be, is a party or by which
Ripplewood or WMC, as the case may be, is bound. This Employment and Co-
Investment Agreement has been duly executed by Ripplewood and WMC and
constitutes a valid and legally binding agreement of Ripplewood and WMC.
(ii) The Common Stock to be issued pursuant to Section 2.01, the
Warrants and any shares of Common Stock issued upon exercise of the Warrants,
when issued and delivered in accordance with the terms hereof, will be duly
authorized and validly issued, fully paid and nonassessable. Upon transfer
of the purchase price by Seaview to WMC, good and valid title to the Common
Stock and the Warrants will pass to Seaview, free and clear of any liens
other than the restrictions on transferability described in this Agreement
and by federal and state securities laws.
(iii) As of the Closing Date, the authorized capital stock of WMC
will consist of 100,000,000 shares of Class A Common Stock and 100,000,000
shares of Class B Common Stock. As of the Closing Date, the issued and
outstanding capital stock of WMC is expected to be as set forth on Annex I
hereto, subject to change due to the adjustment mechanisms in the Redemption
and Purchase Agreement or there being additional cash available (thereby
reducing the amount of capital to be contributed by Ripplewood). All shares
of Common Stock to be purchased by Ripplewood on the Closing Date will be
purchased for a cash purchase price of $.50 per share. Except for the Co-
Investment Agreement among WMC, Ripplewood, Western Multiplex Corporation,
The Michael and Roberta Seedman Family Trust and Michael Seedman of even date
herewith, the Warrants and options or warrants issued to management of
Western Multiplex in connection with the acquisition of Western Multiplex as
unanimously approved by WMC's Board of Directors, there are no options,
warrants, rights, convertible or exchangeable securities, "phantom" stock
rights, stock appreciation rights, stock-based performance rights or contract
of any kind to which WMC or Ripplewood is a party or by which either of them
is bound (i) obligating WMC to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other equity
interests in, or any security convertible or exchangeable into any capital
stock or other interest in WMC, (ii) obligating WMC to issue, grant, extend
or enter into such option, warrant, call, right, security or contract, or
(iii) that give any person the right to receive any economic benefit or right
similar to or derived from the economic benefits and rights accruing to
holders of Common Stock.
SECTION 14.01. General Provisions. (a) Amendments. This
Agreement may not be amended except by an instrument in writing signed by the
parties hereto.
(b) Entire Agreement; No Third-Party Beneficiaries; Assignment.
This Agreement constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties with
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respect to the subject matter hereof, and is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
Without limiting the foregoing, to the extent any of the provisions of this
Agreement are inconsistent with the terms of the Prior Agreement, the terms
of this Agreement shall control and the terms of the Prior Agreement will not
have any force or effect. Neither this Agreement, nor any of the rights,
interests or obligations hereunder shall be assigned or transferred by any
party without the prior written consent of the other parties hereto, except
as provided in Section 14.01(h) and except that Ripplewood may assign, in its
sole discretion, any or all of its rights and obligations to any direct or
indirect Affiliate of Ripplewood Holdings; provided that no assignment by
Ripplewood shall limit or affect the assignor's obligations hereunder.
Subject to the preceding sentence, this Agreement will be binding upon, inure
to the benefit of and be enforceable by the parties and their respective
successors and assigns. Any attempted assignment in violation of this
Agreement shall be void and of no force and effect.
(c) Notices. All notices or other communications required or
permitted by this Agreement shall be made in writing and any such notice or
communication shall be deemed delivered when delivered in person, transmitted
by telecopier, or one business day after it has been sent by a nationally
recognized overnight courier, at the address for notices as follows:
(i) if to Ripplewood,
Ripplewood Holdings L.L.C.
One Rockefeller Plaza
32nd Floor
New York, New York 10020
Attention: Mr. Timothy C. Collins
Mr. Jeffrey Hendren
Facsimile: (212) 582-4110
with a copy to
Simpson Thacher & Bartlett
3373 Hillview Avenue
Suite 250
Palo Alto, California 94304
Attention: Mr. Daniel Clivner, Esq.
(ii) if to WMC or Western Multiplex,
WMC Holding Corp.
One Rockefeller Plaza
32nd Floor
New York, New York 10020
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Attention: Mr. Timothy C. Collins
Mr. Jeffrey Hendren
Facsimile: (212) 582-4110
with a copy to Ripplewood at its address set forth above
and a copy to Simpson Thacher & Bartlett at its address
set forth above.
(iii) if to Seaview or Zakin,
101 California Street
Suite 2825
San Francisco, California 94111
Attention: Mr. Jonathan N. Zakin
Facsimile: (415) 772-9289
with a copy to
Weil Gotshal & Manges
2882 Sand Hill Road
Suite 280
Menlo Park, CA 94025
Attention: Mr. Richard Millard, Esq.
Facsimile: (650) 854-3713
Communications by telecopier also shall be sent concurrently by
first class mail or overnight courier, but shall in any event be effective as
stated above. Each party may from time to time change its address for
notices under this Section 14.01(c) by giving at least five days' notice of
such changed address to the other parties hereto.
(d) Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more of the counterparts have been
signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
(e) Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) Governing Law. This letter shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
contracts executed and to be performed entirely within such states.
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(g) Obligations of WMC. Neither Seaview, Zakin or Ripplewood will
have any liability or obligation to any other party for the failure of WMC to
perform any of its obligations hereunder.
(h) Conversion to LLC. Each of Zakin and Seaview acknowledges and
agrees that WMC shall have the right to convert to a limited liability
company and/or distribute to the shareholders of WMC all of the capital stock
of Western Multiplex held by WMC. In the event of any distribution of the
capital stock of Western Multiplex held by WMC, (x) the holders of WMC Class
A Common Stock may receive shares of MUX Class A Common Stock having the same
relative rights as the WMC Class A Common Stock and the holders of WMC Class
B Common Stock may receive shares of MUX Class B Common Stock having the same
rights as the WMC Class B Common Stock, provided that the MUX Class B Common
Stock may also be held by the current stockholders of Western Multiplex and
their transferees, (y) Western Multiplex shall assume all rights and
obligations of WMC hereunder and be deemed to be "WMC" hereunder and all
references to "WMC Common Stock" shall be deemed references to "MUX Common
Stock" and (2) to the extent WMC is dissolved and Zakin's employment with WMC
is thereby terminated, Zakin's employment with WMC shall not be deemed to
have terminated for purposes of this Agreement.
(i) Capitalization. Whenever WMC issues shares of WMC Class A
Common Stock or WMC Class B Common Stock, WMC shall use the proceeds to
purchase the same number of shares of the equivalent class of MUX Common
Stock. In the event either of WMC or Western Multiplex effects a stock
split, reclassification, recapitalization or any other subdivision,
combination or consolidation of its outstanding shares of WMC Common Stock or
MUX Common Stock, as the case may be, the other company shall effect an
equivalent stock split, reclassification, recapitalization, subdivision,
combination or consolidation such that a share of WMC Common Stock is
economically comparable to a share of MUX Common Stock.
(j) Treatment as Single Entity. Except as expressly provided in
this Agreement, where this Agreement makes reference to treating Western
Multiplex and WMC as a single entity, they will be treated as a single entity
so that the percentage owned by a person will be the percentage equivalent of
a fraction, the numerator of which is the number of outstanding shares of
Common Stock owned by such person and the denominator of which is the
aggregate number of outstanding shares of Common Stock minus the number of
outstanding shares of MUX Common Stock that are owned by WMC; for these
purposes, all shares issuable upon exercise of options, warrants or other
rights to acquire Common Stock that are then exercisable shall be deemed
outstanding.
(k) Business. WMC will not hold any assets or conduct any
business other than its ownership of capital stock of Western Multiplex and
receipt of any cash dividends or distributions in respect thereof.
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(l) Legal Expenses. WMC shall pay the reasonable legal fees and
expenses payable to Weil Gotshal & Manges by Zakin and Seaview incurred as a
result the negotiation and execution of this Agreement.
(m) Effectiveness. This Agreement shall be effective as of the
date set forth above without the signature of Western Multiplex Corporation.
At the Common Stock Closing, WMC shall cause Western Multiplex to execute and
deliver this Agreement.
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IN WITNESS WHEREOF, Ripplewood, WMC, Seaview and Zakin have duly
executed this Agreement as of the date first written above.
RIPPLEWOOD PARTNERS L.P.
by
/s/ Jeffrey M. Hendren
-----------------------
Name: Jeffrey M. Hendren
Title: Principal
WMC HOLDING CORP.,
by
/s/ Jeffrey M. Hendren
------------------------
Name: Jeffrey M. Hendren
Title: Vice President
SEAVIEW HOLDINGS, L.L.C.,
by
/s/ Jonathan N. Zakin
-------------------------
Name: Jonathan N. Zakin
Title: Manager
/s/ Jonathan N. Zakin
-------------------------
JONATHAN N. ZAKIN
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IN WITNESS WHEREOF, Western Multiplex has duly executed this
Agreement as of November 1, 1999.
WESTERN MULTIPLEX CORPORATION,
by
/s/ Jeffrey M. Hendren
-------------------------
Name: Jeffrey M. Hendren
Title: Secretary
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Annex I
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EXHIBIT 10.2
CO-INVESTMENT AGREEMENT dated as of October 31, 1999,
among Ripplewood Partners L.P., a Delaware limited partnership
(together with its successors and permitted assigns,
"Ripplewood"), WMC Holding Corp., a Delaware corporation
(together with its successors and permitted assigns, "WMC"), The
Michael and Roberta Seedman Revocable Trust (together with its
successors and any of its Permitted Transferees who acquire
shares of Common Stock pursuant to Section 6.01,"The Trust"),
Michael Seedman ("Seedman"), Western Multiplex Corporation, a
Delaware corporation (together with its successors and
permitted assigns, "Western Multiplex").
WHEREAS, WMC, Western Multiplex Corporation, a California
corporation, GTI Acquisition Corp. and Glenayre Technologies, Inc. have
entered into a Redemption, Stock Purchase and Recapitalization Agreement (as
amended, supplemented or otherwise modified from time to time, the
"Redemption and Purchase Agreement");
WHEREAS, subject to the terms and conditions of the Redemption and
Purchase Agreement WMC will acquire a controlling interest in Western
Multiplex Corporation;
WHEREAS, Seedman is the trustee of The Trust;
WHEREAS, The Trust wishes to purchase 1,900,000 shares of Class A
Common Stock, par value $.01 per share, of WMC (the "WMC Class A Common
Stock"); and
WHEREAS, Ripplewood will acquire shares of Class B Common Stock,
par value $.01 per share of WMC (the "WMC Class B Common Stock" and,
collectively with the WMC Class A Common Stock, "WMC Common Stock");
WHEREAS, Western Multiplex will issue to The Trust warrants to
purchase an aggregate amount of 1,900,000 shares of Class A Common Stock, par
value $0.01 per share, of Western Multiplex (the "MUX Class A Common Stock"
and, collectively with the shares of Class B Common Stock, par value $.01 per
share, of Western Multiplex, the "MUX Common Stock"):
WHEREAS, Ripplewood, WMC, The Trust, Zakin and Western Multiplex
wish to make certain agreements with respect to Ripplewood's and The Trust's
investment in the WMC Common Stock and the MUX Common Stock (collectively,
the "Common Stock"), The Trust's investments in warrants to acquire MUX
Common Stock and Zakin's employment by WMC.
<PAGE>
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, Ripplewood, WMC, The Trust,
Seedman and Western Multiplex agree as follows:
SECTION 1.01. Position. (a) Agreement to Act as Director.
Subject to Section 11.01, WMC agrees to cause Seedman to be elected to the
Boards of Directors of WMC and Western Multiplex and Seedman hereby agrees
to serve as a director on WMC's and Western Multiplex's Board of Directors.
(b) Term of Position as Director. Seedman shall serve as director
pursuant hereto commencing on the Closing Date (as defined in the Redemption
and Purchase Agreement) and continuing until terminated pursuant to Section
11.01 (the "Term").
(c) Compensation and Benefits. Seedman shall not be entitled to
receive any compensation or benefits from Ripplewood, WMC, Western Multiplex
or any of their Affiliates as a consequence of serving as a director of WMC
or Western Multiplex. "Affiliate" shall mean, with respect to any person,
any other person that directly or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common control
with, such person. For purposes of the foregoing sentence, "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with"), as used with respect to any person, means the direct
or indirect possession of the power to direct or cause the direction of the
management or policies of such person, whether through the ownership of
voting securities, by contract or otherwise.
2.01. Equity Investment. (a) (i) Subject only to the
satisfaction of the conditions precedent set forth in clauses (ii) and (iii)
below, WMC hereby agrees to issue and sell to The Trust, and The Trust hereby
agrees to purchase from WMC, immediately prior to the Closing (as defined in
the Redemption and Purchase Agreement), 1,900,000 shares of WMC Class A
Common Stock at a price of $.50 per share in cash. At the closing of the
purchase and sale of the shares of WMC Class A Common Stock pursuant to this
Section 2.01(a) (the "Common Stock Closing"), The Trust shall transfer to an
account designated by WMC $950,000 in cash in immediately available funds and
WMC shall deliver to The Trust a duly executed stock certificate evidencing
1,900,000 shares of WMC Class A Common Stock.
(ii) The obligation of The Trust to purchase the 1,900,000 shares
of WMC Class A Common Stock pursuant to clause (i) above is subject only to
the following: (A) the representations and warranties of WMC contained in
Section 13.01(a) shall be true and correct in all material respects as of the
date hereof and as of the Closing Date, (B) WMC shall have delivered to The
Trust a certificate of the Vice President of WMC to the effect that the
transactions to occur on the Closing Date under the Redemption and Purchase
Agreement will occur immediately after the Common Stock Closing on
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substantially the same terms reflected in the Redemption and Purchase
Agreement and that WMC has not knowingly waived in any material respect any
material closing conditions under the Redemption and Purchase Agreement, and
(C) definitive agreements shall have been executed providing for the
financing contemplated by the Commitment Letter (as defined in the Redemption
and Purchase Agreement) on substantially the same terms set forth in the
Commitment Letter.
(iii) The obligation of WMC to issue and sell the 1,900,000 shares
of WMC Class A Common Stock pursuant to clause (i) above is subject only to
the following: (A) the representations and warranties of The Trust contained
in Section 13.01(b) shall be true and correct in all material respects as of
the date hereof and as of the Closing Date and (B) all conditions precedent
to the Closing under the Redemption and Purchase Agreement shall have been
satisfied or waived by the applicable parties to the Redemption and Purchase
Agreement.
(b) Subject to the Common Stock Closing simultaneously occurring,
Western Multiplex hereby agrees to issue to The Trust at the Common Stock
Closing warrants (the "Initial Warrants") to purchase 570,000 shares of Class
A Common Stock. The Initial Warrants will be in the form of Exhibit A
hereto.
(c) Subject to the Common Stock Closing simultaneously occurring,
Western Multiplex hereby agrees to issue to The Trust at the Common Stock
Closing warrants (the "5x Warrants") to purchase 254,600 shares of MUX Class
A Common Stock. The 5x Warrants will be in the form of Exhibit B hereto.
(d) Subject to the Common Stock Closing simultaneously occurring,
Western Multiplex hereby agrees to issue to The Trust at the Common Stock
Closing warrants ( the "10x Warrants," and, collectively with the Initial
Warrants and the 5x Warrants, the "Warrants") to purchase 627,000 shares of
MUX Class A Common Stock. The 10x Warrants will be in the form of Exhibit C
hereto.
(e) Seedman agrees to cause The Trust to perform its obligations
under Section 2.01(a).
SECTION 3.01. Exclusive Basis, Nonsolicitation. During the Term
and for one year thereafter, Seedman shall not, and shall cause his
Affiliates not to, directly or indirectly (other than as an employee of or
consultant to WMC and/or Western Multiplex):
(a) solicit or attempt to solicit any business from any of WMC or
Western Multiplex (or any of their respective subsidiaries') customers or
clients, including, without limitation, actively sought prospective customers
or clients, for purposes of providing products or services that are
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competitive with WMC's or Western Multiplex's (or any of their respective
subsidiaries') products or services; or
(b) (i) solicit for employment or for use as a consultant any
employees of Ripplewood, WMC, Western Multiplex or any of their respective
Affiliates, (ii) solicit or encourage any employee of Ripplewood, WMC,
Western Multiplex or any of their respective Affiliates to leave the
employment of Ripplewood, WMC, Western Multiplex or any such Affiliate or
(iii) otherwise intentionally interfere with the relationship of Ripplewood,
WMC Western Multiplex or any of their Affiliates with any person or entity
who or which is employed by or otherwise engaged to perform services for
Ripplewood, WMC, Western Multiplex or any such Affiliate. The provisions of
this Section 3.01(b) shall not prevent Seedman or any of his Affiliates from
hiring any person who contacts Seedman or such affiliate on a non-solicited
basis or who responds to a help wanted or similar ad not specifically
targeted to such person.
SECTION 4.01. Confidential Information. During the term of this
Agreement and for one year thereafter, except as may be required by law,
Seedman shall not, and shall cause his Affiliates not to, use or disclose, or
knowingly permit any representative of Seedman or any of his Affiliates to
use or disclose any information (whether or not in written form) which
relates to Ripplewood, WMC, Western Multiplex or any of their Affiliates or
any of their respective businesses or products or this Agreement and which is
not known to the public generally, except in the conduct of the business of
WMC.
SECTION 5.01. Option to Purchase Shares and Warrants. (a) If
Seedman's position as a director is terminated pursuant to Section 11.01(a)
or (c), WMC and Western Multiplex, jointly and severally, shall have an
option to purchase all or any portion of (i) the Common Stock (the "Shares")
then held by The Trust at a purchase price equal to the Fair Market Value of
such Shares (determined in accordance with Section 5.01(b)) as of the date of
such termination and (ii) the Warrants that have not terminated and are then
held by The Trust at a purchase price equal to the product of (x) the Fair
Market Value per Share (determined in accordance with Section 5.01(b)) as of
the date of such termination) minus the exercise price per share of Common
Stock pursuant to the Warrants being purchased multiplied by (y) the number
of shares of Common Stock issuable upon exercise of the Warrants being
purchased. WMC or Western Multiplex, as the case may be, shall within 90
days of such date of termination give notice in writing to The Trust of its
election to exercise or not to exercise such option, which notice shall set
forth the portion, if any, of the Shares and Warrants that WMC or Western
Multiplex elects to purchase. The purchase of the Shares and Warrants shall
take place at the principal office of Ripplewood, located at One Rockefeller
Plaza, New York, New York, on the date specified by WMC (not later than the
later of (x) the twentieth business day following the receipt by The Trust of
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the required notice from WMC and (y) the satisfaction of any legal
requirements to the purchase of the Shares and Warrants). The consideration
for the purchase of the Shares and Warrants shall be paid by delivery to The
Trust of a certified or bank check made payable to The Trust or by wire
transfer of immediately available funds to a bank account designated by The
Trust, against delivery of certificates or other instruments representing the
Shares and Warrants so purchased, appropriately endorsed by the owner
thereof, free and clear of all security interests, liens, claims,
encumbrances, charges, options, restrictions on transfer, proxies and voting
and other agreements of whatever nature. WMC and Western Multiplex may
assign their rights under this Section 5.01 to any person.
(b) (i) If a determination of the Fair Market Value of the Shares
is required by this Agreement when there is no public trading market for the
Shares, such "Fair Market Value" shall be such amount as is determined to be
the fair market value of the Shares as of the date such Fair Market Value is
required to be determined hereunder as determined by (x) The Trust and WMC
through good faith negotiations; (y) an investment banking firm of national
reputation mutually acceptable to both The Trust and WMC, if The Trust and
WMC do not agree upon the Fair Market Value of such Shares within 30 days
after the date as of which such Fair Market Value is to be determined; or (z)
an investment banking firm of national reputation selected by two investment
banking firms of national reputation (one of which shall be chosen by The
Trust and one of which shall be chosen by WMC), if The Trust and WMC do not
mutually agree upon an investment banking firm to determine the Fair Market
Value of the Shares pursuant to clause (y) above within 10 days after the
expiration of the 30-day period referred to in clause (y) above. In making a
determination of such Fair Market Value, due consideration shall be given to
such factors as are deemed appropriate, including, without limitation, the
earnings and other financial and operating information of WMC and its
subsidiaries in recent periods, its potential value and that of its
subsidiaries as a whole, its future prospects and that of its subsidiaries
and the industries in which they compete, its history and management and that
of its subsidiaries, the general condition of the securities markets and the
fair market value of securities of privately owned companies (with transfer
restrictions) engaged in businesses similar to those of WMC and its
subsidiaries. The Fair Market Value shall be determined assuming that all
Warrants that have not terminated are then exercisable and assuming that all
Class B Common Stock has been voluntarily converted to Class A Common Stock.
The Fair Market Value as determined by the foregoing procedure shall be
binding and conclusive upon the parties hereto.
(ii) If a determination of the Fair Market Value of the Shares is
required by this Agreement when there is a public trading market for the
Shares, such "Fair Market Value" shall mean the average daily closing sales
price of the Shares for the ten consecutive trading days preceding the date
the Fair Market Value of the Shares is required to be determined hereunder.
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The closing price for each day shall be the last reported sales price regular
way or, in case no such reported sale takes place on such day, the average of
the reported closing bid and asked prices regular way, in either case on the
principal national securities exchange on which the Shares are listed and
admitted to trading, or, if not listed and admitted to trading on any such
exchange on the NASDAQ National Market System, or, if not quoted on the
National Market System, the average of the closing bid and asked prices in
the over-the-counter market as furnished by any New York Stock Exchange
member firm selected from time to time by Western Multiplex's Board of
Directors for that purpose.
SECTION 6.01. Transfers. (a) Defined Terms. The following terms
shall have the following meanings:
"Involuntary Transfer" means any Transfer by Ripplewood or The
Trust of any shares of Common Stock or any Warrant, or of any beneficial
ownership thereof, upon death, appointment of a guardian, default,
foreclosure, forfeit, bankruptcy (voluntary or involuntary), court order,
levy of attachment, execution or otherwise than voluntarily by the
Transferor; provided, that a Transfer required pursuant to Section 6.01(g)
shall not be deemed an Involuntary Transfer.
"Permitted Transferee" means, (i) with respect to Ripplewood, (A)
any Affiliate of Ripplewood Holdings L.L.C. ("Ripplewood Holdings"), (B) a
shareholder, partner, member or employee of Ripplewood Holdings or any
Affiliate of Ripplewood Holdings or (C) an employee, director or officer of
WMC or Western Multiplex or any subsidiary of WMC or Western Multiplex (up to
an aggregate of 5% of the outstanding Common Stock) and (ii) with respect to
The Trust, (x) Seedman, (y) a trust of which the beneficiaries consist solely
of Seedman, Seedman's spouse or former spouse or Seedman's children or (z)
any corporation, partnership, limited liability company or other entity all
of the equity interests of which are, and will at all times continue to be,
directly or indirectly owned solely by Seedman; provided, that such
transferee is (or becomes at the time of such Transfer) a party hereto.
"Person" means any individual, corporation, partnership, trust,
association, limited liability company, joint venture, joint-stock company or
any other entity or organization, including, without limitation, a government
or governmental agency.
"Third Party Purchaser" means, with respect to any proposed sale of
shares of Common Stock by Ripplewood or The Trust, a Person other than a
Permitted Transferee, who offers to purchase from Ripplewood or The Trust, as
the case may be, such shares pursuant to a bona fide written offer.
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"Transfer" means any transfer, sale, conveyance, assignment, gift,
hypothecation, pledge or other disposition, whether voluntary or by operation
of law, of a share of Common Stock or any Warrant.
"Transferee" means the transferee in a Transfer.
"Transferor" means the transferor in a Transfer.
"Unrestricted Shares" means shares of Common Stock previously (i)
Transferred by Ripplewood or any of its Permitted Transferees in a
transaction subject to Section 6.01(f) or (ii) Transferred by The Trust or
any of its Permitted Transferees pursuant to Section 6.01(f).
(b) Generally. Neither Ripplewood nor The Trust may Transfer all
or any portion of its shares of Common Stock or any Warrant, or any
beneficial ownership thereof, unless (A) such Transfer is in accordance with
this Section 6.01, (B) the Transferee executes and delivers a counterpart of
the signature page of this Agreement (or other appropriate assumption
agreement) in which the Transferee agrees to be bound by the provisions of
this Agreement to the same extent as the Transferor, (C) the Transferee
executes and delivers any other agreements, documents or instruments
reasonably specified by WMC's Board of Directors (in the case of a Transfer
of WMC Common Stock) or Western Multiplex's Board of Directors (in the case
of a Transfer of Warrants or Western Multiplex Common Stock) (in each case,
which shall be uniformly and consistently applied to all transfers by
Ripplewood and The Trust) and (D) such transfer is pursuant to an effective
registration statement under the Securities Act of 1933, as amended (the
"Securities Act") or a valid exemption from registration under the Securities
Act and in compliance with all applicable state and foreign securities laws.
Any Transfer made in violation of this Section 6.01(b) shall be null and void
and shall be subject to Section 6.01(e).
(c) Transfers by Ripplewood. (i) Subject to Section 6.01(b) and,
with respect to a Transfer by Ripplewood or any of its Permitted Transferees
to any Person other than a Permitted Transferee of Ripplewood, Section
6.01(f), Ripplewood (and its Permitted Transferees) shall have the right to
Transfer at any time all or any portion of its shares of Common Stock
(including, without limitation, any beneficial ownership thereof) to any
Person without the prior consent of any Person.
(ii) Subject to Section 6.01(b), any Unrestricted Shares may be
Transferred to any Person without the consent of any other Person and any
such Transfer will not be subject to Section 6.01(b).
(d) Transfers by Seedman. (i) Subject to Section 6.01(b), The
Trust (and its Permitted Transferees) shall have the right to Transfer at any
time all or any portion of its (or its Permitted Transferees') shares of
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Common Stock and Warrants (including, without limitation, any beneficial
ownership thereof) to any of its Permitted Transferees without the prior
consent of any Person.
(ii) The Trust (and its Permitted Transferees) shall not have the
right to Transfer all or any portion of its (or its Permitted Transferees')
shares of Common Stock or Warrants (including, without limitation, any
beneficial ownership thereof) to any Person other than Ripplewood, WMC or
Western Multiplex except in accordance with Section 6.01(b) and (A) pursuant
to Section 6.01(d)(i), (f), (g), (h) or (B) with the prior written consent of
WMC's Board of Directors and Ripplewood.
(iii) Without the prior written consent of Ripplewood, The Trust
(and its Permitted Transferees) shall not have the right to Transfer to any
Person (other than a Permitted Transferee who complies with Sections
6.01(b)(B) and (C)) all or any portion of its (or its Permitted Transferees')
10x Warrants, 5x Warrants or shares of Common Stock issued upon exercise of
the 10x Warrants or the 5x Warrants except (x) pursuant to Section 6.01(g) or
6.01(f), or (y) after the earlier of (A) such time as Ripplewood and its
Permitted Transferees have Transferred to Persons who are not Permitted
Transferees of Ripplewood an aggregate of two-thirds of the shares of Common
Stock issued to Ripplewood and its Permitted Transferees or (B) two years
after a Triggering Event (as defined in the 5x Warrants and the 10x Warrants)
described in clause (1) of the definition thereof.
(e) Involuntary and Impermissible Transfers. If an Involuntary
Transfer or a Transfer in violation of this Agreement shall occur with
respect to The Trust and, in the case of a Transfer in violation of this
Agreement, such violation has not been cured within 30 days after notice to
the applicable Transferor or Transferee, WMC shall give notice to Ripplewood
offering Ripplewood the right, exercisable by delivery of written notice to
the Transferee with respect to such Involuntary Transfer or Transfer within
90 days following the day on which such notice is given, to purchase all the
shares of Common Stock and/or Warrants acquired by such Transferee at a
purchase price equal to, in the case of an Involuntary Transfer, 100% or, in
the case of a Transfer in violation of this Agreement, 90% of the purchase
price determined pursuant to Section 5.01(a) as if such transfer were a
termination of Seedman's employment for cause. The closing date of any
purchase described in this Section 6.01(e) shall be on the date specified by
WMC that shall not be later than the 30th day after a determination of the
Fair Market Value of the shares of Common Stock to be purchased is made.
Ripplewood may assign its rights under this Section 6.01(e) to any person.
(f) Tag-Along Rights. (i) If Ripplewood or its Permitted
Transferee desire to Transfer any portion of its shares of WMC Common Stock
to a prospective Transferee (or Transferees) other than to a Permitted
Transferee of Ripplewood, Ripplewood or its Permitted Transferee shall, as a
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condition to such Transfer, (A) provide a notice to The Trust in writing (a
"Tag-Along Notice") of the material terms of the proposed Transfer at least
14 days prior to such Transfer and (B) permit The Trust and its Permitted
Transferees (or cause The Trust and its Permitted Transferees to be
permitted) to sell (either to the prospective Transferee of Common Stock or
to another financially reputable Transferee reasonably acceptable to The
Trust) the same portion of its outstanding shares of Common Stock and Section
6.01(f) Vested Warrants (as defined below) on the same terms and conditions,
subject to the same agreements and at the same price as the sale by
Ripplewood or its Permitted Transferees (in each case subject to Section
6.01(f)(iii)), which sale shall take place on the date Ripplewood's (or its
Permitted Transferee's) shares of Common Stock (or such portion) are
Transferred to such Transferee (or Transferees). To calculate the number of
outstanding shares of Common Stock and Section 6.01(f) Vested Warrants that
The Trust and its Permitted Transferees can sell for the purposes of clause
(i)(B) of this Section 6.01(f), WMC and Western Multiplex shall be treated as
a single entity such that The Trust and its Permitted Transferees will be
able to sell the product of (x) a fraction, the numerator of which is the
number of shares of WMC Common Stock being sold by Ripplewood, and the
denominator of which is the total number of shares of WMC Common Stock owned
by Ripplewood, multiplied by (y) the total number of shares of Common Stock
and Section 6.01(f) Vested Warrants owned by The Trust and its Permitted
Transferees (e.g., if Ripplewood is selling 75% of its interest in WMC Common
Stock, The Trust and its Permitted Transferees will be able to include 75% of
their total ownership of Common Stock and Section 6.01(f) Vested Warrants,
calculated as though WMC and Western Multiplex are a single entity). Should
The Trust and/or its Permitted Transferees exercise their rights pursuant to
this Section 6.01 (f) (i), The Trust and/or its Permitted Transferees shall
be required to Transfer Common Stock and Section 6.01(f) Vested Warrants held
by them in the following order of priority: (1) first, shares of Common Stock
(until the Transferor holds no shares of Common Stock), (2) second, Initial
Warrants (until the Transferor holds no Initial Warrants), (3) third, 5x
Warrants (until the Transferor hold no 5x Warrants), and (4) fourth, 10x
Warrants. The Trust and its Permitted Transferees shall have ten days from
the date of receipt of a Tag-Along Notice to exercise its right to sell
pursuant to this Section 6.01(f) by delivering written notice to Ripplewood
of its intent to exercise such right. The Trust's and its Permitted
Transferees' right to sell in such transaction pursuant to the above shall
terminate if not exercised within such ten-day period. If The Trust or its
Permitted Transferee elects to exercise its right to sell pursuant to the
above, it shall share, on a pro rata basis, the legal, investment banking and
other expenses of Ripplewood or the Permitted Transferee incurred in
connection with such Transfer. For purposes hereof, "Section 6.01(f) Vested
Warrants" means Warrants that are then exercisable or which would become
exercisable upon completion of the transactions subject to this Section
6.01(f).
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(ii) If WMC sells any portion or all of its interest in Western
Multiplex, WMC shall, as a condition to such Transfer, (A) provide a notice
to The Trust in writing (a "MUX Sale Tag-Along Notice") of the material terms
of the proposed Transfer at least 14 days prior to such Transfer and (B)
permit The Trust and its Permitted Transferees (or cause The Trust and its
Permitted Transferees to be permitted) to sell (either to the prospective
Transferee of Common Stock or to another financially reputable Transferee
reasonably acceptable to The Trust) a number of its outstanding shares of
MUX Common Stock and Section 6.01(f) Vested Warrants equal to (x) the
percentage of the outstanding shares of MUX Common Stock owned by WMC that
are being sold by WMC (e.g. if there are 2,000 shares of MUX Common Stock
outstanding of which WMC owns 1,800 shares and WMC is selling 180 shares, the
percentage under this clause (x) will be 10%) multiplied by (y) the number of
shares of MUX Common Stock and 6.01(f) Vested Warrants owned by The Trust or
such Permitted Transferee. Subject to Section 6.01(f)(iii) any such sale
shall be on the same terms and conditions, subject to the same agreements and
at the same price as the sale by WMC, which sale shall take place on the date
WMC's shares of MUX Common Stock (or such portion) are Transferred to such
Transferee (or Transferees). Should The Trust and/or its Permitted
Transferees exercise their rights pursuant to this Section 6.01(f), The Trust
and/or its Permitted Transferees shall be required to Transfer MUX Common
Stock and Section 6.01(f)(ii) Vested Warrants held by them in the following
order of priority: (1) first, shares of MUX Common Stock (until the
Transferor holds no shares of Common Stock), (2) second, Initial Warrants
(until the Transferor holds no Initial Warrants), (3) third, 5x Warrants
(until the Transferor hold no 5x Warrants), and (4) fourth, 10x Warrants.
The Trust and its Permitted Transferees shall have ten days from the date of
receipt of a MUX Sale Tag-Along Notice to exercise its right to sell pursuant
to this Section 6.01(f)(ii) by delivering written notice to WMC of its intent
to exercise such right. The Trust's and its Permitted Transferees' right to
sell in such transaction pursuant to the above shall terminate if not
exercised within such ten-day period. If The Trust or its Permitted
Transferee elects to exercise its right to sell pursuant to the above, it
shall share, on a pro rata basis, the legal, investment banking and other
expenses of WMC incurred in connection with such Transfer.
(iii) Anything in the foregoing to the contrary notwithstanding,
upon any sale of Warrants pursuant to this Section 6.01(f), The Trust and/or
its Permitted Transferees shall be entitled to receive a price per Warrant
equal to the greater of (A) the product of (x) the number of shares of Common
Stock issuable upon exercise of such Warrants multiplied by (y) the
difference between (1) the price per share to be receive by Ripplewood, its
Permitted Transferee or WMC (as applicable) as a result of such sale, and (2)
the exercise price per share of the Warrants, and (B) zero.
(g) Drag-Along Rights. So long as The Trust and its Permitted
Transferees do not own in the aggregate at least 50% more shares of Common
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Stock than Ripplewood and its Permitted Transferees own in the aggregate, if
at any time Ripplewood and/or its Permitted Transferees desire to Transfer
all or any portion of its shares of Common Stock to any Third Party Purchaser
(or Third Party Purchasers), Ripplewood and its Permitted Transferees shall
have the right to require that The Trust and its Permitted Transferees
Transfer the same portion of their shares of Common Stock and Section 6.01(g)
Vested Warrants (as defined below) to such Third Party Purchaser (or Third
Party Purchasers) on the same terms and conditions, subject to the same
agreements and at the same price as the sale by Ripplewood and/or its
Permitted Transferees (in each case subject to Section 6.01(f)(iii)). To
calculate the number of outstanding shares of Common Stock and Section
6.01(g) Vested Warrants that The Trust and its Permitted Transferees can be
required to sell pursuant to this Section 6.01(g)(i), WMC and Western
Multiplex shall be treated as a single entity such that The Trust and its
Permitted Transferees can be required to sell the product of (x) a fraction,
the numerator of which is the number of shares of WMC Common Stock being sold
by Ripplewood, and the denominator of which is the total number of shares of
WMC Common Stock owned by Ripplewood, multiplied by (y) the total number of
shares of Common Stock and Section 6.01(g) Vested Warrants owned by The
Trust and its Permitted Transferees (e.g. if Ripplewood is selling 75% of
its interest in WMC Common Stock, Ripplewood and its Permitted Transferees
will have the right to require that The Trust and its Permitted Transferees
transfer 75% of their total ownership of Common Stock and Section 6.01(f)
Vested Warrants, calculated as though WMC and Western Multiplex are a single
entity). Should Ripplewood and/or its Permitted Transferees exercise their
rights pursuant to this Section 6.01(g)(i), The Trust and/or its Permitted
Transferees shall be required to Transfer Common Stock and Section 6.01(g)
Vested Warrants held by them in the following order of priority: (1) first,
shares of Common Stock (until the Transferor holds no shares of Common
Stock), (2) second, Initial Warrants (until the Transferor holds no Initial
Warrants), (3) third, 5x Warrants (until the Transferor holds no 5x
Warrants), and (4) fourth, 10x Warrants. Ripplewood shall provide a notice
to The Trust in writing (a "Drag-Along Notice") of such sale at least 10 days
prior to such Transfer, and the Drag-Along Notice shall identify such Third
Party Purchaser (or Third Party Purchasers), all material terms of the sale
and the date of closing. Upon the closing of any sale by Ripplewood and/or
its Permitted Transferees of all (or such portion) of its shares of Common
Stock as described in a Drag-Along Notice, such Third Party Purchaser (or
Third Party Purchasers) shall pay to The Trust and/or its Permitted
Transferees the consideration payable to The Trust and/or its Permitted
Transferees in connection with such sale of all (or such portion) of its
shares of Common Stock or Warrants to such Third Party Purchaser (or Third
Party Purchasers), net of The Trust's and/or its Permitted Transferees'
proportionate share of the legal, investment banking and other expenses of
Ripplewood and/or its Permitted Transferees incurred in connection with such
sale, and The Trust's and/or its Permitted Transferees' shares of Common
Stock or Warrants (or such portion) shall be deemed Transferred to such Third
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Party Purchaser (or Third Party Purchasers). For purposes hereof, Section
6.01(g) "Vested Warrants" means Warrants that are then exercisable or which
would become exercisable upon completion of the transactions subject to this
Section 6.01(g).
(ii) So long as The Trust and its Permitted Transferees do not own
in the aggregate at least 50% more shares of Common Stock than Ripplewood and
its Permitted Transferees own in the aggregate, if at any time WMC desires to
Transfer all or any portion of its shares of MUX Common Stock to any Third
Party Purchaser (or Third Party Purchasers), WMC shall have the right to
require that The Trust and its Permitted Transferees Transfer the same
portion of their shares of MUX Common Stock and Section 6.01(g) Vested
Warrants to such Third Party Purchaser (or Third Party Purchasers) on the
same terms and conditions, subject to the same agreements and at the same
price as the sale by WMC. Should WMC exercise its rights pursuant to this
Section 6.01(g)(ii), The Trust and or its Permitted Transferees shall be
required to Transfer MUX Common Stock and Section 6.01(g) Vested Warrants
held by them in the following order of priority: (1) first, shares of MUX
Common Stock (until the Transferor holds no shares of MUX Common Stock), (2)
second, Initial Warrants (until the Transferor holds no Initial Warrants),
(3) third, 5x Warrants (until the Transferor holds no 5x Warrants), and (4)
fourth, 10x Warrants. WMC shall provide a notice to The Trust in writing (a
"MUX Sale Drag-Along Notice") of such sale at least 10 days prior to such
Transfer, and the MUX Sale Drag-Along Notice shall identify such Third Party
Purchaser (or Third Party Purchasers), all material terms of the sale and the
date of closing. Upon the closing of any sale by WMC of all (or such
portion) of its shares of MUX Common Stock as described in a MUX Sale Drag-
Along Notice, such Third Party Purchaser (or Third Party Purchasers) shall
pay to The Trust and/or its Permitted Transferees the consideration payable
to The Trust and/or its Permitted Transferees in connection with such sale of
all (or such portion) of its shares of MUX Common Stock or Warrants to such
Third Party Purchaser (or Third Party Purchasers), net of The Trust's and/or
its Permitted Transferees' proportionate share of the legal, investment
banking and other expenses of WMC incurred in connection with such sale, and
The Trust's and/or its Permitted Transferees' shares of MUX Common Stock or
Warrants (or such portion) shall be deemed Transferred to such Third Party
Purchaser (or Third Party Purchasers).
(iii) Anything in the foregoing to the contrary notwithstanding,
upon any sale of Warrants pursuant to this Section 6.01(g), The Trust and/or
its Permitted Transferees shall be entitled to receive a price per Warrant
equal to the greater of (1) the product of (A) the number of shares of Common
Stock issuable upon exercise of such Warrants multiplied by (B) the
difference between (x) the price per share to be received by Ripplewood or
its Permitted Transferee or WMC (as applicable) as a result of such sale, and
(y) the exercise price per share of the Warrants, and (2) zero.
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(h) At any time after an initial public offering of Common Stock,
The Trust will have the right to make written demands upon either of WMC or
Western Multiplex or both to register its Common Stock; provided that The
Trust shall be entitled to exercise its rights under this Section 6.01(h) on
only two occasions. Ripplewood and its Permitted Transferees and WMC (in the
case of any sale of MUX Common Stock) will have the right to have its Common
Stock registered pro rata with The Trust's at the same time The Trust's
Common Stock is registered in accordance with the immediately preceding
sentence. The Trust will have the right to choose the managing underwriter
of any such offering; provided that such managing underwriter is reasonably
satisfactory to Ripplewood. WMC and/or Western Multiplex (as applicable)
will be entitled to postpone any demand registration by The Trust if such
offering will interfere with a pending financing, merger, sale of assets,
recapitalization or other similar corporate action of WMC and/or Western
Multiplex (as applicable) or an offering of Common Stock owned by Ripplewood
or its Permitted Transferees or WMC. WMC or Western Multiplex (as
applicable) will pay all fees (excluding any underwriter discount) and
expenses in connection with a demand registration by The Trust. In addition,
The Trust will have the right to have its Common Stock registered pro rata
with Ripplewood (x) at any time any public offering of Common Stock is made
by Western Multiplex or WMC or (y) if Ripplewood makes a demand upon Western
Multiplex or WMC to register its Common Stock. Such registration rights will
be on customary terms and conditions (including, without limitation,
customary cut back and lock-up provisions) established in good faith by
Western Multiplex's or WMC's Board of Directors and Ripplewood and applicable
to Ripplewood. Subject to Section 6.01(d)(iii), at any time and from time to
time after an initial public offering by WMC, The Trust will have the right
to sell to Western Multiplex any shares of Common Stock. The Trust can
exercise such right by delivering notice to Western Multiplex and the closing
of such sale will occur 10 business days after delivery of such notice,
unless the aggregate purchase price exceeds $2.5 million, in which case
Western Multiplex will have the right to postpone the purchase for an
additional 20 days. The purchase price per share will equal the average
closing price for the WMC Common Stock on the principal trading exchange on
which the WMC Common Stock is traded during the five business days prior to
delivery by The Trust of such notice (as equitably adjusted to the extent
that the number of outstanding shares of WMC Common Stock does not equal the
number of outstanding shares of MUX Common Stock held by WMC). WMC and
Western Multiplex shall be jointly and severally liable for Western
Multiplex's obligation to purchase The Trust's shares of Common Stock
pursuant to this Section 6.01(h).
(i) Beneficiaries and Control of The Trust. Seedman agrees that
for as long as The Trust or any Permitted Transferee of Seedman described in
(ii)(y) of the definition of Permitted Transferee hold any Warrants or shares
of Common Stock the Transfer of which are restricted by Section 6.01(d),
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Seedman and his Permitted Transferees will be the sole beneficiaries of The
Trust and Seedman shall be the trustee of The Trust.
SECTION 7.01. Legend. Each of Ripplewood and The Trust agrees
that any and all certificates representing shares of WMC Common Stock will
have inscribed conspicuously on the front or back of such certificates the
following legend: "The shares of Common Stock, par value $.01 per share, of
WMC Holding Corp. represented by this certificate are subject to one or more
agreements among shareholders or agreements between shareholders and WMC
Holding Corp. and may not be sold or otherwise transferred except in
accordance therewith. Copies of such agreement or agreements may be obtained
at the principal executive offices of WMC Holding Corp." Each of Ripplewood
and The Trust agrees that any and all certificates representing shares of MUX
Common Stock will have inscribed conspicuously on the front or back of such
certificates the following legend: "The shares of Common Stock, par value
$.01 per share, of Western Multiplex Corporation represented by this
certificate are subject to one or more agreements among shareholders or
agreements between shareholders and Western Multiplex Corporation and may not
be sold or otherwise transferred except in accordance therewith. Copies of
such agreement or agreements may be obtained at the principal executive
offices of Western Multiplex Corporation."
SECTION 8.01. Voting Agreements and Directors. (a) From and
after the date hereof, so long as The Trust and its Permitted Transferees do
not own in the aggregate at least 50% more shares of Common Stock than
Ripplewood and its Permitted Transferees own in the aggregate, The Trust and
its Permitted Transferees: (i) shall vote all of the shares of Common Stock
held by them (including, without limitation, shares acquired after the date
hereof) in the same manner as the shares of Common Stock held by Ripplewood
or WMC (in the case of MUX Common Stock) are voted on all matters acted upon
at any annual or special meeting of shareholders or by written consent in
lieu of a meeting and (ii) irrevocably constitutes and appoints the Person
who is at the time the Senior Managing Director and Chief Executive Officer
of Ripplewood Holding his proxy to vote all of the shares of Common stock
held by The Trust or such Permitted Transferee in the same manner as the
shares of Common Stock held by Ripplewood or WMC (in the case of MUX Common
Stock) are voted on all matters acted upon at any annual or special meeting
of shareholders or by written consent in lieu of a meeting; provided that
this Section 8.01(a) shall be inapplicable with respect to any matters which
would both adversely affect the rights of the shares of Common Stock held by
The Trust or such Permitted Transferee and treat The Trust or such Permitted
Transferee differently from other holders of shares of Common Stock (it being
understood that a conversion of WMC to a limited liability company will not
be deemed to adversely affect the rights of The Trust or such Permitted
Transferee and The Trust and its Permitted Transferees hereby agree that
their shares of Common Stock will be voted in favor of any such action). The
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voting agreements and proxies granted pursuant to this Section 8.01(a) are
coupled with an interest and shall be valid for the term of this Agreement.
The Trust represents that it has not granted and is not party to any proxy,
voting trust or other agreement which in each case is inconsistent with or
conflicts with the provisions of this Agreement, and The Trust and its
Permitted Transferees shall not grant any proxy or become a party to any
voting trust or other agreement which in each case is inconsistent with or
conflicts with the provisions of this Agreement.
(b) It is presently contemplated that each of the Boards of
Directors of WMC and Western Multiplex at the Closing will consist of
Seedman, Jonathan N. Zakin, two designees of Ripplewood and the President of
Western Multiplex.
SECTION 9.01. Preemptive Rights. (a) Except for (i) issuances of
pro rata dividends to all holders of Common Stock, (ii) stock issued to
employees, officers or directors of WMC or its subsidiaries (including,
without limitation, Western Multiplex) in connection with management options
or incentive plans approved by WMC's Board of Directors, (iii) stock issued
in connection with any merger, acquisition, business combination, joint
venture, partnership or limited liability company of WMC or its subsidiaries
(including, without limitation, Western Multiplex), (iv) issuances pursuant
to the exercise of the Warrants or pursuant to the exercise, conversion or
exchange of any security whose issuance was subject to this Section 9.01(a),
Ripplewood and The Trust and their respective Permitted Transferees, in order
to enable them to maintain their respective fully diluted percentage
ownership of the Common Stock (calculated as though WMC and Western Multiplex
are a single entity), shall have preemptive rights, as hereinafter set forth,
to purchase any capital stock (subject to the proviso below), including any
warrants or securities convertible into capital stock, of WMC hereafter
issued by WMC so that each of Ripplewood and The Trust and their respective
Permitted Transferees shall hereafter be entitled to acquire a percentage of
capital stock which is hereafter issued equal to the same percentage of the
issued and outstanding Common Stock (calculated as though WMC and Western
Multiplex are a single entity) as is held by such holder immediately prior to
the date on which the capital stock is to be issued, provided, however, that
any shares of Common Stock or warrants or securities convertible into Common
Stock purchased by Ripplewood and its Permitted Transferees pursuant to this
Section 9.01(a) shall be shares of or warrants or securities convertible into
WMC Class B Common Stock and any shares of capital stock or warrants or
securities convertible into capital stock purchased by The Trust and its
permitted transferees pursuant to this Section 9.01(a) shall be shares of or
warrants or securities convertible into WMC Class A Common Stock. As used
herein, "issue" (and variations thereof) includes sales and transfers by WMC
of treasury shares.
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(b) WMC shall, before issuing any additional capital stock (other
than in accordance with the exceptions referred to in Section 9.01(a)
hereof), give written notice thereof to Ripplewood and The Trust. Such
notice shall specify what type of instrument WMC intends to issue and the
consideration which WMC intends to receive therefor. For a period of twenty
(20) days following receipt by Ripplewood and The Trust of such notice, WMC
shall be deemed to have irrevocably offered to sell to each of them and their
respective Permitted Transferees a sufficient number of shares of such
capital stock so that each such holder, if such holder elects to acquire such
shares as hereinafter set forth, shall be capable of acquiring the same
percentage of shares of WMC Common Stock as the percentage of outstanding
Common Stock beneficially owned by such holder at the time of such notice.
In the event any such offer is accepted, in whole or in part, by a holder,
WMC shall sell such shares (which number may be adjusted downward on a pro
rata basis if the original numbers of shares proposed to be issued is
reduced) to such holder for the consideration and on the terms set forth in
WMC's notice (given under the first two sentences of this paragraph). In the
event that Ripplewood or Seedman or any of their respective Permitted
Transferees elects not to, or fails to, exercise its rights under this
Section 9.01 within the twenty (20) day period, then WMC may issue the shares
of capital stock offered to, but not purchased by, such holder to third
persons but only for the same consideration set forth in WMC's notice (given
under the first two sentences of this paragraph) and no later than sixty (60)
days after the expiration of such twenty day period. The closing for such
transaction shall take place as proposed by WMC with respect to the shares of
capital stock proposed to be issued, at which closing WMC shall deliver
certificates for the shares of capital stock or other securities in the
respective names of the purchasers against receipt of the consideration
therefor.
SECTION 10.01. Indemnification. (a) Scope. (i) General Rule.
To the fullest extent permitted by law, WMC shall indemnify Seedman on an
after-tax basis against any liability incurred in connection with any
proceeding in which Seedman may be involved as a party or otherwise by reason
of the fact that Seedman is or was serving in an indemnified capacity,
including, without limitation, liabilities resulting from any actual or
alleged breach or neglect of duty, error, misstatement or misleading
statement or act giving rise to strict or products liability; provided that
no indemnity shall be payable hereunder against any liability incurred by
Seedman by reason of (i) Seedman's fraud, wilful violation of law, gross
negligence, breach of this Agreement or bad faith or (ii) the receipt by
Seedman from WMC of a personal benefit to which Seedman is not legally
entitled.
(ii) Partial Payment. If Seedman is entitled to indemnification
in respect of a portion, but not all, of any liabilities to which Seedman may
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be subject, WMC shall indemnify Seedman to the maximum extent legally
permissible for such liabilities.
(iii) Presumption. The termination of a proceeding by judgment,
order, settlement or conviction or upon a plea of nolo contendere or its
equivalent shall not of itself create a presumption that the indemnified
representative is not entitled to indemnification under this Section
10.01(a).
(iv) Definitions. For purposes of this Section 10.01: (i)
"indemnified capacity" means any and all past, present and future service by
Seedman in his capacity as a director of WMC or Western Multiplex, or, at the
request of WMC or Western Multiplex, as a member, director, officer, manager,
employee, agent, fiduciary or trustee of another corporation, limited
liability company, partnership, joint venture, trust, employee benefit plan
or other entity or enterprise, (ii) "liability" means any damage, judgment,
amount paid in settlement, fine, penalty, punitive damages, excise tax
assessed with respect to any employee benefit plan, or cost or expense of any
nature (including, without limitation, attorneys' fees and disbursements) and
(iii) "proceeding" means any threatened, pending or completed action, suit,
appeal or other proceeding of any nature, whether civil, criminal,
administrative or investigative, whether formal or informal, and whether
brought by or in the right of WMC or Western Multiplex, its shareholders or
otherwise.
(b) Advancing Expenses. To the fullest extent permitted by law,
WMC shall pay the expenses (including, without limitation, attorneys' fees
and disbursements) incurred in good faith by Seedman in advance of the final
disposition of a proceeding upon receipt of an undertaking by or on behalf of
Seedman to repay the amount if it is ultimately determined that Seedman is
not entitled to be indemnified by WMC pursuant to this Section 10.01.
(c) Securing of Indemnification Obligations. To further effect,
satisfy or secure the indemnification obligations provided in this Section
10.01 or otherwise, WMC may maintain insurance, obtain a letter of credit,
act as self-insurer, create a reserve, trust, escrow, cash collateral or
other fund or account, enter into indemnification agreements, pledge or grant
a security interest in any assets or properties of WMC, or use any other
mechanism or arrangement whatsoever in such amounts, at such costs, and upon
such other terms and conditions as WMC's Board of Directors shall deem
appropriate.
(d) Scope. The rights granted by this Section 10.01 shall not be
deemed exclusive of any other rights to which those seeking indemnification,
contribution or advancement of expenses may be entitled under any statute,
agreement, vote of shareholders or disinterested shareholders or otherwise,
both as to action in an indemnified capacity and as to action in any other
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capacity. The indemnification, contribution and advancement of expenses
provided by or granted pursuant to this Section 10.01 shall continue as to
Seedman after he has ceased to be a director of WMC in respect of matters
arising prior to such time, and shall inure to the benefit of the successors,
heirs, executors, administrators and personal representatives of Seedman.
(e) D&O Insurance. WMC and Western Multiplex shall provide
directors' liability insurance for Seedman in his capacity as a director of
WMC and Western Multiplex under the same insurance policy covering Ripplewood
designees to the Board of Directors of WMC and Western Multiplex, or under a
different policy providing the same level of coverage as such policy.
SECTION 11.01. Termination of Seedman's Position as Director.
Seedman's position as a director shall terminate:
(a) upon written notice by WMC to Seedman or Western Multiplex to
Seedman of WMC's termination of Seedman as a director hereunder for
"cause", which shall exist upon the occurrence of any of the following:
(i) Seedman is convicted of, pleads guilty to, confesses to, or enters a
plea of nolo contendere to, any felony or any crime that involves moral
turpitude or any act of fraud, misappropriation or embezzlement; (ii)
Seedman has engaged in a fraudulent act to the damage or prejudice of
Ripplewood, WMC, Western Multiplex or any of their respective
Affiliates; (iii) any act or omission by Seedman involving malfeasance
or gross negligence in the performance of Seedman's duties hereunder
and, within 30 days after written notice from WMC of any such act or
omission, Seedman has not corrected such act or omission; (iv) Seedman
otherwise fails to comply with the terms of this Agreement or deviates
from any written policies or directives of the WMC Board of Directors
and, within 30 days after written notice from WMC of such failure or
deviation, Seedman has not corrected such failure or deviation; (v) the
death of Seedman; or (vi) Seedman becomes mentally or physically
disabled (as reasonably determined by an independent physician selected
by WMC); or (vii) as provided in Section 1.01(c) of this Agreement;
(b) upon 60 days prior written notice by WMC to Seedman or Western
Multiplex to Seedman of WMC's termination of Seedman as a director
hereunder (other than for cause pursuant to Section 11.01(a)); or
(c) upon 60 days prior written notice by Seedman to WMC or Western
Multiplex of Seedman's termination of his position as director
hereunder.
(d) upon termination of Seedman's position as director with WMC or
Western Multiplex pursuant to Section 11.01(a), (b) or (c), Seedman's
position as director with the other company (i.e., Western Multiplex or
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WMC) shall automatically terminate and be deemed terminated pursuant to
such same Section.
SECTION 12.01. Termination. This Agreement (other than Sections
3.01, 4.01 and 10.01) shall terminate when The Trust no longer owns any
shares of Common Stock or any Warrants; provided that The Trust disposes of
all of its shares of Common Stock in accordance with the terms of this
Agreement. Notwithstanding the foregoing, Sections 5.01(a), 6.01 (other than
Sections 6.01(b)(D), 6.01(d)(iii) and 6.01(h)) and 9.01 of this Agreement
shall terminate upon an initial public offering of the Common Stock.
SECTION 13.01. Representation and Warranties.
(a) The Trust Representations and Warranties. The Trust
represents and warrants to Ripplewood and WMC:
(i) The Trust acknowledged that the Common Stock and the Warrants
are subject to the restrictions on transferability contained in this
Agreement, and the Common Stock and Warrants cannot be transferred, sold or
otherwise disposed of, except in accordance with such restrictions and that
any transfer that does not comply with such restrictions shall be void and
shall not bind WMC.
(ii) The Trust acknowledges that he has been advised that (i) a
restrictive legend in the form heretofore set forth shall be placed on the
certificates representing the Common Stock and that a restrictive legend in
the form set forth in the Warrants is contained therein and (ii) a notation
shall be made in the appropriate records of WMC indicating that the Common
Stock and Warrants are subject to restrictions on transfer and appropriate
stop transfer restrictions will be issued to WMC's transfer agent with
respect to the Common Stock. The Trust also acknowledges that (1) the Common
Stock and the Warrants must be held indefinitely and The Trust must continue
to bear the economic risk of the investment in the Common Stock and the
Warrants unless a transfer or exercise, as the case may be, is permitted
under the terms of this Agreement, (2) when and if shares of the Common Stock
may be disposed of pursuant to the terms hereof without registration in
reliance on Rule 144 of the rules and regulations promulgated under the
Securities Act, such disposition can be made only in limited amounts in
accordance with the terms and conditions of such Rule and (3) if the Rule 144
exemption is not available, sale without registration will require compliance
with some other exemption under the Act.
(iii) The Trust further represents and warrants that with respect
to the Common Stock and Warrants to be purchased hereunder (i) The Trust is
an "Accredited Investor" (as such term is defined in Rule 501(a) promulgated
under the Securities Act), (ii) The Trust has been given the opportunity to
obtain any additional information or documents and to ask questions and
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receive answers about such documents, WMC and the business and prospects of
the WMC as The Trust deems necessary to evaluate the merits and risks related
to an investment in the Common Stock and Warrants, and no representations
concerning such matters or any other matters have been made to The Trust
except as set forth in this Agreement, (iii) The Trust's net worth and
financial condition is such that The Trust can afford to bear the economic
risk of holding the unregistered Common Stock and Warrants for an indefinite
period of time and has adequate means for providing for The Trust's current
needs and contingencies, (iv) The Trust can afford to suffer a complete loss
of The Trust's investment in the Common Stock and Warrants, (v) all
information which The Trust has provided to WMC concerning The Trust and The
Trust's financial position is correct and complete in all material respects
as of the date of this Agreement, (vi) The Trust understands and has taken
cognizance of all risk factors related to the purchase of the Common Stock
and Warrants, (vii) The Trust's knowledge and experience in financial and
business matters are such that The Trust is capable of evaluating the merits
and risks of the purchase of the Common Stock and Warrants as contemplated by
this Agreement and (viii) The Trust is acquiring the Common Stock and
Warrants for The Trust's own account.
(iv) The Trust has all requisite legal capacity to acquire and
hold the Common Stock and Warrants and to execute, deliver and comply with
the terms of each of the documents required to be executed and delivered by
The Trust in connection with the purchase of Common Stock and Warrants. The
execution and delivery by The Trust, and compliance by The Trust with, this
Agreement, and each other document required to be executed and delivered by
The Trust in connection with the purchase of Common Stock and Warrants does
not conflict with, or constitute a default under, any instruments governing
The Trust, any law, regulation or order, or any agreement to which The Trust
is a party or by which The Trust is bound. This Co-Investment Agreement has
been duly executed by The Trust and constitutes a valid and legally binding
agreement of The Trust.
(b) WMC Representations and Warranties. WMC represents and
warrants to The Trust:
(i) This Agreement has been duly authorized, executed and
delivered by Ripplewood and WMC. The execution and delivery by Ripplewood
and WMC, and compliance by Ripplewood and WMC with, this Agreement, and each
other document required to be executed and delivered by Ripplewood and WMC in
connection with the purchase of Common Stock and Warrants does not conflict
with, or constitute a default under, any instruments governing Ripplewood or
WMC, as the case may be, any law, regulation or order, or any agreement to
which Ripplewood or WMC, as the case may be, is a party or by which
Ripplewood or WMC, as the case may be, is bound. This Co-Investment Agreement
has been duly executed by Ripplewood and WMC and constitutes a valid and
legally binding agreement of Ripplewood and WMC.
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(ii) The Common Stock to be issued pursuant to Section 2.01, the
Warrants and any shares of Common Stock issued upon exercise of the Warrants,
when issued and delivered in accordance with the terms hereof, will be duly
authorized and validly issued, fully paid and nonassessable. Upon transfer
of the purchase price by The Trust to WMC, good and valid title to the Common
Stock and the Warrants will pass to The Trust, free and clear of any liens
other than the restrictions on transferability described in this Agreement
and by federal and state securities laws.
(iii) As of the Closing Date, the authorized capital stock of WMC
will consist of 100,000,000 shares of Class A Common Stock and 100,000,000
shares of Class B Common Stock. As of the Closing Date, the issued and
outstanding capital stock of WMC is expected to be as set forth on Annex I
hereto, subject to change due to the adjustment mechanisms in the Redemption
and Purchase Agreement or there being additional cash available (thereby
reducing the amount of capital to be contributed by Ripplewood). All shares
of Common Stock to be purchased by Ripplewood on the Closing Date will be
purchased for a cash purchase price of $.50 per share. Except for the
Employment and Co-Investment Agreement among WMC, Ripplewood, Western
Multiplex, Seaview Holdings, L.L.C. and Jonathan N. Zakin of even date
herewith, the Warrants and options or warrants issued to management of
Western Multiplex in connection with the acquisition of Western Multiplex as
unanimously approved by WMC's Board of Directors, there are no options,
warrants, rights, convertible or exchangeable securities, "phantom" stock
rights, stock appreciation rights, stock-based performance rights or contract
of any kind to which WMC or Ripplewood is a party or by which either of them
is bound (i) obligating WMC to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other equity
interests in, or any security convertible or exchangeable into any capital
stock or other interest in WMC, (ii) obligating WMC to issue, grant, extend
or enter into such option, warrant, call, right, security or contract, or
(iii) that give any person the right to receive any economic benefit or right
similar to or derived from the economic benefits and rights accruing to
holders of Common Stock.
SECTION 14.01. General Provisions. (a) Amendments. This
Agreement may not be amended except by an instrument in writing signed by the
parties hereto.
(b) Entire Agreement; No Third-Party Beneficiaries; Assignment.
This Agreement constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, and is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
Without limiting the foregoing, to the extent any of the provisions of this
Agreement are inconsistent with the terms of the Prior Agreement, the terms
of this Agreement shall control and the terms of the Prior Agreement will not
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have any force or effect. Neither this Agreement, nor any of the rights,
interests or obligations hereunder shall be assigned or transferred by any
party without the prior written consent of the other parties hereto, except
as provided in Section 14.01(h) and except that Ripplewood may assign, in its
sole discretion, any or all of its rights and obligations to any direct or
indirect Affiliate of Ripplewood Holdings; provided that no assignment by
Ripplewood shall limit or affect the assignor's obligations hereunder.
Subject to the preceding sentence, this Agreement will be binding upon, inure
to the benefit of and be enforceable by the parties and their respective
successors and assigns. Any attempted assignment in violation of this
Agreement shall be void and of no force and effect.
(c) Notices. All notices or other communications required or
permitted by this Agreement shall be made in writing and any such notice or
communication shall be deemed delivered when delivered in person, transmitted
by telecopier, or one business day after it has been sent by a nationally
recognized overnight courier, at the address for notices as follows:
(i) if to Ripplewood,
Ripplewood Holdings L.L.C.
One Rockefeller Plaza
32nd Floor
New York, New York 10020
Attention: Mr. Timothy C. Collins
Mr. Jeffrey Hendren
Facsimile: (212) 582-4110
with a copy to
Simpson Thacher & Bartlett
3373 Hillview Avenue
Suite 250
Palo Alto, California 94304
Attention: Mr. Daniel Clivner, Esq.
(ii) if to WMC or Western Multiplex,
WMC Holding Corp.
One Rockefeller Plaza
32nd Floor
New York, New York 10020
Attention: Mr. Timothy C. Collins
Mr. Jeffrey Hendren
Facsimile: (212) 582-4110
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with a copy to Ripplewood at its address set forth above
and a copy to Simpson Thacher & Bartlett at its address
set forth above.
(iii) if to The Trust or Seedman,
__________________________
__________________________
__________________________
Attention: Mr. Michael Seedman
Facsimile: 847-831-8826
with a copy to
Weil Gotshal & Manges
2882 Sand Hill Road
Suite 280
Menlo Park, CA 94025
Attention: Mr. Richard Millard, Esq.
Facsimile: (650) 854-3713
Communications by telecopier also shall be sent concurrently by
first class mail or overnight courier, but shall in any event be effective as
stated above. Each party may from time to time change its address for
notices under this Section 14.01(c) by giving at least five days' notice of
such changed address to the other parties hereto.
(d) Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more of the counterparts have been
signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
(e) Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) Governing Law. This letter shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
contracts executed and to be performed entirely within such states.
(g) Obligations of WMC. Neither The Trust, Seedman or Ripplewood
will have any liability or obligation to any other party for the failure of
WMC to perform any of its obligations hereunder.
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(h) Conversion to LLC. Each of Seedman and The Trust acknowledges
and agrees that WMC shall have the right to convert to a limited liability
company and/or distribute to the shareholders of WMC all of the capital stock
of Western Multiplex held by WMC. In the event of any distribution of the
capital stock of Western Multiplex held by WMC, (x) the holders of WMC Class
A Common Stock may receive shares of MUX Class A Common Stock having the same
relative rights as the WMC Class A Common Stock and the holders of WMC Class
B Common Stock may receive shares of MUX Class B Common Stock having the same
rights as the WMC Class B Common Stock, provided that the MUX Class B Common
Stock may also be held by the current stockholders of Western Multiplex and
their transferees, (y) Western Multiplex shall assume all rights and
obligations of WMC hereunder and be deemed to be "WMC" hereunder and all
references to "WMC Common Stock" shall be deemed references to "MUX Common
Stock" and (z) to the extent WMC is dissolved and Seedman's position as
director with WMC is thereby terminated, Seedman's position as director with
WMC shall not be deemed to have terminated for purposes of this Agreement.
(i) Capitalization. Whenever WMC issues shares of WMC Class A
Common Stock or WMC Class B Common Stock, WMC shall use the proceeds to
purchase the same number of shares of the equivalent class of MUX Common
Stock. In the event either of WMC or Western Multiplex effects a stock
split, reclassification, recapitalization or any other subdivision,
combination or consolidation of its outstanding shares of WMC Common Stock or
MUX Common Stock, as the case may be, the other company shall effect an
equivalent stock split, reclassification, recapitalization, subdivision,
combination or consolidation such that a share of WMC Common Stock is
economically comparable to a share of MUX Common Stock.
(j) Treatment as Single Entity. Except as expressly provided in
this Agreement, where this Agreement makes reference to treating Western
Multiplex and WMC as a single entity, they will be treated as a single entity
so that the percentage owned by a person will be the percentage equivalent of
a fraction, the numerator of which is the number of outstanding shares of
Common Stock owned by such person and the denominator of which is the
aggregate number of outstanding shares of Common Stock minus the number of
outstanding shares of MUX Common Stock that are owned by WMC; for these
purposes, all shares issuable upon exercise of options, warrants or other
rights to acquire Common Stock that are then exercisable shall be deemed
outstanding.
(k) Business. WMC will not hold any assets or conduct any
business other than its ownership of capital stock of Western Multiplex and
receipt of any cash dividends or distributions in respect thereof.
(l) Legal Expenses. WMC shall pay the reasonable legal fees and
expenses payable to Weil Gotshal & Manges by Seedman and The Trust incurred
as a result the negotiation and execution of this Agreement.
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(m) Effectiveness. This Agreement shall be effective as of the
date set forth above without the signature of Western Multiplex Corporation.
At the Common Stock Closing, WMC shall cause Western Multiplex to execute and
deliver this Agreement.
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IN WITNESS WHEREOF, Ripplewood, WMC, The Trust and Seedman have
duly executed this Agreement as of the date first written above.
RIPPLEWOOD PARTNERS L.P.
by
/s/ Jeffrey M. Hendren
------------------------------
Name: Jeffrey M. Hendren
Title: Principal
WMC HOLDING CORP.,
by
/s/ Jeffrey M. Hendren
------------------------------
Name: Jeffrey M. Hendren
Title: Vice President
THE MICHAEL AND ROBERTA SEEDMAN
REVOCABLE TRUST
by
/s/ Michael Seedman
------------------------------
Name: Michael Seedman
Title: Trustee
/s/ Michael Seedman
-----------------------------
MICHAEL SEEDMAN
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IN WITNESS WHEREOF, Western Multiplex has duly executed this Agreement
as of November 1, 1999.
WESTERN MULTIPLEX CORPORATION,
by
/s/ Jeffrey M. Hendren
-----------------------------
Name: Jeffrey M. Hendren
Title: Vice President
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EXHIBIT 10.3
EMPLOYMENT AGREEMENT
AGREEMENT, made as of November 1, 1999 by and between Western
Multiplex Corporation (the "Company"), a Delaware corporation and Amir
Zoufonoun ("Executive").
RECITALS
In connection with the acquisition by WMC Holding Corp. of all of
the issued and outstanding capital stock of Western Multiplex Corporation
from Glenayre Technologies, Inc., the Company desires to employ Executive to
serve as the President and Chief Operating Officer of the Company. In order
to induce Executive to serve as the President and Chief Operating Officer of
the Company, the Company desires to provide Executive with compensation and
other benefits on the terms and conditions set forth in this Agreement.
Executive is willing to accept such employment and perform services
for the Company, on the terms and conditions hereinafter set forth.
It is therefore hereby agreed by and between the parties as
follows:
1. Employment.
----------
1.1 Subject to the terms and conditions of this Agreement,
effective as of the date of the closing of the acquisition contemplated above
(the "Closing Date"), the Company agrees to employ Executive during the term
hereof (as defined in Section 2 below) as its President and Chief Operating
Officer. In his capacity as the President and Chief Operating Officer of the
Company, Executive shall report to the Chief Executive Officer (the "CEO") or
the Board of Directors (the "Board") of the Company and shall have the
customary powers, responsibilities and authorities of a president for
corporations of the size and character of the Company, as it exists from time
to time, and as are assigned by the CEO or the Board.
1.2 Subject to the terms and conditions of this Agreement,
Executive hereby accepts employment with the Company commencing on the date
hereof, and agrees to devote his full working time and efforts, to the best
of his ability, experience and talent, to the performance of services, duties
and responsibilities in connection therewith. Executive shall perform such
duties and exercise such powers, commensurate with his position, as the CEO
or the Board shall from time to time delegate to him on such terms and
conditions and subject to such restrictions as the CEO or the Board may
reasonably from time to time impose. Executive also agrees to serve, if
elected, as a member of the Board.
<PAGE>
1.3 Nothing in this Agreement shall preclude Executive from
engaging, so long as, in the reasonable determination of the CEO, such
activities do not interfere with his duties and responsibilities hereunder,
in charitable and community affairs, from managing any passive investment
made by him in publicly traded equity securities or other property (provided
that no such investment may exceed 5% of the equity of any entity or, without
prior notice to the CEO and the Board and subject to Section 12(b) hereof,
from serving as a member of boards of directors or as a trustee of any other
corporation, association or entity.
1.4 Executive hereby represents to the Company that the execution
and delivery of this Agreement by Executive and the Company and the
performance by Executive of the Executive's duties hereunder shall not
constitute a breach of, or otherwise contravene, the terms of any employment
agreement or other agreement or policy to which Executive is a party or
otherwise bound.
2. Term of Employment. Executive's term of employment under this
Agreement shall commence on the date of the Closing Date (the "Effective
Date") and, subject to the terms hereof, Executive and the Company agree and
acknowledge that Executive's employment with the Company constitutes "at-
will" employment and that this Agreement may be terminated at any time by the
Company or Executive; provided, however, that any termination of employment
by Executive (other than for death or Permanent Disability) may only be made
upon 90 days prior written notice to the Company.
3. Compensation.
------------
3.1 Salary. The Company shall pay Executive a base salary ("Base
Salary") at the rate of $175,000 per annum for the year commencing on the
beginning of Executive's term of employment hereunder. Base Salary shall be
adjusted annually at the discretion of the Board but in no event shall Base
Salary be reduced nor be less than the median base salary for a comparable
position at corporations of similar size and character as the Company, as it
exists from time to time, and, as increased, shall constitute "Base Salary"
hereunder. Base Salary shall be payable in accordance with the ordinary
payroll practices of the Company.
3.2 Annual Bonus. In addition to his Base Salary, the Company
may, in its discretion, pay to Executive an annual cash bonus (the "Bonus")
during the term of his employment hereunder equal to a percentage of
Executive's Base Salary (the "Target Bonus"). The Bonus for each fiscal year
of the Company will be based on performance targets as may be established by
the Board (or a committee thereof), pursuant to an annual incentive plan that
is substantially similar to the plan in effect at the Company immediately
prior to the Closing Date.
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3.3 Compensation Plans and Programs. Executive shall be eligible
to participate in any compensation plan or program maintained by the Company
from time to time in which other senior executives of the Company participate
on terms that are intended to be comparable to those applicable to such other
senior executives.
3.4 Equity Participation. (a) Simultaneous with the execution of
this Agreement, Executive shall subscribe to a certain number of shares of
common stock, par value $.01 per share of the Company ("Common Stock"), to be
purchased by Executive on the Closing Date from the Company at the same per
share purchase price paid by WMC Holding Corp. pursuant to a stockholder's
agreement to be entered into with the Company, substantially in the form of
the stockholder's agreement attached hereto as Exhibit [A]. Such purchase
shall be financed by Executive personally; provided, that the Company shall
guarantee a loan obtained by Executive from a third-party lender, in an
amount to be agreed upon, in respect of a portion of the Common Stock
purchased by Executive on the Closing Date, the terms of which are set forth
in Exhibit [B] attached hereto.
(b) (i) Executive shall also be granted an option to purchase a
certain number of shares of Common Stock at the same per share purchase price
paid by WMC Holding Corp. on the Closing Date, which option shall vest (i)
12/36 after the first anniversary of the date of grant and (ii) thereafter,
1/36 until such option is 100% vested, and which shall otherwise be subject
to the terms and conditions of the stock option plan of the Company in effect
from time to time and the stockholder's agreement as discussed above (the
"Time Option"), [the terms of which are set forth in Exhibit [C] hereto].
(ii) Executive shall also be granted an option to purchase a
certain number of shares of Common Stock at a per share purchase price equal
to the fair market value of such shares at the date of grant, which option
shall vest (A) 100% in any event upon the tenth anniversary of the date of
grant, but (B) which vesting may accelerated in the event that certain
performance targets are achieved by the Company for fiscal years 2000 and
2001, which performance targets shall be established by the Board (the
"Performance Option"), [the terms of which are set forth in Exhibit [D]
hereto].
(c) In addition, the Company may, in its discretion, grant to
Executive additional options during the term of his employment hereunder as
may be determined by the Board (or a committee thereof) in accordance with
the terms of the stock option plan of the Company as in effect from time to
time, which options shall also be subject to the terms and conditions of the
stock option plan of the Company in effect from time to time and the
stockholder's agreement as discussed above.
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4. Employee Benefits.
-----------------
4.1 Employee Benefit Programs, Plans and Practices. The Company
shall provide Executive during the term of his employment hereunder with
coverage under all employee pension and welfare benefit programs, plans and
practices (commensurate with his positions in the Company from time to time
and to the extent permitted under any employee benefit plan) in accordance
with the terms thereof, which the Company makes available to its senior
executives.
4.2 Vacation, Sick Leave and Fringe Benefits. Executive shall be
entitled to such number of days of paid vacation and sick leave in each
calendar year as established under the Company's policies as in effect from
time to time, which shall be taken at such times as are consistent with
Executive's responsibilities hereunder. In addition, Executive shall be
entitled to the perquisites and other fringe benefits currently made
available to senior executives of the Company, commensurate with his position
with the Company.
5. Expenses. Executive is authorized to incur reasonable expenses
in carrying out his duties and responsibilities under this Agreement,
including, without limitation, expenses for travel and similar items related
to such duties and responsibilities. The Company will reimburse Executive
for all such expenses upon presentation by Executive from time to time of
appropriately itemized and approved (consistent with the Company's policy)
accounts of such expenditures.
6. Termination of Employment.
-------------------------
6.1 Termination By the Company Without Cause By the Executive for
Good Reason. (a) The Company may terminate Executive's employment at any
time for any reason. If Executive's employment is terminated by the Company
without Cause (as defined in Section 6.4(b) hereof) or by Executive for Good
Reason (as defined in Section 6.4(c) hereof), Executive shall receive such
payments, if any, under applicable plans or programs to which he is entitled
pursuant to the terms of such plans or programs. In addition, Executive
shall be entitled to receive the following:
(i) an amount equal to one times the Executive's Base Salary at the
annual rate as of the Termination Date, payable over the twelve month period
following the Termination Date in substantially equal installment payments
and in accordance with the normal payroll practices of the Company;
(ii) a cash lump sum payment in respect of (x) accrued but unused
vacation days (the "Vacation Payment"), (y) compensation earned but not yet
paid (including any deferred Bonus payments) (the "Compensation Payment") and
(z) reasonable expenses incurred under Section 5 but not yet reimbursed (the
"Expense Payment");
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(iii) continued coverage under any employee medical, disability and
life insurance plans in accordance with the respective terms thereof for a
period ending on the earlier of (A) the first anniversary of the Termination
Date or (B) the date on which the Executive becomes covered under comparable
benefit plans of a new employer;
(iv) acceleration of one hundred percent (100%) of the unvested
portion of the Time Option, if any, so that Executive's Time Option is fully
exercisable; and
(v) the Target Bonus in respect of the fiscal year in which his
termination occurs, prorated by a fraction, the numerator of which is the
number of days of the fiscal year until the Termination Date and the
denominator of which is 365.
(b) The Vacation Payment, the Compensation Payment, and the
Expense Payment shall be paid by the Company to Executive within 30 days
after the termination of Executive's employment by check payable to the order
of Executive or by wire transfer to an account specified by Executive.
6.2 Permanent Disability. If the Executive becomes totally and
Permanently Disabled (as defined herein) for one hundred eighty (180)
consecutive days in any three hundred sixty-five (365) day period, the
Company or Executive may terminate Executive's employment on written notice
thereof, and Executive shall receive or commence receiving, as soon as
practicable:
(a) amounts payable pursuant to the terms of a disability
insurance policy or similar arrangement which the Company maintains during
the term hereof;
(b) the Target Bonus in respect of the fiscal year in which his
termination occurs, prorated by a fraction, the numerator of which is the
number of days of the fiscal year until termination and the denominator of
which is 365;
(c) the Vacation Payment, the Compensation Payment, and the
Expense Payment; and
(d) such payments under applicable plans or programs to which he
is entitled pursuant to the terms of such plans or programs.
For purposes of this Section 6.2, "Permanent Disability" shall be
defined as (i) Executive's inability, by reason of physical or mental illness
or other cause, to substantially perform Executive's duties, responsibility
or obligations hereunder or (ii) in the discretion of the Board, disability
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as that term is defined in any disability insurance policy of the Company in
effect at the time in question.
6.3 Death. In the event of Executive's death during the term of
his employment hereunder, Executive's estate or designated beneficiaries
shall receive or commence receiving, as soon as practicable:
(a) the Target Bonus in respect of the fiscal year in which his
death occurs, prorated by a fraction, the numerator of which is the number of
days of the fiscal year until his death and the denominator of which is 365;
(b) any death benefits provided under the employee benefit
programs, plans and practices referred to in Section 4.1 hereof, in
accordance with their terms;
(c) the Vacation Payment, the Compensation Payment, and the
Expense Payment; and
(d) such payments under applicable plans or programs to which
Executive's estate or designated beneficiaries are entitled pursuant to the
terms of such plans or programs.
6.4 Termination By the Company for Cause or By Executive Without
Good Reason. (a) The Company shall have the right to terminate the
employment of Executive for Cause. In the event that Executive's employment
is terminated by the Company for Cause, as hereinafter defined, or by
Executive without Good Reason (other than as a result of the Executive's
Permanent Disability, death or for Good Reason), notwithstanding any other
provision in this Agreement, the Executive shall be entitled only to the
Compensation Payment, the Vacation Payment, and the Expense Payment, and
shall not be entitled to any further compensation or benefits hereunder
including, without limitation, the payment of any Bonus in respect of all or
any portion of the fiscal year in which such termination occurs.
(b) As used herein, the term "Cause" shall be limited to (i)
willful misconduct by Executive in connection with his employment which
results in a demonstrable injury to the Company, (ii) willful and continued
failure by Executive to perform his material duties with respect to the
Company or its subsidiaries, which failure continues beyond 10 business days
after a written demand for substantial performance of such duties was given
to Executive by the Company, or (iii) the Executive's conviction of, or plea
of nolo contendere to, a felony or any misdemeanor involving moral turpitude.
Termination of the Executive for Cause shall be made by delivery to the
Executive of a copy of a resolution duly adopted by the affirmative vote of
not less than a majority of the non-employee members of the Board at a
meeting of such members called and held for such purpose, after 30 days prior
written notice to the Executive specifying the basis for such termination and
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the particulars thereof and a reasonable opportunity for the Executive to
cure or otherwise, finding that in the reasonable judgment of such Directors,
the conduct or event set forth in any of clauses (i) through (iii) above has
occurred and that such occurrence warrants the Executive's termination.
Notwithstanding the foregoing, in no event shall the Company initiate a
termination for Cause in the event that the Executive has provided the
Company with written notice of his termination of employment for Good Reason.
(c) As used herein, the term "Good Reason" shall be limited to the
following:
(i) any material and adverse diminution in the Executive's duties
or responsibilities with the Company from those in effect immediately prior
to the Closing Date;
(ii) any reduction in the Executive's annual base salary or cash
target bonus opportunity from the annual base salary or cash target bonus
opportunity in effect immediately prior to the Closing Date;
(iii) any requirement that Executive be based at a location more
than fifty (50) miles from the location at which the Executive was based
immediately prior to the Closing Date (or a substantial increase in the
amount of travel Executive is required to do because of a relocation of the
executive offices);
(iv) any adverse change in the Executive's reporting obligations,
which results in the Executive ceasing to report to either the CEO or the
Board; and
(v) any failure by the Company to obtain from any successor to the
Company an agreement reasonably satisfactory to the Executive to assume and
perform this Agreement, as contemplated by Section 10 hereof.
7. Mitigation of Damages; Limitations on Severance Payments. (a)
Executive shall not be required to mitigate damages or the amount of any
payment provided for under this Agreement by seeking other employment or
otherwise after the termination of his employment hereunder.
(b) (i) In the event that the severance payments and other
benefits provided for in this Agreement or otherwise payable or provided to
the Executive (i) constitute "parachute payments" within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"),
and (ii) but for this Section 7(b) would be subject to the excise tax imposed
by Section 4999 of the Code or any similar or successor provision thereto
(the "Excise Tax"), then the Executive's severance payments and benefits
provided for hereunder shall be either (i) delivered in full pursuant to the
terms of this Agreement or (ii) delivered as to such lesser extent which
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would result in no portion of such severance payments and other benefits
being subject to the Excise Tax, whichever of the foregoing amounts, taking
into account the applicable federal, state and local income taxes and the
Excise Tax, results in the receipt by the Executive, on an after-tax basis,
of the greatest amount of severance payments and benefits provided for
hereunder, notwithstanding that all or some portion of such severance
payments and benefits may be subject to the Excise Tax. Unless the Company
and the Executive otherwise agree in writing, any determination required
under this Section 7(b) shall be made by the Company's accountants prior to a
"change in ownership or control" (as such terms are defined in Section 280G
of the Code), whose determination shall be conclusive and binding upon the
Executive and the Company for all purposes.
(ii) For purposes of making the calculations required by this
Section 7(b), the accountants may make reasonable assumptions and
approximations concerning applicable taxes and may rely on reasonable, good
faith interpretations concerning the application of Sections 280G and 4999 of
the Code to the severance payments and benefits provided for hereunder. The
Company and the Executive shall furnish to the accountants such information
and documents as the accountants may reasonably request in order to make a
determination under this Section 7(b). In addition, the Company shall bear
all costs that the accountants may reasonably incur in connection with any
calculations contemplated by this Section 7(b).
8. Notices. All notices or communications hereunder shall be in
writing, addressed as follows:
To the Company:
Western Multiplex Corporation
1196 Borregas Ave.
Sunnyvale, California 94089
Attention:
with a copy to:
Alvin H. Brown, Esq.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
-8-
<PAGE>
To Executive:
Amir Zoufonoun
c/o Western Multiplex Corporation
1196 Borregas Ave.
Sunnyvale, California 94089
Any such notice or communication shall be delivered by hand, by telecopy
(with machine confirmation) or by courier or sent certified or registered
mail, return receipt requested, postage prepaid, addressed as above (or to
such other address as such party may designate in a notice duly delivered as
described above), and the third business day after the actual date of mailing
shall constitute the time at which notice was given.
9. Separability; Legal Fees. If any provision of this Agreement
shall be declared to be invalid or unenforceable, in whole or in part, such
invalidity or unenforceability shall not affect the remaining provisions
hereof which shall remain in full force and effect. In the event of any
dispute with respect to this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees and other costs and expenses incurred
in resolving such dispute.
10. Assignment. This contract shall be binding upon and inure to
the benefit of the heirs and representatives of Executive and the assigns and
successors of the Company, but neither this Agreement nor any rights or
obligations hereunder shall be assignable or otherwise subject to
hypothecation by Executive (except by will or by operation of the laws of
intestate succession) or by the Company, except that the Company may assign
this Agreement to any successor (whether by merger, purchase or otherwise) to
all or substantially all of the stock, assets or businesses of the Company,
if such successor expressly agrees to assume the obligations of the Company
hereunder.
11. Amendment. This Agreement may only be amended by written
agreement of the parties hereto.
12. Nondisclosure of Confidential Information; Non-Competition.
(a) At any time during or after Executive's employment with the Company,
Executive shall not, without the prior written consent of the Company, use,
divulge, disclose or make accessible to any other person, firm, partnership,
corporation or other entity any Confidential Information (as hereinafter
defined) pertaining to the business of the Company or any of its
subsidiaries, except (i) while employed by the Company, in the business of
and for the benefit of the Company, or (ii) when required to do so by a court
of competent jurisdiction, by any governmental agency having supervisory
authority over the business of the Company, or by any administrative body or
legislative body (including a committee thereof) with jurisdiction to order
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<PAGE>
Executive to divulge, disclose or make accessible such information. For
purposes of this Section 12(a), "Confidential Information" shall mean non-
public information concerning the financial data, strategic business plans,
and other non-public, proprietary and confidential information of the
Company, its subsidiaries, Ripplewood Holdings L.L.C. or their respective
affiliates as in existence as of the date of Executive's termination of
employment that, in any case, is not otherwise available to the public (other
than by Executive's breach of the terms hereof).
(b) As President and Chief Operating Officer, Executive will
acquire knowledge of Confidential Information and trade secrets. Executive
acknowledges that the Confidential Information and trade secrets which the
Company has provided and will provide to him could play a significant role
were he to directly to indirectly be engaged in any business in Competition
with the Company or its subsidiaries. During the period of his employment
hereunder and for one year thereafter, Executive agrees that, without the
prior written consent of the Company, (A) he will not, directly or
indirectly, either as principal, manager, agent, consultant, officer,
stockholder, partner, investor, lender or employee or in any other capacity,
carry on, be engaged in or have any financial interest in (other than an
ownership position of less than 5 percent in any company whose shares are
publicly traded), any business, which is in Competition (as hereinafter
defined) with the existing business of the Company or its subsidiaries and
(B) he shall not, on his own behalf or on behalf of any person, firm or
company, directly or indirectly, solicit or offer employment to any person
who has been employed by the Company or its subsidiaries at any time during
the 12 months immediately preceding such solicitation to the extent that
Executive would use or inevitably use Confidential Information or trade
secrets or that would otherwise constitute unfair competition.
(c) For purposes of this Section 12, a business shall be deemed to
be in Competition with the Company or its subsidiaries if it is engaged in or
has taken concrete steps toward engaging in the business of research and
development, designing, manufacturing, marketing, distributing, or servicing
or selling components as used in microwave radios, products and equipment,
whether in existence or in development, relating to microwave communications
(including unlicensed spread spectrum radio, licensed microwave radio,
wireless ethernet bridge, and fixed wireless (e.g., wireless local loop,
point-to-point, point-to-multipoint)), as carried on by the Company or its
affiliates as of the date of Executive's termination of employment, in all
cities, counties, states and countries in which the business of the Company
or its affiliates is then being conducted or its products are being sold.
(d) The results and proceeds of Executive's services hereunder,
including, without limitation, any works of authorship resulting from
Executive's services during Executive's employment with the Company and/or
any of the Company's affiliates and any works in progress, will be works-
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<PAGE>
made-for hire and the Company will be deemed the sole owner throughout the
universe of any and all rights of whatsoever nature therein, whether or not
now or hereafter known, existing, contemplated, recognized or developed, with
the right to use the same in perpetuity in any manner the Company determines
in its sole discretion without any further payment to Executive whatsoever.
If, for any reason, any of such results and proceeds will not legally be a
work-for-hire and/or there are any rights which do not accrue to the Company
under the preceding sentence, then Executive hereby irrevocably assigns and
agrees to assign any and all of Executive's right, title and interest
thereto, including, without limitation, any and all copyrights, patents,
trade secrets, trademarks and/or other rights of whatsoever nature therein,
whether or not now or hereafter known, existing, contemplated, recognized or
developed, to the Company, and the Company will have the right to use the
same in perpetuity throughout the universe in any manner the Company
determines without any further payment to Executive whatsoever. Executive
will, from time to time as may be requested by the Company, (i) during the
term of Executive's employment without further consideration, and (ii)
thereafter at Executive's then current hourly rate, do any and all things
which the Company may deem useful or desirable to establish or document the
Company's exclusive ownership of any and all rights in any such results and
proceeds, including, without limitation, the execution of appropriate
copyright and/or patent applications or assignments. To the extent Executive
has any rights in the results and proceeds of Executive's services that
cannot be assigned in the manner described above, Executive unconditionally
and irrevocably waives the enforcement of such rights. This subsection is
subject to and will not be deemed to limit, restrict, or constitute any
waiver by the Company of any rights of ownership to which the Company may be
entitled by operation of law by virtue of the Company being Executive's
employer. This Section does not apply to an invention that qualifies as a
nonassignable invention Section 2870 of the California Labor Code, which
applies to any invention for which no equipment, supplies, facilities or
Confidential Information was used, which does not (i) relate to the business
of the Company; (ii) relate to the Company's actual or demonstrable
anticipated research or development or (iii) result from any work performed
by Executive for the Company. This confirms that Executive has been notified
of his rights under Section 2870 of the California Labor Code.
(e) Executive and the Company agree that this covenant not to
compete is a reasonable covenant under the circumstances, and further agree
that if in the opinion of any court of competent jurisdiction such restraint
is not reasonable in any respect, such court shall have the right, power and
authority to excise or modify such provision or provisions of this covenant
as to the court shall appear not reasonable and to enforce the remainder of
the covenant as so amended. Executive agrees that any breach of the
covenants contained in this Section 12 would irreparably injure the Company.
Accordingly, Executive agrees that the Company may, in addition to pursuing
any other remedies it may have in law or in equity, cease making any payments
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<PAGE>
otherwise required by this Agreement and obtain an injunction against
Executive from any court having jurisdiction over the matter restraining any
further violation of this Agreement by Executive.
13. Beneficiaries; References. Executive shall be entitled to
select (and change, to the extent permitted under any applicable law) a
beneficiary or beneficiaries to receive an compensation or benefit payable
hereunder following Executive's death, and may change such election, in
either case by giving the Company written notice thereof. In the event of
Executive's death or a judicial determination of his incompetence, reference
in this Agreement to Executive shall be deemed, where appropriate, to refer
to his beneficiary, estate or other legal representative. Any reference to
the masculine gender in this Agreement shall include, where appropriate, the
feminine.
14. Survivorship. The respective rights and obligations of the
parties hereunder shall survive any termination of this Agreement to the
extent necessary to the intended preservation of such rights and obligations,
including the provisions of Section 12 herein. The provisions of this
Section 14 are in addition to the survivorship provisions of any other
section of this Agreement.
15. Governing Law. This Agreement shall be construed, interpreted
and governed in accordance with the laws of the State of New York without
reference to rules relating to conflicts of law. For purposes of
jurisdiction and venue, the Company hereby consents to jurisdiction and venue
in any suit, action or proceeding with respect to this Agreement in any court
of competent jurisdiction in the state in which Executive resides at the
commencement of such suit, action or proceeding and waives any objection,
challenge or dispute as to such jurisdiction or venue being proper.
16. Effect on Prior Agreements. This Agreement contains the
entire understanding between the parties hereto and supersedes in all
respects any prior or other agreement or understanding between the Company or
any affiliate of the Company and Executive other than the agreements referred
to in Section 3.4 hereof.
17. Withholding. The Company shall be entitled to withhold from
payment any amount of withholding required by law.
18. Shareholder Approval. This Agreement shall not become
effective and no payments and benefits set forth in Section 6 shall be paid
unless and until the Company obtains the affirmative vote of more than
seventy-five percent of all shareholders, excluding Executive and excluding
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those shareholders who are lineally related to, or the spouse of, Executive.
Even though all shareholders of the Company may vote on the approval of this
Agreement, only the votes of such qualifying shareholders as are described in
this Section 18 will count for purposes of calculating whether the requisite
shareholder approval of this Agreement is obtained.
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<PAGE>
19. Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original.
WESTERN MULTIPLEX CORPORATION
By /s/ Jonathan N. Zakin
-----------------------
Name: Jonathan N. Zakin
Title: Chief Executive Officer
EXECUTIVE:
/s/ Amir Zoufonoun
-------------------------
Amir Zoufonoun
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<PAGE>
EXHIBIT 10.4
SUBSCRIPTION AND EMPLOYEE STOCKHOLDER'S AGREEMENT
[Employee Receiving Options and Purchasing Common Stock with Assistance]
This SUBSCRIPTION EMPLOYEE AND STOCKHOLDER'S AGREEMENT, is entered into as
of January 31, 2000 (the "Agreement"), among, WMC Holding Corp., a Delaware
corporation (together with its successors and permitted assigns, "Holding"),
Western Multiplex Corporation, a Delaware corporation (together with its
successors and permitted assigns, "WMC"), the undersigned, as set forth on the
signature page hereof (the "Employee Stockholder") and Ripplewood Partners, L.P.
(together with its successors and permitted assignees (including Permitted
Transferees as defined below) "Ripplewood") (Holding, WMC, Ripplewood and the
Employee Stockholder being hereinafter collectively referred to as the
"Parties").
Recitals
Pursuant to an Acquisition Agreement, dated as of September 30, 1999, as
amended on October 31, 1999, among WMC, Holding, GTI Acquisition Corp., a
Delaware corporation ("Glenayre"), Glenayre Technologies, Inc., a Delaware
corporation, and Western Multiplex Corporation, a California corporation, WMC
redeemed 42,000,000 shares of Class B common stock of WMC, par value $.01 per
share, held by Glenayre and Holding purchased 35,955,000 shares of outstanding
Common Stock of WMC from Glenayre (the "Recapitalization");
In connection with the Recapitalization, employees and members of
management of WMC are being offered the opportunity to subscribe for shares of
Class A common stock of Holding, par value $.01 per share ("Common Stock"), and
WMC is issuing options ("Options") to certain of its key employees under the
1999 Western Multiplex Corporation Stock Incentive Plan (the "Plan") to purchase
shares of Class A Common Stock of WMC, par value $.01 per share;
The Employee Stockholder, Holding and WMC have agreed that the Employee
Stockholder may subscribe for a certain number of shares of Common Stock and,
the Employee Stockholder will receive a certain number of Options pursuant to
the terms of the "Non-Qualified Stock Option Agreement" attached hereto as
Exhibit A;
WMC has agreed, through the guarantee of a loan to the Employee Stockholder
from a designated bank, to assist the Employee Stockholder in purchasing shares
of Common Stock on terms and conditions to be determined by WMC ("Assisted
Shares");
This Agreement is one of several other similar agreements which have been,
or will be, entered into by WMC, Holding and other individuals who are employees
of WMC and who are being offered the right to purchase Common Stock and who are
being granted Options (the "Other Employee Stockholder");
NOW THEREFORE, to implement the foregoing and in consideration of the grant
of Options and of the mutual agreements contained herein, the Parties agree as
follows:
<PAGE>
2
Section 1. Certain Definitions.
(a) As used in this Agreement, the following terms shall have the following
meanings:
"Affiliate" with respect to any person, means any entity directly or
indirectly controlling, controlled by, or under common control with such
person or any entity designated as such by the Board of Directors of such
person in which such person or an Affiliate has an interest.
"Book Value" means, on a per share, fully-diluted basis, shareholder's
equity as determined in accordance with GAAP.
"Cause" has the same meaning attributed to it in the Employee
Stockholder's Employment Agreement with WMC, dated as of November 1, 1999.
"Employment, Confidential Information and Invention Assignment
Agreement" means the Employment, Confidential Information and Invention
Assignment Agreement in the form attached as Exhibit B hereto to be
executed and delivered by the Employee Stockholder to WMC on the date
hereof.
"Fair Market Value" means, prior to a Public Offering (as defined
below), the fair market value of the shares of Stock, as determined in good
faith by the Board of Directors of WMC (with respect to Option Stock) or
Holding (with respect to Common Stock), and following a Public Offering,
the average daily closing price of the shares of common stock of WMC ("WMC
Common Stock") for the ten consecutive trading days preceding the date the
Fair Market Value of the Stock is required to be determined hereunder.
"Good Reason" means (i) a reduction in the Employee Stockholder's base
salary (other than any general salary reduction and/or reorganization
affecting at least the majority of salaried employees of WMC), (ii) a
material and adverse reduction in the Employee Stockholder's duties and
responsibilities, or (iii) a transfer of the Employee Stockholder's primary
workplace by more than fifty (50) miles from the current workplace, other
than as approved by any of the senior executives of WMC.
The "Option Price" is $0.50 per share (as adjusted for any share
dividend, split, reverse split, combination, recapitalization, liquidation,
reclassification, merger, consolidation or otherwise).
"Permitted Ripplewood/Holding Transferee" means (a) Ripplewood
Holdings L.L.C. ("Ripplewood Holdings") or any Affiliate of Ripplewood
Holdings, (b) a stockholder, partner, member or employee of Ripplewood
Holdings or any Affiliate of Ripplewood Holdings or (c) an employee,
director or officer of Holding or WMC or any subsidiary of Holding or WMC
(up to an aggregate of 5% of the outstanding common stock of WMC and
Holding).
"Public Offering" means a firmly underwritten registered public
offering of WMC Common Stock.
<PAGE>
3
"Securities Act" means the Securities Act of 1933, as amended.
(b) As used in this Agreement, each of the following capitalized terms
shall have the meaning ascribed to them in the Section set forth opposite such
term:
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Affiliate 1(a)
Assisted Shares Recitals
Book Value 1(a)
Call Notice 6(e)
Call Rights 6(d)
Cause 1(a)
Common Stock Recitals
Confidential Offering Memorandum 3(g)
Drag Along Notice 8
Employment, Confidential Information &
Invention Assignment Agreement 1(a)
Employee Stockholder's Trust 3(a)
Fair Market Value 1(a)
Good Reason 1(a)
Holding Stock 7(a)
Offer 5
Offeror 5
Option Agreement Recitals
Options Recitals
Option Price 1(a)
Option Stock 3(a)
Other Employee Stockholders Recitals
Permitted Ripplewood/Holding Transferee 1(a)
Permitted Transferee 3(a)
Plan Recitals
Purchase Price 6(d)
Public Offering 1(a)
Restricted Period 4(a)
Ripplewood Holdings 2
SEC 3(e)
Securities Act 1(a)
Stock 3(a)
Tag-Along Notice 7
Termination Not for Cause 5(b)
Transfer 2(a)
WMC Recitals
WMC Common Stock 1(a)
WMC Sale Tag-Along Notice 7
</TABLE>
<PAGE>
4
Section 2. Common Stock: Issuance of Options. (a) Subject to the terms and
conditions hereof, Holding hereby agrees to issue and sell to the Employee
Stockholder, and the Employee Stockholder hereby agrees to subscribe for the
number of shares of Common Stock set forth opposite such Employee Stockholder's
name on the signature page hereof at a price of $0.50 per share in cash. In
addition, WMC agrees to guarantee a loan to be made by a bank designated by WMC
to the Employee Stockholder in order to enable the Employee Stockholder to
purchase the Assisted Shares set forth on the signature pages hereof at a
purchase price of $.50 per share in cash and on such other terms and conditions
as are determined by WMC. The closing of such purchase and sale shall take place
at such time and place as is notified to the Employee Stockholder (the "Closing
Date"). On or prior to the Closing Date, the Employee Stockholder shall deliver
to Holding a check in an amount equal to the purchase price for the Common
Stock. Holding shall have no obligation to sell any shares of Common Stock to
any person who (i) is a resident or citizen of a state or other jurisdiction in
which the sale of the Common Stock to him or her would constitute a violation of
the securities or "blue sky" laws of such jurisdiction or (ii) is not an
employee of WMC on the date hereof.
(b) Subject to the terms and conditions hereinafter set forth and upon and
as of the Closing Date, WMC shall issue to the Employee Stockholder the number
of Options set forth opposite the Employee Stockholder's name on the signature
page hereof and the Parties shall execute and deliver to each other copies of
the Non-Qualified Option Agreement concurrently with the issuance of the
Options.
Section 3. Employee Stockholder's Representations, Warranties and
Agreements. (a) The Employee Stockholder agrees and acknowledges that he or she
will not, directly or indirectly, offer, transfer, sell, assign, pledge,
hypothecate or otherwise dispose of (any such act being referred to herein as a
"transfer") any shares of Common Stock (whether purchased on the Closing Date or
acquired at any time thereafter) and, at the time of exercise, the Class A
common stock of WMC issuable upon exercise of the Options (the "Option Stock"
and, collectively with the Common Stock and the Assisted Shares, the "Stock")
unless such transfer complies with Section 4 of this Agreement. If the Employee
Stockholder is an Affiliate, the Employee Stockholder also agrees and
acknowledges that he or she will not transfer any shares of Stock unless:
(i) the transfer is pursuant to an effective registration statement
under the Securities Act, and in compliance with applicable provisions of
state securities laws, (if otherwise permitted under the terms set forth
herein) or
(ii) (A) counsel for the Employee Stockholder (which counsel shall be
reasonably acceptable to WMC or Holding, as the case may be) shall have
furnished WMC or Holding, as the case may be, with an opinion, satisfactory
in form and substance to WMC or Holding, as the case may be, that no such
registration is required because of the availability of an exemption from
registration under the Securities Act and (B) if the Employee Stockholder
is a citizen or resident of any country other than the United States, or
the Employee Stockholder desires to effect any transfer in any such
country, counsel for the Employee Stockholder (which counsel shall be
reasonably
<PAGE>
5
satisfactory to WMC, in the case of Option Stock, or Holding, in the case
of Common Stock) shall have furnished WMC or Holding, as the case may be,
with an opinion or other advice satisfactory in form and substance to WMC
or Holding, as the case may be, to the effect that such transfer will
comply with the securities laws of such jurisdiction.
Notwithstanding the foregoing, WMC and Holding acknowledge and agree that
any of the following transfers are deemed to be in compliance with the
Securities Act and this Agreement and no opinion of counsel is required in
connection therewith: (x) a transfer made pursuant to Section 9 hereof, (y) a
transfer upon the death of the Employee Stockholder to his executors,
administrators, testamentary trustees, legatees or beneficiaries or a transfer
to the executors, administrators, testamentary trustees, legatees or
beneficiaries of a person who has become a holder of Stock in accordance with
the terms of this Agreement, provided that it is expressly understood that any
such transferee shall be bound by the provisions of this Agreement and (z) a
transfer made after the Closing Date in compliance with the federal securities
laws to a trust or custodianship the beneficiaries of which may include only the
Employee Stockholder, his spouse or his lineal descendants (an "Employee
Stockholder's Trust"), provided that any such transfer under (x), (y) or (z) is
made expressly subject to this Agreement and that the transferee agrees in
writing to be bound by the terms and conditions hereof. The transferees of Stock
purchase to (x), (y) or (z) who agree to be bound by the terms of this Agreement
are referred to as "Permitted Transferees",
(b) The certificate (or certificates) representing the Option Stock shall
bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED,
SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH
TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION
COMPLIES WITH THE PROVISIONS OF THE SUBSCRIPTION AND EMPLOYEE STOCKHOLDER'S
AGREEMENT DATED AS OF DECEMBER __, 1999 BETWEEN WESTERN MULTIPLEX
CORPORATION ("WMC"), WMC HOLDING CORP., THE EMPLOYEE STOCKHOLDER NAMED ON
THE FACE HEREOF AND RIPPLEWOOD PARTNERS, L.P. (A COPY OF WHICH IS ON FILE
WITH THE SECRETARY OF WMC)."
(c) The certificate (or certificates) representing the Common Stock shall
bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED,
SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH
TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION
COMPLIES WITH THE PROVISIONS OF THE SUBSCRIPTION AND EMPLOYEE STOCKHOLDER'S
AGREEMENT DATED AS OF DECEMBER __, 1999 BETWEEN WESTERN MULTIPLEX
CORPORATION, WMC HOLDING CORP. ("HOLDING"), THE EMPLOYEE STOCKHOLDER NAMED
ON THE FACE HEREOF AND RIPPLEWOOD PARTNERS, L.P. (A COPY OF WHICH IS ON
FILE WITH THE SECRETARY OF HOLDING)."
<PAGE>
6
(d) The Employee Stockholder acknowledges that he or she has been advised
that (i) a restrictive legend in the form heretofore set forth shall be placed
on the certificates representing the Stock and (ii) a notation shall be made in
the appropriate records of WMC and/or Holding, as the case may be, indicating
that the Stock is subject to restrictions on transfer and appropriate stop-
transfer restrictions will be issued to the applicable transfer agent with
respect to the Stock. If the Employee Stockholder is an Affiliate, the Employee
Stockholder also acknowledges that (1) the Stock must be held indefinitely and
the Employee Stockholder must continue to bear the economic risk of the
investment in the Stock unless it is subsequently registered under the
Securities Act or an exemption from such registration is available, (2) when and
if shares of Stock may be disposed of without registration in reliance on Rule
144 of the rules and regulations promulgated under the Securities Act, such
disposition can be made only in limited amounts in accordance with the terms and
conditions of such Rule and (3) if the Rule 144 exemption is not available,
public sale without registration will require compliance with some other
exemption under the Securities Act.
(e)(i) If any shares of Option Stock are to be disposed of in accordance
with Rule 144 under the Securities Act or otherwise, the Employee Stockholder
shall promptly notify WMC of such intended disposition and shall deliver to WMC
at or prior to the time of such disposition such documentation as WMC may
reasonably request in connection with such sale and, in the case of a
disposition pursuant to Rule 144, shall deliver to WMC an executed copy of any
notice of Form 144 required to be filed with the Securities and Exchange
Commission (the "SEC").
(ii) If any shares of Common Stock are to be disposed of in accordance
with Rule 144 under the Securities Act or otherwise, the Employee
Stockholder shall promptly notify Holding of such intended disposition and
shall deliver to Holding at or prior to the time of such disposition such
documentation as Holding may reasonably request in connection with such
sale and, in the case of a disposition pursuant to Rule 144, shall deliver
to Holding an executed copy of any notice of Form 144 required to be filed
with the SEC.
(f) The Employee Stockholder agrees that, if any shares of WMC Common Stock
are offered to the public pursuant to an effective registration statement under
the Securities Act (other than registration of securities issued under an
employee plan), the Employee Stockholder will not effect any public sale or
distribution of any shares of Stock not covered by such registration statement
from the time of the receipt of a notice from WMC that WMC has filed or
imminently intends to file such registration statement to, or within 180 days
after, the effective date of such registration statement, unless otherwise
agreed to in writing by WMC.
(g) The Employee Stockholder represents and warrants that (i) he has
received and reviewed the document(s) comprising the Confidential Information
Memorandum, dated December 21, 1999 (the "Confidential Information Memorandum"),
relating to the Stock and Options, and the documents referred to therein,
certain of which documents set forth the rights, preferences, and restrictions
relating to the Stock and Options, and (ii) he or she has been given the
opportunity to obtain any additional information or documents and to ask
questions and receive answers about such information, WMC, Holding and the
business and prospects of WMC and Holding which he or she deems necessary to
evaluate the merits and risks related to his or her investment in the
<PAGE>
7
Stock, and to verify the Confidential Information Memorandum and the information
contained in the document(s) received as indicated in this Section 3(g), and he
or she has relied solely on such information.
(h) The Employee Stockholder further represents and warrants that (i) his
or her financial condition is such that he or she can afford to bear the
economic risk of holding the Stock for an indefinite period of time and has
adequate means for providing for his or her current needs and personal
contingencies, (ii) he or she can afford to suffer a complete loss of his or her
investment in the Stock, (iii) he or she understands and has taken cognizance of
all risk factors related to the purchase of Stock (including, but not limited
to, those set forth in the Confidential Information Memorandum) and (iv) his or
her knowledge and experience in financial and business matters are such that he
is capable of evaluating the merits and risks of his or her purchase of Stock as
contemplated by this Agreement.
(i) The Employee Stockholder has executed and delivered to WMC the
Employment, Confidential Information and Invention Assignment Agreement.
Section 4. Restrictions on Transfer. Except for transfers to Permitted
Transferees permitted by clauses (x), (y) and (z) of Section 3(a) or a sale of
shares of Stock pursuant to Section 9 of this Agreement, the Employee
Stockholder agrees that he or she will not transfer any shares of Stock at any
time prior to the third anniversary of the Closing Date (the "Restricted
Period"). The Employee Stockholder further agrees not to transfer any Options,
except as expressly provided by this Agreement. No transfer in violation of this
Section 4 shall be made or recorded on the books of WMC or Holding and any such
transfer shall be void and of no effect.
Section 5. Right of First Refusal. If, following the Restricted Period, but
prior to a Public Offering, the Employee Stockholder or any Permitted Transferee
receives a bona fide offer to purchase any or all of his shares of Stock (the
"Offer") from a third party (the "Offeror") which the Employee Stockholder or
any such Permitted Transferee wishes to accept, the Employee Stockholder shall
cause the Offer to be reduced to writing and shall notify WMC, in the case of an
Offer to purchase Option Stock, or Holding, in the case of an Offer to purchase
Common Stock, in writing of his or her wish to accept the Offer. The Employee
Stockholder's notice shall contain an irrevocable offer to sell such shares of
Stock to WMC or Holding, as the case may be (in the manner set forth below), at
a purchase price equal to the price contained in, and on the same terms and
conditions of, the Offer, and shall be accompanied by a copy of the Offer (which
shall identify the Offeror). At any time within 30 days after the date of the
receipt by WMC or Holding of the Employee Stockholder's notice, WMC or Holding,
as the case may be, shall have the right and option to elect to purchase, or to
arrange for a third party (including WMC, Holding or Ripplewood) to elect to
purchase, all of the shares of Stock covered by the Offer either (i) at the same
price and on the same terms and conditions as the Offer or (ii) if the Offer
includes any consideration other than cash, then at the sole option of WMC or
its designee or Holding or its designee, as the case may be, at the equivalent
all cash price, determined in good faith by WMC's or Holding's, as the case may
be, Board of Directors, by delivering notice of such election to the Employee
Stockholder within such 30-day period. If WMC or Holding, as the case may be,
exercises such right, it shall deliver a certified bank check or checks in the
<PAGE>
8
appropriate amount (and any such non-cash consideration to be paid) to the
Employee Stockholder or any Permitted Transferee (as the case may be) at the
principal office of WMC against delivery of certificates or other instruments
representing the shares of Stock so purchased, appropriately endorsed by the
Employee Stockholder and the Permitted Transferee, within 10 business days
following its election. If at the end of the 30-day period, WMC or Holding has
not notified the Employee Stockholder of its election in the manner set forth
above, the Employee Stockholder and the Permitted Transferee may, during the
succeeding 60-day period, sell not less than all of the shares of Stock covered
by the Offer to the Offeror at a price and on terms no less favorable to the
Employee Stockholder or the Permitted Transferee (as the case may be) than those
contained in the Offer. Promptly after such sale, the Employee Stockholder or
the Permitted Transferee (as the case may be) shall notify WMC or Holding, as
the case may be, of the consummation thereof and shall furnish such evidence of
the completion and time of completion of such sale and of the terms thereof as
may reasonably be requested by WMC or Holding. If, at the end of 60 days
following the expiration of the 30-day period for WMC or Holding to purchase the
Stock, the Employee Stockholder or the Permitted Transferee (as the case may be)
has not completed the sale of such shares of Stock as aforesaid, all the
restrictions on sale, transfer or assignment contained in this Agreement shall
again be in effect with respect to such shares of Stock.
Section 6. Call Rights. (a) If, prior to the end of the Restricted Period,
(x) the Employee Stockholder's active employment with WMC (and/or, if
applicable, its subsidiaries) is terminated by WMC for Cause, (y) the
beneficiaries of an Employee Stockholder's Trust shall include any person or
entity other than the Employee Stockholder, his spouse or lineal descendants, or
(z) the Employee Stockholder (and any Permitted Transferees) shall effect a
transfer of any shares of Stock other than as permitted in this Agreement, then:
(i) Holding shall have the right to purchase all or any portion of the
Common Stock (other than the Assisted Shares) then held by the Employee
Stockholder (and any Permitted Transferees) for a purchase price equal to
the lesser of the Fair Market Value per share and the Book Value per share;
(ii) WMC shall have the right to purchase all or any portion of the
Option Stock then held by the Employee Stockholder (and any Permitted
Transferees) for a purchase price equal to the lesser of the Option Price
and the Book Value per Option; and
(iii) All Options shall terminate without any payment.
(iv) Holding shall have the right to purchase all or any portion of
the Assisted Shares then held by the Employee Stockholder (and any
Permitted Transferees) at a price equal to the lesser of (a) the purchase
price per share ($.50) and (b) the Book Value per share.
(b) If, prior to the expiration of the Restricted Period, the Employee
Stockholder's active employment with WMC is terminated without Cause or if the
Employee Stockholder quits or for Good Reason, then WMC may purchase all or any
portion of the Assisted Shares then held by the
<PAGE>
9
Employee Stockholder (and any Permitted Transferees) at a price equal to the
Fair Market Value per share.
(c) If, prior to the expiration of the Restricted Period, the Employee
Stockholder quits without Good Reason, then WMC will have the right to purchase
all or any portion of the Assisted Shares then held by the Employee Stockholder
(and any Permitted Transferees) for the lesser of (a) the purchase price per
share and the Fair Market Value per share.
(d) If, prior to the expiration of the Restricted Period, the Employee
Stockholder's active employment with WMC (and/or, if applicable, its
subsidiaries) ceases for any reason other than termination by WMC for Cause or
termination due to the death or permanent disability (including if the Employee
Stockholder quits or resigns), then:
(i) Holding shall have the right to purchase all or any portion of the
Common Stock then held by the Employee Stockholder (and any Permitted
Transferees) for a purchase price equal to the Fair Market Value per share;
(ii) WMC shall have the right to purchase all or any portion of vested
Options then held by the Employee Stockholder (and any Permitted
Transferees) at a purchase price equal to the Fair Market Value per vested
Option less the Option Price; provided that, if WMC exercises such
repurchase right with respect to any Option that would have a repurchase
price under this clause (b)(ii) of less than the Option Price at the time
of such exercise, then such Options shall be canceled without any payment;
(iii) WMC shall have the right to purchase all or any portion of the
Option Stock then held by the Employee Stockholder (and any Permitted
Transferees) at a purchase price equal to the Fair Market Value per share;
and
(iv) all unvested Options shall terminate without any payment
therefor.
(e) If the purchaser dies or becomes permanently disabled while still an
employee of WMC (and/or, if applicable, its subsidiaries), then (i) Holding may
purchase all or any portion of the shares of Common Stock then held by the
Employee Stockholder (and any Permitted Transferees) at a purchase price equal
to the Fair Market Value per share; and (ii) WMC ma purchase all of the Option
Stock then held by the Employee Stockholder (and any Permitted Transferees) at a
purchase price equal to the Fair Market Value per share less the Option Price
per share.
(f) The price at which Stock or Options are purchased by WMC or Holding
pursuant to Sections 5(a), 5(b) and 5(c) is referred to as the "Purchase Price".
Any right to repurchase pursuant to Sections 5(a), 5(b) and 5(c) is referred to
as a "Call Right".
(g) Absent the extension of a Call Right on account of a default under any
indebtedness agreement or violation of a statute as described in Section 5(f)
below, WMC or Holding, as the case may be, shall have a period of sixty (60)
days from the date of the event giving rise to the
<PAGE>
10
Call Right (or if later, after the discovery of an impermissible transfer) in
which to give notice in writing to the Employee Stockholder of its election to
exercise its Call Rights pursuant to Sections 5(a), 5(b) or 5(c) (a "Call
Notice"); provided that, in the case of the Employee Stockholder's permanent
disability, such 60-day exercise period shall be extended to twelve (12) months
after the event giving rise to the Call Right; and provided further, that any
Call Right available in such case must be exercised within such 12-month period.
(h) A Call Right shall be extended if WMC or Holding is, or would be as a
result of the payment of the Purchase Price, in default under any indebtedness
agreement or in violation of a statute. Any Call Right may be delayed upon such
default or violation of twelve (12) months thereafter; provided however, that,
if in connection with an event giving rise to a Call Right pursuant to Section
5(b), the exercise by WMC or Holding, as the case may be, of its Call Right is
delayed by reason of such default, then and only then will exercisable Options
be deemed to continue to be exercisable for the purposes of the purchase
pursuant to the Call Right and the Purchase Price for the Stock and Options will
be the higher of: (i) the Purchase Price determined as of the month end prior to
termination and (ii) the Purchase Price determined as of the month end prior to
the delayed purchase. In connection with a termination for Cause or any other
event giving rise to a Call Right pursuant to Section 6(a), the Purchase Price
for the Stock and Options shall be the lesser of (i) the Purchase Price
determined as of the month end prior to termination and (ii) the Purchase Price
determined as of the month end prior to the delayed purchase. Any Call Right may
only be delayed upon such default or violation for twelve (12) months
thereafter.
(i) The completion of any purchase pursuant to this Section 5 shall take
place at the principal office of WMC on the tenth business day after the giving
of the Call Notice. The applicable Purchase Price shall be paid by delivery to
the Employee Stockholder (or the Permitted Transferee, as the case may be) of a
certified bank check or checks in the appropriate amount payable to the order of
the Employee Stockholder against delivery of certificates or other instruments
representing the Stock so purchased and appropriate documents canceling the
Options so terminated, appropriately endorsed or executed by the Employee
Stockholder (or the Permitted Transferee, as the case may be) or the Employee
Stockholder's or Permitted Transferee's authorized representative.
(j) Subject to Section 5(f), the Purchase Price shall be calculated as of
the last day of the month preceding the month in which the event giving rise to
the Call Right occurs.
(k) In determining the Purchase Price, appropriate adjustments shall be
made for any share dividends, splits, combinations, recapitalizations or any
other adjustment in the number of outstanding common stock in order to maintain,
as nearly as practicable, the intended operation of the provisions of this
Section 6.
Section 7. Tag-Along Rights. (a) If prior to a Public Offering Ripplewood,
("Ripplewood") desires to transfer a majority or all of its shares of common
stock of Holding ("Holding Stock") to a prospective third party purchaser other
than to a Permitted Ripplewood/ Holding Transferee, Ripplewood shall, as a
condition to such transfer, (A) provide a notice to the Employee Stockholder in
writing (a "Tag-Along Notice") of the material terms of the proposed transfer at
<PAGE>
11
least 14 days prior to such transfer and (B) permit the Employee Stockholder (or
cause the Employee Stockholder to be permitted) to sell (either to the
prospective transferee or to another financially reputable transferee reasonably
acceptable to the Employee Stockholder) the same portion of its outstanding
shares of Common Stock and Option Stock on the same terms and conditions,
subject to the same agreements and at the same price as the sale by Ripplewood
(in each case subject to Section 7(c)), which sale shall take place on the date
Ripplewood's shares of Holding Stock (or such portion) are transferred to such
transferee. To calculate the number of outstanding shares of Common Stock and
Option Stock that the Employee Stockholder can sell for the purposes of this
Section 7(a), WMC and Holding shall be treated as a single entity such that the
Employee Stockholder will be able to sell the product of (x) a fraction, the
numerator of which is the number of shares of common stock of Holding being sold
by Ripplewood, and the denominator of which is the total number of shares of
common stock of Holding owned by Ripplewood, multiplied by (y) the total number
of shares of Common Stock and Option Stock owned by the Employee Stockholder
(e.g., if Ripplewood is selling 75% of its interest in common stock of Holding,
the Employee Stockholder will be able to include 75% of its total ownership of
Common Stock and Option Stock, calculated as though WMC and Holding are a single
entity). Should the Employee Stockholder exercise his or her rights pursuant to
this Section 7(a), the Employee Stockholder shall be required to transfer Common
Stock and Option Stock held by him or her in the following order of priority:
(1) first, shares of Common Stock (until the Employee Stockholder holds no
shares of Common Stock), and (2) second, Option Stock (until the Employee
Stockholder holds no shares of Option Stock). The Employee Stockholder shall
have ten days from the date of receipt of a Tag-Along Notice to exercise his or
her right to sell pursuant to this Section 7(a) by delivering written notice to
Ripplewood of his or her intent to exercise such right. The Employee
Stockholder's right to sell in such transaction pursuant to the above shall
terminate if not exercised within such ten-day period.
(b) If Holding sells a majority or all of its interest in WMC to a
prospective third party purchaser other than a Permitted Ripplewood/Holding
Transferee, Holding shall, as a condition to such transfer, (A) provide a notice
to the Employee Stockholder in writing (a "WMC Sale Tag-Along Notice") of the
material terms of the proposed transfer at least 14 days prior to such transfer
and (B) permit the Employee Stockholder (or cause the Employee Stockholder to be
permitted) to sell (either to the prospective transferee or to another
financially reputable transferee reasonably acceptable to the Employee
Stockholder) a number of its outstanding shares of Option Stock equal to (x) the
percentage of the outstanding shares of WMC Common Stock owned by Holding that
are being sold by Holding (e.g., if there are 2,000 shares of WMC Common Stock
outstanding of which Holding owns 1,800 shares and Holding is selling 180
shares, the percentage under this clause (x) will be 10%) multiplied by (y) the
number of shares of Option Stock owned by the Employee Stockholder. Subject to
Section 7(c), any such sale shall be on the same terms and conditions, subject
to the same agreements and at the same price as the sale by Holding, which sale
shall take place on the date Holding's shares of WMC Common Stock (or such
portion) are transferred to such transferee (or transferees). The Employee
Stockholder shall have ten days from the date of receipt of a WMC Sale Tag-Along
Notice to exercise his or her right to sell pursuant to this Section 7 by
delivering written notice to Holding of his or her intent to exercise such
right. The Employee Stockholder's right to sell in such transaction pursuant to
the above shall terminate if not exercised within such ten-day period.
<PAGE>
12
(c) The Employee Stockholder shall not have the right to transfer any
Options pursuant to this Section 7.
Section 8. Drag-Along Rights. (i) If at any time Ripplewood desires to
transfer all or any portion of its shares of Holding Stock to any third party
purchaser(s), other than Permitted Ripplewood/Holding Transferees, or Holding
desires to transfer all or any portion of its shares of WMC Common Stock to any
third party purchaser(s), other than Permitted Ripplewood/Holding Transferees,
Ripplewood shall have the right to require that the Employee Stockholder and its
Permitted Transferees transfer the same portion of the Employee Stockholder's
and its Permitted Transferees' shares of Common Stock and Option Stock to such
third party purchaser(s) on the same terms and conditions, subject to the same
agreements and at the same price as the sale by Ripplewood. To calculate the
number of outstanding shares of Common Stock and Option Stock that the Employee
Stockholder and its Permitted Transferees can be required to sell pursuant to
this Section 8, WMC and Holding shall be treated as a single entity such that
the Employee Stockholder and its Permitted Transferees (considered as a single
stockholder for this purpose) can be required to sell the product of (x) a
fraction, the numerator of which is the number of shares of Holding Stock being
sold by Ripplewood, and the denominator of which is the total number of shares
of Holding Stock owned by Ripplewood, multiplied by (y) the total number of
shares of Common Stock and Option Stock owned by the Employee Stockholder and
its Permitted Transferees (e.g. if Ripplewood is selling 75% of its interest in
Holding Stock, Ripplewood will have the right to require that the Employee
Stockholder and its Permitted Transferees transfer 75% of their total aggregate
ownership of Common Stock and Option Stock, calculated as though WMC and Holding
are a single entity). Should Ripplewood exercise its rights pursuant to this
Section 8, the Employee Stockholder and its Permitted Transferees shall be
required to transfer Common Stock and Option Stock held by them in the following
order of priority: (1) first, shares of Common Stock (until the Employee
Stockholder and its Permitted Transferees hold no shares of Common Stock), and
(2) second, Option Stock (until the Employee Stockholder and its Permitted
Transferees hold no Option Stock). Ripplewood shall provide a notice to the
Employee Stockholder in writing (a "Drag-Along Notice") of such sale at least 10
days prior to such transfer, and the Drag-Along Notice shall identify such third
party purchaser(s), all material terms of the sale and the date of closing. Upon
the closing of any sale by Ripplewood of all (or such portion) of its shares of
Holding Stock or any sale by Holding of WMC Common Stock, as described in a
Drag-Along Notice, such third party purchaser(s) shall pay to the Employee
Stockholder and/or its Permitted Transferees, as the case may be, the
consideration payable to the Employee Stockholder and/or its Permitted
Transferees, as the case may be, in connection with such sale of all (or such
portion) of its shares of Common Stock and Option Stock, and the Employee
Stockholder's and its Permitted Transferee's shares of Common Stock and Option
Stock (or such portion) shall be deemed transferred to such third party
purchaser(s).
Section 9. Sale Participation Rights. At any time following the expiration
of the period ending 180-days after a Public Offering, the Employee Stockholder
and its Permitted Transferees will have the right to sell all or any portion of
the Stock held by such Employee Stockholder and its Permitted Transferees in any
registered offering of WMC Common Stock initiated by WMC, Holding or Ripplewood.
Such registration rights will be on customary terms and conditions
<PAGE>
13
(including, without limitation, customary cut back and lock-up provisions)
established in good faith by WMC's or Holding's Board of Directors and
Ripplewood and notified to the Employee Stockholder and the Other Employee
Stockholders.
Section 10. Voting Agreement. (a) From and after the Closing Date, the
Employee Stockholder and its Permitted Transferees: (i) shall vote all of the
shares of Stock held by him, her or it (including, without limitation, shares
acquired after the date hereof) in the same manner as the shares of Holding held
by Ripplewood (in the case of Holding Stock) or Holding (in the case of WMC
Common Stock) are voted on all matters acted upon at any annual or special
meeting of Stockholders or by written consent in lieu of a meeting and (ii)
irrevocably constitutes and appoints the person who is at the time the Senior
Managing Director of Ripplewood Holdings (or his or her designee, with full
power of substitution) his proxy to vote all of the shares of Common Stock held
by the Employee Stockholder in the same manner as the shares of Holding Stock
held by Ripplewood and appoints the person who is at the time the Chief
Executive Officer of WMC (or his or her designee, with full power of
substitution) his proxy to vote all of the shares of Option Stock held by the
Employee Stockholder and its Permitted Transferees in the same manner as the
shares of WMC Common Stock held by Holding are voted on all matters acted upon
at any annual or special meeting of stockholders or by written consent in lieu
of a meeting; provided that this Section 10 shall be inapplicable with respect
to any matters which would both adversely affect the rights of shares of Stock
held by the Employee Stockholder (or its Permitted Transferees) and treat the
Employee Stockholder (or its Permitted Transferees) differently from other
holders of shares of WMC Common Stock or Holdings Stock (it being understood
that a conversion of Holding to a limited liability company and a merger or
other business combination of Holding and WMC will not be deemed to adversely
affect the rights of the Employee Stockholder (or its Permitted Transferees) and
the Employee Stockholder hereby agrees that his or her shares of Common Stock
will be voted in favor of any such action). The voting agreements and proxies
granted pursuant to this Section 10 are coupled with an interest and shall be
valid for the term of this Agreement. The Employee Stockholder represents that
he or she has not granted and is not party to any proxy, voting trust or other
agreement which in each case is inconsistent with or conflicts with the
provisions of this Agreement, and the Employee Stockholder shall not grant any
proxy or become a party to any voting trust or other agreement which in each
case is inconsistent with or conflicts with the provisions of this Agreement.
Section 11. Rights to Negotiate Repurchase Price. Nothing in this Agreement
shall be deemed to restrict or prohibit WMC or Holding from purchasing Stock or
Options from the Employee Stockholder or its Permitted Transferees (or any other
Employee Stockholder), at any time, upon such terms and conditions, and for such
price, as may be mutually agreed upon between the Parties, whether or not at the
time of such purchase circumstances exist which specifically grant WMC or
Holding the right to purchase Stock or Options.
Section 12. Covenant Regarding 83(b) Election. Except as WMC may otherwise
agree in writing, the Employee Stockholder hereby covenants and agrees that he
will make an election provided pursuant to Treasury Regulation 1.83-2 with
respect shares of Option Stock to be acquired upon each exercise of the Employee
Stockholder's Options; and the Employee Stockholder further
<PAGE>
14
covenants and agrees that he or she will furnish WMC with copies of the forms of
election the Employee Stockholder files and within 30 days after each exercise
of the Employee Stockholder Options and with evidence that each such election
has been filed in a timely manner.
Section 13. Notice of Change of Beneficiary. Immediately prior to any
transfer of shares of Stock to an Employee Stockholder's Trust, the Employee
Stockholder shall provide WMC and Holding with a copy of the instruments
creating the Employee Stockholder's Trust and with the identity of the
beneficiaries of the Employee Stockholder's Trust. The Employee Stockholder
shall notify WMC and Holding as soon as practicable prior to any change in the
identity of any beneficiary of the Employee Stockholder's Trust.
Section 14. Recapitalizations, etc. The provisions of this Agreement shall
apply, to the full extent set forth herein with respect to Stock or the Options,
to any and all shares of capital shares of WMC and Holding or any capital stock,
partnership units or any other security evidencing ownership interests in any
successor or assign of WMC and Holding (whether by merger, consolidation, sale
of assets or otherwise) which may be issued in respect of, in exchange for, or
substitution of Stock or Options, by reason of any share dividend, split,
reverse split, combination, recapitalization, liquidation, reclassification,
merger, consolidation or otherwise.
Section 15. State Securities Laws. WMC and Holding hereby agree to use
their best efforts to comply with all state securities or "blue sky" laws which
might be applicable to the sale of Stock and the issuance of the Options to the
Employee Stockholder.
Section 16. Binding Effect. The provisions of this Agreement shall be
binding upon and accrue to the benefit of the parties hereto and their
respective heirs, legal representatives, successors and assigns. In the case of
a transferee permitted under Section 3(a) hereof, such transferee shall be
deemed the Employee Stockholder hereunder; provided, however, that no transferee
(including without limitation, transferees referred to in Section 3(a) hereof)
shall derive any rights under this Agreement unless and until such transferee
has delivered to WMC and Holding a valid undertaking and becomes bound by the
terms of this Agreement.
Section 17. Amendment. This Agreement may be amended only by a written
instrument signed by the Parties hereto. Notwithstanding the foregoing, this
Agreement may be amended without the consent of any party hereto other than WMC
to provide for any change in the corporate structure of WMC, including its
conversion to a limited liability company or a merger or other business
combination of Holding and WMC.
Section 18. Closing. Except as otherwise provided herein, the closing of
each purchase and sale of Stock and the payment of the Purchase Price by WMC or
Holding upon exercise of a Call Right, if any, pursuant to this Agreement shall
take place at the principal office of WMC on the tenth business day following
delivery of the notice by any Party of its exercise of the right to purchase or
sell such Stock or Options hereunder, as the case may be.
Section 19. Applicable Law. The laws of the state of Delaware shall govern
the interpretation, validity and performance of the terms of this Agreement. Any
suit, action or proceeding against
<PAGE>
15
the Employee Stockholder, WMC or Holding, with respect to this Agreement, or any
judgment entered by any court in respect of any thereof, may be brought in any
court of competent jurisdiction in the State of Delaware and the Parties each
hereby submit to the exclusive jurisdiction of such courts for the purpose of
any such suit, action, proceeding or judgment. The Parties hereby irrevocably
waive any objections which either of them may now or hereafter have to the
laying of the venue of any suit, action or proceeding arising out of or relating
to this Agreement brought in any court of competent jurisdiction in the State of
Delaware, and hereby further irrevocably waive any claim that any such suit,
action or proceeding brought in any such court has been brought in any
inconvenient forum. No suit, action or proceeding against any of the Parties
with respect to this Agreement may be brought in any court, domestic or foreign,
or before any similar domestic or foreign authority other than in a court of
competent jurisdiction in the State of Delaware, and the Parties hereby
irrevocably waive any right which any of them may otherwise have had to bring
such an action in any other court, domestic or foreign, or before any similar
domestic or foreign authority. Each Party hereto hereby irrevocably and
unconditionally waives trial by jury in any legal action or proceeding in
relation to this Agreement and for any counterclaim therein.
Section 20. Assignability of Certain Rights by WMC, Holding and Ripplewood.
WMC, Holding and Ripplewood shall have the right to assign any or all of their
rights or obligations to purchase Stock or Options pursuant to this Agreement;
provided, however, that such assigning party shall remain obligated to perform
its obligations notwithstanding such assignment in the event that such assignee
fails to perform the obligations so assigned to it. The rights and obligations
of WMC, Holding and Ripplewood under this Agreement shall insure to the benefit
of, and be binding upon, any of their respective successors.
Section 21. Conflicts with Other Agreements. In the event that any
provision of this Agreement conflicts in any way with the Plan or the provisions
of any Stock Option Agreement to which the Employee Stockholder is a party or
bound, the provisions of this Agreement shall govern.
Section 22. Miscellaneous. (a) In this Agreement all references to
"dollars" or "$" are to United States dollars.
(b) If any provision of this Agreement shall be declared illegal, void or
unenforceable by any court of competent jurisdiction, the other provisions shall
not be affected, but shall remain in full force and effect.
(c) WMC and Holding shall have the right to deduct from any cash payment
made under this Agreement to the Employee Stockholder any federal, state or
local income or other taxes required by law to be withheld with respect to such
payment.
Section 23. Notices. All notices and other communications provided for
herein shall be in writing and shall be deemed to have been duly given if
delivered by hand (whether by overnight courier or otherwise) or sent by
registered or certified mail, return receipt requested, postage prepaid, or by
overnight delivery or telecopy, to the Party to whom it is directed:
<PAGE>
16
(a) If to WMC, to it at the following address:
Western Multiplex Corporation
1196 Borregas Avenue
Sunnyvale, CA 94089
Attn: Kim Viera
Facsimile: 408-542-5300
with a copy to:
Simpson Thacher & Bartlett
3373 Hillview Avenue
Suite 250
Palo Alto, CA 94304
Attn: Daniel Cilvner, Esq.
Facsimile: 650-251-5002
(b) If to Holding, to it at the following address:
WMC Holding Corp.
101 California Street
Suite 2825
San Francisco, CA 94111
Attn: Jeffrey M. Hendren
Facsimile: 415-772-9289
with a copy to:
Simpson Thacher & Bartlett
3373 Hillview Avenue
Suite 250
Palo Alto, CA 94304
Attn: Daniel Cilvner, Esq.
Facsimile: 650-251-5002
(c) If to Ripplewood, to it at the following address:
Ripplewood Partners, L.P.
One Rockefeller Plaza
New York, NY 10020
Attn: Jeffrey M. Hendren
Facsimile: 212-218-2721
(d) If to the Employee Stockholder, to him at the address set forth below
under his signature; or at such other address as either party shall have
specified by notice in writing to the other.
Section 24. Expiration of Section Provisions. The provisions contained in
Sections 5, 6 and 7 and any portion of any other provision of this Agreement
which incorporates the provisions of Sections 5, 6 and 7 shall terminate and be
of no further force or effect with respect to any shares of Stock sold by the
Employee Stockholder or any Permitted Transferee pursuant to any Public
Offering.
<PAGE>
17
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
WESTERN MULTIPLEX CORPORATION
By: /s/ Jeffrey M. Hendren
-----------------------------
Name: Jeffrey M. Hendren
Title: Vice President
WMC HOLDING CORP.
By: /s/ Jeffrey M. Hendren
-----------------------------
Name: Jeffrey M. Hendren
Title: Vice President
RIPPLEWOOD PARTNERS, L.P.
By: /s/ Jeffrey M. Hendren
-----------------------------
Name: Jeffrey M. Hendren
Title: Principal
EMPLOYEE STOCKHOLDER 190,000
Number of shares of Class A Common Stock
/s/ Amir Zoufonoun of WMC Holding Corp. to be purchased
- -----------------------
Name: Amir Zoufonoun
Address: 950,000
887 N. Central Ave. Number of Assisted Shares to be
Campbell, CA 95008 guaranteed by Western Multiplex
Corporation
1,330,000
Number of Options to purchase share of
Class A Common Stock of Western
Multiplex Corp. being granted
<PAGE>
EXHIBIT 10.5
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement") dated as of February 16,
2000 by and between Western Multiplex Corporation, a Delaware Company (the
"Company") and Nancy Huber (the "Executive").
WHEREAS, the Company considers it essential to its best interests
and the best interests of its stockholders to foster the continued employment
of Executive by the Company during the term of this Agreement and Executive
is willing to accept and continue Executive's employment on the terms
hereinafter set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein and for other good and valuable consideration, the parties
agree as follows:
1. Term of Employment; Executive Representation.
---------------------------------------------
a. Employment Term. Executive's term of employment under this
Agreement shall commence on the date hereof and, subject to the terms hereof,
Executive and the Company agree and acknowledge that Executive's employment
with the Company constitutes "at-will" employment and that this Agreement may
be terminated at any time by the Company or Executive; provided, however,
that any termination of employment by Executive (other than for death or
Permanent Disability) may only be made upon 90 days prior written notice to
the Company.
b. Executive Representation. Executive hereby represents to
the Company that the execution and delivery of this Agreement by Executive
and the Company and the performance by Executive of the Executive's duties
hereunder shall not constitute a breach of, or otherwise contravene, the
terms of any employment agreement or other agreement or policy to which
Executive is a party or otherwise bound.
2. Position.
--------
a. While employed hereunder, Executive shall serve as the
Company's Chief Financial Officer. In such position, Executive shall have
such duties and authority as shall be determined from time to time by the
Board of Directors of the Company (the "Board"). If requested, the Executive
shall also serve as a member of the Board of Directors of the Company
without additional compensation.
<PAGE>
b. While employed hereunder, Executive will devote
Executive's full business time and best efforts to the performance of
Executive's duties hereunder and will not engage in any other business,
profession or occupation for compensation or otherwise which would conflict
with the rendition of such services either directly or indirectly, without
the prior written consent of the Board; provided that nothing herein shall
preclude Executive from continuing to serve on the board of directors or
trustees of any business corporation or any charitable organization on which
he currently serves and which is identified on Exhibit A hereto or, subject
to the prior approval of the Board, from accepting appointment to any
additional directorships or trusteeships, provided in each case, and in the
aggregate, that such activities do not interfere with the performance of
Executive's duties hereunder or conflict with Section 8.
3. Base Salary. While employed hereunder, the Company shall pay
Executive a base salary (the "Base Salary") at the annual rate of $160,000
payable in regular installments in accordance with the Company's usual
payment practices. Executive shall be entitled to such increases in
Executive's Base Salary, if any, as may be determined from time to time in
the sole discretion of the Board.
4. Annual Bonus. With respect to each calendar year while
employed hereunder, Executive shall be eligible to earn an annual bonus award
(an "Annual Bonus") pursuant to an annual incentive plan to be established by
the Board.
5. Employee Benefits; Vacation; Business Expenses.
----------------------------------------------
a. Employee Benefits and Vacation. The Company shall
provide Executive during the term of his employment hereunder with coverage
under all employee pension and welfare benefit programs, plans and practices
in accordance with the terms thereof, which the Company generally makes
available to its senior executives. Executive shall also be entitled to
three (3) weeks of paid vacation in each calendar year, and such number of
days of sick leave in each calendar year as shall be established under the
Company's policies as in effect from time to time, in both cases which shall
be taken at such times as are consistent with Executive's responsibilities
hereunder.
b. Business Expenses. Executive is authorized to incur
reasonable expenses in carrying out his duties and responsibilities under
this Agreement, including, without limitation, expenses for travel and
similar items related to such duties and responsibilities. The Company will
reimburse Executive for all such expenses upon presentation by Executive from
time to time of appropriately itemized and approved (consistent with the
Company's policy) accounts of such expenditures.
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6. Special Equity Arrangements. Upon the occurrence of a Change
of Control, (a) the vesting of all of Executive's outstanding, unvested Time
Options (as defined in Executive's Time- and Performance-Based Non-Qualified
Stock Option Agreement) shall accelerate and become fully (100%) vested and
exercisable immediately prior to such Change in Control and (b) all transfer
restrictions on any shares of common stock of the Company acquired and held
by Executive shall lapse and Executive shall hold such shares free and clear
of all transfer restrictions (other than those which may be imposed by any
underwriters). For purposes hereof, a "Change of Control" shall have the
same meaning as such term is defined in the 1999 Western Multiplex
Corporation Stock Incentive Plan.
7. Termination. The Executive's employment hereunder may be
terminated by either party at any time and for any reason; provided that
Executive will be required to give the Company at least 90 days advance
written notice of any resignation of Executive's employment. Notwithstanding
any other provision of this Agreement, the provisions of this Section 7 shall
exclusively govern Executive's rights upon termination of employment with the
Company and its affiliates. Upon termination of Executive's employment for
any reason, Executive agrees to resign, as of the date of such termination,
from the Company's Board of Directors and the Board of Directors of any of
the Company's affiliates.
a. By the Company For Cause
------------------------
(i) The Executive's employment hereunder may be terminated by
the Company for Cause (as defined below) or upon 90 days prior written
notice, by Executive without Good Reason.
(ii) For purposes of this Agreement, "Cause" shall mean (i)
the Executive's willful and continued failure to perform his or her duties
with respect to the Company or its subsidiaries after demand by his or her
superior for substantial performance is made or delivered, (ii) willful
misconduct by the Executive involving dishonesty or breach of trust in
connection with the Executive's employment, (iii) indictment for any felony
or misdemeanor involving moral turpitude, (iv) any material breach of the
Executive's restrictive covenants as provided in Section 8 of this Agreement,
or (v) violation of any written Company policy.
(iii) If Executive's employment is terminated by the Company
for Cause or by Executive without Good Reason, Executive shall be entitled to
receive:
(A) the Base Salary through the date of termination;
(B) any Annual Bonus earned but unpaid as of the date of
termination for any previously completed calendar year;
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<PAGE>
(C) reimbursement for any unreimbursed business expenses
properly incurred by Executive in accordance with Company policy
prior to the date of Executive's termination; and
(D) such Employee Benefits, if any, as to which Executive may
be entitled under the employee benefit plans of the Company (the
amounts described in clauses (A) through (D) hereof being referred
to as the "Accrued Rights").
Following such termination of Executive's employment by the Company
for Cause, except as set forth in this Section 7(a), Executive shall have no
further rights to any compensation or any other benefits under this
Agreement.
b. Disability or Death.
-------------------
(i) The Executive's employment hereunder shall terminate upon
Executive's death and if Executive becomes physically or mentally
incapacitated and is therefore unable for a period of six (6) consecutive
months or for an aggregate of nine (9) months in any twenty-four (24)
consecutive month period to perform Executive's duties (such incapacity is
hereinafter referred to as "Disability"). Any question as to the existence
of the Disability of Executive as to which Executive and the Company cannot
agree shall be determined in writing by a qualified independent physician
mutually acceptable to Executive and the Company. If Executive and the
Company cannot agree as to a qualified independent physician, each shall
appoint such a physician and those two physicians shall select a third who
shall make such determination in writing. The determination of Disability
made in writing to the Company and Executive shall be final and conclusive
for all purposes of the Agreement.
(ii) Upon termination of Executive's employment hereunder for
either Disability or death, Executive or Executive's estate (as the case may
be) shall be entitled to receive:
(A) the Accrued Rights; and
(B) a pro rata portion of any Annual Bonus that the Executive
would have been entitled to receive pursuant to Section 4 hereof in
such year based upon the percentage of the calendar year that shall
have elapsed through the date of Executive's termination of
employment, payable when such Annual Bonus would have otherwise
been payable had the Executive's employment not terminated.
Following Executives termination of employment due to death or
Disability, except as set forth in this Section 7(b), Executive shall have no
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<PAGE>
further rights to any compensation or any other benefits under this
Agreement.
c. By the Company Without Cause or Resignation by Executive
for Good Reason.
--------------------------------------------------------
(i) The Executive's employment hereunder may be terminated by
the Company without Cause or by Executive's resignation for Good Reason.
(ii) For purposes of this Agreement, "Good Reason" shall
mean: (x) a reduction in the Executive's base salary (other than any general
salary reduction affecting at least the majority of salaried employees of the
Company), (y) a material and adverse reduction in the Executive's duties,
responsibilities and other requirements, inconsistent with Executive's
position with the Company and with Executive's prior duties, responsibilities
and other requirements or (z) a transfer of the Executive's primary workplace
by more than fifty (50) miles from the current workplace.
Notwithstanding the foregoing, none of the events described in clauses (x)
or (y) of this Section 7(c)(ii) shall constitute Good Reason unless Executive
shall have notified the Company in writing describing the events which
constitute Good Reason and then only if the Company shall have failed to cure
such event within thirty (30) days after the Company's receipt of such
written notice.
(iii) If Executive's employment is terminated by the Company
without Cause (other than by reason of death or Disability) or if Executive
resigns for Good Reason, Executive shall be entitled to receive:
(A) the Accrued Rights; and
(B) subject to Executive's continued compliance with the
provisions of Section 8, during the period from the date of the
Employee's termination until the date that is twelve (12) months
after the effective date of the termination (the "Severance
Period"), severance payments equal to (x) the Base Salary in effect
immediately prior to the date of termination, plus (y) an amount in
respect of Executive's annual target bonus for the year in which
the termination occurs, which amount shall, for purposes of this
Section 7(c)(iii), be deemed to be forty percent (40%) of the
Executive's Base Salary as in effect immediately prior to the date
of termination, which severance payments shall be paid during the
Severance Period in equal installments on the same schedule as the
Company's usual payroll payment practices; provided that the
aggregate amount described in this clause (B) shall be reduced by
the present value of any other cash severance or termination
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<PAGE>
benefits payable to Executive under any other plans, programs or
arrangements of the Company or its affiliates; and
(C) the continuation of all health and life insurance
benefits through the end of the Severance Period, which benefits
shall be substantially identical to those to which Executive was
entitled to receive immediately prior to the Executive's
termination, or to those being offered to executive officers of the
Company (or its successor corporation, if applicable) if the
benefit programs of the Company are changed for its employees at
any time during the Severance Period.
Following Executive's termination of employment by the Company
without Cause (other than by reason of Executive's death or Disability) or by
Executive's resignation for Good Reason, except as set forth in this Section
7(c), Executive shall have no further rights to any compensation or any other
benefits under this Agreement.
d. Notice of Termination. Any purported termination of
employment by the Company or by Executive (other than due to Executive's
death) shall be communicated by written Notice of Termination to the other
party hereto in accordance with Section 11(h) hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon and shall
set forth in reasonable detail the facts and circumstances claimed to provide
a basis for termination of employment under the provision so indicated.
8. Nondisclosure of Confidential Information; Non-Competition.
(a) At any time during or after Executive's employment with the Company,
Executive shall not, without the prior written consent of the Company, use,
divulge, disclose or make accessible to any other person, firm, partnership,
corporation or other entity any Confidential Information (as hereinafter
defined) pertaining to the business of the Company or any of its
subsidiaries, except (i) while employed by the Company, in the business of
and for the benefit of the Company, or (ii) when required to do so by a court
of competent jurisdiction, by any governmental agency having supervisory
authority over the business of the Company, or by any administrative body or
legislative body (including a committee thereof) with jurisdiction to order
Executive to divulge, disclose or make accessible such information. For
purposes of this Section 8(a), "Confidential Information" shall mean non-
public information concerning the financial data, strategic business plans,
and other non-public, proprietary and confidential information of the
Company, its subsidiaries, Ripplewood Holdings L.L.C. or their respective
affiliates as in existence as of the date of Executive's termination of
employment that, in any case, is not otherwise available to the public (other
than by Executive's breach of the terms hereof).
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<PAGE>
(b) As Chief Financial Officer, Executive will acquire knowledge
of Confidential Information and trade secrets. Executive acknowledges that
the Confidential Information and trade secrets which the Company has provided
and will provide to him could play a significant role were he to directly to
indirectly be engaged in any business in Competition with the Company or its
subsidiaries. During the period of his employment hereunder and for one year
thereafter, Executive agrees that, without the prior written consent of the
Company, (A) he will not, directly or indirectly, either as principal,
manager, agent, consultant, officer, stockholder, partner, investor, lender
or employee or in any other capacity, carry on, be engaged in or have any
financial interest in (other than an ownership position of less than 5
percent in any company whose shares are publicly traded), any business, which
is in Competition (as hereinafter defined) with the existing business of the
Company or its subsidiaries and (B) he shall not, on his own behalf or on
behalf of any person, firm or company, directly or indirectly, solicit or
otherwise actively recruit any person who has been employed by the Company or
its subsidiaries at any time during the 12 months immediately preceding such
solicitation or recruitment to the extent that Executive would use or
inevitably use Confidential Information or trade secrets or that would
otherwise constitute unfair competition.
(c) For purposes of this Section 8, a business shall be deemed to
be in Competition with the Company or its subsidiaries if it is engaged in or
has taken concrete steps toward engaging in the business of research and
development, designing, manufacturing, marketing, distributing, or servicing
or selling components as used in microwave radios, products and equipment,
whether in existence or in development, relating to microwave communications
(including unlicensed spread spectrum radio, licensed microwave radio,
wireless ethernet bridge, and fixed wireless (e.g., wireless local loop,
point-to-point, point-to-multipoint)), as carried on by the Company or its
affiliates as of the date of Executive's termination of employment, in all
cities, counties, states and countries in which the business of the Company
or its affiliates is then being conducted or its products are being sold.
(d) The results and proceeds of Executive's services hereunder,
including, without limitation, any works of authorship resulting from
Executive's services during Executive's employment with the Company and/or
any of the Company's affiliates and any works in progress, will be works-
made-for hire and the Company will be deemed the sole owner throughout the
universe of any and all rights of whatsoever nature therein, whether or not
now or hereafter known, existing, contemplated, recognized or developed, with
the right to use the same in perpetuity in any manner the Company determines
in its sole discretion without any further payment to Executive whatsoever.
If, for any reason, any of such results and proceeds will not legally be a
work-for-hire and/or there are any rights which do not accrue to the Company
under the preceding sentence, then Executive hereby irrevocably assigns and
agrees to assign any and all of Executive's right, title and interest
-7-
<PAGE>
thereto, including, without limitation, any and all copyrights, patents,
trade secrets, trademarks and/or other rights of whatsoever nature therein,
whether or not now or hereafter known, existing, contemplated, recognized or
developed, to the Company, and the Company will have the right to use the
same in perpetuity throughout the universe in any manner the Company
determines without any further payment to Executive whatsoever. Executive
will, from time to time as may be requested by the Company, (i) during the
term of Executive's employment without further consideration, and (ii)
thereafter at Executive's then current hourly rate, do any and all things
which the Company may deem useful or desirable to establish or document the
Company's exclusive ownership of any and all rights in any such results and
proceeds, including, without limitation, the execution of appropriate
copyright and/or patent applications or assignments. To the extent Executive
has any rights in the results and proceeds of Executive's services that
cannot be assigned in the manner described above, Executive unconditionally
and irrevocably waives the enforcement of such rights. This subsection is
subject to and will not be deemed to limit, restrict, or constitute any
waiver by the Company of any rights of ownership to which the Company may be
entitled by operation of law by virtue of the Company being Executive's
employer. This Section does not apply to an invention that qualifies as a
nonassignable invention Section 2870 of the California Labor Code, which
applies to any invention for which no equipment, supplies, facilities or
Confidential Information was used, which does not (i) relate to the business
of the Company; (ii) relate to the Company's actual or demonstrable
anticipated research or development or (iii) result from any work performed
by Executive for the Company. This confirms that Executive has been notified
of his rights under Section 2870 of the California Labor Code.
(e) Executive and the Company agree that this covenant not to
compete is a reasonable covenant under the circumstances, and further agree
that if in the opinion of any court of competent jurisdiction such restraint
is not reasonable in any respect, such court shall have the right, power and
authority to excise or modify such provision or provisions of this covenant
as to the court shall appear not reasonable and to enforce the remainder of
the covenant as so amended. Executive agrees that any breach of the
covenants contained in this Section 8 would irreparably injure the Company.
Accordingly, Executive agrees that the Company may, in addition to pursuing
any other remedies it may have in law or in equity, cease making any payments
otherwise required by this Agreement and obtain an injunction against
Executive from any court having jurisdiction over the matter restraining any
further violation of this Agreement by Executive.
9. Specific Performance. Executive acknowledges and agrees that
the Company's remedies at law for a breach or threatened breach of any of the
provisions of Section 8 would be inadequate and, in recognition of this fact,
Executive agrees that, in the event of such a breach or threatened breach, in
addition to any remedies at law, the Company, without posting any bond, shall
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<PAGE>
be entitled to cease making any payments or providing any benefit otherwise
required by this Agreement and obtain equitable relief in the form of
specific performance, temporary restraining order, temporary or permanent
injunction or any other equitable remedy which may then be available.
10. Miscellaneous.
-------------
a. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without
regard to conflicts of laws principles thereof.
b. Entire Agreement/Amendments. This Agreement contains the
entire understanding of the parties with respect to the employment of
Executive by the Company. There are no restrictions, agreements, promises,
warranties, covenants or undertakings between the parties with respect to the
subject matter herein other than those expressly set forth herein. This
Agreement may not be altered, modified, or amended except by written
instrument signed by the parties hereto. This Agreement supercedes all prior
agreements and understandings (including verbal agreements) between Executive
and the Company and/or its affiliates regarding the terms and conditions of
Executive's employment with the Company and/or its affiliates.
c. No Waiver. The failure of a party to insist upon strict
adherence to any term of this Agreement on any occasion shall not be
considered a waiver of such party's rights or deprive such party of the right
thereafter to insist upon strict adherence to that term or any other term of
this Agreement.
d. Severability. In the event that any one or more of the
provisions of this Agreement shall be or become invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions of this Agreement shall not be affected thereby.
e. Assignment. This Agreement shall not be assignable by
Executive. This Agreement may be assigned by the Company to a company which
is a successor in interest to substantially all of the business operations of
the Company. Such assignment shall become effective when the Company
notifies the Executive of such assignment or at such later date as may be
specified in such notice. Upon such assignment, the rights and obligations
of the Company hereunder shall become the rights and obligations of such
successor company, provided that any assignee expressly assumes the
obligations, rights and privileges of this Agreement.
f. Mitigation. Executive shall be required to mitigate the
amount of any payment provided for pursuant to this Agreement by seeking
other employment, taking into account the provisions of Section 8 of this
Agreement. Anything in this Agreement to the contrary notwithstanding, in
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the event that Executive provides services for pay to anyone other than the
Company or any of its affiliates from the date Executive's employment
hereunder is terminated until twelve months thereafter, the amounts paid to
Executive during such period pursuant to this Agreement shall be reduced by
the amounts of salary, bonus or other compensation earned by Executive during
such period as a result of Executive's performing such services (regardless
of when such earned amounts are actually paid to Executive).
g. Successors; Binding Agreement. 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 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. The terms of this
Agreement and all of Executive's rights hereunder shall be binding upon,
inure to the benefit of, and be enforceable by, Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributes,
devises and legatees, to the extent applicable.
h. Notice. For the purpose of this Agreement, notices and
all other communications provided for in the Agreement shall be in writing
and shall be deemed to have been duly given when delivered or mailed by
United States registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth below Agreement, or to such
other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be
effective only upon receipt.
If to the Company:
Western Multiplex Corporation
1196 Borregas Ave.
Sunnyvale, California 94089
Attention: Amir Zoufonoun
If to Executive:
To the most recent address of Executive set forth in the personnel
records of the Company.
i. Withholding Taxes. The Company may withhold from any
amounts payable under this Agreement such Federal, state and local taxes as
may be required to be withheld pursuant to any applicable law or regulation.
-10-
<PAGE>
j. Counterparts. This Agreement may be signed in
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
-11-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
WESTERN MULTIPLEX CORPORATION
By: /s/ Amir Zoufonoun
--------------------------
Name: Amir Zoufonoun
Title: President
EXECUTIVE:
/s/ Nancy Huber
------------------------------
Nancy Huber
Address of Executive:
1024 Hazelwood Avenue
San Jose, California 95125
-12-
<PAGE>
EXHIBIT 10.6
SUBSCRIPTION AND EMPLOYEE STOCKHOLDER'S AGREEMENT
[Employees Receiving Options and Purchasing Common Stock]
This SUBSCRIPTION EMPLOYEE AND STOCKHOLDER'S AGREEMENT, is entered into as
of February 28, 2000 (the "Agreement"), among, WMC Holding Corp., a Delaware
corporation (together with its successors and permitted assigns, "Holding"),
Western Multiplex Corporation, a Delaware corporation (together with its
successors and permitted assigns, "WMC"), the undersigned, as set forth on the
signature page hereof (the "Employee Stockholder") and Ripplewood Partners, L.P.
(together with its successors and permitted assignees (including Permitted
Transferees as defined below) ("Ripplewood") (Holding, WMC, Ripplewood and the
Employee Stockholder being hereinafter collectively referred to as the
"Parties").
Recitals
Pursuant to an Acquisition Agreement, dated as of September 30, 1999, as
amended on October 31, 1999, among WMC, Holding, GTI Acquisition Corp., a
Delaware corporation ("Glenayre"), Glenayre Technologies, Inc., a Delaware
corporation, and Western Multiplex Corporation, a California corporation, WMC
redeemed 42,000,000 shares of Class B common stock of WMC, par value $.01 per
share, held by Glenayre and Holding purchased 35,955,000 shares of outstanding
Common Stock of WMC from Glenayre (the "Recapitalization");
In connection with the Recapitalization, employees and members of
management of WMC are being offered the opportunity to subscribe for shares of
Class A common stock of Holding, par value $.01 per share ("Common Stock"), and
WMC is issuing options ("Options") to certain of its key employees under the
1999 Western Multiplex Corporation Stock Incentive Plan (the "Plan") to purchase
shares of Class A Common Stock of WMC, par value $.01 per share;
The Employee Stockholder, Holding and WMC have agreed that the Employee
Stockholder may subscribe for a certain number of shares of Common Stock and,
the Employee Stockholder will receive a certain number of Options pursuant to
the terms of the "Non-Qualified Stock Option Agreement" attached hereto as
Exhibit A;
This Agreement is one of several other similar agreements which have been,
or will be, entered into by WMC, Holding and other individuals who are employees
of WMC and who are being offered the right to purchase Common Stock and who are
being granted Options (the "Other Employee Stockholders");
NOW THEREFORE, to implement the foregoing and in consideration of the grant
of Options and of the mutual agreements contained herein, the Parties agree as
follows:
Section 1. Certain Definitions.
(a) As used in this Agreement, the following terms shall have the following
meanings:
<PAGE>
2
"Affiliate" with respect to any person, means any entity directly or
indirectly controlling, controlled by, or under common control with such
person or any entity designated as such by the Board of Directors of such
person in which such person or an Affiliate has an interest.
"Book Value" means, on a per share, fully-diluted basis, shareholder's
equity as determined in accordance with GAAP.
"Cause" means (i) the Employee Stockholder's willful and continued
failure to perform his or her duties with respect to WMC or its
subsidiaries after demand by his or her superior for substantial
performance is made or delivered, (ii) willful misconduct by the Employee
Stockholder involving dishonesty or breach of trust in connection with the
Employee Stockholder's employment, (iii) indictment for any felony or any
misdemeanor involving moral turpitude, (iv) any material breach of the
Employee's restrictive covenants as provided herein and in the Employment,
Confidential Information and Invention Assignment Agreement (as defined
below), or (v) violation of any written WMC policy.
"Employment, Confidential Information and Invention Assignment
Agreement" means the Employment, Confidential Information and Invention
Assignment Agreement in the form attached as Exhibit B hereto to be
executed and delivered by the Employee Stockholder to WMC on the date
hereof.
"Fair Market Value" means, prior to a Public Offering, the fair market
value of the shares of Stock, as determined in good faith by the Board of
Directors of WMC (with respect to Option Stock) or Holding (with respect to
Common Stock), and following a Public Offering, the average daily closing
price of the shares of common stock of WMC ("WMC Common Stock") for the ten
consecutive trading days preceding the date the Fair Market Value of the
Stock is required to be determined hereunder.
The "Option Price" is $0.50 per share (as adjusted for any share
dividend, split, reverse split, combination, recapitalization, liquidation,
reclassification, merger, consolidation or otherwise).
"Permitted Ripplewood/Holding Transferee" means (a) Ripplewood
Holdings L.L.C. ("Ripplewood Holdings") or any Affiliate of Ripplewood
Holdings, (b) a stockholder, partner, member or employee of Ripplewood
Holdings or any Affiliate of Ripplewood Holdings or (c) an employee,
director or officer of Holding or WMC or any subsidiary of Holding or WMC
(up to an aggregate of 5% of the outstanding common stock of WMC and
Holding).
"Public Offering" means a firmly underwritten registered public
offering of WMC Common Stock.
"Securities Act" means the Securities Act of 1933, as amended.
(b) As used in this Agreement, each of the following capitalized terms
shall have the meaning ascribed to them in the Section set forth opposite such
term:
<PAGE>
3
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Affiliate 1(a)
Book Value 1(a)
Call Notice 6(e)
Call Rights 6(d)
Cause 1(a)
Common Stock Recitals
Confidential Offering Memorandum 3(g)
Drag Along Notice 8
Employment, Confidential Information & Invention
Assignment Agreement 1(a)
Employee Stockholder's Trust 3(a)
Fair Market Value 1(a)
Holding Stock 7(a)
Offer 5
Offeror 5
Option Agreement Recitals
Options Recitals
Option Price 1(a)
Option Stock 3(a)
Other Employee Stockholders Recitals
Permitted Ripplewood/Holding Transferee 1(a)
Permitted Transferee 3(a)
Plan Recitals
Purchase Price 6(d)
Public Offering 1(a)
Restricted Period 4(a)
Ripplewood Holdings 2
SEC 3(e)
Securities Act 1(a)
Stock 3(a)
Tag-Along Notice 7
Termination Not for Cause 5(b)
Transfer 2(a)
WMC Recitals
<CAPTION>
Term Section
---- -------
<S> <C>
WMC Common Stock 1(a)
WMC Sale Tag-Along Notice 7
</TABLE>
Section 2. Common Stock; Issuance of Options. (a) Subject to the terms and
conditions hereof, Holding hereby agrees to issue and sell to the Employee
Stockholder, and the Employee
<PAGE>
4
Stockholder hereby agrees to subscribe for the number of shares of Common Stock
set forth opposite such Employee Stockholder's name on the signature page hereof
at a price of $0.50 per share in cash. The closing of such purchase and sale
shall take place at such time and place as is notified to the Employee
Stockholder (the "Closing Date"). On or prior to the Closing Date, the Employee
Stockholder shall deliver to Holding a check in an amount equal to the purchase
price for the Common Stock. Holding shall have no obligation to sell any shares
of Common Stock to any person who (i) is a resident or citizen of a state or
other jurisdiction in which the sale of the Common Stock to him or her would
constitute a violation of the securities or "blue sky" laws of such jurisdiction
or (ii) is not an employee of WMC on the date hereof.
(b) Subject to the terms and conditions hereinafter set forth and upon and
as of the Closing Date, Holding shall issue to the Employee Stockholder the
number of Options set forth opposite the Employee Stockholder's name on the
signature page hereof and the Parties shall execute and deliver to each other
copies of the Non-Qualified Stock Option Agreement concurrently with the
issuance of the Options.
Section 3. Employee Stockholder's Representations, Warranties and
Agreements. (a) The Employee Stockholder agrees and acknowledges that he or she
will not, directly or indirectly, offer, transfer, sell, assign, pledge,
hypothecate or otherwise dispose of (any such act being referred to herein as a
"transfer") any shares of Common Stock (whether purchased on the Closing Date or
acquired at any time thereafter) and, at the time of exercise, the Class A
common stock of WMC issuable upon exercise of the Options (the "Option Stock"
and, collectively with the Common Stock, the "Stock") unless such transfer
complies with Section 4 of this Agreement. If the Employee Stockholder is an
Affiliate, the Employee Stockholder also agrees and acknowledges that he or she
will not transfer any shares of Stock unless:
(i) the transfer is pursuant to an effective registration statement
under the Securities Act, and in compliance with applicable provisions of
state securities laws, (if otherwise permitted under the terms set forth
herein) or
(ii) (A) counsel for the Employee Stockholder (which counsel shall be
reasonably acceptable to WMC or Holding, as the case may be) shall have
furnished WMC or Holding, as the case may be, with an opinion, satisfactory
in form and substance to WMC or Holding, as the case may be, that no such
registration is required because of the availability of an exemption from
registration under the Securities Act and (B) if the Employee Stockholder
is a citizen or resident of any country other than the United States, or
the Employee Stockholder desires to effect any transfer in any such
country, counsel for the Employee Stockholder (which counsel shall be
reasonably satisfactory to WMC, in the case of Option Stock, or Holding, in
the case of Common Stock) shall have furnished WMC or Holding, as the case
may be, with an opinion or other advice satisfactory in form and substance
to WMC or Holding, as the case may be, to the effect that such transfer
will comply with the securities laws of such jurisdiction.
Notwithstanding the foregoing, WMC and Holding acknowledge and agree that
any of the following transfers are deemed to be in compliance with the
Securities Act and this Agreement and no opinion of counsel is required in
connection therewith: (x) a transfer made pursuant to
<PAGE>
5
Section 9 hereof, (y) a transfer upon the death of the Employee Stockholder to
his executors, administrators, testamentary trustees, legatees or beneficiaries
or a transfer to the executors, administrators, testamentary trustees, legatees
or beneficiaries of a person who has become a holder of Stock in accordance with
the terms of this Agreement, provided that it is expressly understood that any
such transferee shall be bound by the provisions of this Agreement and (z) a
transfer made after the Closing Date in compliance with the federal securities
laws to a trust or custodianship the beneficiaries of which may include only the
Employee Stockholder, his spouse or his lineal descendants (an "Employee
Stockholder's Trust"), provided that any such transfer under (x), (y) or (z) is
made expressly subject to this Agreement and that the transferee agrees in
writing to be bound by the terms and conditions hereof. The transferees of Stock
pursuant to (x), (y) and (z) who agree to be bound by the terms of this
Agreement are referred to as "Permitted Transferees".
(b) The certificate (or certificates) representing the Option Stock shall
bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED,
SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH
TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION
COMPLIES WITH THE PROVISIONS OF THE SUBSCRIPTION AND EMPLOYEE STOCKHOLDER'S
AGREEMENT DATED AS OF FEBRUARY 28, 2000 BETWEEN WESTERN MULTIPLEX
CORPORATION ("WMC"), WMC HOLDING CORP., THE EMPLOYEE STOCKHOLDER NAMED ON
THE FACE HEREOF AND RIPPLEWOOD PARTNERS, L.P. (A COPY OF WHICH IS ON FILE
WITH THE SECRETARY OF WMC)."
(c) The certificate (or certificates) representing the Common Stock shall
bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED,
SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH
TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION
COMPLIES WITH THE PROVISIONS OF THE SUBSCRIPTION AND EMPLOYEE STOCKHOLDER'S
AGREEMENT DATED AS OF FEBRUARY 28, 2000 BETWEEN WESTERN MULTIPLEX
CORPORATION, WMC HOLDING CORP. ("HOLDING"), THE EMPLOYEE STOCKHOLDER NAMED
ON THE FACE HEREOF AND RIPPLEWOOD PARTNERS, L.P. (A COPY OF WHICH IS ON
FILE WITH THE SECRETARY OF HOLDING)."
(d) The Employee Stockholder acknowledges that he or she has been advised
that (i) a restrictive legend in the form heretofore set forth shall be placed
on the certificates representing the Stock and (ii) a notation shall be made in
the appropriate records of WMC and/or Holding, as the case may be, indicating
that the Stock is subject to restrictions on transfer and appropriate stop-
transfer restrictions will be issued to the applicable transfer agent with
respect to the Stock. If the Employee Stockholder is an Affiliate, the Employee
Stockholder also acknowledges that (1) the Stock must be held indefinitely and
the Employee Stockholder must continue to bear the economic risk of the
investment in the Stock unless it is subsequently registered under the
<PAGE>
6
Securities Act or an exemption from such registration is available, (2) when and
if shares of Stock may be disposed of without registration in reliance on Rule
144 of the rules and regulations promulgated under the Securities Act, such
disposition can be made only in limited amounts in accordance with the terms and
conditions of such Rule and (3) if the Rule 144 exemption is not available,
public sale without registration will require compliance with some other
exemption under the Securities Act.
(e) (i) If any shares of Option Stock are to be disposed of in accordance
with Rule 144 under the Securities Act or otherwise, the Employee Stockholder
shall promptly notify WMC of such intended disposition and shall deliver to WMC
at or prior to the time of such disposition such documentation as WMC may
reasonably request in connection with such sale, and, in the case of a
disposition pursuant to Rule 144, shall deliver to WMC an executed copy of any
notice on Form 144 required to be filed with the Securities and Exchange
Commission (the "SEC").
(ii) If any shares of Common Stock are to be disposed of in accordance with
Rule 144 under the Securities Act or otherwise, the Employee Stockholder shall
promptly notify Holding of such intended disposition and shall deliver to
Holding at or prior to the time of such disposition such documentation as
Holding may reasonably request in connection with such sale and, in the case of
a disposition pursuant to Rule 144, shall deliver to Holding an executed copy of
any notice on Form 144 required to be filed with the SEC.
(f) The Employee Stockholder agrees that, if any shares of WMC Common Stock
are offered to the public pursuant to an effective registration statement under
the Securities Act (other than registration of securities issued under an
employee plan), the Employee Stockholder will not effect any public sale or
distribution of any shares of the Stock not covered by such registration
statement from the time of the receipt of a notice from WMC that WMC has filed
or imminently intends to file such registration statement to, or within 180 days
after, the effective date of such registration statement, unless otherwise
agreed to in writing by WMC.
(g) The Employee Stockholder represents and warrants that (i) he has
received and reviewed the document(s) comprising the Confidential Information
Memorandum, dated December 21, 1999 (the "Confidential Information Memorandum"),
relating to the Stock and Options, and the documents referred to therein,
certain of which documents set forth the rights, preferences, and restrictions
relating to the Stock and Options, and (ii) he or she has been given the
opportunity to obtain any additional information or documents and to ask
questions and receive answers about such information, WMC, Holding and the
business and prospects of WMC and Holding which he or she deems necessary to
evaluate the merits and risks to his or her investment in the Stock, and to
verify the Confidential Information Memorandum and the information contained in
the document(s) received as indicated in this Section 3(g), and he or she has
relied solely on such information.
(h) The Employee Stockholder further represents and warrants that (i) his
or her financial condition is such that he or she can afford to bear the
economic risk of holding the Stock for an indefinite period of time and has
adequate means for providing for his or her current needs and personal
contingencies, (ii) he or she can afford to suffer a complete loss of his or her
investment
<PAGE>
7
in the Stock, (iii) he or she understands and has taken cognizance of all risk
factors related to the purchase of the Stock (including, but not limited to,
those set forth in the Confidential Information Memorandum) and (iv) his or her
knowledge and experience in financial and business matters are such that he is
capable of evaluating the merits and risks of his or her purchase of Stock as
contemplated by this Agreement.
(i) The Employee Stockholder has executed and delivered to WMC the
Employment, Confidential Information and Invention Assignment Agreement.
Section 4. Restrictions on Transfer. Except for transfers to Permitted
Transferees permitted by clauses (x), (y) and (z) of Section 3(a) or a sale of
shares of Stock pursuant to Section 9 of this Agreement, the Employee
Stockholder agrees that he or she will not transfer any shares of Stock at any
time prior to the third anniversary of the Closing Date (the "Restricted
Period"). The Employee Stockholder further agrees not to transfer any Options,
except as expressly permitted by this Agreement. No transfer in violation of
this Section 4 shall be made or recorded on the books of WMC or Holding and any
such transfer shall be void and of no effect.
Section 5. Right of First Refusal. If, following the Restricted Period, but
prior to a Public Offering, the Employee Stockholder or any Permitted Transferee
receives a bona fide offer to purchase any or all of his shares of Stock (the
"Offer") from a third party (the "Offeror") which the Employee Stockholder or
any such Permitted Transferee wishes to accept, the Employee Stockholder shall
cause the Offer to be reduced to writing and shall notify WMC, in the case of an
Offer to purchase Option Stock, or Holding, in the case of an Offer to purchase
Common Stock, in writing of his or her wish to accept the Offer. The Employee
Stockholder's notice shall contain an irrevocable offer to sell such shares of
Stock to WMC or Holding, as the case may be (in the manner set forth below), at
a purchase price equal to the price contained in, and on the same terms and
conditions of, the Offer, and shall be accompanied by a copy of the Offer (which
shall identify the Offeror). At any time within 30 days after the date of the
receipt by WMC or Holding of the Employee Stockholder's notice, WMC or Holding,
as the case may be, shall have the right and option to elect to purchase, or to
arrange for a third party (including WMC, Holding or Ripplewood) to elect to
purchase, all of the shares of Stock covered by the Offer either (i) at the same
price and on the same terms and conditions as the Offer or (ii) if the Offer
includes any consideration other than cash, then at the sole option of WMC or
its designee or Holding or its designee, as the case may be, at the equivalent
all cash price, determined in good faith by WMC's or Holding's, as the case may
be, Board of Directors, by delivering notice of such election to the Employee
Stockholder within such 30-day period. If WMC or Holding, as the case may be,
exercises such right, it shall deliver a certified bank check or checks in the
appropriate amount (and any such non-cash consideration to be paid) to the
Employee Stockholder or any Permitted Transferee (as the case may be) at the
principal office of WMC against delivery of certificates or other instruments
representing the shares of Stock so purchased, appropriately endorsed by the
Employee Stockholder and the Permitted Transferee, within 10 business days
following its election. If at the end of the 30-day period, WMC or Holding has
not notified the Employee Stockholder of its election in the manner set forth
above, the Employee Stockholder and the Permitted Transferee may, during the
succeeding 60-day period, sell not less than all of the shares of Stock covered
by the Offer to the Offeror at a price and on terms no less
<PAGE>
8
favorable to the Employee Stockholder or the Permitted Transferee (as the case
may be) than those contained in the Offer. Promptly after such sale, the
Employee Stockholder or the Permitted Transferee (as the case may be) shall
notify WMC or Holding, as the case may be, of the consummation thereof and shall
furnish such evidence of the completion and time of completion of such sale and
of the terms thereof as may reasonably be requested by WMC or Holding. If, at
the end of 60 days following the expiration of the 30-day period for WMC or
Holding to purchase the Stock, the Employee Stockholder or the Permitted
Transferee (as the case may be) has not completed the sale of such shares of
Stock as aforesaid, all the restrictions on sale, transfer or assignment
contained in this Agreement shall again be in effect with respect to such shares
of Stock.
Section 6. Call Rights. (a) If, prior to the end of the Restricted Period,
(x) the Employee Stockholder's active employment with WMC (and/or, if
applicable, its subsidiaries) is terminated by WMC for Cause, (y) the
beneficiaries of an Employee Stockholder's Trust shall include any person or
entity other than the Employee Stockholder, his spouse or lineal descendants, or
(z) the Employee Stockholder (and any Permitted Transferees) shall effect a
transfer of any shares of Stock other than as permitted in this Agreement, then:
(i) Holding shall have the right to purchase all or any portion of the
Common Stock then held by the Employee Stockholder (and any Permitted
Transferees) for a purchase price equal to the lesser of the Fair Market
Value per share and the Book Value per share;
(ii) WMC shall have the right to purchase all or any portion of the
Option Stock then held by the Employee Stockholder (and any Permitted
Transferees) for a purchase price equal to the lesser of the Option Price
and the Book Value per Option; and
(iii) All Options shall terminate without any payment.
(b) If, prior to the expiration of the Restricted Period, the Employee
Stockholder's active employment with WMC (and/or, if applicable, its
subsidiaries) ceases for any reason other than termination by WMC for Cause or
termination due to the death or permanent disability (including if the Employee
Stockholder quits or resigns), then:
(i) Holding shall have the right to purchase all or any portion of the
Common Stock then held by the Employee Stockholder (and any Permitted
Transferees) for a purchase price equal to the Fair Market Value per share;
(ii) WMC shall have the right to purchase all or any portion of vested
Options then held by the Employee Stockholder (and any Permitted
Transferees) at a purchase price equal to the Fair Market Value per vested
Option less the Option Price; provided that, if WMC exercises such
repurchase right with respect to any Option that would have a repurchase
price under this clause (b)(ii) of less than the Option Price at the time
of such exercise, then such Options shall be canceled without any payment;
<PAGE>
9
(iii) WMC shall have the right to purchase all or any portion of the
Option Stock then held by the Employee Stockholder (and any Permitted
Transferees) at a purchase price equal to the Fair Market Value per share;
and
(iv) all unvested Options shall terminate without any payment
therefor.
(c) If the purchaser dies or becomes permanently disabled while still an
employee of WMC (and/or, if applicable, its subsidiaries), then (i) Holding may
purchase all or any portion of the shares of Common Stock then held by the
Employee Stockholder (and any Permitted Transferees) at a purchase price equal
to the Fair Market Value per share; and (ii) WMC may purchase all of the Option
Stock then held by the Employee Stockholder (and any Permitted Transferees) at a
purchase price equal to the Fair Market Value per share less the Option Price
per share.
(d) The price at which Stock or Options are purchased by WMC or Holding
pursuant to Sections 5(a), 5(b) and 5(c) is referred to as the "Purchase Price".
Any right to repurchase pursuant to Sections 5(a), 5(b) and 5(c) is referred to
as a "Call Right".
(e) Absent the extension of a Call Right on account of a default under any
indebtedness agreement or violation of a statute as described in Section 5(f)
below, WMC or Holding, as the case may be, shall have a period of sixty (60)
days from the date of the event giving rise to the Call Right (or if later,
after the discovery of an impermissible transfer) in which to give notice in
writing to the Employee Stockholder of its election to exercise its Call Rights
pursuant to Sections 5(a), 5(b) or 5(c) (a "Call Notice"); provided that, in the
case of the Employee Stockholder's permanent disability, such 60-day exercise
period shall be extended to twelve (12) months after the event giving rise to
the Call Right; and provided further, that any Call Right available in such case
must be exercised within such 12-month period.
(f) A Call Right shall be extended if WMC or Holding is, or would be as a
result of the payment of the Purchase Price, in default under any indebtedness
agreement or in violation of a statute. Any Call Right may be delayed upon such
default or violation for twelve (12) months thereafter; provided however, that,
if in connection with an event giving rise to a Call Right pursuant to Section
5(b), the exercise by WMC or Holding, as the case may be, of its Call Right is
delayed by reason of such default, then and only then will exercisable Options
be deemed to continue to be exercisable for the purposes of the purchase
pursuant to the Call Right and the Purchase Price for the Stock and Options will
be the higher of: (i) the Purchase Price determined as of the month end prior to
termination and (ii) the Purchase Price determined as of the month end prior to
the delayed purchase. In connection with a termination for Cause or any other
event giving rise to a Call Right pursuant to Section 6(a), the Purchase Price
for the Stock and Options shall be the lesser of (i) the Purchase Price
determined as of the month end prior to termination and (ii) the Purchase Price
determined as of the month end prior to the delayed purchase. Any Call Right may
only be delayed upon such default or violation for twelve (12) months
thereafter.
(g) The completion of any purchase pursuant to this Section 5 shall take
place at the principal office of WMC on the tenth business day after the giving
of the Call Notice. The applicable
<PAGE>
10
Purchase Price shall be paid by delivery to the Employee Stockholder (or the
Permitted Transferee, as the case may be) of a certified bank check or checks in
the appropriate amount payable to the order of the Employee Stockholder against
delivery of certificates or other instruments representing the Stock so
purchased and appropriate documents canceling the Options so terminated,
appropriately endorsed or executed by the Employee Stockholder (or the Permitted
Transferee, as the case may be) or the Employee Stockholder's or Permitted
Transferee's authorized representative.
(h) Subject to Section 5(f), the Purchase Price shall be calculated as of
the last day of the month preceding the month in which the event giving rise to
the Call Right occurs.
(i) In determining the Purchase Price, appropriate adjustments shall be
made for any share dividends, splits, combinations, recapitalizations or any
other adjustment in the number of outstanding common stock in order to maintain,
as nearly as practicable, the intended operation of the provisions of this
Section 6.
Section 7. Tag-Along Rights. (a) If prior to a Public Offering, Ripplewood
("Ripplewood") desires to transfer a majority or all of its shares of common
stock of Holding ("Holding Stock") to a prospective third party purchaser other
than to a Permitted Ripplewood/ Holding Transferee, Ripplewood shall, as a
condition to such transfer, (A) provide a notice to the Employee Stockholder in
writing (a "Tag-Along Notice") of the material terms of the proposed transfer at
least 14 days prior to such transfer and (B) permit the Employee Stockholder (or
cause the Employee Stockholder to be permitted) to sell (either to the
prospective transferee or to another financially reputable transferee reasonably
acceptable to the Employee Stockholder) the same portion of its outstanding
shares of Common Stock and Option Stock on the same terms and conditions,
subject to the same agreements and at the same price as the sale by Ripplewood
(in each case subject to Section 7(c)), which sale shall take place on the date
Ripplewood's shares of Holding Stock (or such portion) are transferred to such
transferee. To calculate the number of outstanding shares of Common Stock and
Option Stock that the Employee Stockholder can sell for the purposes of this
Section 7(a), WMC and Holding shall be treated as a single entity such that the
Employee Stockholder will be able to sell the product of (x) a fraction, the
numerator of which is the number of shares of common stock of Holding being sold
by Ripplewood, and the denominator of which is the total number of shares of
common stock of Holding owned by Ripplewood, multiplied by (y) the total number
of shares of Common Stock and Option Stock owned by the Employee Stockholder
(e.g., if Ripplewood is selling 75% of its interest in common stock of Holding,
the Employee Stockholder will be able to include 75% of its total ownership of
Common Stock and Option Stock, calculated as though WMC and Holding are a single
entity). Should the Employee Stockholder exercise his or her rights pursuant to
this Section 7(a), the Employee Stockholder shall be required to transfer Common
Stock and Option Stock held by him or her in the following order of priority:
(1) first, shares of Common Stock (until the Employee Stockholder holds no
shares of Common Stock), and (2) second, Option Stock (until the Employee
Stockholder holds no shares of Option Stock). The Employee Stockholder shall
have ten days from the date of receipt of a Tag-Along Notice to exercise his or
her right to sell pursuant to this Section 7(a) by delivering written notice to
Ripplewood of his or
<PAGE>
11
her intent to exercise such right. The Employee Stockholder's right to sell in
such transaction pursuant to the above shall terminate if not exercised within
such ten-day period.
(b) If Holding sells a majority or all of its interest in WMC to a
prospective third party purchaser other than a Permitted Ripplewood/Holding
Transferee, Holding shall, as a condition to such transfer, (A) provide a notice
to the Employee Stockholder in writing (a "WMC Sale Tag-Along Notice") of the
material terms of the proposed transfer at least 14 days prior to such transfer
and (B) permit the Employee Stockholder (or cause the Employee Stockholder to be
permitted) to sell (either to the prospective transferee or to another
financially reputable transferee reasonably acceptable to the Employee
Stockholder) a number of its outstanding shares of Option Stock equal to (x) the
percentage of the outstanding shares of WMC Common Stock owned by Holding that
are being sold by Holding (e.g., if there are 2,000 shares of WMC Common Stock
outstanding of which Holding owns 1,800 shares and Holding is selling 180
shares, the percentage under this clause (x) will be 10%) multiplied by (y) the
number of shares of Option Stock owned by the Employee Stockholder. Subject to
Section 7(c), any such sale shall be on the same terms and conditions, subject
to the same agreements and at the same price as the sale by Holding, which sale
shall take place on the date Holding's shares of WMC Common Stock (or such
portion) are transferred to such transferee (or transferees). The Employee
Stockholder shall have ten days from the date of receipt of a WMC Sale Tag-Along
Notice to exercise his or her right to sell pursuant to this Section 7 by
delivering written notice to Holding of his or her intent to exercise such
right. The Employee Stockholder's right to sell in such transaction pursuant to
the above shall terminate if not exercised within such ten-day period.
(c) The Employee Stockholder shall not have the right to transfer any
Options pursuant to this Section 7.
Section 8. Drag-Along Rights. (i) If at any time Ripplewood desires to
transfer all or any portion of its shares of Holding Stock to any third party
purchaser(s), other than Permitted Ripplewood/Holding Transferees, or Holding
desires to transfer all or any portion of its shares of WMC Common Stock to any
third party purchaser(s), other than Permitted Ripplewood/Holding Transferees,
Ripplewood shall have the right to require that the Employee Stockholder and its
Permitted Transferees transfer the same portion of the Employee Stockholder's
and its Permitted Transferees' shares of Common Stock and Option Stock to such
third party purchaser(s) on the same terms and conditions, subject to the same
agreements and at the same price as the sale by Ripplewood. To calculate the
number of outstanding shares of Common Stock and Option Stock that the Employee
Stockholder and its Permitted Transferees can be required to sell pursuant to
this Section 8, WMC and Holding shall be treated as a single entity such that
the Employee Stockholder and its Permitted Transferees (considered as a single
stockholder for this purpose) can be required to sell the product of (x) a
fraction, the numerator of which is the number of shares of Holding Stock being
sold by Ripplewood, and the denominator of which is the total number of shares
of Holding Stock owned by Ripplewood, multiplied by (y) the total number of
shares of Common Stock and Option Stock owned by the Employee Stockholder and
its Permitted Transferees (e.g. if Ripplewood is selling 75% of its interest in
Holding Stock, Ripplewood will have the right to require that the Employee
Stockholder and its Permitted Transferees transfer 75% of their total aggregate
ownership of Common Stock and Option Stock, calculated as though WMC and Holding
are a single entity). Should Ripplewood exercise its
<PAGE>
12
rights pursuant to this Section 8, the Employee Stockholder and its Permitted
Transferees shall be required to transfer Common Stock and Option Stock held by
them in the following order of priority: (1) first, shares of Common Stock
(until the Employee Stockholder and its Permitted Transferees hold no shares of
Common Stock), and (2) second, Option Stock (until the Employee Stockholder and
its Permitted Transferees hold no Option Stock). Ripplewood shall provide a
notice to the Employee Stockholder in writing (a "Drag-Along Notice") of such
sale at least 10 days prior to such transfer, and the Drag-Along Notice shall
identify such third party purchaser(s), all material terms of the sale and the
date of closing. Upon the closing of any sale by Ripplewood of all (or such
portion) of its shares of Holding Stock or any sale by Holding of WMC Common
Stock, as described in a Drag-Along Notice, such third party purchaser(s) shall
pay to the Employee Stockholder and/or its Permitted Transferees, as the case
may be, the consideration payable to the Employee Stockholder and/or its
Permitted Transferees, as the case may be, in connection with such sale of all
(or such portion) of its shares of Common Stock and Option Stock, and the
Employee Stockholder's and its Permitted Transferee's shares of Common Stock and
Option Stock (or such portion) shall be deemed transferred to such third party
purchaser(s).
Section 9. Sale Participation Rights. At any time following the expiration
of the period ending 180 days after a Public Offering, the Employee Stockholder
and its Permitted Transferees will have the right to sell all or any portion of
the Stock held by such Employee Stockholder and its Permitted Transferees in any
registered offering of WMC Common Stock initiated by WMC, Holding or Ripplewood.
Such registration rights will be on customary terms and conditions (including,
without limitation, customary cut back and lock-up provisions) established in
good faith by WMC's or Holding's Board of Directors and Ripplewood and notified
to the Employee Stockholder and the Other Employee Stockholders.
Section 10. Voting Agreement. (a) From and after the Closing Date, the
Employee Stockholder and its Permitted Transferees: (i) shall vote all of the
shares of Stock held by him or her (including, without limitation, shares
acquired after the date hereof) in the same manner as the shares of Holding held
by Ripplewood (in the case of Holding Stock) or Holding (in the case of WMC
Common Stock) are voted on all matters acted upon at any annual or special
meeting of Stockholders or by written consent in lieu of a meeting and (ii)
irrevocably constitutes and appoints the person who is at the time the Senior
Managing Director of Ripplewood Holdings (or his or her designee, with full
power of substitution) his proxy to vote all of the shares of Common Stock held
by the Employee Stockholder in the same manner as the shares of Holding Stock
held by Ripplewood and appoints the person who is at the time the Chief
Executive Officer of WMC (or his or her designee, with full power of
substitution) his proxy to vote all of the shares of Option Stock held by the
Employee Stockholder and its Permitted Transferees in the same manner as the
shares of WMC Common Stock held by Holding are voted on all matters acted upon
at any annual or special meeting of stockholders or by written consent in lieu
of a meeting; provided that this Section 10 shall be inapplicable with respect
to any matters which would both adversely affect the rights of shares of Stock
held by the Employee Stockholder (or its Permitted Transferees) and treat the
Employee Stockholder (or its Permitted Transferees) differently from other
holders of shares of WMC Common Stock or Holdings Stock (it being understood
that a conversion of Holding to a limited liability company and a merger or
other
<PAGE>
13
business combination of Holding and WMC will not be deemed to adversely affect
the rights of the Employee Stockholder (or its Permitted Transferees) and the
Employee Stockholder hereby agrees that his or her shares of Common Stock will
be voted in favor of any such action). The voting agreements and proxies granted
pursuant to this Section 10 are coupled with an interest and shall be valid for
the term of this Agreement. The Employee Stockholder represents that he or she
has not granted and is not party to any proxy, voting trust or other agreement
which in each case is inconsistent with or conflicts with the provisions of this
Agreement, and the Employee Stockholder shall not grant any proxy or become a
party to any voting trust or other agreement which in each case is inconsistent
with or conflicts with the provisions of this Agreement.
Section 11. Rights to Negotiate Repurchase Price. Nothing in this Agreement
shall be deemed to restrict or prohibit WMC or Holding from purchasing Stock or
Options from the Employee Stockholder or its Permitted Transferees (or any other
Employee Stockholder), at any time, upon such terms and conditions, and for such
price, as may be mutually agreed upon between the Parties, whether or not at the
time of such purchase circumstances exist which specifically grant WMC or
Holding the right to purchase Stock or Options.
Section 12. Covenant Regarding 83(b) Election. Except as WMC may otherwise
agree in writing, the Employee Stockholder hereby covenants and agrees that he
will make an election provided pursuant to Treasury Regulation 1.83-2 with
respect to shares of Option Stock to be acquired upon each exercise of the
Employee Stockholder's Options; and the Employee Stockholder further covenants
and agrees that he or she will furnish WMC with copies of the forms of election
the Employee Stockholder files and within 30 days after each exercise of the
Employee Stockholder Options and with evidence that each such election has been
filed in a timely manner.
Section 13. Notice of Change of Beneficiary. Immediately prior to any
transfer of shares of Stock to an Employee Stockholder's Trust, the Employee
Stockholder shall provide WMC and Holding with a copy of the instruments
creating the Employee Stockholder's Trust and with the identity of the
beneficiaries of the Employee Stockholder's Trust. The Employee Stockholder
shall notify WMC and Holding as soon as practicable prior to any change in the
identity of any beneficiary of the Employee Stockholder's Trust.
Section 14. Recapitalizations, etc. The provisions of this Agreement shall
apply, to the full extent set forth herein with respect to Stock or the Options,
to any and all shares of capital shares of WMC and Holding or any capital stock,
partnership units or any other security evidencing ownership interests in any
successor or assign of WMC and Holding (whether by merger, consolidation, sale
of assets or otherwise) which may be issued in respect of, in exchange for, or
substitution of Stock or Options, by reason of any share dividend, split,
reverse split, combination, recapitalization, liquidation, reclassification,
merger, consolidation or otherwise.
Section 15. State Securities Laws. WMC and Holding hereby agree to use
their best efforts to comply with all state securities or "blue sky" laws which
might be applicable to the sale of Stock and the issuance of the Options to the
Employee Stockholder.
<PAGE>
14
Section 16. Binding Effect. The provisions of this Agreement shall be
binding upon and accrue to the benefit of the parties hereto and their
respective heirs, legal representatives, successors and assigns. In the case of
a transferee permitted under Section 3(a) hereof, such transferee shall be
deemed the Employee Stockholder hereunder; provided, however, that no transferee
(including without limitation, transferees referred to in Section 3(a) hereof)
shall derive any rights under this Agreement unless and until such transferee
has delivered to WMC and Holding a valid undertaking and becomes bound by the
terms of this Agreement.
Section 17. Amendment. This Agreement may be amended only by a written
instrument signed by the Parties hereto. Notwithstanding the foregoing, this
Agreement may be amended without the consent of any party hereto other than WMC
to provide for any change in the corporate structure of WMC, including its
conversion to a limited liability company or a merger or other business
combination of Holding and WMC.
Section 18. Closing. Except as otherwise provided herein, the closing of
each purchase and sale of Stock and the payment of the Purchase Price by WMC or
Holding upon exercise of a Call Right, if any, pursuant to this Agreement shall
take place at the principal office of WMC on the tenth business day following
delivery of the notice by any Party of its exercise of the right to purchase or
sell such Stock or Options hereunder, as the case may be.
Section 19. Applicable Law. The laws of the state of Delaware shall govern
the interpretation, validity and performance of the terms of this Agreement. Any
suit, action or proceeding against the Employee Stockholder, WMC or Holding,
with respect to this Agreement, or any judgment entered by any court in respect
of any thereof, may be brought in any court of competent jurisdiction in the
State of Delaware and the Parties each hereby submit to the exclusive
jurisdiction of such courts for the purpose of any such suit, action, proceeding
or judgment. The Parties hereby irrevocably waive any objections which either of
them may now or hereafter have to the laying of the venue of any suit, action or
proceeding arising out of or relating to this Agreement brought in any court of
competent jurisdiction in the State of Delaware, and hereby further irrevocably
waive any claim that any such suit, action or proceeding brought in any such
court has been brought in any inconvenient forum. No suit, action or proceeding
against any of the Parties with respect to this Agreement may be brought in any
court, domestic or foreign, or before any similar domestic or foreign authority
other than in a court of competent jurisdiction in the State of Delaware, and
the Parties hereby irrevocably waive any right which any of them may otherwise
have had to bring such an action in any other court, domestic or foreign, or
before any similar domestic or foreign authority. Each Party hereto hereby
irrevocably and unconditionally waives trial by jury in any legal action or
proceeding in relation to this Agreement and for any counterclaim therein.
Section 20. Assignability of Certain Rights by WMC, Holding and Ripplewood.
WMC, Holding and Ripplewood shall have the right to assign any or all of their
rights or obligations to purchase Stock or Options pursuant to this Agreement;
provided, however, that such assigning party shall remain obligated to perform
its obligations notwithstanding such assignment in the event that such assignee
fails to perform the obligations so assigned to it. The rights and obligations
of
<PAGE>
15
WMC, Holding and Ripplewood under this Agreement shall inure to the benefit of,
and be binding upon, any of their respective successors.
Section 21. Conflicts with Other Agreements. In the event that any
provision of this Agreement conflicts in any way with the Plan or the provisions
of any Stock Option Agreement to which the Employee Stockholder is a party or
bound, the provisions of this Agreement shall govern.
Section 22. Miscellaneous. (a) In this Agreement all references to
"dollars" or "$" are to United States dollars.
(b) If any provision of this Agreement shall be declared illegal, void or
unenforceable by any court of competent jurisdiction, the other provisions shall
not be affected, but shall remain in full force and effect.
(c) WMC and Holding shall have the right to deduct from any cash payment
made under this Agreement to the Employee Stockholder any federal, state or
local income or other taxes required by law to be withheld with respect to such
payment.
Section 23. Notices. All notices and other communications provided for
herein shall be in writing and shall be deemed to have been duly given if
delivered by hand (whether by overnight courier or otherwise) or sent by
registered or certified mail, return receipt requested, postage prepaid, or by
overnight delivery or telecopy, to the Party to whom it is directed:
(a) If to WMC, to it at the following address:
Western Multiplex Corporation
1196 Borregas Avenue
Sunnyvale, CA 94089
Attn: Kim Viera
Facsimile: 408-542-5300
<PAGE>
16
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.
WESTERN MULTIPLEX CORPORATION
By: /s/ Jeffrey M. Hendren
--------------------------
Name: Jeffrey M. Hendren
Title: Vice President
WMC HOLDING CORP.
By: /s/ Jeffrey M. Hendren
--------------------------
Name: Jeffrey M. Hendren
Title: Vice President
RIPPLEWOOD PARTNERS, L.P.
By: /s/ Jeffrey M. Hendren
--------------------------
Name: Jeffrey M. Hendren
Title: Principal
EMPLOYEE STOCKHOLDER 135,000
Number of shares of Class A Common Stck of
/s/ Nancy B. Huber WMC Holding Corp. to be purchased
- ------------------------------
Name: Nancy B. Huber
Address: 190,000
1024 Hazelwood Ave. Number of Assisted Shares to be guaranteed by
San Jose, CA 95525 Western Multiplx Corporation
115,000
Number of Options to purchase shares of
Class A Common Stock of Western Multiplex
Corp. being granted.
<PAGE>
17
IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto.
WESTERN MULTIPLEX CORPORATION
By: /s/ Jeffrey M. Hendren
--------------------------
Name: Jeffrey M. Hendren
Title: Vice President
NANCY HUBER Number of Shares subject to the Time Option:
Optionee Name (Print)
95,000
/s/ Nancy Huber Number of Shares subject to the 5x
- ------------------------- Performance Option:
Optionee Signature
6,666
Number of Shares subject to the 10x
1024 Hazlewood Ave. Performance Option:
San Jose, CA, 95125
Optionee's Address 13,334
Aggregate Number of Shares subject to the
Option:
115,000
Optionee's Taxpayer
Identification Number:
392 74 8166
<PAGE>
EXHIBIT 10.7
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement") dated as of May 2, 2000 by and
between Western Multiplex Corporation, a Delaware Company (the "Company") and
Frederick Corsentino (the "Executive").
WHEREAS, the Company considers it essential to its best interests and the
best interests of its stockholders to foster the continued employment of
Executive by the Company during the term of this Agreement and Executive is
willing to accept and continue Executive's employment on the terms hereinafter
set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein and for other good and valuable consideration, the parties agree as
follows:
1. Term of Employment; Executive Representation.
--------------------------------------------
a. Employment Term. Executive's term of employment under this
---------------
Agreement shall commence on the date hereof and, subject to the terms hereof,
Executive and the Company agree and acknowledge that Executive's employment with
the Company constitutes "at-will" employment and that this Agreement may be
terminated at any time by the Company or Executive; provided, however, that any
--------- -------
termination of employment by Executive (other than for death or Permanent
Disability) may only be made upon 90 days prior written notice to the Company.
b. Executive Representation. Executive hereby represents to the
------------------------
Company that the execution and delivery of this Agreement by Executive and the
Company and the performance by Executive of the Executive's duties hereunder
shall not constitute a breach of, or otherwise contravene, the terms of any
employment agreement or other agreement or policy to which Executive is a party
or otherwise bound.
2. Position.
--------
a. While employed hereunder, Executive shall serve as the
Company's Vice President of Sales. In such position, Executive shall have such
duties and authority as shall be determined from time to time by the chief
operating officer of the Company (or his designee) (the "COO").
b. While employed hereunder, Executive will devote Executive's
full business time and best efforts to the performance of Executive's duties
hereunder and will not engage in any other business, profession or occupation
for compensation or otherwise which would conflict with the rendition of such
services either directly or indirectly, without the prior written consent of the
COO; provided that nothing herein shall preclude Executive from continuing to
--------
serve on the board of directors or trustees of any business corporation or any
charitable organization on which he currently serves and which is identified on
Exhibit A hereto
<PAGE>
2
or, subject to the prior approval of the COO, from accepting appointment to any
additional directorships or trusteeships, provided in each case, and in the
aggregate, that such activities do not interfere with the performance of
Executive's duties hereunder or conflict with Section 8.
3. Base Salary. While employed hereunder, the Company shall pay
-----------
Executive a base salary (the "Base Salary") at the annual rate of $150,000,
payable in regular installments in accordance with the Company's usual payment
practices. Executive shall be entitled to such increases in Executive's Base
Salary, if any, as may be determined from time to time in the sole discretion of
the Board.
4. Commission; Annual Bonus.
------------------------
a. Commission. With respect to each calendar year while employed
----------
hereunder, Executive shall be eligible to earn a sales commission (a
"Commission") at an annual rate of $100,000, based upon Executive's achievement
of certain sales quota, as established by the Board (or a designated committee
thereof). The Commission shall be payable quarterly, annually, or pursuant to
such other schedule as the Board (or its designated committee) may in its
discretion determine, but in no event shall such Commission be payable less
frequently than on an annual basis.
b. Annual Bonus. With respect to each calendar year while employed
------------
hereunder, Executive shall be eligible to earn an annual bonus award (an "Annual
Bonus") pursuant to an annual incentive plan to be established by the Board.
The Annual Bonus shall be payable in accordance with the terms of such incentive
plan.
5. Employee Benefits. The Company shall provide Executive during
-----------------
the term of his employment hereunder with coverage under all employee pension
and welfare benefit programs, plans and practices in accordance with the terms
thereof, which the Company generally makes available to its senior executives.
Executive shall also be entitled to such number of paid vacation and sick leave
in each calendar year as established under the Company's policies as in effect
from time to time, which shall be taken at such times as are consistent with
Executive's responsibilities hereunder.
6. Business Expenses. Executive is authorized to incur reasonable
-----------------
expenses in carrying out his duties and responsibilities under this Agreement,
including, without limitation, expenses for travel and similar items related to
such duties and responsibilities. The Company will reimburse Executive for all
such expenses upon presentation by Executive from time to time of appropriately
itemized and approved (consistent with the Company's policy) accounts of such
expenditures.
7. Termination. The Executive's employment hereunder may be
-----------
terminated by either party at any time and for any reason; provided that
--------
Executive will be required to give the Company at least 90 days advance written
notice of any resignation of Executive's employment. Notwithstanding any other
provision of this Agreement, the provisions of this
<PAGE>
3
Section 7 shall exclusively govern Executive's rights upon termination of
employment with the Company and its affiliates.
a. By the Company For Cause
------------------------
(i) The Executive's employment hereunder may be terminated by the
Company for Cause (as defined below) or upon 90 days prior written notice, by
Executive without Good Reason.
(ii) For purposes of this Agreement, "Cause" shall mean (i) the
Executive's willful and continued failure to perform his or her duties with
respect to the Company or its subsidiaries after demand by his or her superior
for substantial performance is made or delivered, (ii) willful misconduct by the
Executive involving dishonesty or breach of trust in connection with the
Executive's employment, (iii) indictment for any felony or misdemeanor involving
moral turpitude, (iv) any material breach of the Executive's restrictive
covenants as provided in Section 8 of this Agreement, or (v) violation of any
written Company policy.
(iii) If Executive's employment is terminated by the Company for
Cause or by Executive without Good Reason, Executive shall be entitled to
receive:
(A) the Base Salary through the date of termination;
(B) any Annual Bonus and/or Commission earned but unpaid as of
the date of termination for any previously completed calendar year;
(C) reimbursement for any unreimbursed business expenses properly
incurred by Executive in accordance with Company policy prior to the
date of Executive's termination; and
(D) such Employee Benefits, if any, as to which Executive may be
entitled under the employee benefit plans of the Company (the amounts
described in clauses (A) through (D) hereof being referred to as the
"Accrued Rights").
Following such termination of Executive's employment by the Company
for Cause, except as set forth in this Section 7(a), Executive shall have no
further rights to any compensation or any other benefits under this Agreement.
b. Disability or Death.
-------------------
(i) The Executive's employment hereunder shall terminate upon
Executive's death and if Executive becomes physically or mentally incapacitated
and is therefore unable for a period of six (6) consecutive months or for an
aggregate of nine (9) months in any twenty-four (24) consecutive month period to
perform Executive's duties (such incapacity is hereinafter referred to as
"Disability"). Any question as to the existence of the Disability of
<PAGE>
4
Executive as to which Executive and the Company cannot agree shall be determined
in writing by a qualified independent physician mutually acceptable to Executive
and the Company. If Executive and the Company cannot agree as to a qualified
independent physician, each shall appoint such a physician and those two
physicians shall select a third who shall make such determination in writing.
The determination of Disability made in writing to the Company and Executive
shall be final and conclusive for all purposes of the Agreement.
(ii) Upon termination of Executive's employment hereunder for
either Disability or death, Executive or Executive's estate (as the case may be)
shall be entitled to receive:
(A) the Accrued Rights; and
(B) a pro rata portion of any Annual Bonus and/or Commission that
the Executive would have been entitled to receive pursuant to Section
4 hereof in such year based upon the percentage of the calendar year
that shall have elapsed through the date of Executive's termination of
employment, payable when such Annual Bonus and/or Commission would
have otherwise been payable had the Executive's employment not
terminated.
Following Executives termination of employment due to death or
Disability, except as set forth in this Section 7(b), Executive shall have no
further rights to any compensation or any other benefits under this Agreement.
c. By the Company Without Cause or Resignation by Executive for
------------------------------------------------------------
Good Reason.
- -----------
(i) The Executive's employment hereunder may be terminated by the
Company without Cause or by Executive's resignation for Good Reason.
(ii) For purposes of this Agreement, "Good Reason" shall mean:
(x) a reduction in the Executive's base salary (other than any general salary
reduction affecting at least the majority of salaried employees of the Company),
(y) a material and adverse reduction in the Executive's duties and
responsibilities, or (z) a transfer of the Executive's primary workplace by more
than fifty (50) miles from the current workplace, other than as approved by any
of the senior executives of the Company.
Notwithstanding the foregoing, none of the events described in clauses (x) or
(y) of this Section 7(c)(ii) shall constitute Good Reason unless Executive shall
------
have notified the Company in writing describing the events which constitute Good
Reason and then only if the Company shall have failed to cure such event within
thirty (30) days after the Company's receipt of such written notice.
<PAGE>
5
(iii) If Executive's employment is terminated by the Company
without Cause (other than by reason of death or Disability) or if Executive
resigns for Good Reason, Executive shall be entitled to receive:
(A) the Accrued Rights;
(B) the Commission that the Executive would have been entitled to
receive pursuant to Section 4(a) hereof in such year based upon the
percentage of the calendar year that shall have elapsed through the
date of Executive's termination of employment, payable when such
Commission would have otherwise been payable had the Executive's
employment not terminated; and
(C) subject to Executive's continued compliance with the
provisions of Section 8, continued payment of the Base Salary until
twelve (12) months after the date of such termination; provided that
--------
the aggregate amount described in this clause (B) shall be reduced by
the present value of any other cash severance or termination benefits
payable to Executive under any other plans, programs or arrangements
of the Company or its affiliates.
Following Executive's termination of employment by the Company without
Cause (other than by reason of Executive's death or Disability) or by
Executive's resignation for Good Reason, except as set forth in this Section
7(c), Executive shall have no further rights to any compensation or any other
benefits under this Agreement.
d. Notice of Termination. Any purported termination of
---------------------
employment by the Company or by Executive (other than due to Executive's death)
shall be communicated by written Notice of Termination to the other party hereto
in accordance with Section 11(h) hereof. For purposes of this Agreement, a
"Notice of Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of employment under the provision so indicated.
8. Nondisclosure of Confidential Information; Non-Competition. (a)
----------------------------------------------------------
At any time during or after Executive's employment with the Company, Executive
shall not, without the prior written consent of the Company, use, divulge,
disclose or make accessible to any other person, firm, partnership, corporation
or other entity any Confidential Information (as hereinafter defined) pertaining
to the business of the Company or any of its subsidiaries, except (i) while
employed by the Company, in the business of and for the benefit of the Company,
or (ii) when required to do so by a court of competent jurisdiction, by any
governmental agency having supervisory authority over the business of the
Company, or by any administrative body or legislative body (including a
committee thereof) with jurisdiction to order Executive to divulge, disclose or
make accessible such information. For purposes of this Section 8(a),
"Confidential Information" shall mean non-public information concerning the
financial data, strategic business plans, and other non-public, proprietary and
confidential information of the Company, its subsidiaries, Ripplewood Holdings
L.L.C. or their respective affiliates as in existence as of the
<PAGE>
6
date of Executive's termination of employment that, in any case, is not
otherwise available to the public (other than by Executive's breach of the terms
hereof).
(b) As Vice President of Sales, Executive will acquire knowledge of
Confidential Information and trade secrets. Executive acknowledges that the
Confidential Information and trade secrets which the Company has provided and
will provide to him could play a significant role were he to directly to
indirectly be engaged in any business in Competition with the Company or its
subsidiaries. During the period of his employment hereunder and for one year
thereafter, Executive agrees that, without the prior written consent of the
Company, (A) he will not, directly or indirectly, either as principal, manager,
agent, consultant, officer, stockholder, partner, investor, lender or employee
or in any other capacity, carry on, be engaged in or have any financial interest
in (other than an ownership position of less than 5 percent in any company whose
shares are publicly traded), any business, which is in Competition (as
hereinafter defined) with the existing business of the Company or its
subsidiaries and (B) he shall not, on his own behalf or on behalf of any person,
firm or company, directly or indirectly, solicit or offer employment to any
person who has been employed by the Company or its subsidiaries at any time
during the 12 months immediately preceding such solicitation to the extent that
Executive would use or inevitably use Confidential Information or trade secrets
or that would otherwise constitute unfair competition.
(c) For purposes of this Section 8, a business shall be deemed to be
in Competition with the Company or its subsidiaries if it is engaged in or has
taken concrete steps toward engaging in the business of research and
development, designing, manufacturing, marketing, distributing, or servicing or
selling components as used in microwave radios, products and equipment, whether
in existence or in development, relating to microwave communications (including
unlicensed spread spectrum radio, licensed microwave radio, wireless ethernet
bridge, and fixed wireless (e.g., wireless local loop, point-to-point, point-to-
multipoint)), as carried on by the Company or its affiliates as of the date of
Executive's termination of employment, in all cities, counties, states and
countries in which the business of the Company or its affiliates is then being
conducted or its products are being sold.
(d) The results and proceeds of Executive's services hereunder,
including, without limitation, any works of authorship resulting from
Executive's services during Executive's employment with the Company and/or any
of the Company's affiliates and any works in progress, will be works-made-for
hire and the Company will be deemed the sole owner throughout the universe of
any and all rights of whatsoever nature therein, whether or not now or hereafter
known, existing, contemplated, recognized or developed, with the right to use
the same in perpetuity in any manner the Company determines in its sole
discretion without any further payment to Executive whatsoever. If, for any
reason, any of such results and proceeds will not legally be a work-for-hire
and/or there are any rights which do not accrue to the Company under the
preceding sentence, then Executive hereby irrevocably assigns and agrees to
assign any and all of Executive's right, title and interest thereto, including,
without limitation, any and all copyrights, patents, trade secrets, trademarks
and/or other rights of whatsoever nature therein, whether or not now or
hereafter known, existing, contemplated, recognized or developed, to the
Company, and the Company will have the right to use the same in perpetuity
throughout the
<PAGE>
7
universe in any manner the Company determines without any further payment to
Executive whatsoever. Executive will, from time to time as may be requested by
the Company, (i) during the term of Executive's employment without further
consideration, and (ii) thereafter at Executive's then current hourly rate, do
any and all things which the Company may deem useful or desirable to establish
or document the Company's exclusive ownership of any and all rights in any such
results and proceeds, including, without limitation, the execution of
appropriate copyright and/or patent applications or assignments. To the extent
Executive has any rights in the results and proceeds of Executive's services
that cannot be assigned in the manner described above, Executive unconditionally
and irrevocably waives the enforcement of such rights. This subsection is
subject to and will not be deemed to limit, restrict, or constitute any waiver
by the Company of any rights of ownership to which the Company may be entitled
by operation of law by virtue of the Company being Executive's employer. This
Section does not apply to an invention that qualifies as a nonassignable
invention under Section 2870 of the California Labor Code, which applies to any
invention for which no equipment, supplies, facilities or Confidential
Information was used, which does not (i) relate to the business of the Company;
(ii) relate to the Company's actual or demonstrable anticipated research or
development or (iii) result from any work performed by Executive for the
Company. This confirms that Executive has been notified of his rights under
Section 2870 of the California Labor Code.
(d) Executive and the Company agree that this covenant not to compete
is a reasonable covenant under the circumstances, and further agree that if in
the opinion of any court of competent jurisdiction such restraint is not
reasonable in any respect, such court shall have the right, power and authority
to excise or modify such provision or provisions of this covenant as to the
court shall appear not reasonable and to enforce the remainder of the covenant
as so amended. Executive agrees that any breach of the covenants contained in
this Section 8 would irreparably injure the Company. Accordingly, Executive
agrees that the Company may, in addition to pursuing any other remedies it may
have in law or in equity, cease making any payments otherwise required by this
Agreement and obtain an injunction against Executive from any court having
jurisdiction over the matter restraining any further violation of this Agreement
by Executive.
9. Specific Performance. Executive acknowledges and agrees that the
--------------------
Company's remedies at law for a breach or threatened breach of any of the
provisions of Section 8 would be inadequate and, in recognition of this fact,
Executive agrees that, in the event of such a breach or threatened breach, in
addition to any remedies at law, the Company, without posting any bond, shall be
entitled to cease making any payments or providing any benefit otherwise
required by this Agreement and obtain equitable relief in the form of specific
performance, temporary restraining order, temporary or permanent injunction or
any other equitable remedy which may then be available.
10. Miscellaneous.
-------------
a. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of New York, without regard
to conflicts of laws principles thereof.
<PAGE>
8
b. Entire Agreement/Amendments. This Agreement contains the
---------------------------
entire understanding of the parties with respect to the employment of Executive
by the Company. There are no restrictions, agreements, promises, warranties,
covenants or undertakings between the parties with respect to the subject matter
herein other than those expressly set forth herein. This Agreement may not be
altered, modified, or amended except by written instrument signed by the parties
hereto. This Agreement supercedes all prior agreements and understandings
(including verbal agreements) between Executive and the Company and/or its
affiliates regarding the terms and conditions of Executive's employment with the
Company and/or its affiliates.
c. No Waiver. The failure of a party to insist upon strict
---------
adherence to any term of this Agreement on any occasion shall not be considered
a waiver of such party's rights or deprive such party of the right thereafter to
insist upon strict adherence to that term or any other term of this Agreement.
d. Severability. In the event that any one or more of the
------------
provisions of this Agreement shall be or become invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions of this Agreement shall not be affected thereby.
e. Assignment. This Agreement shall not be assignable by
----------
Executive. This Agreement may be assigned by the Company to a company which is a
successor in interest to substantially all of the business operations of the
Company. Such assignment shall become effective when the Company notifies the
Executive of such assignment or at such later date as may be specified in such
notice. Upon such assignment, the rights and obligations of the Company
hereunder shall become the rights and obligations of such successor company,
provided that any assignee expressly assumes the obligations, rights and
- --------
privileges of this Agreement.
f. Mitigation. Executive shall be required to mitigate the
----------
amount of any payment provided for pursuant to this Agreement by seeking other
employment, taking into account the provisions of Section 8 of this Agreement.
Anything in this Agreement to the contrary notwithstanding, in the event that
Executive provides services for pay to anyone other than the Company or any of
its affiliates from the date Executive's employment hereunder is terminated
until twelve months thereafter, the amounts paid to Executive during such period
pursuant to this Agreement shall be reduced by the amounts of salary, bonus or
other compensation earned by Executive during such period as a result of
Executive's performing such services (regardless of when such earned amounts are
actually paid to Executive).
g. Successors; Binding Agreement. This Agreement shall inure
-----------------------------
to the benefit of and be binding upon personal or legal representatives,
executors, administrators, successors, heirs, distributes, devises and legatees.
h. Notice. For the purpose of this Agreement, notices and all
------
other communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt
<PAGE>
9
requested, postage prepaid, addressed to the respective addresses set forth
below Agreement, or to such other address as either party may have furnished to
the other in writing in accordance herewith, except that notice of change of
address shall be effective only upon receipt.
If to the Company:
Western Multiplex Corporation
1196 Borregas Ave.
Sunnyvale, California 94089
Attention: Amir Zoufonoun
If to Executive:
To the most recent address of Executive set forth in the personnel records
of the Company.
i. Withholding Taxes. The Company may withhold from any
-----------------
amounts payable under this Agreement such Federal, state and local taxes as may
be required to be withheld pursuant to any applicable law or regulation.
j. Counterparts. This Agreement may be signed in counterparts,
------------
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
<PAGE>
10
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
WESTERN MULTIPLEX CORPORATION
By: /s/ Amir Zoufounoun
-----------------------------
Name: Amir Zoufonoun
Title: President
EXECUTIVE:
/s/ Frederick Corsentino
-----------------------------
Frederick Corsentino
4515 Carlyle Ct. # 3301
-----------------------------
Santa Clara, CA 95054
-----------------------------
[Address of Executive]
<PAGE>
EXHIBIT 10.8
SUBSCRIPTION AND EMPLOYEE STOCKHOLDER'S AGREEMENT
[Employees Receiving Options and Purchasing Common Stock]
This SUBSCRIPTION EMPLOYEE AND STOCKHOLDER'S AGREEMENT, is entered into as
of February 25, 2000 (the "Agreement"), among, WMC Holding Corp., a Delaware
corporation (together with its successors and permitted assigns, "Holding"),
Western Multiplex Corporation, a Delaware corporation (together with its
successors and permitted assigns, "WMC"), the undersigned, as set forth on the
signature page hereof (the "Employee Stockholder") and Ripplewood Partners, L.P.
(together with its successors and permitted assignees (including Permitted
Transferees as defined below) ("Ripplewood") (Holding, WMC, Ripplewood and the
Employee Stockholder being hereinafter collectively referred to as the
"Parties").
Recitals
Pursuant to an Acquisition Agreement, dated as of September 30, 1999, as
amended on October 31, 1999, among WMC, Holding, GTI Acquisition Corp., a
Delaware corporation ("Glenayre"), Glenayre Technologies, Inc., a Delaware
corporation, and Western Multiplex Corporation, a California corporation, WMC
redeemed 42,000,000 shares of Class B common stock of WMC, par value $.01 per
share, held by Glenayre and Holding purchased 35,955,000 shares of outstanding
Common Stock of WMC from Glenayre (the "Recapitalization");
In connection with the Recapitalization, employees and members of
management of WMC are being offered the opportunity to subscribe for shares of
Class A common stock of Holding, par value $.01 per share ("Common Stock"), and
WMC is issuing options ("Options") to certain of its key employees under the
1999 Western Multiplex Corporation Stock Incentive Plan (the "Plan") to purchase
shares of Class A Common Stock of WMC, par value $.01 per share;
The Employee Stockholder, Holding and WMC have agreed that the Employee
Stockholder may subscribe for a certain number of shares of Common Stock and,
the Employee Stockholder will receive a certain number of Options pursuant to
the terms of the "Non-Qualified Stock Option Agreement" attached hereto as
Exhibit A;
This Agreement is one of several other similar agreements which have been,
or will be, entered into by WMC, Holding and other individuals who are employees
of WMC and who are being offered the right to purchase Common Stock and who are
being granted Options (the "Other Employee Stockholders");
NOW THEREFORE, to implement the foregoing and in consideration of the grant
of Options and of the mutual agreements contained herein, the Parties agree as
follows:
<PAGE>
2
Section 1. Certain Definitions.
(a) As used in this Agreement, the following terms shall have the following
meanings:
"Affiliate" with respect to any person, means any entity directly or
indirectly controlling, controlled by, or under common control with such
person or any entity designated as such by the Board of Directors of such
person in which such person or an Affiliate has an interest.
"Book Value" means, on a per share, fully-diluted basis, shareholder's
equity as determined in accordance with GAAP.
"Cause" has the meaning attributed to it in the Employee Stockholder's
Employment Agreement with WMC, dated as of May 2, 2000.
"Employment, Confidential Information and Invention Assignment
Agreement" means the Employment, Confidential Information and Invention
Assignment Agreement in the form attached as Exhibit B hereto to be
executed and delivered by the Employee Stockholder to WMC on the date
hereof.
"Fair Market Value" means, prior to a Public Offering, the fair market
value of the shares of Stock, as determined in good faith by the Board of
Directors of WMC (with respect to Option Stock) or Holding (with respect to
Common Stock), and following a Public Offering, the average daily closing
price of the shares of common stock of WMC ("WMC Common Stock") for the ten
consecutive trading days preceding the date the Fair Market Value of the
Stock is required to be determined hereunder.
The "Option Price" is $0.50 per share (as adjusted for any share
dividend, split, reverse split, combination, recapitalization, liquidation,
reclassification, merger, consolidation or otherwise).
"Permitted Ripplewood/Holding Transferee" means (a) Ripplewood
Holdings L.L.C. ("Ripplewood Holdings") or any Affiliate of Ripplewood
Holdings, (b) a stockholder, partner, member or employee of Ripplewood
Holdings or any Affiliate of Ripplewood Holdings or (c) an employee,
director or officer of Holding or WMC or any subsidiary of Holding or WMC
(up to an aggregate of 5% of the outstanding common stock of WMC and
Holding).
<PAGE>
3
"Public Offering" means a firmly underwritten registered public
offering of WMC Common Stock.
"Securities Act" means the Securities Act of 1933, as amended.
(b) As used in this Agreement, each of the following capitalized terms
shall have the meaning ascribed to them in the Section set forth opposite such
term:
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Affiliate 1(a)
Book Value 1(a)
Call Notice 6(e)
Call Rights 6(d)
Cause 1(a)
Common Stock Recitals
Confidential Offering Memorandum 3(g)
Drag Along Notice 8
Employment, Confidential Information & Invention
Assignment Agreement 1(a)
Employee Stockholder's Trust 3(a)
Fair Market Value 1(a)
Holding Stock 7(a)
Offer 5
Offeror 5
Option Agreement Recitals
Options Recitals
Option Price 1(a)
Option Stock 3(a)
Other Employee Stockholders Recitals
Permitted Ripplewood/Holding Transferee 1(a)
Permitted Transferee 3(a)
Plan Recitals
Purchase Price 6(d)
Public Offering 1(a)
Restricted Period 4(a)
Ripplewood Holdings 2
SEC 3(e)
Securities Act 1(a)
Stock 3(a)
Tag-Along Notice 7
Termination Not for Cause 5(b)
Transfer 2(a)
WMC Recitals
</TABLE>
<PAGE>
4
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
WMC Common Stock 1(a)
WMC Sale Tag-Along Notice 7
</TABLE>
Section 2. Common Stock; Issuance of Options. (a) Subject to the terms and
conditions hereof, Holding hereby agrees to issue and sell to the Employee
Stockholder, and the Employee Stockholder hereby agrees to subscribe for the
number of shares of Common Stock set forth opposite such Employee Stockholder's
name on the signature page hereof at a price of $0.50 per share in cash. The
closing of such purchase and sale shall take place at such time and place as is
notified to the Employee Stockholder (the "Closing Date"). On or prior to the
Closing Date, the Employee Stockholder shall deliver to Holding a check in an
amount equal to the purchase price for the Common Stock. Holding shall have no
obligation to sell any shares of Common Stock to any person who (i) is a
resident or citizen of a state or other jurisdiction in which the sale of the
Common Stock to him or her would constitute a violation of the securities or
"blue sky" laws of such jurisdiction or (ii) is not an employee of WMC on the
date hereof.
(b) Subject to the terms and conditions hereinafter set forth and upon and
as of the Closing Date, Holding shall issue to the Employee Stockholder the
number of Options set forth opposite the Employee Stockholder's name on the
signature page hereof and the Parties shall execute and deliver to each other
copies of the Non-Qualified Stock Option Agreement concurrently with the
issuance of the Options.
Section 3. Employee Stockholder's Representations, Warranties and
Agreements. (a) The Employee Stockholder agrees and acknowledges that he or she
will not, directly or indirectly, offer, transfer, sell, assign, pledge,
hypothecate or otherwise dispose of (any such act being referred to herein as a
"transfer") any shares of Common Stock (whether purchased on the Closing Date or
acquired at any time thereafter) and, at the time of exercise, the Class A
common stock of WMC issuable upon exercise of the Options (the "Option Stock"
and, collectively with the Common Stock, the "Stock") unless such transfer
complies with Section 4 of this Agreement. If the Employee Stockholder is an
Affiliate, the Employee Stockholder also agrees and acknowledges that he or she
will not transfer any shares of Stock unless:
(i) the transfer is pursuant to an effective registration statement
under the Securities Act, and in compliance with applicable provisions of
state securities laws, (if otherwise permitted under the terms set forth
herein) or
(ii) (A) counsel for the Employee Stockholder (which counsel shall be
reasonably acceptable to WMC or Holding, as the case may be) shall have
furnished WMC or Holding, as the case may be, with an opinion, satisfactory
in form and substance to WMC or Holding, as the case may be, that no such
registration is required because of the availability of an exemption from
registration under the Securities Act and (B) if the Employee Stockholder
is a citizen or resident of any country other than the United States, or
the Employee Stockholder desires to effect any transfer in any such
country, counsel
<PAGE>
5
for the Employee Stockholder (which counsel shall be reasonably
satisfactory to WMC, in the case of Option Stock, or Holding, in the case
of Common Stock) shall have furnished WMC or Holding, as the case may be,
with an opinion or other advice satisfactory in form and substance to WMC
or Holding, as the case may be, to the effect that such transfer will
comply with the securities laws of such jurisdiction.
Notwithstanding the foregoing, WMC and Holding acknowledge and agree that any of
the following transfers are deemed to be in compliance with the Securities Act
and this Agreement and no opinion of counsel is required in connection
therewith: (x) a transfer made pursuant to Section 9 hereof, (y) a transfer upon
the death of the Employee Stockholder to his executors, administrators,
testamentary trustees, legatees or beneficiaries or a transfer to the executors,
administrators, testamentary trustees, legatees or beneficiaries of a person who
has become a holder of Stock in accordance with the terms of this Agreement,
provided that it is expressly understood that any such transferee shall be bound
by the provisions of this Agreement and (z) a transfer made after the Closing
Date in compliance with the federal securities laws to a trust or custodianship
the beneficiaries of which may include only the Employee Stockholder, his spouse
or his lineal descendants (an "Employee Stockholder's Trust"), provided that any
such transfer under (x), (y) or (z) is made expressly subject to this Agreement
and that the transferee agrees in writing to be bound by the terms and
conditions hereof. The transferees of Stock pursuant to (x), (y) and (z) who
agree to be bound by the terms of this Agreement are referred to as "Permitted
Transferees".
(b) The certificate (or certificates) representing the Option Stock shall
bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH
TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION
COMPLIES WITH THE PROVISIONS OF THE SUBSCRIPTION AND EMPLOYEE STOCKHOLDER'S
AGREEMENT DATED AS OF FEBRUARY 28, 2000 BETWEEN WESTERN MULTIPLEX
CORPORATION ("WMC"), WMC HOLDING CORP., THE EMPLOYEE STOCKHOLDER NAMED ON
THE FACE HEREOF AND RIPPLEWOOD PARTNERS, L.P. (A COPY OF WHICH IS ON FILE
WITH THE SECRETARY OF WMC)."
(c) The certificate (or certificates) representing the Common Stock shall
bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH
TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION
COMPLIES WITH THE PROVISIONS OF THE SUBSCRIPTION AND EMPLOYEE STOCKHOLDER'S
AGREEMENT DATED AS OF
<PAGE>
6
FEBRUARY 28, 2000 BETWEEN WESTERN MULTIPLEX CORPORATION, WMC HOLDING CORP.
("HOLDING"), THE EMPLOYEE STOCKHOLDER NAMED ON THE FACE HEREOF AND
RIPPLEWOOD PARTNERS, L.P. (A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF
HOLDING)."
(d) The Employee Stockholder acknowledges that he or she has been advised
that (i) a restrictive legend in the form heretofore set forth shall be placed
on the certificates representing the Stock and (ii) a notation shall be made in
the appropriate records of WMC and/or Holding, as the case may be, indicating
that the Stock is subject to restrictions on transfer and appropriate
stop-transfer restrictions will be issued to the applicable transfer agent with
respect to the Stock. If the Employee Stockholder is an Affiliate, the Employee
Stockholder also acknowledges that (1) the Stock must be held indefinitely and
the Employee Stockholder must continue to bear the economic risk of the
investment in the Stock unless it is subsequently registered under the
Securities Act or an exemption from such registration is available, (2) when and
if shares of Stock may be disposed of without registration in reliance on Rule
144 of the rules and regulations promulgated under the Securities Act, such
disposition can be made only in limited amounts in accordance with the terms and
conditions of such Rule and (3) if the Rule 144 exemption is not available,
public sale without registration will require compliance with some other
exemption under the Securities Act.
(e) (i) If any shares of Option Stock are to be disposed of in accordance
with Rule 144 under the Securities Act or otherwise, the Employee Stockholder
shall promptly notify WMC of such intended disposition and shall deliver to WMC
at or prior to the time of such disposition such documentation as WMC may
reasonably request in connection with such sale, and, in the case of a
disposition pursuant to Rule 144, shall deliver to WMC an executed copy of any
notice on Form 144 required to be filed with the Securities and Exchange
Commission (the "SEC").
(ii) If any shares of Common Stock are to be disposed of in accordance with
Rule 144 under the Securities Act or otherwise, the Employee Stockholder shall
promptly notify Holding of such intended disposition and shall deliver to
Holding at or prior to the time of such disposition such documentation as
Holding may reasonably request in connection with such sale and, in the case of
a disposition pursuant to Rule 144, shall deliver to Holding an executed copy of
any notice on Form 144 required to be filed with the SEC.
(f) The Employee Stockholder agrees that, if any shares of WMC Common Stock
are offered to the public pursuant to an effective registration statement under
the Securities Act (other than registration of securities issued under an
employee plan), the Employee Stockholder will not effect any public sale or
distribution of any shares of the Stock not covered by such registration
statement from the time of the receipt of a notice from WMC that WMC has filed
or imminently intends to file such registration statement to, or within 180 days
after, the effective date of such registration statement, unless otherwise
agreed to in writing by WMC.
<PAGE>
7
(g) The Employee Stockholder represents and warrants that (i) he has
received and reviewed the document(s) comprising the Confidential Information
Memorandum, dated December 21, 1999 (the "Confidential Information Memorandum"),
relating to the Stock and Options, and the documents referred to therein,
certain of which documents set forth the rights, preferences, and restrictions
relating to the Stock and Options, and (ii) he or she has been given the
opportunity to obtain any additional information or documents and to ask
questions and receive answers about such information, WMC, Holding and the
business and prospects of WMC and Holding which he or she deems necessary to
evaluate the merits and risks to his or her investment in the Stock, and to
verify the Confidential Information Memorandum and the information contained in
the document(s) received as indicated in this Section 3(g), and he or she has
relied solely on such information.
(h) The Employee Stockholder further represents and warrants that (i) his
or her financial condition is such that he or she can afford to bear the
economic risk of holding the Stock for an indefinite period of time and has
adequate means for providing for his or her current needs and personal
contingencies, (ii) he or she can afford to suffer a complete loss of his or her
investment in the Stock, (iii) he or she understands and has taken cognizance of
all risk factors related to the purchase of the Stock (including, but not
limited to, those set forth in the Confidential Information Memorandum) and (iv)
his or her knowledge and experience in financial and business matters are such
that he is capable of evaluating the merits and risks of his or her purchase of
Stock as contemplated by this Agreement.
(i) The Employee Stockholder has executed and delivered to WMC the
Employment, Confidential Information and Invention Assignment Agreement.
Section 4. Restrictions on Transfer. Except for transfers to Permitted
Transferees permitted by clauses (x), (y) and (z) of Section 3(a) or a sale of
shares of Stock pursuant to Section 9 of this Agreement, the Employee
Stockholder agrees that he or she will not transfer any shares of Stock at any
time prior to the third anniversary of the Closing Date (the "Restricted
Period"). The Employee Stockholder further agrees not to transfer any Options,
except as expressly permitted by this Agreement. No transfer in violation of
this Section 4 shall be made or recorded on the books of WMC or Holding and any
such transfer shall be void and of no effect.
Section 5. Right of First Refusal. If, following the Restricted Period, but
prior to a Public Offering, the Employee Stockholder or any Permitted Transferee
receives a bona fide offer to purchase any or all of his shares of Stock (the
"Offer") from a third party (the "Offeror") which the Employee Stockholder or
any such Permitted Transferee wishes to accept, the Employee Stockholder shall
cause the Offer to be reduced to writing and shall notify WMC, in the case of an
Offer to purchase Option Stock, or Holding, in the case of an Offer to purchase
Common Stock, in writing of his or her wish to accept the Offer. The Employee
Stockholder's notice shall contain an irrevocable offer to sell such shares of
Stock to WMC or Holding, as the case may be (in the manner set forth below), at
a purchase price equal to the price contained in, and on the same terms and
conditions of, the Offer, and shall be accompanied by a copy of the Offer (which
shall identify the Offeror). At any time within 30 days after the date of the
receipt
<PAGE>
8
by WMC or Holding of the Employee Stockholder's notice, WMC or Holding, as the
case may be, shall have the right and option to elect to purchase, or to arrange
for a third party (including WMC, Holding or Ripplewood) to elect to purchase,
all of the shares of Stock covered by the Offer either (i) at the same price and
on the same terms and conditions as the Offer or (ii) if the Offer includes any
consideration other than cash, then at the sole option of WMC or its designee or
Holding or its designee, as the case may be, at the equivalent all cash price,
determined in good faith by WMC's or Holding's, as the case may be, Board of
Directors, by delivering notice of such election to the Employee Stockholder
within such 30-day period. If WMC or Holding, as the case may be, exercises such
right, it shall deliver a certified bank check or checks in the appropriate
amount (and any such non-cash consideration to be paid) to the Employee
Stockholder or any Permitted Transferee (as the case may be) at the principal
office of WMC against delivery of certificates or other instruments representing
the shares of Stock so purchased, appropriately endorsed by the Employee
Stockholder and the Permitted Transferee, within 10 business days following its
election. If at the end of the 30-day period, WMC or Holding has not notified
the Employee Stockholder of its election in the manner set forth above, the
Employee Stockholder and the Permitted Transferee may, during the succeeding
60-day period, sell not less than all of the shares of Stock covered by the
Offer to the Offeror at a price and on terms no less favorable to the Employee
Stockholder or the Permitted Transferee (as the case may be) than those
contained in the Offer. Promptly after such sale, the Employee Stockholder or
the Permitted Transferee (as the case may be) shall notify WMC or Holding, as
the case may be, of the consummation thereof and shall furnish such evidence of
the completion and time of completion of such sale and of the terms thereof as
may reasonably be requested by WMC or Holding. If, at the end of 60 days
following the expiration of the 30-day period for WMC or Holding to purchase the
Stock, the Employee Stockholder or the Permitted Transferee (as the case may be)
has not completed the sale of such shares of Stock as aforesaid, all the
restrictions on sale, transfer or assignment contained in this Agreement shall
again be in effect with respect to such shares of Stock.
Section 6. Call Rights. (a) If, prior to the end of the Restricted Period,
(x) the Employee Stockholder's active employment with WMC (and/or, if
applicable, its subsidiaries) is terminated by WMC for Cause, (y) the
beneficiaries of an Employee Stockholder's Trust shall include any person or
entity other than the Employee Stockholder, his spouse or lineal descendants, or
(z) the Employee Stockholder (and any Permitted Transferees) shall effect a
transfer of any shares of Stock other than as permitted in this Agreement, then:
(i) Holding shall have the right to purchase all or any portion of the
Common Stock then held by the Employee Stockholder (and any Permitted
Transferees) for a purchase price equal to the lesser of the Fair Market
Value per share and the Book Value per share;
(ii) WMC shall have the right to purchase all or any portion of the
Option Stock then held by the Employee Stockholder (and any Permitted
Transferees) for a purchase price equal to the lesser of the Option Price
and the Book Value per Option; and
(iii) All Options shall terminate without any payment.
(iv) Holding shall have the right to purchase all or any portion of
the Assisted Shares then held by the Employee Stockholder (and any
Permitted Transferees) at a price equal to the lesser of (a) the purchase
price per share ($.50) and (b) the Book Value per share.
(b) If, prior to the expiration of the Restricted Period, the
Employee Stockholder's active employment with WMC is terminated without Cause or
if the Employee Stockholder quits or for Good Reason, then WMC may purchase all
or any portion of the Assisted Shares then held by the Employee Stockholder (and
any Permitted Transferees) at a price equal to the Fair Market Value per share.
(c) If, prior to the expiration of the Restricted Period, the
Employee Stockholder quits without Good Reason, then WMC will have the right to
purchase all or any portion of the Assisted Shares then held by the Employee
Stockholder (and any Permitted Transferees) for the lesser of (a) the purchase
price per share and the Fair Market Value per share.
<PAGE>
9
(d) If, prior to the expiration of the Restricted Period, the Employee
Stockholder's active employment with WMC (and/or, if applicable, its
subsidiaries) ceases for any reason other than termination by WMC for Cause or
termination due to the death or permanent disability (including if the Employee
Stockholder quits or resigns), then:
(i) Holding shall have the right to purchase all or any portion of the
Common Stock then held by the Employee Stockholder (and any Permitted
Transferees) for a purchase price equal to the Fair Market Value per share;
(ii) WMC shall have the right to purchase all or any portion of vested
Options then held by the Employee Stockholder (and any Permitted
Transferees) at a purchase price equal to the Fair Market Value per vested
Option less the Option Price; provided that, if WMC exercises such
repurchase right with respect to any Option that would have a repurchase
price under this clause (b)(ii) of less than the Option Price at the time
of such exercise, then such Options shall be canceled without any payment;
(iii) WMC shall have the right to purchase all or any portion of the
Option Stock then held by the Employee Stockholder (and any Permitted
Transferees) at a purchase price equal to the Fair Market Value per share;
and
(iv) all unvested Options shall terminate without any payment
therefor.
(e) If the purchaser dies or becomes permanently disabled while still an
employee of WMC (and/or, if applicable, its subsidiaries), then (i) Holding may
purchase all or any portion of the shares of Common Stock then held by the
Employee Stockholder (and any Permitted Transferees) at a purchase price equal
to the Fair Market Value per share; and (ii) WMC may purchase all of the Option
Stock then held by the Employee Stockholder (and any Permitted Transferees) at a
purchase price equal to the Fair Market Value per share less the Option Price
per share.
(f) The price at which Stock or Options are purchased by WMC or Holding
pursuant to Sections 5(a), 5(b) and 5(c) is referred to as the "Purchase Price".
Any right to repurchase pursuant to Sections 5(a), 5(b) and 5(c) is referred to
as a "Call Right".
(g) Absent the extension of a Call Right on account of a default under any
indebtedness agreement or violation of a statute as described in Section 5(f)
below, WMC or Holding, as the case may be, shall have a period of sixty (60)
days from the date of the event giving rise to the Call Right (or if later,
after the discovery of an impermissible transfer) in which to give notice in
writing to the Employee Stockholder of its election to exercise its Call Rights
pursuant to Sections 5(a), 5(b) or 5(c) (a "Call Notice"); provided that, in the
case of the Employee Stockholder's permanent disability, such 60-day exercise
period shall be extended to twelve (12) months after the event giving rise to
the Call Right; and provided further, that any Call Right available in such case
must be exercised within such 12-month period.
<PAGE>
10
(h) A Call Right shall be extended if WMC or Holding is, or would be as a
result of the payment of the Purchase Price, in default under any indebtedness
agreement or in violation of a statute. Any Call Right may be delayed upon such
default or violation for twelve (12) months thereafter; provided however, that,
if in connection with an event giving rise to a Call Right pursuant to Section
5(b), the exercise by WMC or Holding, as the case may be, of its Call Right is
delayed by reason of such default, then and only then will exercisable Options
be deemed to continue to be exercisable for the purposes of the purchase
pursuant to the Call Right and the Purchase Price for the Stock and Options will
be the higher of: (i) the Purchase Price determined as of the month end prior to
termination and (ii) the Purchase Price determined as of the month end prior to
the delayed purchase. In connection with a termination for Cause or any other
event giving rise to a Call Right pursuant to Section 6(a), the Purchase Price
for the Stock and Options shall be the lesser of (i) the Purchase Price
determined as of the month end prior to termination and (ii) the Purchase Price
determined as of the month end prior to the delayed purchase. Any Call Right may
only be delayed upon such default or violation for twelve (12) months
thereafter.
(i) The completion of any purchase pursuant to this Section 5 shall take
place at the principal office of WMC on the tenth business day after the giving
of the Call Notice. The applicable Purchase Price shall be paid by delivery to
the Employee Stockholder (or the Permitted Transferee, as the case may be) of a
certified bank check or checks in the appropriate amount payable to the order of
the Employee Stockholder against delivery of certificates or other instruments
representing the Stock so purchased and appropriate documents canceling the
Options so terminated, appropriately endorsed or executed by the Employee
Stockholder (or the Permitted Transferee, as the case may be) or the Employee
Stockholder's or Permitted Transferee's authorized representative.
(j) Subject to Section 5(f), the Purchase Price shall be calculated as of
the last day of the month preceding the month in which the event giving rise to
the Call Right occurs.
(k) In determining the Purchase Price, appropriate adjustments shall be
made for any share dividends, splits, combinations, recapitalizations or any
other adjustment in the number of outstanding common stock in order to maintain,
as nearly as practicable, the intended operation of the provisions of this
Section 6.
Section 7. Tag-Along Rights. (a) If prior to a Public Offering, Ripplewood
("Ripplewood") desires to transfer a majority or all of its shares of common
stock of Holding ("Holding Stock") to a prospective third party purchaser other
than to a Permitted Ripplewood/ Holding Transferee, Ripplewood shall, as a
condition to such transfer, (A) provide a notice to the Employee Stockholder in
writing (a "Tag-Along Notice") of the material terms of the proposed transfer at
least 14 days prior to such transfer and (B) permit the Employee Stockholder (or
cause the Employee Stockholder to be permitted) to sell (either to the
prospective transferee or to another financially reputable transferee reasonably
acceptable to the Employee Stockholder) the same portion of its outstanding
shares of Common Stock and Option Stock on the same terms and conditions,
subject to the same agreements and at the same price as the sale by Ripplewood
(in each case subject to Section 7(c)), which sale shall take place on the date
Ripplewood's
<PAGE>
11
shares of Holding Stock (or such portion) are transferred to such transferee. To
calculate the number of outstanding shares of Common Stock and Option Stock that
the Employee Stockholder can sell for the purposes of this Section 7(a), WMC and
Holding shall be treated as a single entity such that the Employee Stockholder
will be able to sell the product of (x) a fraction, the numerator of which is
the number of shares of common stock of Holding being sold by Ripplewood, and
the denominator of which is the total number of shares of common stock of
Holding owned by Ripplewood, multiplied by (y) the total number of shares of
Common Stock and Option Stock owned by the Employee Stockholder (e.g., if
Ripplewood is selling 75% of its interest in common stock of Holding, the
Employee Stockholder will be able to include 75% of its total ownership of
Common Stock and Option Stock, calculated as though WMC and Holding are a single
entity). Should the Employee Stockholder exercise his or her rights pursuant to
this Section 7(a), the Employee Stockholder shall be required to transfer Common
Stock and Option Stock held by him or her in the following order of priority:
(1) first, shares of Common Stock (until the Employee Stockholder holds no
shares of Common Stock), and (2) second, Option Stock (until the Employee
Stockholder holds no shares of Option Stock). The Employee Stockholder shall
have ten days from the date of receipt of a Tag-Along Notice to exercise his or
her right to sell pursuant to this Section 7(a) by delivering written notice to
Ripplewood of his or her intent to exercise such right. The Employee
Stockholder's right to sell in such transaction pursuant to the above shall
terminate if not exercised within such ten-day period.
(b) If Holding sells a majority or all of its interest in WMC to a
prospective third party purchaser other than a Permitted Ripplewood/Holding
Transferee, Holding shall, as a condition to such transfer, (A) provide a notice
to the Employee Stockholder in writing (a "WMC Sale Tag-Along Notice") of the
material terms of the proposed transfer at least 14 days prior to such transfer
and (B) permit the Employee Stockholder (or cause the Employee Stockholder to be
permitted) to sell (either to the prospective transferee or to another
financially reputable transferee reasonably acceptable to the Employee
Stockholder) a number of its outstanding shares of Option Stock equal to (x) the
percentage of the outstanding shares of WMC Common Stock owned by Holding that
are being sold by Holding (e.g., if there are 2,000 shares of WMC Common Stock
outstanding of which Holding owns 1,800 shares and Holding is selling 180
shares, the percentage under this clause (x) will be 10%) multiplied by (y) the
number of shares of Option Stock owned by the Employee Stockholder. Subject to
Section 7(c), any such sale shall be on the same terms and conditions, subject
to the same agreements and at the same price as the sale by Holding, which sale
shall take place on the date Holding's shares of WMC Common Stock (or such
portion) are transferred to such transferee (or transferees). The Employee
Stockholder shall have ten days from the date of receipt of a WMC Sale Tag-Along
Notice to exercise his or her right to sell pursuant to this Section 7 by
delivering written notice to Holding of his or her intent to exercise such
right. The Employee Stockholder's right to sell in such transaction pursuant to
the above shall terminate if not exercised within such ten-day period.
(c) The Employee Stockholder shall not have the right to transfer any
Options pursuant to this Section 7.
Section 8. Drag-Along Rights. (i) If at any time Ripplewood desires to
transfer all or any portion of its shares of Holding Stock to any third party
purchaser(s), other than Permitted Ripplewood/Holding Transferees, or Holding
desires to transfer all or any portion
<PAGE>
12
of its shares of WMC Common Stock to any third party purchaser(s), other than
Permitted Ripplewood/Holding Transferees, Ripplewood shall have the right to
require that the Employee Stockholder and its Permitted Transferees transfer the
same portion of the Employee Stockholder's and its Permitted Transferees' shares
of Common Stock and Option Stock to such third party purchaser(s) on the same
terms and conditions, subject to the same agreements and at the same price as
the sale by Ripplewood. To calculate the number of outstanding shares of Common
Stock and Option Stock that the Employee Stockholder and its Permitted
Transferees can be required to sell pursuant to this Section 8, WMC and Holding
shall be treated as a single entity such that the Employee Stockholder and its
Permitted Transferees (considered as a single stockholder for this purpose) can
be required to sell the product of (x) a fraction, the numerator of which is the
number of shares of Holding Stock being sold by Ripplewood, and the denominator
of which is the total number of shares of Holding Stock owned by Ripplewood,
multiplied by (y) the total number of shares of Common Stock and Option Stock
owned by the Employee Stockholder and its Permitted Transferees (e.g. if
Ripplewood is selling 75% of its interest in Holding Stock, Ripplewood will have
the right to require that the Employee Stockholder and its Permitted Transferees
transfer 75% of their total aggregate ownership of Common Stock and Option
Stock, calculated as though WMC and Holding are a single entity). Should
Ripplewood exercise its rights pursuant to this Section 8, the Employee
Stockholder and its Permitted Transferees shall be required to transfer Common
Stock and Option Stock held by them in the following order of priority: (1)
first, shares of Common Stock (until the Employee Stockholder and its Permitted
Transferees hold no shares of Common Stock), and (2) second, Option Stock (until
the Employee Stockholder and its Permitted Transferees hold no Option Stock).
Ripplewood shall provide a notice to the Employee Stockholder in writing (a
"Drag- Along Notice") of such sale at least 10 days prior to such transfer, and
the Drag-Along Notice shall identify such third party purchaser(s), all material
terms of the sale and the date of closing. Upon the closing of any sale by
Ripplewood of all (or such portion) of its shares of Holding Stock or any sale
by Holding of WMC Common Stock, as described in a Drag-Along Notice, such third
party purchaser(s) shall pay to the Employee Stockholder and/or its Permitted
Transferees, as the case may be, the consideration payable to the Employee
Stockholder and/or its Permitted Transferees, as the case may be, in connection
with such sale of all (or such portion) of its shares of Common Stock and Option
Stock, and the Employee Stockholder's and its Permitted Transferee's shares of
Common Stock and Option Stock (or such portion) shall be deemed transferred to
such third party purchaser(s).
Section 9. Sale Participation Rights. At any time following the expiration
of the period ending 180 days after a Public Offering, the Employee Stockholder
and its Permitted Transferees will have the right to sell all or any portion of
the Stock held by such Employee Stockholder and its Permitted Transferees in any
registered offering of WMC Common Stock initiated by WMC, Holding or Ripplewood.
Such registration rights will be on customary terms and conditions (including,
without limitation, customary cut back and lock-up provisions) established in
good faith by WMC's or Holding's Board of Directors and Ripplewood and notified
to the Employee Stockholder and the Other Employee Stockholders.
Section 10. Voting Agreement. (a) From and after the Closing Date, the
Employee Stockholder and its Permitted Transferees: (i) shall vote all of the
shares of Stock held
<PAGE>
13
by him or her (including, without limitation, shares acquired after the date
hereof) in the same manner as the shares of Holding held by Ripplewood (in the
case of Holding Stock) or Holding (in the case of WMC Common Stock) are voted on
all matters acted upon at any annual or special meeting of Stockholders or by
written consent in lieu of a meeting and (ii) irrevocably constitutes and
appoints the person who is at the time the Senior Managing Director of
Ripplewood Holdings (or his or her designee, with full power of substitution)
his proxy to vote all of the shares of Common Stock held by the Employee
Stockholder in the same manner as the shares of Holding Stock held by Ripplewood
and appoints the person who is at the time the Chief Executive Officer of WMC
(or his or her designee, with full power of substitution) his proxy to vote all
of the shares of Option Stock held by the Employee Stockholder and its Permitted
Transferees in the same manner as the shares of WMC Common Stock held by Holding
are voted on all matters acted upon at any annual or special meeting of
stockholders or by written consent in lieu of a meeting; provided that this
Section 10 shall be inapplicable with respect to any matters which would both
adversely affect the rights of shares of Stock held by the Employee Stockholder
(or its Permitted Transferees) and treat the Employee Stockholder (or its
Permitted Transferees) differently from other holders of shares of WMC Common
Stock or Holdings Stock (it being understood that a conversion of Holding to a
limited liability company and a merger or other business combination of Holding
and WMC will not be deemed to adversely affect the rights of the Employee
Stockholder (or its Permitted Transferees) and the Employee Stockholder hereby
agrees that his or her shares of Common Stock will be voted in favor of any such
action). The voting agreements and proxies granted pursuant to this Section 10
are coupled with an interest and shall be valid for the term of this Agreement.
The Employee Stockholder represents that he or she has not granted and is not
party to any proxy, voting trust or other agreement which in each case is
inconsistent with or conflicts with the provisions of this Agreement, and the
Employee Stockholder shall not grant any proxy or become a party to any voting
trust or other agreement which in each case is inconsistent with or conflicts
with the provisions of this Agreement.
Section 11. Rights to Negotiate Repurchase Price. Nothing in this Agreement
shall be deemed to restrict or prohibit WMC or Holding from purchasing Stock or
Options from the Employee Stockholder or its Permitted Transferees (or any other
Employee Stockholder), at any time, upon such terms and conditions, and for such
price, as may be mutually agreed upon between the Parties, whether or not at the
time of such purchase circumstances exist which specifically grant WMC or
Holding the right to purchase Stock or Options.
Section 12. Covenant Regarding 83(b) Election. Except as WMC may otherwise
agree in writing, the Employee Stockholder hereby covenants and agrees that he
will make an election provided pursuant to Treasury Regulation 1.83-2 with
respect to shares of Option Stock to be acquired upon each exercise of the
Employee Stockholder's Options; and the Employee Stockholder further covenants
and agrees that he or she will furnish WMC with copies of the forms of election
the Employee Stockholder files and within 30 days after each exercise of the
Employee Stockholder Options and with evidence that each such election has been
filed in a timely manner.
<PAGE>
14
Section 13. Notice of Change of Beneficiary. Immediately prior to any
transfer of shares of Stock to an Employee Stockholder's Trust, the Employee
Stockholder shall provide WMC and Holding with a copy of the instruments
creating the Employee Stockholder's Trust and with the identity of the
beneficiaries of the Employee Stockholder's Trust. The Employee Stockholder
shall notify WMC and Holding as soon as practicable prior to any change in the
identity of any beneficiary of the Employee Stockholder's Trust.
Section 14. Recapitalizations, etc. The provisions of this Agreement shall
apply, to the full extent set forth herein with respect to Stock or the Options,
to any and all shares of capital shares of WMC and Holding or any capital stock,
partnership units or any other security evidencing ownership interests in any
successor or assign of WMC and Holding (whether by merger, consolidation, sale
of assets or otherwise) which may be issued in respect of, in exchange for, or
substitution of Stock or Options, by reason of any share dividend, split,
reverse split, combination, recapitalization, liquidation, reclassification,
merger, consolidation or otherwise.
Section 15. State Securities Laws. WMC and Holding hereby agree to use
their best efforts to comply with all state securities or "blue sky" laws which
might be applicable to the sale of Stock and the issuance of the Options to the
Employee Stockholder.
Section 16. Binding Effect. The provisions of this Agreement shall be
binding upon and accrue to the benefit of the parties hereto and their
respective heirs, legal representatives, successors and assigns. In the case of
a transferee permitted under Section 3(a) hereof, such transferee shall be
deemed the Employee Stockholder hereunder; provided, however, that no transferee
(including without limitation, transferees referred to in Section 3(a) hereof)
shall derive any rights under this Agreement unless and until such transferee
has delivered to WMC and Holding a valid undertaking and becomes bound by the
terms of this Agreement.
Section 17. Amendment. This Agreement may be amended only by a written
instrument signed by the Parties hereto. Notwithstanding the foregoing, this
Agreement may be amended without the consent of any party hereto other than WMC
to provide for any change in the corporate structure of WMC, including its
conversion to a limited liability company or a merger or other business
combination of Holding and WMC.
Section 18. Closing. Except as otherwise provided herein, the closing of
each purchase and sale of Stock and the payment of the Purchase Price by WMC or
Holding upon exercise of a Call Right, if any, pursuant to this Agreement shall
take place at the principal office of WMC on the tenth business day following
delivery of the notice by any Party of its exercise of the right to purchase or
sell such Stock or Options hereunder, as the case may be.
Section 19. Applicable Law. The laws of the state of Delaware shall govern
the interpretation, validity and performance of the terms of this Agreement. Any
suit, action or proceeding against the Employee Stockholder, WMC or Holding,
with respect to this Agreement, or any judgment entered by any court in respect
of any thereof, may be brought in any court of
<PAGE>
15
competent jurisdiction in the State of Delaware and the Parties each hereby
submit to the exclusive jurisdiction of such courts for the purpose of any such
suit, action, proceeding or judgment. The Parties hereby irrevocably waive any
objections which either of them may now or hereafter have to the laying of the
venue of any suit, action or proceeding arising out of or relating to this
Agreement brought in any court of competent jurisdiction in the State of
Delaware, and hereby further irrevocably waive any claim that any such suit,
action or proceeding brought in any such court has been brought in any
inconvenient forum. No suit, action or proceeding against any of the Parties
with respect to this Agreement may be brought in any court, domestic or foreign,
or before any similar domestic or foreign authority other than in a court of
competent jurisdiction in the State of Delaware, and the Parties hereby
irrevocably waive any right which any of them may otherwise have had to bring
such an action in any other court, domestic or foreign, or before any similar
domestic or foreign authority. Each Party hereto hereby irrevocably and
unconditionally waives trial by jury in any legal action or proceeding in
relation to this Agreement and for any counterclaim therein.
Section 20. Assignability of Certain Rights by WMC, Holding and Ripplewood.
WMC, Holding and Ripplewood shall have the right to assign any or all of their
rights or obligations to purchase Stock or Options pursuant to this Agreement;
provided, however, that such assigning party shall remain obligated to perform
its obligations notwithstanding such assignment in the event that such assignee
fails to perform the obligations so assigned to it. The rights and obligations
of WMC, Holding and Ripplewood under this Agreement shall inure to the benefit
of, and be binding upon, any of their respective successors.
Section 21. Conflicts with Other Agreements. In the event that any
provision of this Agreement conflicts in any way with the Plan or the provisions
of any Stock Option Agreement to which the Employee Stockholder is a party or
bound, the provisions of this Agreement shall govern.
Section 22. Miscellaneous. (a) In this Agreement all references to
"dollars" or "$" are to United States dollars.
(b) If any provision of this Agreement shall be declared illegal, void or
unenforceable by any court of competent jurisdiction, the other provisions shall
not be affected, but shall remain in full force and effect.
(c) WMC and Holding shall have the right to deduct from any cash payment
made under this Agreement to the Employee Stockholder any federal, state or
local income or other taxes required by law to be withheld with respect to such
payment.
Section 23. Notices. All notices and other communications provided for
herein shall be in writing and shall be deemed to have been duly given if
delivered by hand (whether by overnight courier or otherwise) or sent by
registered or certified mail, return receipt requested, postage prepaid, or by
overnight delivery or telecopy, to the Party to whom it is directed:
(a) If to WMC, to it at the following address:
<PAGE>
16
Western Multiplex Corporation
1196 Borregas Avenue
Sunnyvale, CA 94089
Attn: Kim Viera
Facsimile: 408-542-5300
with a copy to:
Simpson Thacher & Bartlett
3373 Hillview Avenue
Suite 250
Palo Alto, CA 94304
Attn: Daniel Clivner, Esq.
Facsimile: 650-251-5002
(b) If to Holding, to it at the following address:
WMC Holding Corp.
101 California Street
Suite 2825
San Francisco, CA 94111
Attn: Jeffrey M. Hendren
Facsimile: 415-772-9289
with a copy to:
Simpson Thacher & Bartlett
3373 Hillview Avenue
Suite 250
Palo Alto, CA 94304
Attn: Daniel Clivner, Esq.
Facsimile: 650-251-5002
(c) If to Ripplewood, to it at the following address:
Ripplewood Partners, L.P.
One Rockefeller Plaza
New York, NY 10020
Attn: Jeffrey M. Hendren
Facsimile: 212-218-2721
(d) If to the Employee Stockholder, to him at the address set forth
below under his signature: or at such other address as either party shall have
specified by notice in writing to the other.
Section 24. Expiration of Section Provisions. The provisions contained
in Sections 5, 6 and 7 and any portion of any other provision of this Agreement
which incorporates the provisions of Sections 5, 6 and 7 shall terminate and be
of no further force or effect with respect to any shares of Stock sold by the
Employee Stockholder or any Permitted Transferee pursuant to any Public
Offering.
<PAGE>
17
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.
WESTERN MULTIPLEX CORPORATION
By: /s/ Jeffrey M. Hendren
------------------------------------
Name: Jeffrey M. Hendren
Title: Vice President
WMC HOLDING CORP.
By: /s/ Jeffrey M. Hendren
------------------------------------
Name: Jeffrey M. Hendren
Title: Vice President
RIPPLEWOOD PARTNERS, L.P.
By: /s/ Jeffrey M. Hendren
------------------------------------
Name: Jeffrey M. Hendren
Title: Principal
EMPLOYEE STOCKHOLDER 135,000
Number of shares of Class A Common Stock
/s/ Fred Corsentino of WMC Holding Corp. to be purchased
- --------------------------------
Name: Fred Corsentino
Address:
190,000
Number of Assisted Shares to be guaranteed
50 Woodland Drive by Western Multiplex Corporation
Oyster Bay Cove, Ny 11771
115,000
Number of Options to purchase share of
Class A Common Stock of Western Multiplex
Corp. being granted
<PAGE>
18
IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto.
WESTERN MULTIPLEX CORPORATION
By: /s/ Jeffrey M. Hendren
----------------------------
Name: Jeffrey M. Hendren
Title: Vice President
FRED CORSENTINO Number of Shares subject to the Time
Optionee Name (Print) Option:
95,000
/s/ Fred Corsentino Number of Shares subject to the 5x
- -------------------------------- Performance Option:
Optionee Signature
6,666
Number of Shares subject to the 10x
50 Woodland Drive Performance Option:
Oyster Bay Cove, Ny 11771
Optionee's Address 13,334
Aggregate Number of Shares subject to
the Option:
115,000
Optionee's Taxpayer
Identification Number:
392 745 8166
<PAGE>
EXHIBIT 10.9
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement") dated as of March 27, 2000
by and between Western Multiplex Corporation, a Delaware corporation (the
"Company") and Joseph J. Tavormina (the "Executive").
WHEREAS, the Company considers it essential to its best interests
and the best interests of its stockholders to foster the continued employment
of Executive by the Company during the term of this Agreement and Executive
is willing to accept and continue Executive's employment on the terms
hereinafter set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein and for other good and valuable consideration, the parties
agree as follows:
1. Term of Employment; Executive Representation.
--------------------------------------------
a. Employment Term. Executive's term of employment under
this Agreement shall commence on the date hereof and, subject to the terms
hereof, Executive and the Company agree and acknowledge that Executive's
employment with the Company constitutes "at-will" employment and that this
Agreement may be terminated at any time by the Company or Executive, subject
to the provisions of Section 7 of this Agreement.
b. Executive Representation. Executive hereby represents to
the Company that the execution and delivery of this Agreement by Executive
and the Company and the performance by Executive of the Executive's duties
hereunder shall not constitute a breach of, or otherwise contravene, the
terms of any employment agreement or other agreement or policy to which
Executive is a party or otherwise bound.
2. Position.
--------
a. While employed hereunder, Executive shall serve as the
Company's Vice President of Access Products. In such position, Executive
shall have such duties and authority as shall be determined from time to time
by the Company. Executive shall report to the Company's President (or other
position that is equivalent or more senior).
b. While employed hereunder, Executive will devote
Executive's full business time and best efforts to the performance of
Executive's duties hereunder and will not engage in any other business,
<PAGE>
profession or occupation for compensation or otherwise which would conflict
with the rendition of such services either directly or indirectly, without
the prior written consent of the Company; provided that nothing herein shall
preclude Executive from continuing to serve on the board of directors or
trustees of any business corporation or any charitable organization on which
he currently serves and which is identified on Exhibit A hereto or, subject
to the prior approval of the Company, from accepting appointment to any
additional directorships or trusteeships, provided in each case, and in the
aggregate, that such activities do not interfere with the performance of
Executive's duties hereunder or conflict with Section 8.
3. Annual Compensation.
-------------------
a. Base Salary. While employed hereunder, the Company shall
pay Executive a base salary (the "Base Salary") at the annual rate of
$144,000, payable in regular installments in accordance with the Company's
usual payment practices. The Company shall review Executive's Base Salary at
least annually, and Executive shall be entitled to such increases in
Executive's Base Salary, if any, as may be determined from time to time in
the sole discretion of the Company.
b. Annual Bonus. With respect to each calendar year while
employed hereunder, Executive shall be eligible to earn an annual bonus award
(an "Annual Bonus") pursuant to an annual incentive plan to be established by
the Company (the "Bonus Plan"); provided, however, that the Executive's
minimum Annual Bonus opportunity shall be based on a minimum percentage of
Base Salary (the "Minimum Target"), which shall not be less than such minimum
percentage of base salary that other similarly situated employees of the
Company may be eligible to earn pursuant to the Bonus Plan; and provided,
further, that with respect to the Annual Bonus payable in respect of calendar
year 2000, Executive's Minimum Target shall not be less than 15% of
Executive's Base Salary, and his Annual Bonus shall not be less than 22.5% of
Executive's Base Salary. A copy of the Company's existing annual incentive
plan is attached as Exhibit B hereto.
4. Equity Arrangements.
-------------------
a. Restricted Stock. The Company shall sell to Executive
200,000 shares of the Company's Common Stock. The price per share shall be
$0.50 and shall be paid by a promissory note provided by the Company (which
shall be at the minimum interest rate allowed by the Internal Revenue Service
and the interest on promissory note shall accrue). The stock purchase shall
be subject to the terms of the Subscription and Employee Stockholder's
Agreement attached as Exhibit C hereto, the terms of which shall be
-2-
<PAGE>
consistent with this Agreement and with such terms as may be provided to
other similarly situated executives of the Company.
b. Stock Option. The Company shall provide Executive with
an option to purchase 200,000 shares of the Company's common stock. The
exercise price per share shall be $.50 and the vesting schedule (and all
other terms) shall be as set forth in the Stock Option Agreement attached as
Exhibit D hereto, which terms shall be consistent with this Agreement.
5. Employee Benefits. The Company shall provide Executive during
the term of his employment hereunder with coverage under all employee pension
and welfare benefit programs, plans and practices in accordance with the
terms thereof, which the Company generally makes available to its senior
executives. Executive shall also be entitled to such number of paid vacation
(which shall not be less than four weeks) and sick leave in each calendar
year as established under the Company's policies as in effect from time to
time, which shall be taken at such times as are consistent with Executive's
responsibilities hereunder.
6. Business Expenses. Executive is authorized to incur
reasonable expenses in carrying out his duties and responsibilities under
this Agreement, including, without limitation, expenses for travel and
similar items related to such duties and responsibilities. The Company will
reimburse Executive for all such expenses upon presentation by Executive from
time to time of appropriately itemized and approved (consistent with the
Company's policy) accounts of such expenditures.
7. Termination. The Executive's employment hereunder may be
terminated by either party at any time and for any reason; provided that
Executive will be required to give the Company at least 90 days advance
written notice of Executive's resignation from employment with the Company
for any reason (other than for death or Permanent Disability); provided,
further, however, that Executive shall only be required to give the Company
at least 30 days' advance written notice of Executive's resignation from
employment for Good Reason (but only as defined in Section 7(c)(ii)(x) and
(y)) following the expiration of the 30-day cure period provided to the
Company pursuant to Section 7(c)(i) of this Agreement. Notwithstanding any
other provision of this Agreement, the provisions of this Section 7 shall
exclusively govern Executive's rights upon termination of employment with the
Company and its affiliates.
a. By the Company For Cause for Cause or Resignation By the
Executive Without Good Reason.
--------------------------------------------------------
(i) The Executive's employment hereunder may be terminated by
the Company for Cause (as defined below) or upon 90 days prior written
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<PAGE>
notice, by Executive without Good Reason. Notwithstanding the foregoing,
none of the events described in clauses (i) or (v) of Section 7(a)(ii) shall
constitute Cause unless the Company shall have notified Executive in writing
describing the events which constitute Cause and then only if Executive shall
have failed to cure such event within thirty (30) days after Executive's
receipt of such written notice.
(ii) For purposes of this Agreement, "Cause" shall mean (i)
the Executive's willful and continued failure to perform his or her duties
with respect to the Company or its subsidiaries after demand by his or her
superior for substantial performance is made or delivered, (ii) willful
misconduct by the Executive involving material dishonesty or breach of trust
in connection with the Executive's employment, (iii) conviction for any
felony or misdemeanor involving moral turpitude, (iv) any material breach
of the Executive's restrictive covenants as provided in Section 8 of this
Agreement, or (v) material violation of any written Company policy.
(iii) If Executive's employment is terminated by the Company
for Cause or by Executive without Good Reason, Executive shall be entitled to
receive:
(A) the Base Salary through the date of termination;
(B) any Annual Bonus earned but unpaid as of the date of
termination.
(C) reimbursement for any unreimbursed business expenses
properly incurred by Executive in accordance with Company policy
prior to the date of Executive's termination;
(D) such Employee Benefits, if any, as to which Executive may
be entitled under the employee benefit plans of the Company; and
(E) any accrued but unused vacation pay (the amounts
described in clauses (A) through (E) hereof being referred to as
the "Accrued Rights").
Following such termination of Executive's employment by the Company
for Cause, except as set forth in this Section 7(a), Executive shall have no
further rights to any compensation or any other benefits under this
Agreement.
b. Disability or Death.
-------------------
(i) The Executive's employment hereunder shall terminate upon
Executive's death and if Executive becomes physically or mentally
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<PAGE>
incapacitated and is therefore unable for a period of six (6) consecutive
months or for an aggregate of nine (9) months in any twenty-four (24)
consecutive month period to perform Executive's duties (such incapacity is
hereinafter referred to as "Disability"). Any question as to the existence
of the Disability of Executive as to which Executive and the Company cannot
agree shall be determined in writing by a qualified independent physician
mutually acceptable to Executive and the Company. If Executive and the
Company cannot agree as to a qualified independent physician, each shall
appoint such a physician and those two physicians shall select a third who
shall make such determination in writing. The determination of Disability
made in writing to the Company and Executive shall be final and conclusive
for all purposes of the Agreement.
(ii) Upon termination of Executive's employment hereunder for
either Disability or death, Executive or Executive's estate (as the case may
be) shall be entitled to receive:
(A) the Accrued Rights; and
(B) a pro rata portion of any Annual Bonus that the Executive
would have been entitled to receive pursuant to Section 3(b) hereof
in respect of the year in which the date of Executive's termination
of employment occurs, based upon the percentage of the calendar
year that shall have elapsed through the date of Executive's
termination, payable when such Annual Bonus would have otherwise
been payable had the Executive's employment not terminated.
Following Executives termination of employment due to death or
Disability, except as set forth in this Section 7(b), Executive shall have no
further rights to any compensation or any other benefits under this
Agreement.
c. By the Company Without Cause or Resignation by Executive
for Good Reason.
--------------------------------------------------------
(i) The Executive's employment hereunder may be terminated by
the Company without Cause or by Executive's resignation for Good Reason.
Notwithstanding the foregoing, none of the events described in clauses (x)
or (y) of Section 7(c)(ii) shall constitute Good Reason unless Executive
shall have notified the Company in writing describing the events which
constitute Good Reason and then only if the Company shall have failed to cure
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<PAGE>
such event within thirty (30) days after the Company's receipt of such
written notice.
(ii) For purposes of this Agreement, "Good Reason" shall
mean: (x) a reduction in the Executive's Base Salary (other than any
reduction that is proportionally the same as a general salary reduction
affecting at least the majority of salaried employees of the Company), (y) a
material and adverse reduction in the Executive's duties and
responsibilities, (z) a transfer of the Executive's primary workplace by more
than fifty (50) miles from the current workplace, other than as approved by
Executive. The Company hereby acknowledges that Executive's current
workplace shall be Petaluma, California.
(iii) If Executive's employment is terminated by the Company
without Cause (other than by reason of death or Disability) or if Executive
resigns for Good Reason, Executive shall be entitled to receive:
(A) the Accrued Rights; and
(B) a pro rata portion of any Annual Bonus that the Executive
would have been entitled to receive pursuant to Section 3(b) hereof
in respect of the year in which the date of Executive's termination
of employment occurs, based upon the percentage of the calendar
year that shall have elapsed through the date of Executive's
termination, payable when such Annual Bonus would have otherwise
been payable had the Executive's employment not terminated;
(C) subject to Executive's continued compliance with the
provisions of Section 8, continued payment of the Base Salary and
Annual Bonus until twelve (12) months after the date of such
termination; provided, that the aggregate amount described in this
clause (C) shall be reduced by the present value of any other cash
severance or termination benefits payable to Executive under any
other plans, programs or arrangements of the Company or its
affiliates; and
(D) subject to Executive's continued compliance with the
provisions of Section 8, continuation of such Employee Benefits (as
described in Section 5 hereof), if any, as to which Executive may
be entitled under the employee benefits plans of the Company until
twelve (12) months after the date of such termination.
Notwithstanding the foregoing, if Executive's resigns for Good
Reason or Executive's employment is terminated by the Company without Cause
following a reduction in Executive's Base Salary (other than any reduction
that is proportionally the same as a general salary reduction affecting at
least the majority of salaried employees of the Company), the Base Salary and
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<PAGE>
Annual Bonus for the purpose of Section 7(c)(iii) shall be based on the Base
Salary prior to such reduction.
Following Executive's termination of employment by the Company
without Cause (other than by reason of Executive's death or Disability) or by
Executive's resignation for Good Reason, except as set forth in this Section
7(c), Executive shall have no further rights to any compensation or any other
benefits under this Agreement.
d. Notice of Termination. Any purported termination of
employment by the Company or by Executive (other than due to Executive's
death) shall be communicated by written Notice of Termination to the other
party hereto in accordance with Section 10(h) hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon and shall
set forth in reasonable detail the facts and circumstances claimed to provide
a basis for termination of employment under the provision so indicated.
8. Nondisclosure of Confidential Information; Non-Competition.
----------------------------------------------------------
a. At any time during or after Executive's employment with
the Company, Executive shall not, without the prior written consent of the
Company, use, divulge, disclose or make accessible to any other person, firm,
partnership, corporation or other entity any Confidential Information (as
hereinafter defined) pertaining to the business of the Company or any of its
subsidiaries, except (i) while employed by the Company, in the business of
and for the benefit of the Company, or (ii) when required to do so by a court
of competent jurisdiction, by any governmental agency having supervisory
authority over the business of the Company, or by any administrative body or
legislative body (including a committee thereof) with jurisdiction to order
Executive to divulge, disclose or make accessible such information. For
purposes of this Section 8(a), "Confidential Information" shall mean non-
public information concerning the financial data, strategic business plans,
and other non-public, proprietary and confidential information of the
Company, its subsidiaries, Ripplewood Holdings L.L.C. or their respective
affiliates as in existence as of the date of Executive's termination of
employment that, in any case, is not otherwise available to the public (other
than by Executive's breach of the terms hereof).
b. As Vice President of Access Products, Executive will
acquire knowledge of Confidential Information and trade secrets. Executive
acknowledges that the Confidential Information and trade secrets which the
Company has provided and will provide to him could play a significant role
were he to directly or indirectly be engaged in any business in Competition
with the Company or its subsidiaries. During the period of his employment
hereunder and for one year thereafter, Executive agrees that, without the
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<PAGE>
prior written consent of the Company, (A) he will not, directly or
indirectly, either as principal, manager, agent, consultant, officer,
stockholder, partner, investor, lender or employee or in any other capacity,
carry on, be engaged in or have any financial interest in (other than an
ownership position of less than 5 percent in any company whose shares are
publicly traded), any business, which is in Competition (as hereinafter
defined) with the Business (as hereinafter defined) and (B) he shall not, on
his own behalf or on behalf of any person, firm or company, directly or
indirectly, solicit for employment any person who has been employed by the
Company or its subsidiaries at any time during the 12 months immediately
preceding such solicitation, in either case to the extent that Executive
would use or inevitably use Confidential Information or trade secrets or that
would otherwise constitute unfair competition.
c. For purposes of this Section 8, a business shall be
deemed to be in Competition with the Business if it is primarily engaged in
or has taken concrete steps toward engaging in the business of research and
development, designing, manufacturing, marketing, distributing, or servicing
or selling components as used in microwave radios, products and equipment,
whether in existence or in development, relating to microwave communications
(including unlicenced spread spectrum radio, licensed microwave radio,
wireless Ethernet bridge, and fixed wireless (e.g., wireless local loop,
point-to-point, point-to-multipoint)), as carried on by the Company or its
affiliates as of the date of Executive's termination of employment, in all
cities, counties, states and countries in which the business of the Company
or its affiliates is then being conducted or its products are being sold.
d. The results and proceeds of Executive's services
hereunder, including, without limitation, any works of authorship resulting
from Executive's services during Executive's employment with the Company
and/or any of the Company's affiliates and any works in progress, will be
works-made-for hire and the Company will be deemed the sole owner throughout
the universe of any and all rights of whatsoever nature therein, whether or
not now or hereafter known, existing, contemplated, recognized or developed,
with the right to use the same in perpetuity in any manner the Company
determines in its sole discretion without any further payment to Executive
whatsoever. If, for any reason, any of such results and proceeds will not
legally be a work-for-hire and/or there are any rights which do not accrue to
the Company under the preceding sentence, then Executive hereby irrevocably
assigns and agrees to assign any and all of Executive's right, title and
interest thereto, including, without limitation, any and all copyrights,
patents, trade secrets, trademarks and/or other rights of whatsoever nature
therein, whether or not now or hereafter known, existing, contemplated,
recognized or developed, to the Company, and the Company will have the right
to use the same in perpetuity throughout the universe in any manner the
Company determines without any further payment to Executive whatsoever.
Executive will, from time to time as may be requested by the Company, (i)
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<PAGE>
during the term of Executive's employment without further consideration, and
(ii) thereafter at Executive's then current hourly rate, do any and all
things which the Company may deem useful or desirable to establish or
document the Company's exclusive ownership of any and all rights in any such
results and proceeds, including, without limitation, the execution of
appropriate copyright and/or patent applications or assignments. To the
extent Executive has any rights in the results and proceeds of Executive's
services that cannot be assigned in the manner described above, Executive
unconditionally and irrevocably waives the enforcement of such rights. This
subsection is subject to and will not be deemed to limit, restrict, or
constitute any waiver by the Company of any rights of ownership to which the
Company may be entitled by operation of law by virtue of the Company being
Executive's employer. This Section does not apply to an invention that
qualifies as a nonassignable invention under Section 2870 of the California
Labor Code, which applies to any invention for which no equipment, supplies,
facilities or Confidential Information was used, which does not (i) relate to
the business of the Company; (ii) relate to the Company's actual or
demonstrable anticipated research or development or (iii) result from any
work performed by Executive for the Company. This confirms that Executive
has been notified of his rights under Section 2870 of the California Labor
Code.
e. Executive and the Company agree that this covenant not to
compete is a reasonable covenant under the circumstances, and further agree
that if in the opinion of any court of competent jurisdiction such restraint
is not reasonable in any respect, such court shall have the right, power and
authority to excise or modify such provision or provisions of this covenant
as to the court shall appear not reasonable and to enforce the remainder of
the covenant as so amended. Executive agrees that any breach of the
covenants contained in this Section 8 would irreparably injure the Company.
Accordingly, Executive agrees that the Company may, in addition to pursuing
any other remedies it may have in law or in equity, cease making any payments
otherwise required by this Agreement and obtain an injunction against
Executive from any court having jurisdiction over the matter restraining any
further violation of this Agreement by Executive.
f. Executive agrees to sign the Company's standard
Employment, Confidential Information and Invention Agreement, which is
attached as Exhibit E; provided that this Agreement shall control over any
contrary or inconsistent terms in Exhibit E.
9. Specific Performance. Executive acknowledges and agrees that
the Company's remedies at law for a breach or threatened breach of any of the
provisions of Section 8 would be inadequate and, in recognition of this fact,
Executive agrees that, in the event of such a breach or threatened breach, in
addition to any remedies at law, the Company, without posting any bond, shall
be entitled to cease making any payments or providing any benefit otherwise
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<PAGE>
required by this Agreement and obtain equitable relief in the form of
specific performance, temporary restraining order, temporary or permanent
injunction or any other equitable remedy which may then be available.
10. Miscellaneous.
-------------
a. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without
regard to conflicts of laws principles thereof.
b. Entire Agreement/Amendments. This Agreement contains the
entire understanding of the parties with respect to the employment of
Executive by the Company. There are no restrictions, agreements, promises,
warranties, covenants or undertakings between the parties with respect to the
subject matter herein other than those expressly set forth herein. This
Agreement may not be altered, modified, or amended except by written
instrument signed by the parties hereto. This Agreement supercedes all prior
agreements and understandings (including verbal agreements) between Executive
and the Company and/or its affiliates regarding the terms and conditions of
Executive's employment with the Company and/or its affiliates
c. No Waiver. The failure of a party to insist upon strict
adherence to any term of this Agreement on any occasion shall not be
considered a waiver of such party's rights or deprive such party of the right
thereafter to insist upon strict adherence to that term or any other term of
this Agreement.
d. Severability. In the event that any one or more of the
provisions of this Agreement shall be or become invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions of this Agreement shall not be affected thereby.
e. Assignment. This Agreement shall not be assignable by
Executive. This Agreement may be assigned by the Company to a company which
is a successor in interest to substantially all of the business operations of
the Company. Such assignment shall become effective when the Company
notifies the Executive of such assignment or at such later date as may be
specified in such notice. Upon such assignment, the rights and obligations
of the Company hereunder shall become the rights and obligations of such
successor company, provided that any assignee expressly assumes the
obligations, rights and privileges of this Agreement.
f. Mitigation. Executive shall be required to mitigate the
amount of any payment provided for pursuant to this Agreement by seeking
other employment (which is acceptable to Executive, in his good faith
determination), taking into account the provisions of Section 8 of this
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<PAGE>
Agreement. Anything in this Agreement to the contrary notwithstanding, in
the event that Executive provides services for pay to anyone other than the
Company or any of its affiliates from the date Executive's employment
hereunder is terminated until twelve months thereafter, the amounts paid to
Executive during such period pursuant to Section 7(c)(iii)(C) to this
Agreement shall be reduced by the amounts of salary, bonus or other
compensation earned by Executive during such period as a result of
Executive's performing such services (regardless of when such earned amounts
are actually paid to Executive).
g. Successors; Binding Agreement. This Agreement shall
inure to the benefit of and be binding upon personal or legal
representatives, executors, administrators, successors, heirs, distributes,
devises and legatees.
h. Notice. For the purpose of this Agreement, notices and
all other communications provided for in the Agreement shall be in writing
and shall be deemed to have been duly given when delivered or mailed by
United States registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth below Agreement, or to such
other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be
effective only upon receipt.
If to the Company:
Western Multiplex Corporation
1196 Borregas Ave.
Sunnyvale, California 94089
Attention: Amir Zoufonoun
If to Executive:
To the most recent address of Executive set forth in the personnel
records of the Company.
i. Withholding Taxes. The Company may withhold from any
amounts payable under this Agreement such Federal, state and local taxes as
may be required to be withheld pursuant to any applicable law or regulation.
j. Counterparts. This Agreement may be signed in
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
k. Arbitration/Attorney's Fees. Any dispute between the
parties regarding this Agreement shall be resolved by a single arbitrator,
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<PAGE>
who is qualified to practice law in California, in accordance with the
employment dispute resolution rules of the America Arbitration Association
then in effect. The arbitrator shall have the authority to grant any relief
available under applicable law. The arbitrator's decision shall be final and
binding on the parties and shall be the exclusive remedy for all such
disputes, except that either party may bring an action in court to compel
arbitration under this Agreement, to enforce an arbitration award in any
court having competent jurisdiction, and to obtain temporary injunctive
relief pending final judgment based on the arbitrator's award. The
arbitration shall take place in Sonoma County, California unless otherwise
agreed by the parties. In any legal action, arbitration or other proceeding
between the parties, the prevailing party shall be entitled to recover
reasonable attorneys' fees and costs.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
WESTERN MULTIPLEX CORPORATION
By: /s/Amir Zoufonoun
---------------------------
Name: Amir Zoufonoun
Title: President
EXECUTIVE:
/s/ Joseph Tavormina
--------------------------
Joseph Tavormina
4709 Devonshire Place
------------------------
Santa Rosa, CA 95405
----------------------------
Address of Executive
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EXHIBIT 10.10
SUBSCRIPTION AND EMPLOYEE STOCKHOLDER'S AGREEMENT
[Employees Receiving Options and Purchasing Common Stock with
Assistance]
This SUBSCRIPTION EMPLOYEE AND STOCKHOLDER'S AGREEMENT, is entered into as
of February 23, 2000 (the "Agreement"), among, WMC Holding Corp., a Delaware
corporation (together with its successors and permitted assigns, "Holding"),
Western Multiplex Corporation, a Delaware corporation (together with its
successors and permitted assigns, "WMC"), the undersigned, as set forth on the
signature page hereof (the "Employee Stockholder") and Ripplewood Partners, L.P.
(together with its successors and permitted assignees (including Permitted
Transferees as defined below)"Ripplewood") (Holding, WMC, Ripplewood and the
Employee Stockholder being hereinafter collectively referred to as the
"Parties").
Recitals
Pursuant to an Agreement and Plan of Merger, dated as of March 24, 2000,
among WMC, Holding, and Ubiquity Communication Inc., a California corporation
("Ubiquity"), Ubiquity merged with and into WMC, a subsidiary of Holding (the
"Merger");
In connection with the Merger, employees and members of management of
Ubiquity are being offered the opportunity to subscribe for shares of Class A
common stock of Holding, par value $.01 per share (excluding any shares received
by the Employee Stockholder in the Merger transaction) ("Common Stock"), and WMC
is issuing options ("Options") to certain of its key employees (which shall
include employees of Ubiquity, effective as of the date of the Merger) under the
1999 Western Multiplex Corporation Stock Incentive Plan (the "Plan") to purchase
shares of Class A Common Stock of WMC, par value $.01 per share, pursuant to
this Agreement;
The Employee Stockholder, Holding and WMC have agreed that the Employee
Stockholder may subscribe for a certain number of shares of Common Stock and,
the Employee Stockholder will receive a certain number of Options pursuant to
the terms of the "Non-Qualified Stock Option Agreement" attached hereto as
Exhibit A;
WMC has agreed, through the guarantee of a loan to the Employee Stockholder
from a designated bank, to assist the Employee Stockholder in purchasing shares
of Common Stock on terms and conditions to be determined by WMC ("Assisted
Shares");
This Agreement is one of several other similar agreements which have been,
or will be, entered into by WMC, Holding and other individuals who are employees
of WMC and who are being offered the right to purchase Common Stock and who are
being granted Options (the "Other Employee Stockholders");
NOW THEREFORE, to implement the foregoing and in consideration of the grant
of Options and of the mutual agreements contained herein, the Parties agree as
follows:
Section 1. Certain Definitions.
(a) As used in this Agreement, the following terms shall have the following
meanings:
"Affiliate" with respect to any person, means any entity directly or
indirectly controlling, controlled by, or under common control with such
person or any entity designated as such by the Board of Directors of such
person in which such person or an Affiliate has an interest.
"Book Value" means, on a per share, fully-diluted basis, shareholder's
equity as determined in accordance with GAAP.
<PAGE>
2
"Cause" means (i) the Employee Stockholder's willful and continued
failure to perform his or her duties with respect to WMC or its
subsidiaries after demand by his or her superior for substantial
performance is made or delivered, (ii) willful misconduct by the Employee
Stockholder involving dishonesty or breach of trust in connection with the
Employee Stockholder's employment, (iii) indictment for any felony or any
misdemeanor involving moral turpitude, (iv) any material breach of the
Employee's restrictive covenants as provided herein and in the Employment,
Confidential Information and Invention Assignment Agreement (as defined
below), or (v) violation of any written WMC policy.
"Employment, Confidential Information and Invention Assignment
Agreement" means the Employment, Confidential Information and Invention
Assignment Agreement in the form attached as Exhibit B hereto to be
executed and delivered by the Employee Stockholder to WMC on the date
hereof.
"Fair Market Value" means, prior to a Public Offering (as defined
below), the fair market value of the shares of Stock, as determined in good
faith by the Board of Directors of WMC (with respect to Option Stock) or
Holding (with respect to Common Stock), and following a Public Offering,
the average daily closing price of the shares of common stock of WMC ("WMC
Common Stock") for the ten consecutive trading days preceding the date the
Fair Market Value of the Stock is required to be determined hereunder.
"Good Reason" means (i) a reduction in the Employee Stockholder's base
salary (other than any general salary reduction and/or reorganization
affecting at least the majority of salaried employees of WMC), (ii) a
material and adverse reduction in the Employee Stockholder's duties and
responsibilities, or (iii) a transfer of the Employee Stockholder's primary
workplace by more than fifty (50) miles from the current workplace, other
than as approved by any of the senior executives of WMC.
The "Option Price" is $0.50 per share (as adjusted for any share
dividend, split, reverse split, combination, recapitalization, liquidation,
reclassification, merger, consolidation or otherwise).
"Permitted Ripplewood/Holding Transferee" means (a) Ripplewood
Holdings L.L.C. ("Ripplewood Holdings")or any Affiliate of Ripplewood
Holdings, (b) a stockholder, partner, member or employee of Ripplewood
Holdings or any Affiliate of Ripplewood Holdings or (c) an employee,
director or officer of Holding or WMC or any subsidiary of Holding or WMC
(up to an aggregate of 5% of the outstanding common stock of WMC and
Holding).
"Public Offering" means a firmly underwritten registered public
offering of WMC Common Stock.
"Securities Act" means the Securities Act of 1933, as amended.
(b) As used in this Agreement, each of the following capitalized terms
shall have the meaning ascribed to them in the Section set forth opposite such
term:
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Affiliate 1(a)
Assisted Shares Recitals
Book Value 1(a)
Call Notice 6(e)
Call Rights 6(d)
Cause 1(a)
Common Stock Recitals
Confidential Offering Memorandum 3(g)
Drag Along Notice 8
Employment, Confidential Information & Invention Assignment
Agreement 1(a)
Employee Stockholder's Trust 3(a)
Fair Market Value 1(a)
Good Reason 1(a)
</TABLE>
<PAGE>
3
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Holding Stock 7(a)
Offer 5
Offeror 5
Option Agreement Recitals
Options Recitals
Option Price 1(a)
Option Stock 3(a)
Other Employee Stockholders Recitals
Permitted Ripplewood/Holding Transferee 1(a)
Permitted Transferee 3(a)
Plan Recitals
Purchase Price 6(d)
Public Offering 1(a)
Restricted Period 4(a)
Ripplewood Holdings 2
SEC 3(e)
Securities Act 1(a)
Stock 3(a)
Tag-Along Notice 7
Termination Not for Cause 5(b)
Transfer 2(a)
WMC Recitals
WMC Common Stock 1(a)
WMC Sale Tag-Along Notice 7
</TABLE>
Section 2. Common Stock; Issuance of Options (a) Subject to the terms and
conditions hereof, Holding hereby agrees to issue and sell to the Employee
Stockholder, and the Employee Stockholder hereby agrees to subscribe for the
number of shares of Common Stock set forth opposite such Employee Stockholder's
name on the signature page hereof at a price of $0.50 per share in cash. In
addition, WMC agrees to guarantee a loan to be made by a bank designated by WMC
to the Employee Stockholder in order to enable the Employee Stockholder to
purchase the Assisted Shares set forth on the signature pages hereof at a
purchase price of $.50 per share in cash and on such other terms and conditions
as are determined by WMC. The closing of such purchase and sale shall take place
at such time and place as is notified to the Employee Stockholder (the "Closing
Date"). On or prior to the Closing Date, the Employee Stockholder shall deliver
to Holding a check in an amount equal to the purchase price for the Common
Stock. Holding shall have no obligation to sell any shares of Common Stock to
any person who (i) is a resident or citizen of a state or other jurisdiction in
which the sale of the Common Stock to him or her would constitute a violation of
the securities or "blue sky" laws of such jurisdiction or (ii) is not an
employee of WMC on the date hereof.
(b) Subject to the terms and conditions hereinafter set forth and upon and
as of the Closing Date, WMC shall issue to the Employee Stockholder the number
of Options set forth opposite the Employee Stockholder's name on the signature
page hereof and the Parties shall execute and deliver to each other copies of
the Non -Qualified Stock Option Agreement concurrently with the issuance of the
Options.
Section 3. Employee Stockholder's Representations, Warranties and
Agreements. (a) The Employee Stockholder agrees and acknowledges that he or she
will not, directly or indirectly, offer, transfer, sell, assign, pledge,
hypothecate or otherwise dispose of (any such act being referred to herein as a
"transfer") any shares of Common Stock (whether purchased on the Closing Date or
acquired at any time thereafter) and, at the time of exercise, the Class A
common stock of WMC issuable upon exercise of the Options (the "Option Stock"
and, collectively with the Common Stock and the Assisted Shares, the "Stock")
unless such transfer complies with Section 4 of this Agreement. If the Employee
Stockholder is an Affiliate, the Employee Stockholder also agrees and
acknowledges that he or she will not transfer any shares of Stock unless:
<PAGE>
4
(i) the transfer is pursuant to an effective registration statement
under the Securities Act, and in compliance with applicable provisions of
state securities laws, (if otherwise permitted under the terms set forth
herein) or
(ii) (A) counsel for the Employee Stockholder (which counsel shall be
reasonably acceptable to WMC or Holding, as the case may be) shall have
furnished WMC or Holding, as the case may be, with an opinion, satisfactory
in form and substance to WMC or Holding, as the case may be, that no such
registration is required because of the availability of an exemption from
registration under the Securities Act and (B) if the Employee Stockholder
is a citizen or resident of any country other than the United States, or
the Employee Stockholder desires to effect any transfer in any such
country, counsel for the Employee Stockholder (which counsel shall be
reasonably satisfactory to WMC, in the case of Option Stock, or Holding, in
the case of Common Stock) shall have furnished WMC or Holding, as the case
may be, with an opinion or other advice satisfactory in form and substance
to WMC or Holding, as the case may be, to the effect that such transfer
will comply with the securities laws of such jurisdiction.
Notwithstanding the foregoing, WMC and Holding acknowledge and agree that any of
the following transfers are deemed to be in compliance with the Securities Act
and this Agreement and no opinion of counsel is required in connection
therewith: (x) a transfer made pursuant to Section 9 hereof, (y) a transfer upon
the death of the Employee Stockholder to his executors, administrators,
testamentary trustees, legatees or beneficiaries or a transfer to the executors,
administrators, testamentary trustees, legatees or beneficiaries of a person who
has become a holder of Stock in accordance with the terms of this Agreement,
provided that it is expressly understood that any such transferee shall be bound
by the provisions of this Agreement and (z) a transfer made after the Closing
Date in compliance with the federal securities laws to a trust or custodianship
the beneficiaries of which may include only the Employee Stockholder, his spouse
or his lineal descendants (an "Employee Stockholder's Trust"), provided that any
such transfer under (x), (y) or (z) is made expressly subject to this Agreement
and that the transferee agrees in writing to be bound by the terms and
conditions hereof. The transferees of Stock pursuant to (x), (y) or (z) who
agree to be bound by the terms of this Agreement are referred to as "Permitted
Transferees".
(b) The certificate (or certificates) representing the Option Stock shall
bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH
TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION
COMPLIES WITH THE PROVISIONS OF THE SUBSCRIPTION AND EMPLOYEE STOCKHOLDER'S
AGREEMENT DATED AS OF FEBRUARY 23, 2000 BETWEEN WESTERN MULTIPLEX
CORPORATION ("WMC"), WMC HOLDING CORP., THE EMPLOYEE STOCKHOLDER NAMED ON
THE FACE HEREOF AND RIPPLEWOOD PARTNERS, L.P. (A COPY OF WHICH IS ON FILE
WITH THE SECRETARY OF WMC)."
(c) The certificate (or certificates) representing the Common Stock shall
bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH
TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION
COMPLIES WITH THE PROVISIONS OF THE SUBSCRIPTION AND EMPLOYEE STOCKHOLDER'S
AGREEMENT DATED AS OF FEBRUARY 23, 2000 BETWEEN WESTERN MULTIPLEX
CORPORATION, WMC HOLDING CORP. ("HOLDING"), THE EMPLOYEE STOCKHOLDER NAMED
ON THE FACE HEREOF AND RIPPLEWOOD PARTNERS, L.P. (A COPY OF WHICH IS ON
FILE WITH THE SECRETARY OF HOLDING)."
(d) The Employee Stockholder acknowledges that he or she has been advised
that (i) a restrictive legend in the form heretofore set forth shall be placed
on the certificates representing the Stock and (ii)
<PAGE>
5
a notation shall be made in the appropriate records of WMC and/or Holding, as
the case may be, indicating that the Stock is subject to restrictions on
transfer and appropriate stop-transfer restrictions will be issued to the
applicable transfer agent with respect to the Stock. If the Employee Stockholder
is an Affiliate, the Employee Stockholder also acknowledges that (1) the Stock
must be held indefinitely and the Employee Stockholder must continue to bear the
economic risk of the investment in the Stock unless it is subsequently
registered under the Securities Act or an exemption from such registration is
available, (2) when and if shares of Stock may be disposed of without
registration in reliance on Rule 144 of the rules and regulations promulgated
under the Securities Act, such disposition can be made only in limited amounts
in accordance with the terms and conditions of such Rule and (3) if the Rule 144
exemption is not available, public sale without registration will require
compliance with some other exemption under the Securities Act.
(e) (i) If any shares of Option Stock are to be disposed of in accordance
with Rule 144 under the Securities Act or otherwise, the Employee Stockholder
shall promptly notify WMC of such intended disposition and shall deliver to WMC
at or prior to the time of such disposition such documentation as WMC may
reasonably request in connection with such sale and, in the case of a
disposition pursuant to Rule 144, shall deliver to WMC an executed copy of any
notice on Form 144 required to be filed with the Securities and Exchange
Commission (the "SEC").
(ii) If any shares of Common Stock are to be disposed of in accordance with
Rule 144 under the Securities Act or otherwise, the Employee Stockholder shall
promptly notify Holding of such intended disposition and shall deliver to
Holding at or prior to the time of such disposition such documentation as
Holding may reasonably request in connection with such sale and, in the case of
a disposition pursuant to Rule 144, shall deliver to Holding an executed copy of
any notice on Form 144 required to be filed with the SEC.
(f) The Employee Stockholder agrees that, if any shares of WMC Common Stock
are offered to the public pursuant to an effective registration statement under
the Securities Act (other than registration of securities issued under an
employee plan), the Employee Stockholder will not effect any public sale or
distribution of any shares of Stock not covered by such registration statement
from the time of the receipt of a notice from WMC that WMC has filed or
imminently intends to file such registration statement to, or within 180 days
after, the effective date of such registration statement, unless otherwise
agreed to in writing by WMC.
(g) The Employee Stockholder represents and warrants that (i) he has
received and reviewed the document(s) comprising the Confidential Information
Memorandum, dated December 21, 1999, (the "Confidential Information
Memorandum,") relating to the Stock and Options, and the documents referred to
therein, certain of which documents set forth the rights, preferences, and
restrictions relating to the Stock and Options, and (ii) he or she has been
given the opportunity to obtain any additional information or documents and to
ask questions and receive answers about such information, WMC, Holding and the
business and prospects of WMC and Holding which he or she deems necessary to
evaluate the merits and risks related to his or her investment in the Stock, and
to verify the Confidential Information Memorandum and the information contained
in the document(s) received as indicated in this Section 3(g), and he or she has
relied solely on such information.
(h) The Employee Stockholder further represents and warrants that (i) his
or her financial condition is such that he or she can afford to bear the
economic risk of holding the Stock for an indefinite period of time and has
adequate means for providing for his or her current needs and personal
contingencies, (ii) he or she can afford to suffer a complete loss of his or her
investment in the Stock, (iii) he or she understands and has taken cognizance of
all risk factors related to the purchase of Stock (including, but not limited
to, those set forth in the Confidential Information Memorandum) and (iv) his or
her knowledge and experience in financial and business matters are such that he
is capable of evaluating the merits and risks of his or her purchase of Stock as
contemplated by this Agreement.
(i) The Employee Stockholder has executed and delivered to WMC the
Employment, Confidential Information and Invention Assignment Agreement.
Section 4. Restrictions on Transfer. Except for transfers to Permitted
Transferees permitted by clauses (x), (y) and (z) of Section 3(a) or a sale of
shares of Stock pursuant to Section 9 of this
<PAGE>
6
Agreement, the Employee Stockholder agrees that he or she will not transfer any
shares of Stock at any time prior to the third anniversary of the Closing Date
(the "Restricted Period"). The Employee Stockholder further agrees not to
transfer any Options, except as expressly provided by this Agreement. No
transfer in violation of this Section 4 shall be made or recorded on the books
of WMC or Holding and any such transfer shall be void and of no effect.
Section 5. Right of First Refusal. If, following the Restricted Period, but
prior to a Public Offering, the Employee Stockholder or any Permitted Transferee
receives a bona fide offer to purchase any or all of his shares of Stock (the
"Offer") from a third party (the "Offeror") which the Employee Stockholder or
any such Permitted Transferee wishes to accept, the Employee Stockholder shall
cause the Offer to be reduced to writing and shall notify WMC, in the case of an
Offer to purchase Option Stock, or Holding, in the case of an Offer to purchase
Common Stock, in writing of his or her wish to accept the Offer. The Employee
Stockholder's notice shall contain an irrevocable offer to sell such shares of
Stock to WMC or Holding, as the case may be (in the manner set forth below), at
a purchase price equal to the price contained in, and on the same terms and
conditions of, the Offer, and shall be accompanied by a copy of the Offer (which
shall identify the Offeror). At any time within 30 days after the date of the
receipt by WMC or Holding of the Employee Stockholder's notice, WMC or Holding,
as the case may be, shall have the right and option to elect to purchase, or to
arrange for a third party (including WMC, Holding or Ripplewood) to elect to
purchase, all of the shares of Stock covered by the Offer either (i) at the same
price and on the same terms and conditions as the Offer or (ii) if the Offer
includes any consideration other than cash, then at the sole option of WMC or
its designee or Holding or its designee, as the case may be, at the equivalent
all cash price, determined in good faith by WMC's or Holding's, as the case may
be, Board of Directors, by delivering notice of such election to the Employee
Stockholder within such 30-day period. If WMC or Holding, as the case may be,
exercises such right, it shall deliver a certified bank check or checks in the
appropriate amount (and any such non-cash consideration to be paid) to the
Employee Stockholder or any Permitted Transferee (as the case may be) at the
principal office of WMC against delivery of certificates or other instruments
representing the shares of Stock so purchased, appropriately endorsed by the
Employee Stockholder and the Permitted Transferee, within 10 business days
following its election. If at the end of the 30-day period, WMC or Holding has
not notified the Employee Stockholder of its election in the manner set forth
above, the Employee Stockholder and the Permitted Transferee may, during the
succeeding 60-day period, sell not less than all of the shares of Stock covered
by the Offer to the Offeror at a price and on terms no less favorable to the
Employee Stockholder or the Permitted Transferee (as the case may be) than those
contained in the Offer. Promptly after such sale, the Employee Stockholder or
the Permitted Transferee (as the case may be) shall notify WMC or Holding, as
the case may be, of the consummation thereof and shall furnish such evidence of
the completion and time of completion of such sale and of the terms thereof as
may reasonably be requested by WMC or Holding. If, at the end of 60 days
following the expiration of the 30-day period for WMC or Holding to purchase the
Stock, the Employee Stockholder or the Permitted Transferee (as the case may be)
has not completed the sale of such shares of Stock as aforesaid, all the
restrictions on sale, transfer or assignment contained in this Agreement shall
again be in effect with respect to such shares of Stock.
Section 6. Call Rights. In the event of the Employee Stockholder's
termination of employment with WMC (and/or if applicable, its subsidiaries),
Holding shall have the right to repurchase the Employee' Stockholder's shares of
Stock as set forth below; provided, however, that with respect to the Assisted
Shares, all Call Rights shall terminate (x) with respect to one-third (1/3) of
the Assisted Shares, upon the first anniversary of the Closing Date, (y) with
respect to the next one-third (1/3) of the Assisted Shares, quarterly (on a pro
rata basis) during the second year following the Closing Date, and (z) with
respect to the final one-third (1/3) of the Assisted Shares, quarterly (on a pro
rata basis) during the third year following the Closing Date.
(a) If, prior to the end of the Restricted Period, (x) the Employee
Stockholder's active employment with WMC (and/or, if applicable, its
subsidiaries) is terminated by WMC for Cause, (y) the beneficiaries of an
Employee Stockholder's Trust shall include any person or entity other than the
Employee Stockholder, his spouse or lineal descendants, or (z) the Employee
Stockholder (and any Permitted Transferees) shall effect a transfer of any
shares of Stock other than as permitted in this Agreement, then:
(i) Holding shall have the right to purchase all or any portion of the
Common Stock (other than the Assisted Shares) then held by the Employee
Stockholder (and any Permitted Transferees) for a purchase price equal to
the lesser of the Fair Market Value per share and the Book Value per share;
<PAGE>
7
(ii) WMC shall have the right to purchase all or any portion of the
Option Stock then held by the Employee Stockholder (and any Permitted
Transferees) for a purchase price equal to the lesser of the Option Price
and the Book Value per Option; and
(iii) All Options shall terminate without any payment.
(iv) Holding shall have the right to purchase all or any portion of
the Assisted Shares then held by the Employee Stockholder (and any
Permitted Transferees) at a price equal to the lesser of (a) the purchase
price per share ($.50) and (b) the Book Value per share.
(b) If, prior to the expiration of the Restricted Period, the Employee
Stockholder's active employment with WMC is terminated without Cause or if the
Employee Stockholder quits for Good Reason, then WMC may purchase all or any
portion of the Assisted Shares then held by the Employee Stockholder (and any
Permitted Transferees) at a price equal to the Fair Market Value per share.
(c) If, prior to the expiration of the Restricted Period, the Employee
Stockholder quits without Good Reason, then WMC will have the right to purchase
all or any portion of the Assisted Shares then held by the Employee Stockholder
(and any Permitted Transferees) for the lesser of (a) the purchase price per
share and the Fair Market Value per share.
(d) If, prior to the expiration of the Restricted Period, the Employee
Stockholder's active employment with WMC (and/or, if applicable, its
subsidiaries) ceases for any reason other than termination by WMC for Cause or
termination due to the death or permanent disability (including if the Employee
Stockholder quits or resigns), then:
(i) Holding shall have the right to purchase all or any portion of the
Common Stock then held by the Employee Stockholder (and any Permitted
Transferees) for a purchase price equal to the Fair Market Value per share;
(ii) WMC shall have the right to purchase all or any portion of vested
Options then held by the Employee Stockholder (and any Permitted
Transferees) at a purchase price equal to the Fair Market Value per vested
Option less the Option Price; provided that, if WMC exercises such
repurchase right with respect to any Option that would have a repurchase
price under this clause (b)(ii) of less than the Option Price at the time
of such exercise, then such Options shall be canceled without any payment;
(iii) WMC shall have the right to purchase all or any portion of the
Option Stock then held by the Employee Stockholder (and any Permitted
Transferees) at a purchase price equal to the Fair Market Value per share;
and
(iv) all unvested Options shall terminate without any payment
therefor.
(e) If the purchaser dies or becomes permanently disabled while still an
employee of WMC (and/or, if applicable, its subsidiaries), then (i) Holding may
purchase all or any portion of the shares of Common Stock then held by the
Employee Stockholder (and any Permitted Transferees) at a purchase price equal
to the Fair Market Value per share; and (ii) WMC may purchase all or any portion
of the vested Options then held by the Employee Stockholder (and any Permitted
Transferees) at a purchase price equal to the Fair Market Value per share less
the Option Price per share.
(f) The price at which Stock or Options are purchased by WMC or Holding
pursuant to Sections 6(a), 6(b) and 6(c) is referred to as the "Purchase Price".
Any right to repurchase pursuant to Sections 6(a), 6(b) and 6(c) is referred to
as a "Call Right".
(g) Absent the extension of a Call Right on account of a default under any
indebtedness agreement or violation of a statute as described in Section 6(f)
below, WMC or Holding, as the case may be, shall have a period of sixty (60)
days from the date of the event giving rise to the Call Right (or if later,
after the discovery of an impermissible transfer) in which to give notice in
writing to the Employee Stockholder of its
<PAGE>
8
election to exercise its Call Rights pursuant to Sections 6(a), 6(b) or 6(c) (a
"Call Notice"); provided that, in the case of the Employee Stockholder's
permanent disability, such 60-day exercise period shall be extended to twelve
(12) months after the event giving rise to the Call Right; and provided further,
that any Call Right available in such case must be exercised within such
12-month period.
(h) A Call Right shall be extended if WMC or Holding is, or would be as a
result of the payment of the Purchase Price, in default under any indebtedness
agreement or in violation of a statute. Any Call Right may be delayed upon such
default or violation for twelve (12) months thereafter; provided however, that,
if in connection with an event giving rise to a Call Right pursuant to Section
6(b), the exercise by WMC or Holding, as the case may be, of its Call Right is
delayed by reason of such default, then and only then will exercisable Options
be deemed to continue to be exercisable for the purposes of the purchase
pursuant to the Call Right and the Purchase Price for the Stock and Options will
be the higher of: (i) the Purchase Price determined as of the month end prior to
termination and (ii) the Purchase Price determined as of the month end prior to
the delayed purchase. In connection with a termination for Cause or any other
event giving rise to a Call Right pursuant to Section 6(a), the Purchase Price
for the Stock and Options shall be the lesser of (i) the Purchase Price
determined as of the month end prior to termination and (ii) the Purchase Price
determined as of the month end prior to the delayed purchase. Any Call Right may
only be delayed upon such default or violation for twelve (12) months
thereafter.
(i) The completion of any purchase pursuant to this Section 6 shall take
place at the principal office of WMC on the tenth business day after the giving
of the Call Notice. The applicable Purchase Price shall be paid by delivery to
the Employee Stockholder (or the Permitted Transferee, as the case may be) of a
certified bank check or checks in the appropriate amount payable to the order of
the Employee Stockholder against delivery of certificates or other instruments
representing the Stock so purchased and appropriate documents canceling the
Options so terminated, appropriately endorsed or executed by the Employee
Stockholder (or the Permitted Transferee, as the case may be) or the Employee
Stockholder's or Permitted Transferee's authorized representative.
(j) Subject to Section 6(f), the Purchase Price shall be calculated as of
the last day of the month preceding the month in which the event giving rise to
the Call Right occurs.
(k) In determining the Purchase Price, appropriate adjustments shall be
made for any share dividends, splits, combinations, recapitalizations or any
other adjustment in the number of outstanding common stock in order to maintain,
as nearly as practicable, the intended operation of the provisions of this
Section 6.
Section 7. Tag-Along Rights. (a) If prior to a Public Offering Ripplewood,
("Ripplewood") desires to transfer a majority or all of its shares of common
stock of Holding ("Holding Stock") to a prospective third party purchaser other
than to a Permitted Ripplewood/Holding Transferee, Ripplewood shall, as a
condition to such transfer, (A) provide a notice to the Employee Stockholder in
writing (a "Tag-Along Notice") of the material terms of the proposed transfer at
least 14 days prior to such transfer and (B) permit the Employee Stockholder (or
cause the Employee Stockholder to be permitted) to sell (either to the
prospective transferee or to another financially reputable transferee reasonably
acceptable to the Employee Stockholder) the same portion of its outstanding
shares of Common Stock and Option Stock on the same terms and conditions,
subject to the same agreements and at the same price as the sale by Ripplewood
(in each case subject to Section 7(c)), which sale shall take place on the date
Ripplewood's shares of Holding Stock (or such portion) are transferred to such
transferee. To calculate the number of outstanding shares of Common Stock and
Option Stock that the Employee Stockholder can sell for the purposes of this
Section 7(a), WMC and Holding shall be treated as a single entity such that the
Employee Stockholder will be able to sell the product of (x) a fraction, the
numerator of which is the number of shares of common stock of Holding being sold
by Ripplewood, and the denominator of which is the total number of shares of
common stock of Holding owned by Ripplewood, multiplied by (y) the total number
of shares of Common Stock and Option Stock owned by the Employee Stockholder
(e.g., if Ripplewood is selling 75% of its interest in common stock of Holding,
the Employee Stockholder will be able to include 75% of its total ownership of
Common Stock and Option Stock, calculated as though WMC and Holding are a single
entity). Should the Employee Stockholder exercise his or her rights pursuant to
this Section 7(a), the Employee Stockholder shall be required to transfer Common
Stock and Option Stock held by him or her in the following order of priority:
(1) first, shares of Common Stock (until the
<PAGE>
9
Employee Stockholder holds no shares of Common Stock), and (2) second, Option
Stock (until the Employee Stockholder holds no shares of Option Stock). The
Employee Stockholder shall have ten days from the date of receipt of a Tag-Along
Notice to exercise his or her right to sell pursuant to this Section 7(a) by
delivering written notice to Ripplewood of his or her intent to exercise such
right. The Employee Stockholder's right to sell in such transaction pursuant to
the above shall terminate if not exercised within such ten-day period.
(b) If Holding sells a majority or all of its interest in WMC to a
prospective third party purchaser other than a Permitted Ripplewood/Holding
Transferee, Holding shall, as a condition to such transfer, (A) provide a notice
to the Employee Stockholder in writing (a "WMC Sale Tag-Along Notice") of the
material terms of the proposed transfer at least 14 days prior to such transfer
and (B) permit the Employee Stockholder (or cause the Employee Stockholder to be
permitted) to sell (either to the prospective transferee or to another
financially reputable transferee reasonably acceptable to the Employee
Stockholder) a number of its outstanding shares of Option Stock equal to (x) the
percentage of the outstanding shares of WMC Common Stock owned by Holding that
are being sold by Holding (e.g. if there are 2,000 shares of WMC Common Stock
outstanding of which Holding owns 1,800 shares and Holding is selling 180
shares, the percentage under this clause (x) will be 10%) multiplied by (y) the
number of shares of Option Stock owned by the Employee Stockholder. Subject to
Section 7(c), any such sale shall be on the same terms and conditions, subject
to the same agreements and at the same price as the sale by Holding, which sale
shall take place on the date Holding's shares of WMC Common Stock (or such
portion) are transferred to such transferee (or transferees). The Employee
Stockholder shall have ten days from the date of receipt of a WMC Sale Tag-Along
Notice to exercise his or her right to sell pursuant to this Section 7 by
delivering written notice to Holding of his or her intent to exercise such
right. The Employee Stockholder's right to sell in such transaction pursuant to
the above shall terminate if not exercised within such ten-day period.
(c) The Employee Stockholder shall not have the right to transfer any
Options pursuant to this Section 7.
Section 8. Drag-Along Rights. (i) If at any time Ripplewood desires to
transfer all or any portion of its shares of Holding Stock to any third party
purchaser(s), other than Permitted Ripplewood/Holding Transferees, or Holding
desires to transfer all or any portion of its shares of WMC Common Stock to any
third party purchaser(s), other than Permitted Ripplewood/Holding Transferees,
Ripplewood shall have the right to require that the Employee Stockholder and its
Permitted Transferees transfer the same portion of the Employee Stockholder's
and its Permitted Transferees' shares of Common Stock and Option Stock to such
third party purchaser(s) on the same terms and conditions, subject to the same
agreements and at the same price as the sale by Ripplewood. To calculate the
number of outstanding shares of Common Stock and Option Stock that the Employee
Stockholder and its Permitted Transferees can be required to sell pursuant to
this Section 8, WMC and Holding shall be treated as a single entity such that
the Employee Stockholder and its Permitted Transferees (considered as a single
stockholder for this purpose) can be required to sell the product of (x) a
fraction, the numerator of which is the number of shares of Holding Stock being
sold by Ripplewood, and the denominator of which is the total number of shares
of Holding Stock owned by Ripplewood, multiplied by (y) the total number of
shares of Common Stock and Option Stock owned by the Employee Stockholder and
its Permitted Transferees (e.g. if Ripplewood is selling 75% of its interest in
Holding Stock, Ripplewood will have the right to require that the Employee
Stockholder and its Permitted Transferees transfer 75% of their total aggregate
ownership of Common Stock and Option Stock, calculated as though WMC and Holding
are a single entity). Should Ripplewood exercise its rights pursuant to this
Section 8, the Employee Stockholder and its Permitted Transferees shall be
required to transfer Common Stock and Option Stock held by them in the following
order of priority: (1) first, shares of Common Stock (until the Employee
Stockholder and its Permitted Transferees hold no shares of Common Stock), and
(2) second, Option Stock (until the Employee Stockholder and its Permitted
Transferees hold no Option Stock). Ripplewood shall provide a notice to the
Employee Stockholder in writing(a "Drag-Along Notice") of such sale at least 10
days prior to such transfer, and the Drag-Along Notice shall identify such third
party purchaser(s), all material terms of the sale and the date of closing. Upon
the closing of any sale by Ripplewood of all (or such portion) of its shares of
Holding Stock or any sale by Holding of WMC Common Stock, as described in a
Drag-Along Notice, such third party purchaser(s) shall pay to the Employee
Stockholder and/or its Permitted Transferees, as the case may be, the
consideration payable to the Employee Stockholder and/or its Permitted
Transferees, as the case may be, in connection with such sale of all (or such
portion) of its shares of Common Stock and Option Stock, and the Employee
Stockholder's and its Permitted Transferee's
<PAGE>
10
shares of Common Stock and Option Stock (or such portion) shall be deemed
transferred to such third party purchaser(s).
Section 9. Sale Participation Rights. At any time following the expiration
of the period ending 180-days after a Public Offering, the Employee Stockholder
and its Permitted Transferees will have the right to sell all or any portion of
the Stock held by such Employee Stockholder and its Permitted Transferees in any
registered offering of WMC Common Stock initiated by WMC, Holding or Ripplewood.
Such registration rights will be on customary terms and conditions (including,
without limitation, customary cut back and lock-up provisions) established in
good faith by WMC's or Holding's Board of Directors and Ripplewood and notified
to the Employee Stockholder and the Other Employee Stockholders.
Section 10. Voting Agreement. (a) From and after the Closing Date, the
Employee Stockholder and its Permitted Transferees: (i) shall vote all of the
shares of Stock held by him, her or it (including, without limitation, shares
acquired after the date hereof) in the same manner as the shares of Holding held
by Ripplewood (in the case of Holding Stock) or Holding (in the case of WMC
Common Stock) are voted on all matters acted upon at any annual or special
meeting of Stockholders or by written consent in lieu of a meeting and (ii)
irrevocably constitutes and appoints the person who is at the time the Senior
Managing Director of Ripplewood Holdings (or his or her designee, with full
power of substitution) his proxy to vote all of the shares of Common Stock held
by the Employee Stockholder in the same manner as the shares of Holding Stock
held by Ripplewood and appoints the person who is at the time the Chief
Executive Officer of WMC (or his or her designee, with full power of
substitution) his proxy to vote all of the shares of Option Stock held by the
Employee Stockholder and its Permitted Transferees in the same manner as the
shares of WMC Common Stock held by Holding are voted on all matters acted upon
at any annual or special meeting of stockholders or by written consent in lieu
of a meeting; provided that this Section 10 shall be inapplicable with respect
to any matters which would both adversely affect the rights of shares of Stock
held by the Employee Stockholder (or its Permitted Transferees) and treat the
Employee Stockholder (or its Permitted Transferees) differently from other
holders of shares of WMC Common Stock or Holdings Stock (it being understood
that a conversion of Holding to a limited liability company and a merger or
other business combination of Holding and WMC will not be deemed to adversely
affect the rights of the Employee Stockholder (or its Permitted Transferees) and
the Employee Stockholder hereby agrees that his or her shares of Common Stock
will be voted in favor of any such action). The voting agreements and proxies
granted pursuant to this Section 10 are coupled with an interest and shall be
valid for the term of this Agreement. The Employee Stockholder represents that
he or she has not granted and is not party to any proxy, voting trust or other
agreement which in each case is inconsistent with or conflicts with the
provisions of this Agreement, and the Employee Stockholder shall not grant any
proxy or become a party to any voting trust or other agreement which in each
case is inconsistent with or conflicts with the provisions of this Agreement.
Section 11. Rights to Negotiate Repurchase Price. Nothing in this Agreement
shall be deemed to restrict or prohibit WMC or Holding from purchasing Stock or
Options from the Employee Stockholder or its Permitted Transferees (or any other
Employee Stockholder), at any time, upon such terms and conditions, and for such
price, as may be mutually agreed upon between the Parties, whether or not at the
time of such purchase circumstances exist which specifically grant WMC or
Holding the right to purchase Stock or Options.
Section 12. Covenant Regarding 83(b) Election. Except as WMC may otherwise
agree in writing, the Employee Stockholder hereby covenants and agrees that he
will make an election provided pursuant to Treasury Regulation 1.83-2 with
respect shares of Option Stock to be acquired upon each exercise of the Employee
Stockholder's Options; and the Employee Stockholder further covenants and agrees
that he or she will furnish WMC with copies of the forms of election the
Employee Stockholder files and within 30 days after each exercise of the
Employee Stockholder Options and with evidence that each such election has been
filed in a timely manner.
Section 13. Notice of Change of Beneficiary. Immediately prior to any
transfer of shares of Stock to an Employee Stockholder's Trust, the Employee
Stockholder shall provide WMC and Holding with a copy of the instruments
creating the Employee Stockholder's Trust and with the identity of the
beneficiaries of the
<PAGE>
11
Employee Stockholder's Trust. The Employee Stockholder shall notify WMC and
Holding as soon as practicable prior to any change in the identity of any
beneficiary of the Employee Stockholder's Trust.
Section 14. Recapitalizations, etc. The provisions of this Agreement shall
apply, to the full extent set forth herein with respect to Stock or the Options,
to any and all shares of capital shares of WMC and Holding or any capital stock,
partnership units or any other security evidencing ownership interests in any
successor or assign of WMC and Holding (whether by merger, consolidation, sale
of assets or otherwise) which may be issued in respect of, in exchange for, or
substitution of Stock or Options, by reason of any share dividend, split,
reverse split, combination, recapitalization, liquidation, reclassification,
merger, consolidation or otherwise.
Section 15. State Securities Laws. WMC and Holding hereby agree to use
their best efforts to comply with all state securities or "blue sky" laws which
might be applicable to the sale of Stock and the issuance of the Options to the
Employee Stockholder.
Section 16. Binding Effect. The provisions of this Agreement shall be
binding upon and accrue to the benefit of the parties hereto and their
respective heirs, legal representatives, successors and assigns. In the case of
a transferee permitted under Section 3(a) hereof, such transferee shall be
deemed the Employee Stockholder hereunder; provided, however, that no transferee
(including without limitation, transferees referred to in Section 3(a) hereof)
shall derive any rights under this Agreement unless and until such transferee
has delivered to WMC and Holding a valid undertaking and becomes bound by the
terms of this Agreement.
Section 17. Amendment. This Agreement may be amended only by a written
instrument signed by the Parties hereto. Notwithstanding the foregoing, this
Agreement may be amended without the consent of any party hereto other than WMC
to provide for any change in the corporate structure of WMC, including its
conversion to a limited liability company or a merger or other business
combination of Holding and WMC.
Section 18. Closing. Except as otherwise provided herein, the closing of
each purchase and sale of Stock and the payment of the Purchase Price by WMC or
Holding upon exercise of a Call Right, if any, pursuant to this Agreement shall
take place at the principal office of WMC on the tenth business day following
delivery of the notice by any Party of its exercise of the right to purchase or
sell such Stock or Options hereunder, as the case may be.
Section 19. Applicable Law. The laws of the state of Delaware shall govern
the interpretation, validity and performance of the terms of this Agreement. Any
suit, action or proceeding against the Employee Stockholder, WMC or Holding,
with respect to this Agreement, or any judgment entered by any court in respect
of any thereof, may be brought in any court of competent jurisdiction in the
State of Delaware and the Parties each hereby submit to the exclusive
jurisdiction of such courts for the purpose of any such suit, action, proceeding
or judgment. The Parties hereby irrevocably waive any objections which either of
them may now or hereafter have to the laying of the venue of any suit, action or
proceeding arising out of or relating to this Agreement brought in any court of
competent jurisdiction in the State of Delaware, and hereby further irrevocably
waive any claim that any such suit, action or proceeding brought in any such
court has been brought in any inconvenient forum. No suit, action or proceeding
against any of the Parties with respect to this Agreement may be brought in any
court, domestic or foreign, or before any similar domestic or foreign authority
other than in a court of competent jurisdiction in the State of Delaware, and
the Parties hereby irrevocably waive any right which any of them may otherwise
have had to bring such an action in any other court, domestic or foreign, or
before any similar domestic or foreign authority. Each Party hereto hereby
irrevocably and unconditionally waives trial by jury in any legal action or
proceeding in relation to this Agreement and for any counterclaim therein.
Section 20. Assignability of Certain Rights by WMC, Holding and Ripplewood.
WMC, Holding and Ripplewood shall have the right to assign any or all of their
rights or obligations to purchase Stock or Options pursuant to this Agreement;
provided, however, that such assigning party shall remain obligated to perform
its obligations notwithstanding such assignment in the event that such assignee
fails to perform the obligations so assigned to it. The rights and obligations
of WMC, Holding and Ripplewood under this Agreement shall inure to the benefit
of, and be binding upon, any of their respective successors.
<PAGE>
12
Section 21. Conflicts with Other Agreements. In the event that any
provision of this Agreement conflicts in any way with the Plan or the provisions
of any Stock Option Agreement to which the Employee Stockholder is a party or
bound, the provisions of this Agreement shall govern.
Section 22. Miscellaneous. (a) In this Agreement all references to
"dollars" or "$" are to United States dollars.
(b) If any provision of this Agreement shall be declared illegal, void or
unenforceable by any court of competent jurisdiction, the other provisions shall
not be affected, but shall remain in full force and effect.
(c) WMC and Holding shall have the right to deduct from any cash payment
made under this Agreement to the Employee Stockholder any federal, state or
local income or other taxes required by law to be withheld with respect to such
payment.
Section 23. Notices. All notices and other communications provided for
herein shall be in writing and shall be deemed to have been duly given if
delivered by hand (whether by overnight courier or otherwise) or sent by
registered or certified mail, return receipt requested, postage prepaid, or by
overnight delivery or telecopy, to the Party to whom it is directed:
(a) If to WMC, to it at the following address:
Western Multiplex Corporation
1196 Borregas Avenue
Sunnyvale, CA 94089
Attn: Kim Viera
Facsimile: 408-542-5300
with a copy to:
Simpson Thacher & Bartlett
3373 Hillview Avenue
Suite 250
Palo Alto, CA 94304
Attn: Daniel Clivner, Esq.
Facsimile: 650-251-5002
(b) If to Holding, to it at the following address:
WMC Holding Corp.
101 California Street
Suite 2825
San Francisco, CA 94111
Attn: Jeffrey M. Hendren
Facsimile: 415-772-9289
with a copy to:
Simpson Thacher & Bartlett
3373 Hillview Avenue
Suite 250
Palo Alto, CA 94304
Attn: Daniel Clivner, Esq.
Facsimile: 650-251-5002
(c) If to Ripplewood, to it at the following address:
<PAGE>
13
Ripplewood Partners, L.P.
One Rockefeller Plaza
New York, NY 10020
Attn: Jeffrey M. Hendren
Facsimile: 212-218-2721
(d) If to the Employee Stockholder, to him at the address set forth below
under his signature; or at such other address as either party shall have
specified by notice in writing to the other.
Section 24. Expiration of Section Provisions. The provisions contained in
Sections 5, 6 and 7 and any portion of any other provision of this Agreement
which incorporates the provisions of Sections 5, 6 and 7 shall terminate and be
of no further force or effect with respect to any shares of Stock sold by the
Employee Stockholder or any Permitted Transferee pursuant to any Public
Offering.
<PAGE>
14
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.
WESTERN MULTIPLEX CORPORATION
By: /s/ Amir Zoufonoun
---------------------------
Name: Amir Zoufonoun
Title: President
WMC HOLDING CORP.
By: /s/ Jeffrey M. Hendren
--------------------------
Name: Jeffrey M. Hendren
Title: Vice President
RIPPLEWOOD PARTNERS, L.P.
By: /s/ Jeffrey M. Hendren
--------------------------
Name: Jeffrey M. Hendren
Title: Vice President
EMPLOYEE STOCKHOLDER
/s/ Joseph J. Tavormina
- ---------------------------
Name: Joseph J. Tavormina
Address: 200,000
4709 Devonshire Place Number of Assisted Shares to be purchased
Santa Rosa, CA 95405 from Western Multiplex Corporation
200,000
Number of Options to purchase share of Class
A Common Stock of Western Multiplex Corp.
being granted
<PAGE>
EXHIBIT 10.11
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement") dated as of April 14, 2000 by
and between Western Multiplex Corporation, a Delaware Company (the "Company")
and Hanan Cohen (the "Executive").
WHEREAS, the Company considers it essential to its best interests
and the best interests of its stockholders to foster the continued employment
of Executive by the Company during the term of this Agreement and Executive
is willing to accept and continue Executive's employment on the terms
hereinafter set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein and for other good and valuable consideration, the parties
agree as follows:
1. Term of Employment; Executive Representation.
--------------------------------------------
a. Employment Term. Executive's term of employment under this
Agreement shall commence on the date hereof and, subject to the terms hereof,
Executive and the Company agree and acknowledge that Executive's employment
with the Company constitutes "at-will" employment and that this Agreement may
be terminated at any time by the Company or Executive; provided, however,
that any termination of employment by Executive (other than for death or
Permanent Disability) may only be made upon 90 days prior written notice to
the Company.
b. Executive Representation. Executive hereby represents to
the Company that the execution and delivery of this Agreement by Executive
and the Company and the performance by Executive of the Executive's duties
hereunder shall not constitute a breach of, or otherwise contravene, the
terms of any employment agreement or other agreement or policy to which
Executive is a party or otherwise bound.
2. Position.
--------
a. While employed hereunder, Executive shall serve as the
Company's Vice President, Operations. In such position, Executive shall have
such duties and authority as shall be determined from time to time by the
chief operating officer of the Company (or his designee) (the "COO").
b. While employed hereunder, Executive will devote
Executive's full business time and best efforts to the performance of
Executive's duties hereunder and will not engage in any other business,
profession or occupation for compensation or otherwise which would conflict
with the rendition of such services either directly or indirectly, without
<PAGE>
the prior written consent of the COO; provided that nothing herein shall
preclude Executive from continuing to serve on the board of directors or
trustees of any business corporation or any charitable organization on which
he currently serves and which is identified on Exhibit A hereto or, subject
to the prior approval of the COO, from accepting appointment to any
additional directorships or trusteeships, provided in each case, and in the
aggregate, that such activities do not interfere with the performance of
Executive's duties hereunder or conflict with Section 8.
3. Base Salary. While employed hereunder, the Company shall pay
Executive a base salary (the "Base Salary") at the annual rate of $150,003,
payable in regular installments in accordance with the Company's usual
payment practices. Executive shall be entitled to increases in Executive's
Base Salary, if any, as may be determined from time to time in the sole
discretion of the Board.
4. Annual Bonus. With respect to each calendar year while
employed hereunder, Executive shall be eligible to earn an annual bonus award
(an "Annual Bonus") pursuant to an annual incentive plan to be established by
the Board; provided, however, that in no event shall the Executive's Annual
Bonus be less than thirty percent (30%) of the Executive's Base Salary.
5. Employee Benefits. The Company shall provide Executive during
the term of his employment hereunder with coverage under all employee pension
and welfare benefit programs, plans and practices in accordance with the
terms thereof, which the Company generally makes available to its senior
executives. Executive shall also be entitled to such number of paid vacation
and sick leave in each calendar year as established under the Company's
policies as in effect from time to time, which shall be taken at such times
as are consistent with Executive's responsibilities hereunder.
6. Business Expenses. Executive is authorized to incur
reasonable expenses in carrying out his duties and responsibilities under
this Agreement, including, without limitation, expenses for travel and
similar items related to such duties and responsibilities. The Company will
reimburse Executive for all such expenses upon presentation by Executive from
time to time of appropriately itemized and approved (consistent with the
Company's policy) accounts of such expenditures.
7. Termination. The Executive's employment hereunder may be
terminated by either party at any time and for any reason; provided that the
parties will be required to give at least 90 days advance written notice of
any resignation or termination of Executive's employment. Notwithstanding
any other provision of this Agreement, the provisions of this Section 7 shall
exclusively govern Executive's rights upon termination of employment with the
Company and its affiliates.
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<PAGE>
a. By the Company For Cause
------------------------
(i) The Executive's employment hereunder may be terminated by
the Company for Cause (as defined below) or upon 90 days prior written
notice, by Executive without Good Reason.
(ii) For purposes of this Agreement, "Cause" shall mean (i)
the Executive's willful and continued failure to perform his or her duties
with respect to the Company or its subsidiaries after demand by his or her
superior for substantial performance is made in writing and delivered, (ii)
willful misconduct by the Executive involving dishonesty or breach of trust
in connection with the Executive's employment, (iii) indictment for any
felony or misdemeanor involving moral turpitude, (iv) any material breach
of the Executive's restrictive covenants as provided in Section 8 of this
Agreement, or (v) violation of any written Company or corporate code of
conduct or other related policy.
(iii) If Executive's employment is terminated by the Company
for Cause or by Executive without Good Reason, Executive shall be entitled to
receive:
(A) the Base Salary through the date of termination;
(B) any Annual Bonus earned but unpaid as of the date of
termination for any previously completed calendar year;
(C) reimbursement for any unreimbursed business expenses
properly incurred by Executive in accordance with Company policy
prior to the date of Executive's termination; and
(D) such Employee Benefits, if any, as to which Executive may
be entitled under the employee benefit plans of the Company (the
amounts described in clauses (A) through (D) hereof being referred
to as the "Accrued Rights").
Following such termination of Executive's employment by the Company
for Cause, except as set forth in this Section 7(a), Executive shall have no
further rights to any compensation or any other benefits under this
Agreement.
b. Disability or Death.
-------------------
(i) The Executive's employment hereunder shall terminate upon
Executive's death and if Executive becomes physically or mentally
incapacitated and is therefore unable for a period of six (6) consecutive
months or for an aggregate of nine (9) months in any twenty-four (24)
consecutive month period to perform Executive's duties (such incapacity is
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<PAGE>
hereinafter referred to as "Disability"). Any question as to the existence
of the Disability of Executive as to which Executive and the Company cannot
agree shall be determined in writing by a qualified independent physician
mutually acceptable to Executive and the Company. If Executive and the
Company cannot agree as to a qualified independent physician, each shall
appoint such a physician and those two physicians shall select a third who
shall make such determination in writing. The determination of Disability
made in writing to the Company and Executive shall be final and conclusive
for all purposes of the Agreement.
(ii) Upon termination of Executive's employment hereunder for
either Disability or death, Executive or Executive's estate (as the case may
be) shall be entitled to receive:
(A) the Accrued Rights;
(B) a pro rata portion of any Annual Bonus that the Executive
would have been entitled to receive pursuant to Section 4 hereof in
such year based upon the percentage of the calendar year that shall
have elapsed through the date of Executive's termination of
employment, payable when such Annual Bonus would have otherwise
been payable had the Executive's employment not terminated; and
(C) a sum equal to three months of Executive's Base Salary,
provided, however, that such amount shall only be paid to
Executive's estate upon termination of Executive's employment due
to Executive's death.
Following Executives termination of employment due to death or
Disability, except as set forth in this Section 7(b), Executive shall have no
further rights to any compensation or any other benefits under this
Agreement.
c. By the Company Without Cause or Resignation by Executive
for Good Reason.
--------------------------------------------------------
(i) The Executive's employment hereunder may be terminated by
the Company without Cause or by Executive's resignation for Good Reason.
(ii) For purposes of this Agreement, "Good Reason" shall
mean:
(x) a reduction in the Executive's base salary (other than any
general salary reduction affecting at least the majority of salaried
employees of the Company), (y) a material and adverse reduction in the
Executive's duties and responsibilities, or (z) a transfer of the Executive's
-4-
<PAGE>
primary workplace by more than thirty (30) miles from the current workplace,
without the consent of the Executive.
Notwithstanding the foregoing, none of the events described in clauses (x),
(y) or (z) of this Section 7(c)(ii) shall constitute Good Reason unless
Executive shall have notified the Company in writing describing the events
which constitute Good Reason and then only if the Company shall have failed
to cure such event within thirty (30) days after the Company's receipt of
such written notice.
(iii) If Executive's employment is terminated by the Company
without Cause (other than by reason of death or Disability) or if Executive
resigns for Good Reason, Executive shall be entitled to receive:
(A) the Accrued Rights; and
(B) subject to Executive's continued compliance with the
provisions of Section 8, continued payment of the Base Salary until
twelve (12) months after the date of such termination; provided
that the aggregate amount described in this clause (B) shall be
reduced by the present value of any other cash severance or
termination benefits payable to Executive under any other plans,
programs or arrangements of the Company or its affiliates.
Following Executive's termination of employment by the Company
without Cause (other than by reason of Executive's death or Disability) or by
Executive's resignation for Good Reason, except as set forth in this Section
7(c), Executive shall have no further rights to any compensation or any other
benefits under this Agreement.
d. Notice of Termination. Any purported termination of
employment by the Company or by Executive (other than due to Executive's
death) shall be communicated by written Notice of Termination to the other
party hereto in accordance with Section 11(h) hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon and shall
set forth in reasonable detail the facts and circumstances claimed to provide
a basis for termination of employment under the provision so indicated.
8. Nondisclosure of Confidential Information; Non-Competition.
(a) At any time during or after Executive's employment with the Company,
Executive shall not, without the prior written consent of the Company, use,
divulge, disclose or make accessible to any other person, firm, partnership,
corporation or other entity any Confidential Information (as hereinafter
defined) pertaining to the business of the Company or any of its
subsidiaries, except (i) while employed by the Company, in the business of
and for the benefit of the Company, or (ii) when required to do so by a court
-5-
<PAGE>
of competent jurisdiction, by any governmental agency having supervisory
authority over the business of the Company, or by any administrative body or
legislative body (including a committee thereof) with jurisdiction to order
Executive to divulge, disclose or make accessible such information. For
purposes of this Section 8(a), "Confidential Information" shall mean non-
public information concerning the financial data, strategic business plans,
and other non-public, proprietary and confidential information of the
Company, its subsidiaries, Ripplewood Holdings L.L.C. or their respective
affiliates as in existence as of the date of Executive's termination of
employment that, in any case, is not otherwise available to the public (other
than by Executive's breach of the terms hereof).
(b) As Vice President, Operations; Executive will acquire
knowledge of Confidential Information and trade secrets. Executive
acknowledges that the Confidential Information and trade secrets which the
Company has provided and will provide to him could play a significant role
were he to directly to indirectly be engaged in any business in Competition
with the Company or its subsidiaries. During the period of his employment
hereunder and for one year thereafter, Executive agrees that, without the
prior written consent of the Company, (A) he will not, directly or
indirectly, either as principal, manager, agent, consultant, officer,
stockholder, partner, investor, lender or employee or in any other capacity,
carry on, be engaged in or have any financial interest in (other than an
ownership position of less than 5 percent in any company whose shares are
publicly traded), any business, which is in Competition (as hereinafter
defined) with the existing business of the Company or its subsidiaries and
(B) he shall not, on his own behalf or on behalf of any person, firm or
company, directly or indirectly, solicit or offer employment to any person
who has been employed by the Company or its subsidiaries at any time during
the 12 months immediately preceding such solicitation to the extent that
Executive would use or inevitably use Confidential Information or trade
secrets or that would otherwise constitute unfair competition.
(c) For purposes of this Section 8, a business shall be deemed to
be in Competition with the Company or its subsidiaries if it is primarily
engaged in or has taken concrete steps toward engaging in the business of
research and development, designing, manufacturing, marketing, distributing,
or servicing or selling microwave radios and related products and equipment
(excluding any components thereof), whether in existence or in development,
relating to microwave communications (including unlicensed spread spectrum
radio, licensed microwave radio, wireless ethernet bridge, and fixed wireless
(e.g., wireless local loop, point-to-point, point-to-multipoint)), as carried
on by the Company or its affiliates as of the date of Executive's termination
of employment, in all cities, counties, states and countries in which the
business of the Company or its affiliates is then being conducted or its
products are being sold.
-6-
<PAGE>
(d) The results and proceeds of Executive's services hereunder,
including, without limitation, any works of authorship resulting from
Executive's services during Executive's employment with the Company and/or
any of the Company's affiliates and any works in progress, will be works-
made-for hire and the Company will be deemed the sole owner throughout the
universe of any and all rights of whatsoever nature therein, whether or not
now or hereafter known, existing, contemplated, recognized or developed, with
the right to use the same in perpetuity in any manner the Company determines
in its sole discretion without any further payment to Executive whatsoever.
If, for any reason, any of such results and proceeds will not legally be a
work-for-hire and/or there are any rights which do not accrue to the Company
under the preceding sentence, then Executive hereby irrevocably assigns and
agrees to assign any and all of Executive's right, title and interest
thereto, including, without limitation, any and all copyrights, patents,
trade secrets, trademarks and/or other rights of whatsoever nature therein,
whether or not now or hereafter known, existing, contemplated, recognized or
developed, to the Company, and the Company will have the right to use the
same in perpetuity throughout the universe in any manner the Company
determines without any further payment to Executive whatsoever. Executive
will, from time to time as may be requested by the Company, (i) during the
term of Executive's employment without further consideration, and (ii)
thereafter at Executive's then current hourly rate, do any and all things
which the Company may deem useful or desirable to establish or document the
Company's exclusive ownership of any and all rights in any such results and
proceeds, including, without limitation, the execution of appropriate
copyright and/or patent applications or assignments. To the extent Executive
has any rights in the results and proceeds of Executive's services that
cannot be assigned in the manner described above, Executive unconditionally
and irrevocably waives the enforcement of such rights. This subsection is
subject to and will not be deemed to limit, restrict, or constitute any
waiver by the Company of any rights of ownership to which the Company may be
entitled by operation of law by virtue of the Company being Executive's
employer. This Section does not apply to an invention that qualifies as a
nonassignable invention under Section 2870 of the California Labor Code,
which applies to any invention for which no equipment, supplies, facilities
or Confidential Information was used, which does not (i) relate to the
business of the Company; (ii) relate to the Company's actual or demonstrable
anticipated research or development or (iii) result from any work performed
by Executive for the Company. This confirms that Executive has been notified
of his rights under Section 2870 of the California Labor Code.
(e) Executive and the Company agree that this covenant not to
compete is a reasonable covenant under the circumstances, and further agree
that if in the opinion of any court of competent jurisdiction such restraint
is not reasonable in any respect, such court shall have the right, power and
authority to excise or modify such provision or provisions of this covenant
as to the court shall appear not reasonable and to enforce the remainder of
-7-
<PAGE>
the covenant as so amended. Executive agrees that any breach of the
covenants contained in this Section 8 would result in material injury the
Company. Accordingly, Executive agrees that the Company may, in addition to
pursuing any other remedies it may have in law or in equity, cease making any
payments otherwise required by this Agreement and obtain an injunction
against Executive from any court having jurisdiction over the matter
restraining any further violation of this Agreement by Executive.
9. Specific Performance. Executive acknowledges and agrees that
the Company's remedies at law for a breach or threatened breach of any of the
provisions of Section 8 would be inadequate and, in recognition of this fact,
Executive agrees that, in the event of such a breach or threatened breach, in
addition to any remedies at law, the Company, without posting any bond, shall
be entitled to cease making any payments or providing any benefit otherwise
required by this Agreement and obtain equitable relief in the form of
specific performance, temporary restraining order, temporary or permanent
injunction or any other equitable remedy which may then be available.
10. Miscellaneous.
-------------
a. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without
regard to conflicts of laws principles thereof.
b. Entire Agreement/Amendments. This Agreement contains the
entire understanding of the parties with respect to the employment of
Executive by the Company. Other than the Confidential Information and
Invention Assignment Agreement that Executive has been required to sign in
connection with his entering into agreements relating to Executive's equity
holdings in the Company, there are no restrictions, agreements, promises,
warranties, covenants or undertakings between the parties with respect to the
subject matter herein other than those expressly set forth herein. This
Agreement may not be altered, modified, or amended except by written
instrument signed by the parties hereto. This Agreement supercedes all prior
agreements and understandings (including verbal agreements) between Executive
and the Company and/or its affiliates regarding the terms and conditions of
Executive's employment with the Company and/or its affiliates.
c. No Waiver. The failure of a party to insist upon strict
adherence to any term of this Agreement on any occasion shall not be
considered a waiver of such party's rights or deprive such party of the right
thereafter to insist upon strict adherence to that term or any other term of
this Agreement.
d. Severability. In the event that any one or more of the
provisions of this Agreement shall be or become invalid, illegal or
-8-
<PAGE>
unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions of this Agreement shall not be affected thereby.
e. Assignment. This Agreement shall not be assignable by
Executive. This Agreement may be assigned by the Company to a company which
is a successor in interest to substantially all of the business operations of
the Company. Such assignment shall become effective when the Company
notifies the Executive of such assignment or at such later date as may be
specified in such notice. Upon such assignment, the rights and obligations
of the Company hereunder shall become the rights and obligations of such
successor company, provided that any assignee expressly assumes the
obligations, rights and privileges of this Agreement.
f. Mitigation. Executive shall be required to mitigate the
amount of any payment provided for pursuant to this Agreement by seeking
other employment, taking into account the provisions of Section 8 of this
Agreement. Anything in this Agreement to the contrary notwithstanding, in
the event that Executive provides services for pay to anyone other than the
Company or any of its affiliates from the date Executive's employment
hereunder is terminated until twelve months thereafter, the amounts paid to
Executive during such period pursuant to this Agreement shall be reduced by
the amounts of salary, bonus or other compensation earned by Executive during
such period as a result of Executive's performing such services (regardless
of when such earned amounts are actually paid to Executive).
g. Successors; Binding Agreement. This Agreement shall
inure to the benefit of and be binding upon personal or legal
representatives, executors, administrators, successors, heirs, distributes,
devises and legatees.
h. Notice. For the purpose of this Agreement, notices and
all other communications provided for in the Agreement shall be in writing
and shall be deemed to have been duly given when delivered or mailed by
United States registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth below Agreement, or to such
other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be
effective only upon receipt.
If to the Company:
Western Multiplex Corporation
1196 Borregas Ave.
Sunnyvale, California 94089
Attention: Amir Zoufonoun
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<PAGE>
If to Executive:
To the most recent address of Executive set forth in the personnel
records of the Company.
i. Withholding Taxes. The Company may withhold from any
amounts payable under this Agreement such Federal, state and local taxes as
may be required to be withheld pursuant to any applicable law or regulation.
j. Counterparts. This Agreement may be signed in
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
WESTERN MULTIPLEX CORPORATION
By: /s/Amir Zoufonoun
--------------------------
Name: Amir Zoufonoun
Title: President
EXECUTIVE:
/s/ Hanan Cohen
-----------------------------
Hanan Cohen
907 Blossom Hill Rd.
-----------------------------
Los Gatos, CA. 95032
-----------------------------
[Address of Executive]
-10-
<PAGE>
EXHIBIT 10.12
SUBSCRIPTION AND EMPLOYEE STOCKHOLDER'S AGREEMENT
[Employee Receiving Options and Purchasing Common Stock with Assistance]
This SUBSCRIPTION EMPLOYEE AND STOCKHOLDER'S AGREEMENT, is entered into as
of January 31, 2000 (the "Agreement"), among, WMC Holding Corp., a Delaware
corporation (together with its successors and permitted assigns, "Holding"),
Western Multiplex Corporation, a Delaware corporation (together with its
successors and permitted assigns, "WMC"), the undersigned, as set forth on the
signature page hereof (the "Employee Stockholder") and Ripplewood Partners, L.P.
(together with its successors and permitted assignees (including Permitted
Transferees as defined below) "Ripplewood") (Holding, WMC, Ripplewood and the
Employee Stockholder being hereinafter collectively referred to as the
"Parties").
Recitals
Pursuant to an Acquisition Agreement, dated as of September 30, 1999, as
amended on October 31, 1999, among WMC, Holding, GTI Acquisition Corp., a
Delaware corporation ("Glenayre"), Glenayre Technologies, Inc., a Delaware
corporation, and Western Multiplex Corporation, a California corporation, WMC
redeemed 42,000,000 shares of Class B common stock of WMC, par value $.01 per
share, held by Glenayre and Holding purchased 35,955,000 shares of outstanding
Common Stock of WMC from Glenayre (the "Recapitalization");
In connection with the Recapitalization, employees and members of
management of WMC are being offered the opportunity to subscribe for shares of
Class A common stock of Holding, par value $.01 per share ("Common Stock"), and
WMC is issuing options ("Options") to certain of its key employees under the
1999 Western Multiplex Corporation Stock Incentive Plan (the "Plan") to purchase
shares of Class A Common Stock of WMC, par value $.01 per share;
The Employee Stockholder, Holding and WMC have agreed that the Employee
Stockholder may subscribe for a certain number of shares of Common Stock and,
the Employee Stockholder will receive a certain number of Options pursuant to
the terms of the "Non-Qualified Stock Option Agreement" attached hereto as
Exhibit A;
WMC has agreed, through the guarantee of a loan to the Employee Stockholder
from a designated bank, to assist the Employee Stockholder in purchasing shares
of Common Stock on terms and conditions to be determined by WMC ("Assisted
Shares");
This Agreement is one of several other similar agreements which have been,
or will be, entered into by WMC, Holding and other individuals who are employees
of WMC and who are being offered the right to purchase Common Stock and who are
being granted Options (the "Other Employee Stockholder");
NOW THEREFORE, to implement the foregoing and in consideration of the grant
of Options and of the mutual agreements contained herein, the Parties agree as
follows:
<PAGE>
2
Section 1. Certain Definitions.
(a) As used in this Agreement, the following terms shall have the following
meanings:
"Affiliate" with respect to any person, means any entity directly or
indirectly controlling, controlled by, or under common control with such
person or any entity designated as such by the Board of Directors of such
person in which such person or an Affiliate has an interest.
"Book Value" means, on a per share, fully-diluted basis, shareholder's
equity as determined in accordance with GAAP.
"Cause" has the same meaning attributed to it in the Employee
Stockholder's Employment Agreement with WMC, dated as of November 1, 1999.
"Employment, Confidential Information and Invention Assignment
Agreement" means the Employment, Confidential Information and Invention
Assignment Agreement in the form attached as Exhibit B hereto to be
executed and delivered by the Employee Stockholder to WMC on the date
hereof.
"Fair Market Value" means, prior to a Public Offering (as defined
below), the fair market value of the shares of Stock, as determined in good
faith by the Board of Directors of WMC (with respect to Option Stock) or
Holding (with respect to Common Stock), and following a Public Offering,
the average daily closing price of the shares of common stock of WMC ("WMC
Common Stock") for the ten consecutive trading days preceding the date the
Fair Market Value of the Stock is required to be determined hereunder.
"Good Reason" means (i) a reduction in the Employee Stockholder's base
salary (other than any general salary reduction and/or reorganization
affecting at least the majority of salaried employees of WMC), (ii) a
material and adverse reduction in the Employee Stockholder's duties and
responsibilities, or (iii) a transfer of the Employee Stockholder's primary
workplace by more than fifty (50) miles from the current workplace, other
than as approved by any of the senior executives of WMC.
The "Option Price" is $0.50 per share (as adjusted for any share
dividend, split, reverse split, combination, recapitalization, liquidation,
reclassification, merger, consolidation or otherwise).
"Permitted Ripplewood/Holding Transferee" means (a) Ripplewood
Holdings L.L.C. ("Ripplewood Holdings") or any Affiliate of Ripplewood
Holdings, (b) a stockholder, partner, member or employee of Ripplewood
Holdings or any Affiliate of Ripplewood Holdings or (c) an employee,
director or officer of Holding or WMC or any subsidiary of Holding or WMC
(up to an aggregate of 5% of the outstanding common stock of WMC and
Holding).
"Public Offering" means a firmly underwritten registered public
offering of WMC Common Stock.
<PAGE>
3
"Securities Act" means the Securities Act of 1933, as amended.
(b) As used in this Agreement, each of the following capitalized terms
shall have the meaning ascribed to them in the Section set forth opposite such
term:
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Affiliate 1(a)
Assisted Shares Recitals
Book Value 1(a)
Call Notice 6(e)
Call Rights 6(d)
Cause 1(a)
Common Stock Recitals
Confidential Offering Memorandum 3(g)
Drag Along Notice 8
Employment, Confidential Information &
Invention Assignment Agreement 1(a)
Employee Stockholder's Trust 3(a)
Fair Market Value 1(a)
Good Reason 1(a)
Holding Stock 7(a)
Offer 5
Offeror 5
Option Agreement Recitals
Options Recitals
Option Price 1(a)
Option Stock 3(a)
Other Employee Stockholders Recitals
Permitted Ripplewood/Holding Transferee 1(a)
Permitted Transferee 3(a)
Plan Recitals
Purchase Price 6(d)
Public Offering 1(a)
Restricted Period 4(a)
Ripplewood Holdings 2
SEC 3(e)
Securities Act 1(a)
Stock 3(a)
Tag-Along Notice 7
Termination Not for Cause 5(b)
Transfer 2(a)
</TABLE>
<PAGE>
4
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
WMC Recitals
WMC Common Stock 1(a)
WMC Sale Tag-Along Notice 7
</TABLE>
Section 2. Common Stock: Issuance of Options. (a) Subject to the terms and
conditions hereof, Holding hereby agrees to issue and sell to the Employee
Stockholder, and the Employee Stockholder hereby agrees to subscribe for the
number of shares of Common Stock set forth opposite such Employee Stockholder's
name on the signature page hereof at a price of $0.50 per share in cash. In
addition, WMC agrees to guarantee a loan to be made by a bank designated by WMC
to the Employee Stockholder in order to enable the Employee Stockholder to
purchase the Assisted Shares set forth on the signature pages hereof at a
purchase price of $.50 per share in cash and on such other terms and conditions
as are determined by WMC. The closing of such purchase and sale shall take place
at such time and place as is notified to the Employee Stockholder (the "Closing
Date"). On or prior to the Closing Date, the Employee Stockholder shall deliver
to Holding a check in an amount equal to the purchase price for the Common
Stock. Holding shall have no obligation to sell any shares of Common Stock to
any person who (i) is a resident or citizen of a state or other jurisdiction in
which the sale of the Common Stock to him or her would constitute a violation of
the securities or "blue sky" laws of such jurisdiction or (ii) is not an
employee of WMC on the date hereof.
(b) Subject to the terms and conditions hereinafter set forth and upon and
as of the Closing Date, WMC shall issue to the Employee Stockholder the number
of Options set forth opposite the Employee Stockholder's name on the signature
page hereof and the Parties shall execute and deliver to each other copies of
the Non-Qualified Option Agreement concurrently with the issuance of the
Options.
Section 3. Employee Stockholder's Representations, Warranties and
Agreements. (a) The Employee Stockholder agrees and acknowledges that he or she
will not, directly or indirectly, offer, transfer, sell, assign, pledge,
hypothecate or otherwise dispose of (any such act being referred to herein as a
"transfer") any shares of Common Stock (whether purchased on the Closing Date or
acquired at any time thereafter) and, at the time of exercise, the Class A
common stock of WMC issuable upon exercise of the Options (the "Option Stock"
and, collectively with the Common Stock and the Assisted Shares, the "Stock")
unless such transfer complies with Section 4 of this Agreement. If the Employee
Stockholder is an Affiliate, the Employee Stockholder also agrees and
acknowledges that he or she will not transfer any shares of Stock unless:
(i) the transfer is pursuant to an effective registration statement
under the Securities Act, and in compliance with applicable provisions of
state securities laws, (if otherwise permitted under the terms set forth
herein) or
<PAGE>
5
(ii) (A) counsel for the Employee Stockholder (which counsel shall be
reasonably acceptable to WMC or Holding, as the case may be) shall have
furnished WMC or Holding, as the case may be, with an opinion, satisfactory
in form and substance to WMC or Holding, as the case may be, that no such
registration is required because of the availability of an exemption from
registration under the Securities Act and (B) if the Employee Stockholder
is a citizen or resident of any country other than the United States, or
the Employee Stockholder desires to effect any transfer in any such
country, counsel for the Employee Stockholder (which counsel shall be
reasonably satisfactory to WMC, in the case of Option Stock, or Holding, in
the case of Common Stock) shall have furnished WMC or Holding, as the case
may be, with an opinion or other advice satisfactory in form and substance
to WMC or Holding, as the case may be, to the effect that such transfer
will comply with the securities laws of such jurisdiction.
Notwithstanding the foregoing, WMC and Holding acknowledge and agree that
any of the following transfers are deemed to be in compliance with the
Securities Act and this Agreement and no opinion of counsel is required in
connection therewith: (x) a transfer made pursuant to Section 9 hereof, (y) a
transfer upon the death of the Employee Stockholder to his executors,
administrators, testamentary trustees, legatees or beneficiaries or a transfer
to the executors, administrators, testamentary trustees, legatees or
beneficiaries of a person who has become a holder of Stock in accordance with
the terms of this Agreement, provided that it is expressly understood that any
such transferee shall be bound by the provisions of this Agreement and (z) a
transfer made after the Closing Date in compliance with the federal securities
laws to a trust or custodianship the beneficiaries of which may include only the
Employee Stockholder, his spouse or his lineal descendants (an "Employee
Stockholder's Trust"), provided that any such transfer under (x), (y) or (z) is
made expressly subject to this Agreement and that the transferee agrees in
writing to be bound by the terms and conditions hereof. The transferees of Stock
purchase to (x), (y) or (z) who agree to be bound by the terms of this Agreement
are referred to as "Permitted Transferees",
(b) The certificate (or certificates) representing the Option Stock shall
bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH
TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION
COMPLIES WITH THE PROVISIONS OF THE SUBSCRIPTION AND EMPLOYEE STOCKHOLDER'S
AGREEMENT DATED AS OF DECEMBER __, 1999 BETWEEN WESTERN MULTIPLEX
CORPORATION ("WMC"), WMC HOLDING CORP., THE EMPLOYEE STOCKHOLDER NAMED ON
THE FACE HEREOF AND RIPPLEWOOD PARTNERS, L.P. (A COPY OF WHICH IS ON FILE
WITH THE SECRETARY OF WMC)."
(c) The certificate (or certificates) representing the Common Stock shall
bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED,
<PAGE>
6
SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH
TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION
COMPLIES WITH THE PROVISIONS OF THE SUBSCRIPTION AND EMPLOYEE STOCKHOLDER'S
AGREEMENT DATED AS OF DECEMBER __, 1999 BETWEEN WESTERN MULTIPLEX
CORPORATION, WMC HOLDING CORP. ("HOLDING"), THE EMPLOYEE STOCKHOLDER NAMED
ON THE FACE HEREOF AND RIPPLEWOOD PARTNERS, L.P. (A COPY OF WHICH IS ON
FILE WITH THE SECRETARY OF HOLDING)."
(d) The Employee Stockholder acknowledges that he or she has been advised
that (i) a restrictive legend in the form heretofore set forth shall be placed
on the certificates representing the Stock and (ii) a notation shall be made in
the appropriate records of WMC and/or Holding, as the case may be, indicating
that the Stock is subject to restrictions on transfer and appropriate stop-
transfer restrictions will be issued to the applicable transfer agent with
respect to the Stock. If the Employee Stockholder is an Affiliate, the Employee
Stockholder also acknowledges that (1) the Stock must be held indefinitely and
the Employee Stockholder must continue to bear the economic risk of the
investment in the Stock unless it is subsequently registered under the
Securities Act or an exemption from such registration is available, (2) when and
if shares of Stock may be disposed of without registration in reliance on Rule
144 of the rules and regulations promulgated under the Securities Act, such
disposition can be made only in limited amounts in accordance with the terms and
conditions of such Rule and (3) if the Rule 144 exemption is not available,
public sale without registration will require compliance with some other
exemption under the Securities Act.
(e)(i) If any shares of Option Stock are to be disposed of in accordance
with Rule 144 under the Securities Act or otherwise, the Employee Stockholder
shall promptly notify WMC of such intended disposition and shall deliver to WMC
at or prior to the time of such disposition such documentation as WMC may
reasonably request in connection with such sale and, in the case of a
disposition pursuant to Rule 144, shall deliver to WMC an executed copy of any
notice of Form 144 required to be filed with the Securities and Exchange
Commission (the "SEC").
(ii) If any shares of Common Stock are to be disposed of in accordance with
Rule 144 under the Securities Act or otherwise, the Employee Stockholder shall
promptly notify Holding of such intended disposition and shall deliver to
Holding at or prior to the time of such disposition such documentation as
Holding may reasonably request in connection with such sale and, in the case of
a disposition pursuant to Rule 144, shall deliver to Holding an executed copy of
any notice of Form 144 required to be filed with the SEC.
(f) The Employee Stockholder agrees that, if any shares of WMC Common Stock
are offered to the public pursuant to an effective registration statement under
the Securities Act (other than registration of securities issued under an
employee plan), the Employee Stockholder will not
<PAGE>
7
effect any public sale or distribution of any shares of Stock not covered by
such registration statement from the time of the receipt of a notice from WMC
that WMC has filed or imminently intends to file such registration statement to,
or within 180 days after, the effective date of such registration statement,
unless otherwise agreed to in writing by WMC.
(g) The Employee Stockholder represents and warrants that (i) he has
received and reviewed the document(s) comprising the Confidential Information
Memorandum, dated December 21, 1999 (the "Confidential Information Memorandum"),
relating to the Stock and Options, and the documents referred to therein,
certain of which documents set forth the rights, preferences, and restrictions
relating to the Stock and Options, and (ii) he or she has been given the
opportunity to obtain any additional information or documents and to ask
questions and receive answers about such information, WMC, Holding and the
business and prospects of WMC and Holding which he or she deems necessary to
evaluate the merits and risks related to his or her investment in the Stock, and
to verify the Confidential Information Memorandum and the information contained
in the document(s) received as indicated in this Section 3(g), and he or she has
relied solely on such information.
(h) The Employee Stockholder further represents and warrants that (i) his
or her financial condition is such that he or she can afford to bear the
economic risk of holding the Stock for an indefinite period of time and has
adequate means for providing for his or her current needs and personal
contingencies, (ii) he or she can afford to suffer a complete loss of his or her
investment in the Stock, (iii) he or she understands and has taken cognizance of
all risk factors related to the purchase of Stock (including, but not limited
to, those set forth in the Confidential Information Memorandum) and (iv) his or
her knowledge and experience in financial and business matters are such that he
is capable of evaluating the merits and risks of his or her purchase of Stock as
contemplated by this Agreement.
(i) The Employee Stockholder has executed and delivered to WMC the
Employment, Confidential Information and Invention Assignment Agreement.
Section 4. Restrictions on Transfer. Except for transfers to Permitted
Transferees permitted by clauses (x), (y) and (z) of Section 3(a) or a sale of
shares of Stock pursuant to Section 9 of this Agreement, the Employee
Stockholder agrees that he or she will not transfer any shares of Stock at any
time prior to the third anniversary of the Closing Date (the "Restricted
Period"). The Employee Stockholder further agrees not to transfer any Options,
except as expressly provided by this Agreement. No transfer in violation of this
Section 4 shall be made or recorded on the books of WMC or Holding and any such
transfer shall be void and of no effect.
Section 5. Right of First Refusal. If, following the Restricted Period, but
prior to a Public Offering, the Employee Stockholder or any Permitted Transferee
receives a bona fide offer to purchase any or all of his shares of Stock (the
"Offer") from a third party (the "Offeror") which the Employee Stockholder or
any such Permitted Transferee wishes to accept, the Employee Stockholder shall
cause the Offer to be reduced to writing and shall notify WMC, in the case of
<PAGE>
8
an Offer to purchase Option Stock, or Holding, in the case of an Offer to
purchase Common Stock, in writing of his or her wish to accept the Offer. The
Employee Stockholder's notice shall contain an irrevocable offer to sell such
shares of Stock to WMC or Holding, as the case may be (in the manner set forth
below), at a purchase price equal to the price contained in, and on the same
terms and conditions of, the Offer, and shall be accompanied by a copy of the
Offer (which shall identify the Offeror). At any time within 30 days after the
date of the receipt by WMC or Holding of the Employee Stockholder's notice, WMC
or Holding, as the case may be, shall have the right and option to elect to
purchase, or to arrange for a third party (including WMC, Holding or Ripplewood)
to elect to purchase, all of the shares of Stock covered by the Offer either (i)
at the same price and on the same terms and conditions as the Offer or (ii) if
the Offer includes any consideration other than cash, then at the sole option of
WMC or its designee or Holding or its designee, as the case may be, at the
equivalent all cash price, determined in good faith by WMC's or Holding's, as
the case may be, Board of Directors, by delivering notice of such election to
the Employee Stockholder within such 30-day period. If WMC or Holding, as the
case may be, exercises such right, it shall deliver a certified bank check or
checks in the appropriate amount (and any such non-cash consideration to be
paid) to the Employee Stockholder or any Permitted Transferee (as the case may
be) at the principal office of WMC against delivery of certificates or other
instruments representing the shares of Stock so purchased, appropriately
endorsed by the Employee Stockholder and the Permitted Transferee, within 10
business days following its election. If at the end of the 30-day period, WMC or
Holding has not notified the Employee Stockholder of its election in the manner
set forth above, the Employee Stockholder and the Permitted Transferee may,
during the succeeding 60-day period, sell not less than all of the shares of
Stock covered by the Offer to the Offeror at a price and on terms no less
favorable to the Employee Stockholder or the Permitted Transferee (as the case
may be) than those contained in the Offer. Promptly after such sale, the
Employee Stockholder or the Permitted Transferee (as the case may be) shall
notify WMC or Holding, as the case may be, of the consummation thereof and shall
furnish such evidence of the completion and time of completion of such sale and
of the terms thereof as may reasonably be requested by WMC or Holding. If, at
the end of 60 days following the expiration of the 30-day period for WMC or
Holding to purchase the Stock, the Employee Stockholder or the Permitted
Transferee (as the case may be) has not completed the sale of such shares of
Stock as aforesaid, all the restrictions on sale, transfer or assignment
contained in this Agreement shall again be in effect with respect to such shares
of Stock.
Section 6. Call Rights. (a) If, prior to the end of the Restricted Period,
(x) the Employee Stockholder's active employment with WMC (and/or, if
applicable, its subsidiaries) is terminated by WMC for Cause, (y) the
beneficiaries of an Employee Stockholder's Trust shall include any person or
entity other than the Employee Stockholder, his spouse or lineal descendants, or
(z) the Employee Stockholder (and any Permitted Transferees) shall effect a
transfer of any shares of Stock other than as permitted in this Agreement, then:
(i) Holding shall have the right to purchase all or any portion of the
Common Stock (other than the Assisted Shares) then held by the Employee
Stockholder (and any Permitted Transferees) for a purchase price equal to
the lesser of the Fair Market Value per share and the Book Value per
<PAGE>
9
share;
(ii) WMC shall have the right to purchase all or any portion of the
Option Stock then held by the Employee Stockholder (and any Permitted
Transferees) for a purchase price equal to the lesser of the Option Price
and the Book Value per Option; and
(iii) All Options shall terminate without any payment.
(iv) Holding shall have the right to purchase all or any portion of
the Assisted Shares then held by the Employee Stockholder (and any
Permitted Transferees) at a price equal to the lesser of (a) the purchase
price per share ($.50) and (b) the Book Value per share.
(b) If, prior to the expiration of the Restricted Period, the Employee
Stockholder's active employment with WMC is terminated without Cause or if the
Employee Stockholder quits or for Good Reason, then WMC may purchase all or any
portion of the Assisted Shares then held by the Employee Stockholder (and any
Permitted Transferees) at a price equal to the Fair Market Value per share.
(c) If, prior to the expiration of the Restricted Period, the Employee
Stockholder quits without Good Reason, then WMC will have the right to purchase
all or any portion of the Assisted Shares then held by the Employee Stockholder
(and any Permitted Transferees) for the lesser of (a) the purchase price per
share and the Fair Market Value per share.
(d) If, prior to the expiration of the Restricted Period, the Employee
Stockholder's active employment with WMC (and/or, if applicable, its
subsidiaries) ceases for any reason other than termination by WMC for Cause or
termination due to the death or permanent disability (including if the Employee
Stockholder quits or resigns), then:
(i) Holding shall have the right to purchase all or any portion of the
Common Stock then held by the Employee Stockholder (and any Permitted
Transferees) for a purchase price equal to the Fair Market Value per share;
(ii) WMC shall have the right to purchase all or any portion of vested
Options then held by the Employee Stockholder (and any Permitted
Transferees) at a purchase price equal to the Fair Market Value per vested
Option less the Option Price; provided that, if WMC exercises such
repurchase right with respect to any Option that would have a repurchase
price under this clause (b)(ii) of less than the Option Price at the time
of such exercise, then such Options shall be canceled without any payment;
(iii) WMC shall have the right to purchase all or any portion of the
Option Stock then held by the Employee Stockholder (and any Permitted
Transferees) at a purchase price equal to the Fair
<PAGE>
10
Market Value per share; and
(iv) all unvested Options shall terminate without any payment
therefor.
(e) If the purchaser dies or becomes permanently disabled while still an
employee of WMC (and/or, if applicable, its subsidiaries), then (i) Holding may
purchase all or any portion of the shares of Common Stock then held by the
Employee Stockholder (and any Permitted Transferees) at a purchase price equal
to the Fair Market Value per share; and (ii) WMC may purchase all of the Option
Stock then held by the Employee Stockholder (and any Permitted Transferees) at a
purchase price equal to the Fair Market Value per share less the Option Price
per share.
(f) The price at which Stock or Options are purchased by WMC or Holding
pursuant to Sections 5(a), 5(b) and 5(c) is referred to as the "Purchase Price".
Any right to repurchase pursuant to Sections 5(a), 5(b) and 5(c) is referred to
as a "Call Right".
(g) Absent the extension of a Call Right on account of a default under any
indebtedness agreement or violation of a statute as described in Section 5(f)
below, WMC or Holding, as the case may be, shall have a period of sixty (60)
days from the date of the event giving rise to the Call Right (or if later,
after the discovery of an impermissible transfer) in which to give notice in
writing to the Employee Stockholder of its election to exercise its Call Rights
pursuant to Sections 5(a), 5(b) or 5(c) (a "Call Notice"); provided that, in the
case of the Employee Stockholder's permanent disability, such 60-day exercise
period shall be extended to twelve (12) months after the event giving rise to
the Call Right; and provided further, that any Call Right available in such case
must be exercised within such 12-month period.
(h) A Call Right shall be extended if WMC or Holding is, or would be as a
result of the payment of the Purchase Price, in default under any indebtedness
agreement or in violation of a statute. Any Call Right may be delayed upon such
default or violation of twelve (12) months thereafter; provided however, that,
if in connection with an event giving rise to a Call Right pursuant to Section
5(b), the exercise by WMC or Holding, as the case may be, of its Call Right is
delayed by reason of such default, then and only then will exercisable Options
be deemed to continue to be exercisable for the purposes of the purchase
pursuant to the Call Right and the Purchase Price for the Stock and Options will
be the higher of: (i) the Purchase Price determined as of the month end prior to
termination and (ii) the Purchase Price determined as of the month end prior to
the delayed purchase. In connection with a termination for Cause or any other
event giving rise to a Call Right pursuant to Section 6(a), the Purchase Price
for the Stock and Options shall be the lesser of (i) the Purchase Price
determined as of the month end prior to termination and (ii) the Purchase Price
determined as of the month end prior to the delayed purchase. Any Call Right may
only be delayed upon such default or violation for twelve (12) months
thereafter.
(i) The completion of any purchase pursuant to this Section 5 shall take
place at the principal office of WMC on the tenth business day after the giving
of the Call Notice. The applicable
<PAGE>
11
Purchase Price shall be paid by delivery to the Employee Stockholder (or the
Permitted Transferee, as the case may be) of a certified bank check or checks in
the appropriate amount payable to the order of the Employee Stockholder against
delivery of certificates or other instruments representing the Stock so
purchased and appropriate documents canceling the Options so terminated,
appropriately endorsed or executed by the Employee Stockholder (or the Permitted
Transferee, as the case may be) or the Employee Stockholder's or Permitted
Transferee's authorized representative.
(j) Subject to Section 5(f), the Purchase Price shall be calculated as of
the last day of the month preceding the month in which the event giving rise to
the Call Right occurs.
(k) In determining the Purchase Price, appropriate adjustments shall be
made for any share dividends, splits, combinations, recapitalizations or any
other adjustment in the number of outstanding common stock in order to maintain,
as nearly as practicable, the intended operation of the provisions of this
Section 6.
Section 7. Tag-Along Rights. (a) If prior to a Public Offering Ripplewood,
("Ripplewood") desires to transfer a majority or all of its shares of common
stock of Holding ("Holding Stock") to a prospective third party purchaser other
than to a Permitted Ripplewood/ Holding Transferee, Ripplewood shall, as a
condition to such transfer, (A) provide a notice to the Employee Stockholder in
writing (a "Tag-Along Notice") of the material terms of the proposed transfer at
least 14 days prior to such transfer and (B) permit the Employee Stockholder (or
cause the Employee Stockholder to be permitted) to sell (either to the
prospective transferee or to another financially reputable transferee reasonably
acceptable to the Employee Stockholder) the same portion of its outstanding
shares of Common Stock and Option Stock on the same terms and conditions,
subject to the same agreements and at the same price as the sale by Ripplewood
(in each case subject to Section 7(c)), which sale shall take place on the date
Ripplewood's shares of Holding Stock (or such portion) are transferred to such
transferee. To calculate the number of outstanding shares of Common Stock and
Option Stock that the Employee Stockholder can sell for the purposes of this
Section 7(a), WMC and Holding shall be treated as a single entity such that the
Employee Stockholder will be able to sell the product of (x) a fraction, the
numerator of which is the number of shares of common stock of Holding being sold
by Ripplewood, and the denominator of which is the total number of shares of
common stock of Holding owned by Ripplewood, multiplied by (y) the total number
of shares of Common Stock and Option Stock owned by the Employee Stockholder
(e.g., if Ripplewood is selling 75% of its interest in common stock of Holding,
the Employee Stockholder will be able to include 75% of its total ownership of
Common Stock and Option Stock, calculated as though WMC and Holding are a single
entity). Should the Employee Stockholder exercise his or her rights pursuant to
this Section 7(a), the Employee Stockholder shall be required to transfer Common
Stock and Option Stock held by him or her in the following order of priority:
(1) first, shares of Common Stock (until the Employee Stockholder holds no
shares of Common Stock), and (2) second, Option Stock (until the Employee
Stockholder holds no shares of Option Stock). The Employee Stockholder shall
have ten days from the date of receipt of a Tag-Along Notice to exercise his or
<PAGE>
12
her right to sell pursuant to this Section 7(a) by delivering written notice to
Ripplewood of his or her intent to exercise such right. The Employee
Stockholder's right to sell in such transaction pursuant to the above shall
terminate if not exercised within such ten-day period.
(b) If Holding sells a majority or all of its interest in WMC to a
prospective third party purchaser other than a Permitted Ripplewood/Holding
Transferee, Holding shall, as a condition to such transfer, (A) provide a notice
to the Employee Stockholder in writing (a "WMC Sale Tag-Along Notice") of the
material terms of the proposed transfer at least 14 days prior to such transfer
and (B) permit the Employee Stockholder (or cause the Employee Stockholder to be
permitted) to sell (either to the prospective transferee or to another
financially reputable transferee reasonably acceptable to the Employee
Stockholder) a number of its outstanding shares of Option Stock equal to (x) the
percentage of the outstanding shares of WMC Common Stock owned by Holding that
are being sold by Holding (e.g., if there are 2,000 shares of WMC Common Stock
outstanding of which Holding owns 1,800 shares and Holding is selling 180
shares, the percentage under this clause (x) will be 10%) multiplied by (y) the
number of shares of Option Stock owned by the Employee Stockholder. Subject to
Section 7(c), any such sale shall be on the same terms and conditions, subject
to the same agreements and at the same price as the sale by Holding, which sale
shall take place on the date Holding's shares of WMC Common Stock (or such
portion) are transferred to such transferee (or transferees). The Employee
Stockholder shall have ten days from the date of receipt of a WMC Sale Tag-Along
Notice to exercise his or her right to sell pursuant to this Section 7 by
delivering written notice to Holding of his or her intent to exercise such
right. The Employee Stockholder's right to sell in such transaction pursuant to
the above shall terminate if not exercised within such ten-day period.
(c) The Employee Stockholder shall not have the right to transfer any
Options pursuant to this Section 7.
Section 8. Drag-Along Rights. (i) If at any time Ripplewood desires to
transfer all or any portion of its shares of Holding Stock to any third party
purchaser(s), other than Permitted Ripplewood/Holding Transferees, or Holding
desires to transfer all or any portion of its shares of WMC Common Stock to any
third party purchaser(s), other than Permitted Ripplewood/Holding Transferees,
Ripplewood shall have the right to require that the Employee Stockholder and its
Permitted Transferees transfer the same portion of the Employee Stockholder's
and its Permitted Transferees' shares of Common Stock and Option Stock to such
third party purchaser(s) on the same terms and conditions, subject to the same
agreements and at the same price as the sale by Ripplewood. To calculate the
number of outstanding shares of Common Stock and Option Stock that the Employee
Stockholder and its Permitted Transferees can be required to sell pursuant to
this Section 8, WMC and Holding shall be treated as a single entity such that
the Employee Stockholder and its Permitted Transferees (considered as a single
stockholder for this purpose) can be required to sell the product of (x) a
fraction, the numerator of which is the number of shares of Holding Stock being
sold by Ripplewood, and the denominator of which is the total number of shares
of Holding Stock owned by Ripplewood, multiplied by (y) the total number of
<PAGE>
13
shares of Common Stock and Option Stock owned by the Employee Stockholder and
its Permitted Transferees (e.g. if Ripplewood is selling 75% of its interest in
Holding Stock, Ripplewood will have the right to require that the Employee
Stockholder and its Permitted Transferees transfer 75% of their total aggregate
ownership of Common Stock and Option Stock, calculated as though WMC and Holding
are a single entity). Should Ripplewood exercise its rights pursuant to this
Section 8, the Employee Stockholder and its Permitted Transferees shall be
required to transfer Common Stock and Option Stock held by them in the following
order of priority: (1) first, shares of Common Stock (until the Employee
Stockholder and its Permitted Transferees hold no shares of Common Stock), and
(2) second, Option Stock (until the Employee Stockholder and its Permitted
Transferees hold no Option Stock). Ripplewood shall provide a notice to the
Employee Stockholder in writing (a "Drag-Along Notice") of such sale at least 10
days prior to such transfer, and the Drag-Along Notice shall identify such third
party purchaser(s), all material terms of the sale and the date of closing. Upon
the closing of any sale by Ripplewood of all (or such portion) of its shares of
Holding Stock or any sale by Holding of WMC Common Stock, as described in a
Drag-Along Notice, such third party purchaser(s) shall pay to the Employee
Stockholder and/or its Permitted Transferees, as the case may be, the
consideration payable to the Employee Stockholder and/or its Permitted
Transferees, as the case may be, in connection with such sale of all (or such
portion) of its shares of Common Stock and Option Stock, and the Employee
Stockholder's and its Permitted Transferee's shares of Common Stock and Option
Stock (or such portion) shall be deemed transferred to such third party
purchaser(s).
Section 9. Sale Participation Rights. At any time following the expiration
of the period ending 180-days after a Public Offering, the Employee Stockholder
and its Permitted Transferees will have the right to sell all or any portion of
the Stock held by such Employee Stockholder and its Permitted Transferees in any
registered offering of WMC Common Stock initiated by WMC, Holding or Ripplewood.
Such registration rights will be on customary terms and conditions (including,
without limitation, customary cut back and lock-up provisions) established in
good faith by WMC's or Holding's Board of Directors and Ripplewood and notified
to the Employee Stockholder and the Other Employee Stockholders.
Section 10. Voting Agreement. (a) From and after the Closing Date, the
Employee Stockholder and its Permitted Transferees: (i) shall vote all of the
shares of Stock held by him, her or it (including, without limitation, shares
acquired after the date hereof) in the same manner as the shares of Holding held
by Ripplewood (in the case of Holding Stock) or Holding (in the case of WMC
Common Stock) are voted on all matters acted upon at any annual or special
meeting of Stockholders or by written consent in lieu of a meeting and (ii)
irrevocably constitutes and appoints the person who is at the time the Senior
Managing Director of Ripplewood Holdings (or his or her designee, with full
power of substitution) his proxy to vote all of the shares of Common Stock held
by the Employee Stockholder in the same manner as the shares of Holding Stock
held by Ripplewood and appoints the person who is at the time the Chief
Executive Officer of WMC (or his or her designee, with full power of
substitution) his proxy to vote all of the shares of Option Stock held by the
Employee Stockholder and its Permitted Transferees in the
<PAGE>
14
same manner as the shares of WMC Common Stock held by Holding are voted on all
matters acted upon at any annual or special meeting of stockholders or by
written consent in lieu of a meeting; provided that this Section 10 shall be
inapplicable with respect to any matters which would both adversely affect the
rights of shares of Stock held by the Employee Stockholder (or its Permitted
Transferees) and treat the Employee Stockholder (or its Permitted Transferees)
differently from other holders of shares of WMC Common Stock or Holdings Stock
(it being understood that a conversion of Holding to a limited liability company
and a merger or other business combination of Holding and WMC will not be deemed
to adversely affect the rights of the Employee Stockholder (or its Permitted
Transferees) and the Employee Stockholder hereby agrees that his or her shares
of Common Stock will be voted in favor of any such action). The voting
agreements and proxies granted pursuant to this Section 10 are coupled with an
interest and shall be valid for the term of this Agreement. The Employee
Stockholder represents that he or she has not granted and is not party to any
proxy, voting trust or other agreement which in each case is inconsistent with
or conflicts with the provisions of this Agreement, and the Employee Stockholder
shall not grant any proxy or become a party to any voting trust or other
agreement which in each case is inconsistent with or conflicts with the
provisions of this Agreement.
Section 11. Rights to Negotiate Repurchase Price. Nothing in this Agreement
shall be deemed to restrict or prohibit WMC or Holding from purchasing Stock or
Options from the Employee Stockholder or its Permitted Transferees (or any other
Employee Stockholder), at any time, upon such terms and conditions, and for such
price, as may be mutually agreed upon between the Parties, whether or not at the
time of such purchase circumstances exist which specifically grant WMC or
Holding the right to purchase Stock or Options.
Section 12. Covenant Regarding 83(b) Election. Except as WMC may otherwise
agree in writing, the Employee Stockholder hereby covenants and agrees that he
will make an election provided pursuant to Treasury Regulation 1.83-2 with
respect shares of Option Stock to be acquired upon each exercise of the Employee
Stockholder's Options; and the Employee Stockholder further covenants and agrees
that he or she will furnish WMC with copies of the forms of election the
Employee Stockholder files and within 30 days after each exercise of the
Employee Stockholder Options and with evidence that each such election has been
filed in a timely manner.
Section 13. Notice of Change of Beneficiary. Immediately prior to any
transfer of shares of Stock to an Employee Stockholder's Trust, the Employee
Stockholder shall provide WMC and Holding with a copy of the instruments
creating the Employee Stockholder's Trust and with the identity of the
beneficiaries of the Employee Stockholder's Trust. The Employee Stockholder
shall notify WMC and Holding as soon as practicable prior to any change in the
identity of any beneficiary of the Employee Stockholder's Trust.
Section 14. Recapitalizations, etc. The provisions of this Agreement shall
apply, to the full extent set forth herein with respect to Stock or the Options,
to any and all shares of capital shares of WMC and Holding or any capital stock,
partnership units or any other security evidencing
<PAGE>
15
ownership interests in any successor or assign of WMC and Holding (whether by
merger, consolidation, sale of assets or otherwise) which may be issued in
respect of, in exchange for, or substitution of Stock or Options, by reason of
any share dividend, split, reverse split, combination, recapitalization,
liquidation, reclassification, merger, consolidation or otherwise.
Section 15. State Securities Laws. WMC and Holding hereby agree to use
their best efforts to comply with all state securities or "blue sky" laws which
might be applicable to the sale of Stock and the issuance of the Options to the
Employee Stockholder.
Section 16. Binding Effect. The provisions of this Agreement shall be
binding upon and accrue to the benefit of the parties hereto and their
respective heirs, legal representatives, successors and assigns. In the case of
a transferee permitted under Section 3(a) hereof, such transferee shall be
deemed the Employee Stockholder hereunder; provided, however, that no transferee
(including without limitation, transferees referred to in Section 3(a) hereof)
shall derive any rights under this Agreement unless and until such transferee
has delivered to WMC and Holding a valid undertaking and becomes bound by the
terms of this Agreement.
Section 17. Amendment. This Agreement may be amended only by a written
instrument signed by the Parties hereto. Notwithstanding the foregoing, this
Agreement may be amended without the consent of any party hereto other than WMC
to provide for any change in the corporate structure of WMC, including its
conversion to a limited liability company or a merger or other business
combination of Holding and WMC.
Section 18. Closing. Except as otherwise provided herein, the closing of
each purchase and sale of Stock and the payment of the Purchase Price by WMC or
Holding upon exercise of a Call Right, if any, pursuant to this Agreement shall
take place at the principal office of WMC on the tenth business day following
delivery of the notice by any Party of its exercise of the right to purchase or
sell such Stock or Options hereunder, as the case may be.
Section 19. Applicable Law. The laws of the state of Delaware shall govern
the interpretation, validity and performance of the terms of this Agreement. Any
suit, action or proceeding against the Employee Stockholder, WMC or Holding,
with respect to this Agreement, or any judgment entered by any court in respect
of any thereof, may be brought in any court of competent jurisdiction in the
State of Delaware and the Parties each hereby submit to the exclusive
jurisdiction of such courts for the purpose of any such suit, action, proceeding
or judgment. The Parties hereby irrevocably waive any objections which either of
them may now or hereafter have to the laying of the venue of any suit, action or
proceeding arising out of or relating to this Agreement brought in any court of
competent jurisdiction in the State of Delaware, and hereby further irrevocably
waive any claim that any such suit, action or proceeding brought in any such
court has been brought in any inconvenient forum. No suit, action or proceeding
against any of the Parties with respect to this Agreement may be brought in any
court, domestic or foreign, or before any similar domestic or foreign authority
other than in a court of competent jurisdiction in the State of Delaware, and
the Parties hereby irrevocably waive any right which any of them may otherwise
have had to bring such an action in any other court, domestic or foreign, or
before any
<PAGE>
16
similar domestic or foreign authority. Each Party hereto hereby irrevocably and
unconditionally waives trial by jury in any legal action or proceeding in
relation to this Agreement and for any counterclaim therein.
Section 20. Assignability of Certain Rights by WMC, Holding and Ripplewood.
WMC, Holding and Ripplewood shall have the right to assign any or all of their
rights or obligations to purchase Stock or Options pursuant to this Agreement;
provided, however, that such assigning party shall remain obligated to perform
its obligations notwithstanding such assignment in the event that such assignee
fails to perform the obligations so assigned to it. The rights and obligations
of WMC, Holding and Ripplewood under this Agreement shall insure to the benefit
of, and be binding upon, any of their respective successors.
Section 21. Conflicts with Other Agreements. In the event that any
provision of this Agreement conflicts in any way with the Plan or the provisions
of any Stock Option Agreement to which the Employee Stockholder is a party or
bound, the provisions of this Agreement shall govern.
Section 22. Miscellaneous. (a) In this Agreement all references to
"dollars" or "$" are to United States dollars.
(b) If any provision of this Agreement shall be declared illegal, void or
unenforceable by any court of competent jurisdiction, the other provisions shall
not be affected, but shall remain in full force and effect.
(c) WMC and Holding shall have the right to deduct from any cash payment
made under this Agreement to the Employee Stockholder any federal, state or
local income or other taxes required by law to be withheld with respect to such
payment.
Section 23. Notices. All notices and other communications provided for
herein shall be in writing and shall be deemed to have been duly given if
delivered by hand (whether by overnight courier or otherwise) or sent by
registered or certified mail, return receipt requested, postage prepaid, or by
overnight delivery or telecopy, to the Party to whom it is directed:
(a) If to WMC, to it at the following address:
Western Multiplex Corporation
1196 Borregas Avenue
Sunnyvale, CA 94089
Attn: Kim Viera
Facsimile: 408-542-5300
<PAGE>
17
with a copy to:
Simpson Thacher & Bartlett
3373 Hillview Avenue
Suite 250
Palo Alto, CA 94304
Attn: Daniel Cilvner, Esq.
Facsimile: 650-251-5002
(b) If to Holding, to it at the following address:
WMC Holding Corp.
101 California Street
Suite 2825
San Francisco, CA 94111
Attn: Jeffrey M. Hendren
Facsimile: 415-772-9289
with a copy to:
Simpson Thacher & Bartlett
3373 Hillview Avenue
Suite 250
Palo Alto, CA 94304
Attn: Daniel Cilvner, Esq.
Facsimile: 650-251-5002
(c) If to Ripplewood, to it at the following address:
Ripplewood Partners, L.P.
One Rockefeller Plaza
New York, NY 10020
Attn: Jeffrey M. Hendren
Facsimile: 212-218-2721
(d) If to the Employee Stockholder, to him at the address set forth below
under his signature; or at such other address as either party shall have
specified by notice in writing to the other.
Section 24. Expiration of Section Provisions. The provisions contained in
Sections 5, 6 and 7 and any portion of any other provision of this Agreement
which incorporates the provisions of Sections 5, 6 and 7 shall terminate and be
of no further force or effect with respect to any shares of Stock sold by the
Employee Stockholder or any Permitted Transferee pursuant to any Public
Offering.
<PAGE>
18
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
WESTERN MULTIPLEX CORPORATION
By: /s/ Jeffrey M. Hendren
-------------------------------
Name: Jeffrey M. Hendren
Title: Vice President
WMC HOLDING CORP.
By: /s/ Jeffrey M. Hendren
-------------------------------
Name: Jeffrey M. Hendren
Title: Vice President
RIPPLEWOOD PARTNERS, L.P.
By: /s/ Jeffrey M. Hendren
-------------------------------
Name: Jeffrey M. Hendren
Title: Principal
EMPLOYEE STOCKHOLDER 95,000
Number of shares of Class A Common Stock
/s/ Hanan Cohen of WMC Holding Corp. to be purchased
- ----------------------------
Name: Hanan Cohen
Address:
190,000
677 Torrington Drive Number of Assisted Shares to be guaranteed
Sunnyvale, CA 94087 by Western Multiplex Corporation
209,000
(consisting of 95,000 Time-Based, 38,000
5x Options and 76,000 10x Options)
Number of Options to purchase share of
Class A Common Stock of Western Multiplex
Corp. being granted
<PAGE>
19
EXHIBIT B
FORM OF
EMPLOYMENT, CONFIDENTIAL INFORMATION AND INVENTION
ASSIGNMENT AGREEMENT
Please see Exhibit F to the Confidential Information Memorandum
<PAGE>
EXHIBIT 10.13
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement") dated February 28, 2000 by and
between Western Multiplex Corporation, a Delaware Company (the "Company") and
John H. Saefke (the "Executive").
WHEREAS, the Company considers it essential to its best interests and the
best interests of its stockholders to foster the continued employment of
Executive by the Company during the term of this Agreement and Executive is
willing to accept and continue Executive's employment on the terms hereinafter
set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein and for other good and valuable consideration, the parties agree as
follows:
1. Term of Employment; Executive Representation.
a. Employment Term. Executive's term of employment under this Agreement
shall commence on the date hereof and, subject to the terms hereof, Executive
and the Company agree and acknowledge that Executive's employment with the
Company constitutes "at-will" employment and that this Agreement may be
terminated at any time by the Company or Executive; provided, however, that any
termination of employment by Executive (other than for death or Permanent
Disability) may only be made upon 90 days prior written notice to the Company.
b. Executive Representation. Executive hereby represents to the Company
that the execution and delivery of this Agreement by Executive and the Company
and the performance by Executive of the Executive's duties hereunder shall not
constitute a breach of, or otherwise contravene, the terms of any employment
agreement or other agreement or policy to which Executive is a party or
otherwise bound.
2. Position.
a. While employed hereunder, Executive shall serve as the Company's Vice
President, International Sales. In such position, Executive shall have such
duties and authority as shall be determined from time to time by the chief
operating officer of the Company (or his designee) (the "COO").
b. While employed hereunder, Executive will devote Executive's full
business time and best efforts to the performance of Executive's duties
hereunder and will not engage in any other business, profession or occupation
for compensation or otherwise which would conflict with the rendition of such
services either directly or indirectly, without the prior written consent of the
COO; provided that nothing herein shall preclude Executive from continuing to
serve on the board of directors or trustees of any business corporation or any
<PAGE>
2
charitable organization on which he currently serves and which is identified on
Exhibit A hereto or, subject to the prior approval of the COO, from accepting
appointment to any additional directorships or trusteeships, provided in each
case, and in the aggregate, that such activities do not interfere with the
performance of Executive's duties hereunder or conflict with Section 8.
3. Base Salary. While employed hereunder, the Company shall pay Executive a
base salary (the "Base Salary") at the annual rate of $110,250, payable in
regular installments in accordance with the Company's usual payment practices.
Executive shall be entitled to such increases in Executive's Base Salary, if
any, as may be determined from time to time in the sole discretion of the Board.
4. Annual Bonus. With respect to each calendar year while employed
hereunder, Executive shall be eligible to earn an annual bonus award (an "Annual
Bonus") pursuant to an annual incentive plan to be established by the Board.
5. Employee Benefits. The Company shall provide Executive during the term
of his employment hereunder with coverage under all employee pension and welfare
benefit programs, plans and practices in accordance with the terms thereof,
which the Company generally makes available to its senior executives. Executive
shall also be entitled to such number of paid vacation and sick leave in each
calendar year as established under the Company's policies as in effect from time
to time, which shall be taken at such times as are consistent with Executive's
responsibilities hereunder.
6. Business Expenses. Executive is authorized to incur reasonable expenses
in carrying out his duties and responsibilities under this Agreement, including,
without limitation, expenses for travel and similar items related to such duties
and responsibilities. The Company will reimburse Executive for all such expenses
upon presentation by Executive from time to time of appropriately itemized and
approved (consistent with the Company's policy) accounts of such expenditures.
7. Termination. The Executive's employment hereunder may be terminated by
either party at any time and for any reason; provided that Executive will be
required to give the Company at least 90 days advance written notice of any
resignation of Executive's employment. Notwithstanding any other provision of
this Agreement, the provisions of this Section 7 shall exclusively govern
Executive's rights upon termination of employment with the Company and its
affiliates.
a. By the Company For Cause
(i) The Executive's employment hereunder may be terminated by the Company
for Cause (as defined below) or upon 90 days prior written notice, by Executive
without Good Reason.
(ii) For purposes of this Agreement, "Cause" shall mean (i) the Executive's
willful and continued failure to perform his or her duties with respect to the
<PAGE>
3
Company or its subsidiaries after demand by his or her superior for substantial
performance is made or delivered, (ii) willful misconduct by the Executive
involving dishonesty or breach of trust in connection with the Executive's
employment, (iii) indictment for any felony or misdemeanor involving moral
turpitude, (iv) any material breach of the Executive's restrictive covenants as
provided in Section 8 of this Agreement, or (v) violation of any written Company
policy.
(iii) If Executive's employment is terminated by the Company for Cause or
by Executive without Good Reason, Executive shall be entitled to receive:
(A) the Base Salary through the date of termination;
(B) any Annual Bonus earned but unpaid as of the date of termination
for any previously completed calendar year;
(C) reimbursement for any unreimbursed business expenses properly
incurred by Executive in accordance with Company policy prior to the date
of Executive's termination; and
(D) such Employee Benefits, if any, as to which Executive may be
entitled under the employee benefit plans of the Company (the amounts
described in clauses (A) through (D) hereof being referred to as the
"Accrued Rights").
Following such termination of Executive's employment by the Company for
Cause, except as set forth in this Section 7(a), Executive shall have no further
rights to any compensation or any other benefits under this Agreement.
b. Disability or Death.
(i) The Executive's employment hereunder shall terminate upon Executive's
death and if Executive becomes physically or mentally incapacitated and is
therefore unable for a period of six (6) consecutive months or for an aggregate
of nine (9) months in any twenty-four (24) consecutive month period to perform
Executive's duties (such incapacity is hereinafter referred to as "Disability").
Any question as to the existence of the Disability of Executive as to which
Executive and the Company cannot agree shall be determined in writing by a
qualified independent physician mutually acceptable to Executive and the
Company. If Executive and the Company cannot agree as to a qualified independent
physician, each shall appoint such a physician and those two physicians shall
select a third who shall make such determination in writing. The determination
of Disability made in writing to the Company and Executive shall be final and
conclusive for all purposes of the Agreement.
(ii) Upon termination of Executive's employment hereunder for either
Disability or death, Executive or Executive's estate (as the case may be) shall
be entitled to receive:
<PAGE>
4
(A) the Accrued Rights; and
(B) a pro rata portion of any Annual Bonus that the Executive would
have been entitled to receive pursuant to Section 4 hereof in such year
based upon the percentage of the calendar year that shall have elapsed
through the date of Executive's termination of employment, payable when
such Annual Bonus would have otherwise been payable had the Executive's
employment not terminated.
Following Executives termination of employment due to death or Disability,
except as set forth in this Section 7(b), Executive shall have no further rights
to any compensation or any other benefits under this Agreement.
c. By the Company Without Cause or Resignation by Executive for Good
Reason.
(i) The Executive's employment hereunder may be terminated by the Company
without Cause or by Executive's resignation for Good Reason.
(ii) For purposes of this Agreement, "Good Reason" shall mean: (x) a
reduction in the Executive's base salary (other than any general salary
reduction affecting at least the majority of salaried employees of the Company),
(y) a material and adverse reduction in the Executive's duties and
responsibilities, or (z) a transfer of the Executive's primary workplace by more
than fifty (50) miles from the current workplace, other than as approved by any
of the senior executives of the Company.
Notwithstanding the foregoing, none of the events described in clauses (x) or
(y) of this Section 7(c)(ii) shall constitute Good Reason unless Executive shall
have notified the Company in writing describing the events which constitute Good
Reason and then only if the Company shall have failed to cure such event within
thirty (30) days after the Company's receipt of such written notice.
(iii) If Executive's employment is terminated by the Company without Cause
(other than by reason of death or Disability) or if Executive resigns for Good
Reason, Executive shall be entitled to receive:
(A) the Accrued Rights; and
(B) subject to Executive's continued compliance with the provisions of
Section 8, continued payment of the Base Salary until twelve (12) months
after the date of such termination; provided that the aggregate amount
described in this clause (B) shall be reduced by the present value of any
other cash severance or termination benefits payable to Executive under any
other plans, programs or arrangements of the Company or its affiliates.
<PAGE>
5
Following Executive's termination of employment by the Company without
Cause (other than by reason of Executive's death or Disability) or by
Executive's resignation for Good Reason, except as set forth in this Section
7(c), Executive shall have no further rights to any compensation or any other
benefits under this Agreement.
d. Notice of Termination. Any purported termination of employment by the
Company or by Executive (other than due to Executive's death) shall be
communicated by written Notice of Termination to the other party hereto in
accordance with Section 11(h) hereof. For purposes of this Agreement, a "Notice
of Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of employment under the provision so indicated.
8. Nondisclosure of Confidential Information; Non-Competition. (a) At any
time during or after Executive's employment with the Company, Executive shall
not, without the prior written consent of the Company, use, divulge, disclose or
make accessible to any other person, firm, partnership, corporation or other
entity any Confidential Information (as hereinafter defined) pertaining to the
business of the Company or any of its subsidiaries, except (i) while employed by
the Company, in the business of and for the benefit of the Company, or (ii) when
required to do so by a court of competent jurisdiction, by any governmental
agency having supervisory authority over the business of the Company, or by any
administrative body or legislative body (including a committee thereof) with
jurisdiction to order Executive to divulge, disclose or make accessible such
information. For purposes of this Section 8(a), "Confidential Information" shall
mean non-public information concerning the financial data, strategic business
plans, and other non-public, proprietary and confidential information of the
Company, its subsidiaries, Ripplewood Holdings L.L.C. or their respective
affiliates as in existence as of the date of Executive's termination of
employment that, in any case, is not otherwise available to the public (other
than by Executive's breach of the terms hereof).
(b) As Vice President, International Sales, Executive will acquire
knowledge of Confidential Information and trade secrets. Executive acknowledges
that the Confidential Information and trade secrets which the Company has
provided and will provide to him could play a significant role were he to
directly to indirectly be engaged in any business in Competition with the
Company or its subsidiaries. During the period of his employment hereunder and
for one year thereafter, Executive agrees that, without the prior written
consent of the Company, (A) he will not, directly or indirectly, either as
principal, manager, agent, consultant, officer, stockholder, partner, investor,
lender or employee or in any other capacity, carry on, be engaged in or have any
financial interest in (other than an ownership position of less than 5 percent
in any company whose shares are publicly traded), any business, which is in
Competition (as hereinafter defined) with the existing business of the Company
or its subsidiaries and (B) he shall not, on his own behalf or on behalf of any
person, firm or company, directly or indirectly, solicit or offer employment to
any person who has been employed by the Company or its subsidiaries at any time
during the 12 months immediately preceding such solicitation to the extent that
Executive would use or inevitably use Confidential Information or trade secrets
or that would otherwise constitute unfair competition.
<PAGE>
6
(c) For purposes of this Section 8, a business shall be deemed to be in
Competition with the Company or its subsidiaries if it is engaged in or has
taken concrete steps toward engaging in the business of research and
development, designing, manufacturing, marketing, distributing, or servicing or
selling components as used in microwave radios, products and equipment, whether
in existence or in development, relating to microwave communications (including
unlicensed spread spectrum radio, licensed microwave radio, wireless ethernet
bridge, and fixed wireless (e.g., wireless local loop, point-to-point,
point-to-multipoint)), as carried on by the Company or its affiliates as of the
date of Executive's termination of employment, in all cities, counties, states
and countries in which the business of the Company or its affiliates is then
being conducted or its products are being sold.
(d) The results and proceeds of Executive's services hereunder, including,
without limitation, any works of authorship resulting from Executive's services
during Executive's employment with the Company and/or any of the Company's
affiliates and any works in progress, will be works-made-for hire and the
Company will be deemed the sole owner throughout the universe of any and all
rights of whatsoever nature therein, whether or not now or hereafter known,
existing, contemplated, recognized or developed, with the right to use the same
in perpetuity in any manner the Company determines in its sole discretion
without any further payment to Executive whatsoever. If, for any reason, any of
such results and proceeds will not legally be a work-for-hire and/or there are
any rights which do not accrue to the Company under the preceding sentence, then
Executive hereby irrevocably assigns and agrees to assign any and all of
Executive's right, title and interest thereto, including, without limitation,
any and all copyrights, patents, trade secrets, trademarks and/or other rights
of whatsoever nature therein, whether or not now or hereafter known, existing,
contemplated, recognized or developed, to the Company, and the Company will have
the right to use the same in perpetuity throughout the universe in any manner
the Company determines without any further payment to Executive whatsoever.
Executive will, from time to time as may be requested by the Company, (i) during
the term of Executive's employment without further consideration, and (ii)
thereafter at Executive's then current hourly rate, do any and all things which
the Company may deem useful or desirable to establish or document the Company's
exclusive ownership of any and all rights in any such results and proceeds,
including, without limitation, the execution of appropriate copyright and/or
patent applications or assignments. To the extent Executive has any rights in
the results and proceeds of Executive's services that cannot be assigned in the
manner described above, Executive unconditionally and irrevocably waives the
enforcement of such rights. This subsection is subject to and will not be deemed
to limit, restrict, or constitute any waiver by the Company of any rights of
ownership to which the Company may be entitled by operation of law by virtue of
the Company being Executive's employer. This Section does not apply to an
invention that qualifies as a nonassignable invention under Section 2870 of the
California Labor Code, which applies to any invention for which no equipment,
supplies, facilities or Confidential Information was used, which does not (i)
relate to the business of the Company; (ii) relate to the Company's actual or
demonstrable anticipated research or development or (iii) result from any work
performed by Executive for the Company. This confirms that Executive has been
notified of his rights under Section 2870 of the California Labor Code.
<PAGE>
7
(d) Executive and the Company agree that this covenant not to compete is a
reasonable covenant under the circumstances, and further agree that if in the
opinion of any court of competent jurisdiction such restraint is not reasonable
in any respect, such court shall have the right, power and authority to excise
or modify such provision or provisions of this covenant as to the court shall
appear not reasonable and to enforce the remainder of the covenant as so
amended. Executive agrees that any breach of the covenants contained in this
Section 8 would irreparably injure the Company. Accordingly, Executive agrees
that the Company may, in addition to pursuing any other remedies it may have in
law or in equity, cease making any payments otherwise required by this Agreement
and obtain an injunction against Executive from any court having jurisdiction
over the matter restraining any further violation of this Agreement by
Executive.
9. Specific Performance. Executive acknowledges and agrees that the
Company's remedies at law for a breach or threatened breach of any of the
provisions of Section 8 would be inadequate and, in recognition of this fact,
Executive agrees that, in the event of such a breach or threatened breach, in
addition to any remedies at law, the Company, without posting any bond, shall be
entitled to cease making any payments or providing any benefit otherwise
required by this Agreement and obtain equitable relief in the form of specific
performance, temporary restraining order, temporary or permanent injunction or
any other equitable remedy which may then be available.
10. Miscellaneous.
a. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to conflicts
of laws principles thereof.
b. Entire Agreement/Amendments. This Agreement contains the entire
understanding of the parties with respect to the employment of Executive by the
Company. There are no restrictions, agreements, promises, warranties, covenants
or undertakings between the parties with respect to the subject matter herein
other than those expressly set forth herein. This Agreement may not be altered,
modified, or amended except by written instrument signed by the parties hereto.
This Agreement supercedes all prior agreements and understandings (including
verbal agreements) between Executive and the Company and/or its affiliates
regarding the terms and conditions of Executive's employment with the Company
and/or its affiliates
c. No Waiver. The failure of a party to insist upon strict adherence to any
term of this Agreement on any occasion shall not be considered a waiver of such
party's rights or deprive such party of the right thereafter to insist upon
strict adherence to that term or any other term of this Agreement.
d. Severability. In the event that any one or more of the provisions of
this Agreement shall be or become invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
of this Agreement shall not be affected thereby.
<PAGE>
8
e. Assignment. This Agreement shall not be assignable by Executive. This
Agreement may be assigned by the Company to a company which is a successor in
interest to substantially all of the business operations of the Company. Such
assignment shall become effective when the Company notifies the Executive of
such assignment or at such later date as may be specified in such notice. Upon
such assignment, the rights and obligations of the Company hereunder shall
become the rights and obligations of such successor company, provided that any
assignee expressly assumes the obligations, rights and privileges of this
Agreement.
f. Mitigation. Executive shall be required to mitigate the amount of any
payment provided for pursuant to this Agreement by seeking other employment,
taking into account the provisions of Section 8 of this Agreement. Anything in
this Agreement to the contrary notwithstanding, in the event that Executive
provides services for pay to anyone other than the Company or any of its
affiliates from the date Executive's employment hereunder is terminated until
twelve months thereafter, the amounts paid to Executive during such period
pursuant to this Agreement shall be reduced by the amounts of salary, bonus or
other compensation earned by Executive during such period as a result of
Executive's performing such services (regardless of when such earned amounts are
actually paid to Executive).
g. Successors; Binding Agreement. This Agreement shall inure to the benefit
of and be binding upon personal or legal representatives, executors,
administrators, successors, heirs, distributes, devises and legatees.
h. Notice. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below Agreement, or to such other address as
either party may have furnished to the other in writing in accordance herewith,
except that notice of change of address shall be effective only upon receipt.
If to the Company:
Western Multiplex Corporation
1196 Borregas Ave.
Sunnyvale, California 94089
Attention: Amir Zoufonoun
If to Executive:
To the most recent address of Executive set forth in the personnel
records of the Company.
i. Withholding Taxes. The Company may withhold from any amounts payable
under this Agreement such Federal, state and local taxes as may be required to
be withheld pursuant to any applicable law or regulation.
<PAGE>
9
j. Counterparts. This Agreement may be signed in counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
WESTERN MULTIPLEX CORPORATION
By: /s/ Jeffrey M. Hendren
----------------------------------
Name: Jeffrey M. Hendren
Title: Vice President
EXECUTIVE:
/s/ John H. Saefke
----------------------------------
John H. Saefke
53 Woodhill Drive
Redwood City, CA 94061
[Address of Executive]
<PAGE>
EXHIBIT 10.14
SUBSCRIPTION AND EMPLOYEE STOCKHOLDER'S AGREEMENT
[Employee Receiving Options and Purchasing Common Stock with Assistance]
This SUBSCRIPTION EMPLOYEE AND STOCKHOLDER'S AGREEMENT, is entered into as
of January 31, 2000 (the "Agreement"), among, WMC Holding Corp., a Delaware
corporation (together with its successors and permitted assigns, "Holding"),
Western Multiplex Corporation, a Delaware corporation (together with its
successors and permitted assigns, "WMC"), the undersigned, as set forth on the
signature page hereof (the "Employee Stockholder") and Ripplewood Partners, L.P.
(together with its successors and permitted assignees (including Permitted
Transferees as defined below) "Ripplewood") (Holding, WMC, Ripplewood and the
Employee Stockholder being hereinafter collectively referred to as the
"Parties").
Recitals
Pursuant to an Acquisition Agreement, dated as of September 30, 1999, as
amended on October 31, 1999, among WMC, Holding, GTI Acquisition Corp., a
Delaware corporation ("Glenayre"), Glenayre Technologies, Inc., a Delaware
corporation, and Western Multiplex Corporation, a California corporation, WMC
redeemed 42,000,000 shares of Class B common stock of WMC, par value $.01 per
share, held by Glenayre and Holding purchased 35,955,000 shares of outstanding
Common Stock of WMC from Glenayre (the "Recapitalization");
In connection with the Recapitalization, employees and members of
management of WMC are being offered the opportunity to subscribe for shares of
Class A common stock of Holding, par value $.01 per share ("Common Stock"), and
WMC is issuing options ("Options") to certain of its key employees under the
1999 Western Multiplex Corporation Stock Incentive Plan (the "Plan") to purchase
shares of Class A Common Stock of WMC, par value $.01 per share;
The Employee Stockholder, Holding and WMC have agreed that the Employee
Stockholder may subscribe for a certain number of shares of Common Stock and,
the Employee Stockholder will receive a certain number of Options pursuant to
the terms of the "Non-Qualified Stock Option Agreement" attached hereto as
Exhibit A;
WMC has agreed, through the guarantee of a loan to the Employee Stockholder
from a designated bank, to assist the Employee Stockholder in purchasing shares
of Common Stock on terms and conditions to be determined by WMC ("Assisted
Shares");
This Agreement is one of several other similar agreements which have been,
or will be, entered into by WMC, Holding and other individuals who are employees
of WMC and who are being offered the right to purchase Common Stock and who are
being granted Options (the "Other Employee Stockholder");
NOW THEREFORE, to implement the foregoing and in consideration of the grant
of Options and of the mutual agreements contained herein, the Parties agree as
follows:
<PAGE>
2
Section 1. Certain Definitions.
(a) As used in this Agreement, the following terms shall have the following
meanings:
"Affiliate" with respect to any person, means any entity directly or
indirectly controlling, controlled by, or under common control with such
person or any entity designated as such by the Board of Directors of such
person in which such person or an Affiliate has an interest.
"Book Value" means, on a per share, fully-diluted basis, shareholder's
equity as determined in accordance with GAAP.
"Cause" has the same meaning attributed to it in the Employee
Stockholder's Employment Agreement with WMC, dated as of November 1, 1999.
"Employment, Confidential Information and Invention Assignment
Agreement" means the Employment, Confidential Information and Invention
Assignment Agreement in the form attached as Exhibit B hereto to be
executed and delivered by the Employee Stockholder to WMC on the date
hereof.
"Fair Market Value" means, prior to a Public Offering (as defined
below), the fair market value of the shares of Stock, as determined in good
faith by the Board of Directors of WMC (with respect to Option Stock) or
Holding (with respect to Common Stock), and following a Public Offering,
the average daily closing price of the shares of common stock of WMC ("WMC
Common Stock") for the ten consecutive trading days preceding the date the
Fair Market Value of the Stock is required to be determined hereunder.
"Good Reason" means (i) a reduction in the Employee Stockholder's base
salary (other than any general salary reduction and/or reorganization
affecting at least the majority of salaried employees of WMC), (ii) a
material and adverse reduction in the Employee Stockholder's duties and
responsibilities, or (iii) a transfer of the Employee Stockholder's primary
workplace by more than fifty (50) miles from the current workplace, other
than as approved by any of the senior executives of WMC.
The "Option Price" is $0.50 per share (as adjusted for any share
dividend, split, reverse split, combination, recapitalization, liquidation,
reclassification, merger, consolidation or otherwise).
"Permitted Ripplewood/Holding Transferee" means (a) Ripplewood
Holdings L.L.C. ("Ripplewood Holdings") or any Affiliate of Ripplewood
Holdings, (b) a stockholder, partner, member or employee of Ripplewood
Holdings or any Affiliate of Ripplewood Holdings or (c) an employee,
director or officer of Holding or WMC or any subsidiary of Holding or WMC
(up to an aggregate of 5% of the outstanding common stock of WMC and
Holding).
"Public Offering" means a firmly underwritten registered public
offering of WMC Common Stock.
<PAGE>
3
"Securities Act" means the Securities Act of 1933, as amended.
(b) As used in this Agreement, each of the following capitalized terms
shall have the meaning ascribed to them in the Section set forth opposite such
term:
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Affiliate 1(a)
Assisted Shares Recitals
Book Value 1(a)
Call Notice 6(e)
Call Rights 6(d)
Cause1 (a)
Common Stock Recitals
Confidential Offering Memorandum 3(g)
Drag Along Notice 8
Employment, Confidential Information &
Invention Assignment Agreement 1(a)
Employee Stockholder's Trust 3(a)
Fair Market Value 1(a)
Good Reason 1(a)
Holding Stock 7(a)
Offer 5
Offeror 5
Option Agreement Recitals
Options Recitals
Option Price 1(a)
Option Stock 3(a)
Other Employee Stockholders Recitals
Permitted Ripplewood/Holding Transferee 1(a)
Permitted Transfere 3(a)
Plan Recitals
Purchase Price 6(d)
Public Offering 1(a)
Restricted Period 4(a)
Ripplewood Holdings 2
SEC 3(e)
Securities Act 1(a)
Stock 3(a)
Tag-Along Notice 7
Termination Not for Cause 5(b)
Transfer 2(a)
WMC Recitals
WMC Common Stock 1(a)
WMC Sale Tag-Along Notice 7
</TABLE>
<PAGE>
4
Section 2. Common Stock: Issuance of Options. (a) Subject to the terms and
conditions hereof, Holding hereby agrees to issue and sell to the Employee
Stockholder, and the Employee Stockholder hereby agrees to subscribe for the
number of shares of Common Stock set forth opposite such Employee Stockholder's
name on the signature page hereof at a price of $0.50 per share in cash. In
addition, WMC agrees to guarantee a loan to be made by a bank designated by WMC
to the Employee Stockholder in order to enable the Employee Stockholder to
purchase the Assisted Shares set forth on the signature pages hereof at a
purchase price of $.50 per share in cash and on such other terms and conditions
as are determined by WMC. The closing of such purchase and sale shall take place
at such time and place as is notified to the Employee Stockholder (the "Closing
Date"). On or prior to the Closing Date, the Employee Stockholder shall deliver
to Holding a check in an amount equal to the purchase price for the Common
Stock. Holding shall have no obligation to sell any shares of Common Stock to
any person who (i) is a resident or citizen of a state or other jurisdiction in
which the sale of the Common Stock to him or her would constitute a violation of
the securities or "blue sky" laws of such jurisdiction or (ii) is not an
employee of WMC on the date hereof.
(b) Subject to the terms and conditions hereinafter set forth and upon and
as of the Closing Date, WMC shall issue to the Employee Stockholder the number
of Options set forth opposite the Employee Stockholder's name on the signature
page hereof and the Parties shall execute and deliver to each other copies of
the Non-Qualified Option Agreement concurrently with the issuance of the
Options.
Section 3. Employee Stockholder's Representations, Warranties and
Agreements. (a) The Employee Stockholder agrees and acknowledges that he or she
will not, directly or indirectly, offer, transfer, sell, assign, pledge,
hypothecate or otherwise dispose of (any such act being referred to herein as a
"transfer") any shares of Common Stock (whether purchased on the Closing Date or
acquired at any time thereafter) and, at the time of exercise, the Class A
common stock of WMC issuable upon exercise of the Options (the "Option Stock"
and, collectively with the Common Stock and the Assisted Shares, the "Stock")
unless such transfer complies with Section 4 of this Agreement. If the Employee
Stockholder is an Affiliate, the Employee Stockholder also agrees and
acknowledges that he or she will not transfer any shares of Stock unless:
(i) the transfer is pursuant to an effective registration statement
under the Securities Act, and in compliance with applicable provisions of
state securities laws, (if otherwise permitted under the terms set forth
herein) or
<PAGE>
5
(ii) (A) counsel for the Employee Stockholder (which counsel shall be
reasonably acceptable to WMC or Holding, as the case may be) shall have
furnished WMC or Holding, as the case may be, with an opinion, satisfactory
in form and substance to WMC or Holding, as the case may be, that no such
registration is required because of the availability of an exemption from
registration under the Securities Act and (B) if the Employee Stockholder
is a citizen or resident of any country other than the United States, or
the Employee Stockholder desires to effect any transfer in any such
country, counsel for the Employee Stockholder (which counsel shall be
reasonably satisfactory to WMC, in the case of Option Stock, or Holding, in
the case of Common Stock) shall have furnished WMC or Holding, as the case
may be, with an opinion or other advice satisfactory in form and substance
to WMC or Holding, as the case may be, to the effect that such transfer
will comply with the securities laws of such jurisdiction.
Notwithstanding the foregoing, WMC and Holding acknowledge and agree that
any of the following transfers are deemed to be in compliance with the
Securities Act and this Agreement and no opinion of counsel is required in
connection therewith: (x) a transfer made pursuant to Section 9 hereof, (y) a
transfer upon the death of the Employee Stockholder to his executors,
administrators, testamentary trustees, legatees or beneficiaries or a transfer
to the executors, administrators, testamentary trustees, legatees or
beneficiaries of a person who has become a holder of Stock in accordance with
the terms of this Agreement, provided that it is expressly understood that any
such transferee shall be bound by the provisions of this Agreement and (z) a
transfer made after the Closing Date in compliance with the federal securities
laws to a trust or custodianship the beneficiaries of which may include only the
Employee Stockholder, his spouse or his lineal descendants (an "Employee
Stockholder's Trust"), provided that any such transfer under (x), (y) or (z) is
made expressly subject to this Agreement and that the transferee agrees in
writing to be bound by the terms and conditions hereof. The transferees of Stock
purchase to (x), (y) or (z) who agree to be bound by the terms of this Agreement
are referred to as "Permitted Transferees",
(b) The certificate (or certificates) representing the Option Stock shall
bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER,
SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE
PROVISIONS OF THE SUBSCRIPTION AND EMPLOYEE STOCKHOLDER'S AGREEMENT DATED AS OF
DECEMBER __, 1999 BETWEEN WESTERN MULTIPLEX CORPORATION ("WMC"), WMC HOLDING
CORP., THE EMPLOYEE STOCKHOLDER NAMED ON THE FACE HEREOF AND RIPPLEWOOD
PARTNERS, L.P. (A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF WMC)."
(c) The certificate (or certificates) representing the Common Stock shall
bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED,
<PAGE>
6
SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH
TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION COMPLIES
WITH THE PROVISIONS OF THE SUBSCRIPTION AND EMPLOYEE STOCKHOLDER'S AGREEMENT
DATED AS OF DECEMBER __, 1999 BETWEEN WESTERN MULTIPLEX CORPORATION, WMC HOLDING
CORP. ("HOLDING"), THE EMPLOYEE STOCKHOLDER NAMED ON THE FACE HEREOF AND
RIPPLEWOOD PARTNERS, L.P. (A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF
HOLDING)."
(d) The Employee Stockholder acknowledges that he or she has been advised
that (i) a restrictive legend in the form heretofore set forth shall be placed
on the certificates representing the Stock and (ii) a notation shall be made in
the appropriate records of WMC and/or Holding, as the case may be, indicating
that the Stock is subject to restrictions on transfer and appropriate stop-
transfer restrictions will be issued to the applicable transfer agent with
respect to the Stock. If the Employee Stockholder is an Affiliate, the Employee
Stockholder also acknowledges that (1) the Stock must be held indefinitely and
the Employee Stockholder must continue to bear the economic risk of the
investment in the Stock unless it is subsequently registered under the
Securities Act or an exemption from such registration is available, (2) when and
if shares of Stock may be disposed of without registration in reliance on Rule
144 of the rules and regulations promulgated under the Securities Act, such
disposition can be made only in limited amounts in accordance with the terms and
conditions of such Rule and (3) if the Rule 144 exemption is not available,
public sale without registration will require compliance with some other
exemption under the Securities Act.
(e)(i) If any shares of Option Stock are to be disposed of in accordance
with Rule 144 under the Securities Act or otherwise, the Employee Stockholder
shall promptly notify WMC of such intended disposition and shall deliver to WMC
at or prior to the time of such disposition such documentation as WMC may
reasonably request in connection with such sale and, in the case of a
disposition pursuant to Rule 144, shall deliver to WMC an executed copy of any
notice of Form 144 required to be filed with the Securities and Exchange
Commission (the "SEC").
(ii) If any shares of Common Stock are to be disposed of in accordance with
Rule 144 under the Securities Act or otherwise, the Employee Stockholder shall
promptly notify Holding of such intended disposition and shall deliver to
Holding at or prior to the time of such disposition such documentation as
Holding may reasonably request in connection with such sale and, in the case of
a disposition pursuant to Rule 144, shall deliver to Holding an executed copy of
any notice of Form 144 required to be filed with the SEC.
(f) The Employee Stockholder agrees that, if any shares of WMC Common Stock
are offered to the public pursuant to an effective registration statement under
the Securities Act (other than registration of securities issued under an
employee plan), the Employee Stockholder will not
<PAGE>
7
effect any public sale or distribution of any shares of Stock not covered by
such registration statement from the time of the receipt of a notice from WMC
that WMC has filed or imminently intends to file such registration statement to,
or within 180 days after, the effective date of such registration statement,
unless otherwise agreed to in writing by WMC.
(g) The Employee Stockholder represents and warrants that (i) he has
received and reviewed the document(s) comprising the Confidential Information
Memorandum, dated December 21, 1999 (the "Confidential Information Memorandum"),
relating to the Stock and Options, and the documents referred to therein,
certain of which documents set forth the rights, preferences, and restrictions
relating to the Stock and Options, and (ii) he or she has been given the
opportunity to obtain any additional information or documents and to ask
questions and receive answers about such information, WMC, Holding and the
business and prospects of WMC and Holding which he or she deems necessary to
evaluate the merits and risks related to his or her investment in the Stock, and
to verify the Confidential Information Memorandum and the information contained
in the document(s) received as indicated in this Section 3(g), and he or she has
relied solely on such information.
(h) The Employee Stockholder further represents and warrants that (i) his
or her financial condition is such that he or she can afford to bear the
economic risk of holding the Stock for an indefinite period of time and has
adequate means for providing for his or her current needs and personal
contingencies, (ii) he or she can afford to suffer a complete loss of his or her
investment in the Stock, (iii) he or she understands and has taken cognizance of
all risk factors related to the purchase of Stock (including, but not limited
to, those set forth in the Confidential Information Memorandum) and (iv) his or
her knowledge and experience in financial and business matters are such that he
is capable of evaluating the merits and risks of his or her purchase of Stock as
contemplated by this Agreement.
(i) The Employee Stockholder has executed and delivered to WMC the
Employment, Confidential Information and Invention Assignment Agreement.
Section 4. Restrictions on Transfer. Except for transfers to Permitted
Transferees permitted by clauses (x), (y) and (z) of Section 3(a) or a sale of
shares of Stock pursuant to Section 9 of this Agreement, the Employee
Stockholder agrees that he or she will not transfer any shares of Stock at any
time prior to the third anniversary of the Closing Date (the "Restricted
Period"). The Employee Stockholder further agrees not to transfer any Options,
except as expressly provided by this Agreement. No transfer in violation of this
Section 4 shall be made or recorded on the books of WMC or Holding and any such
transfer shall be void and of no effect.
Section 5. Right of First Refusal. If, following the Restricted Period, but
prior to a Public Offering, the Employee Stockholder or any Permitted Transferee
receives a bona fide offer to purchase any or all of his shares of Stock (the
"Offer") from a third party (the "Offeror") which the Employee Stockholder or
any such Permitted Transferee wishes to accept, the Employee Stockholder shall
cause the Offer to be reduced to writing and shall notify WMC, in the case of
<PAGE>
8
an Offer to purchase Option Stock, or Holding, in the case of an Offer to
purchase Common Stock, in writing of his or her wish to accept the Offer. The
Employee Stockholder's notice shall contain an irrevocable offer to sell such
shares of Stock to WMC or Holding, as the case may be (in the manner set forth
below), at a purchase price equal to the price contained in, and on the same
terms and conditions of, the Offer, and shall be accompanied by a copy of the
Offer (which shall identify the Offeror). At any time within 30 days after the
date of the receipt by WMC or Holding of the Employee Stockholder's notice, WMC
or Holding, as the case may be, shall have the right and option to elect to
purchase, or to arrange for a third party (including WMC, Holding or Ripplewood)
to elect to purchase, all of the shares of Stock covered by the Offer either (i)
at the same price and on the same terms and conditions as the Offer or (ii) if
the Offer includes any consideration other than cash, then at the sole option of
WMC or its designee or Holding or its designee, as the case may be, at the
equivalent all cash price, determined in good faith by WMC's or Holding's, as
the case may be, Board of Directors, by delivering notice of such election to
the Employee Stockholder within such 30-day period. If WMC or Holding, as the
case may be, exercises such right, it shall deliver a certified bank check or
checks in the appropriate amount (and any such non-cash consideration to be
paid) to the Employee Stockholder or any Permitted Transferee (as the case may
be) at the principal office of WMC against delivery of certificates or other
instruments representing the shares of Stock so purchased, appropriately
endorsed by the Employee Stockholder and the Permitted Transferee, within 10
business days following its election. If at the end of the 30-day period, WMC or
Holding has not notified the Employee Stockholder of its election in the manner
set forth above, the Employee Stockholder and the Permitted Transferee may,
during the succeeding 60-day period, sell not less than all of the shares of
Stock covered by the Offer to the Offeror at a price and on terms no less
favorable to the Employee Stockholder or the Permitted Transferee (as the case
may be) than those contained in the Offer. Promptly after such sale, the
Employee Stockholder or the Permitted Transferee (as the case may be) shall
notify WMC or Holding, as the case may be, of the consummation thereof and shall
furnish such evidence of the completion and time of completion of such sale and
of the terms thereof as may reasonably be requested by WMC or Holding. If, at
the end of 60 days following the expiration of the 30-day period for WMC or
Holding to purchase the Stock, the Employee Stockholder or the Permitted
Transferee (as the case may be) has not completed the sale of such shares of
Stock as aforesaid, all the restrictions on sale, transfer or assignment
contained in this Agreement shall again be in effect with respect to such shares
of Stock.
Section 6. Call Rights. (a) If, prior to the end of the Restricted Period,
(x) the Employee Stockholder's active employment with WMC (and/or, if
applicable, its subsidiaries) is terminated by WMC for Cause, (y) the
beneficiaries of an Employee Stockholder's Trust shall include any person or
entity other than the Employee Stockholder, his spouse or lineal descendants, or
(z) the Employee Stockholder (and any Permitted Transferees) shall effect a
transfer of any shares of Stock other than as permitted in this Agreement, then:
(i) Holding shall have the right to purchase all or any portion of the
Common Stock (other than the Assisted Shares) then held by the Employee
Stockholder (and any Permitted Transferees) for a purchase price equal to
the lesser of the Fair Market Value per share and the Book Value per share;
<PAGE>
9
(ii) WMC shall have the right to purchase all or any portion of the
Option Stock then held by the Employee Stockholder (and any Permitted
Transferees) for a purchase price equal to the lesser of the Option Price
and the Book Value per Option; and
(iii) All Options shall terminate without any payment.
(iv) Holding shall have the right to purchase all or any portion of
the Assisted Shares then held by the Employee Stockholder (and any
Permitted Transferees) at a price equal to the lesser of (a) the purchase
price per share ($.50) and (b) the Book Value per share.
(b) If, prior to the expiration of the Restricted Period, the Employee
Stockholder's active employment with WMC is terminated without Cause or if the
Employee Stockholder quits or for Good Reason, then WMC may purchase all or any
portion of the Assisted Shares then held by the
Employee Stockholder (and any Permitted Transferees) at a price equal to
the Fair Market Value per share.
(c) If, prior to the expiration of the Restricted Period, the Employee
Stockholder quits without Good Reason, then WMC will have the right to purchase
all or any portion of the Assisted Shares then held by the Employee Stockholder
(and any Permitted Transferees) for the lesser of (a) the purchase price per
share and the Fair Market Value per share.
(d) If, prior to the expiration of the Restricted Period, the Employee
Stockholder's active employment with WMC (and/or, if applicable, its
subsidiaries) ceases for any reason other than terminationby WMC for Cause or
termination due to the death or permanent disability (including if the Employee
Stockholder quits or resigns), then:
(i) Holding shall have the right to purchase all or any portion of the
Common Stock then held by the Employee Stockholder (and any Permitted
Transferees) for a purchase price equal to the Fair Market Value per share;
(ii) WMC shall have the right to purchase all or any portion of vested
Options then held by the Employee Stockholder (and any Permitted
Transferees) at a purchase price equal to the Fair Market Value per vested
Option less the Option Price; provided that, if WMC exercises such
repurchase right with respect to any Option that would have a repurchase
price under this clause (b)(ii) of less than the Option Price at the time
of such exercise, then such Options shall be canceled without any payment;
(iii) WMC shall have the right to purchase all or any portion of the
Option Stock then held by the Employee Stockholder (and any Permitted
Transferees) at a purchase price equal to the Fair
<PAGE>
10
Market Value per share; and
(iv) all unvested Options shall terminate without any payment
therefor.
(e) If the purchaser dies or becomes permanently disabled while still an
employee of WMC (and/or, if applicable, its subsidiaries), then (i) Holding may
purchase all or any portion of the shares of Common Stock then held by the
Employee Stockholder (and any Permitted Transferees) at a purchase price equal
to the Fair Market Value per share; and (ii) WMC ma purchase all of the Option
Stock then held by the Employee Stockholder (and any Permitted Transferees) at a
purchase price equal to the Fair Market Value per share less the Option Price
per share.
(f) The price at which Stock or Options are purchased by WMC or Holding
pursuant to Sections 5(a), 5(b) and 5(c) is referred to as the "Purchase Price".
Any right to repurchase pursuant to Sections 5(a), 5(b) and 5(c) is referred to
as a "Call Right".
(g) Absent the extension of a Call Right on account of a default under any
indebtedness agreement or violation of a statute as described in Section 5(f)
below, WMC or Holding, as the case may be, shall have a period of sixty (60)
days from the date of the event giving rise to the Call Right (or if later,
after the discovery of an impermissible transfer) in which to give notice in
writing to the Employee Stockholder of its election to exercise its Call Rights
pursuant to Sections 5(a), 5(b) or 5(c) (a "Call Notice"); provided that, in the
case of the Employee Stockholder's permanent disability, such 60-day exercise
period shall be extended to twelve (12) months after the event giving rise to
the Call Right; and provided further, that any Call Right available in such case
must be exercised within such 12-month period.
(h) A Call Right shall be extended if WMC or Holding is, or would be as a
result of the payment of the Purchase Price, in default under any indebtedness
agreement or in violation of a statute. Any Call Right may be delayed upon such
default or violation of twelve (12) months thereafter; provided however, that,
if in connection with an event giving rise to a Call Right pursuant to Section
5(b), the exercise by WMC or Holding, as the case may be, of its Call Right is
delayed by reason of such default, then and only then will exercisable Options
be deemed to continue to be exercisable for the purposes of the purchase
pursuant to the Call Right and the Purchase Price for the Stock and Options will
be the higher of: (i) the Purchase Price determined as of the month end prior to
termination and (ii) the Purchase Price determined as of the month end prior to
the delayed purchase. In connection with a termination for Cause or any other
event giving rise to a Call Right pursuant to Section 6(a), the Purchase Price
for the Stock and Options shall be the lesser of (i) the Purchase Price
determined as of the month end prior to termination and (ii) the Purchase Price
determined as of the month end prior to the delayed purchase. Any Call Right may
only be delayed upon such default or violation for twelve (12) months
thereafter.
(i) The completion of any purchase pursuant to this Section 5 shall take
place at the principal office of WMC on the tenth business day after the giving
of the Call Notice. The applicable
<PAGE>
11
Purchase Price shall be paid by delivery to the Employee Stockholder (or the
Permitted Transferee, as the case may be) of a certified bank check or checks in
the appropriate amount payable to the order of the Employee Stockholder against
delivery of certificates or other instruments representing the Stock so
purchased and appropriate documents canceling the Options so terminated,
appropriately endorsed or executed by the Employee Stockholder (or the Permitted
Transferee, as the case may be) or the Employee Stockholder's or Permitted
Transferee's authorized representative.
(j) Subject to Section 5(f), the Purchase Price shall be calculated as of
the last day of the month preceding the month in which the event giving rise to
the Call Right occurs.
(k) In determining the Purchase Price, appropriate adjustments shall be
made for any share dividends, splits, combinations, recapitalizations or any
other adjustment in the number of outstanding common stock in order to maintain,
as nearly as practicable, the intended operation of the provisions of this
Section 6.
Section 7. Tag-Along Rights. (a) If prior to a Public Offering Ripplewood,
("Ripplewood") desires to transfer a majority or all of its shares of common
stock of Holding ("Holding Stock") to a prospective third party purchaser other
than to a Permitted Ripplewood/ Holding Transferee, Ripplewood shall, as a
condition to such transfer, (A) provide a notice to the Employee Stockholder in
writing (a "Tag-Along Notice") of the material terms of the proposed transfer at
least 14 days prior to such transfer and (B) permit the Employee Stockholder (or
cause the Employee Stockholder to be permitted) to sell (either to the
prospective transferee or to another financially reputable transferee reasonably
acceptable to the Employee Stockholder) the same portion of its outstanding
shares of Common Stock and Option Stock on the same terms and conditions,
subject to the same agreements and at the same price as the sale by Ripplewood
(in each case subject to Section 7(c)), which sale shall take place on the date
Ripplewood's shares of Holding Stock (or such portion) are transferred to such
transferee. To calculate the number of outstanding shares of Common Stock and
Option Stock that the Employee Stockholder can sell for the purposes of this
Section 7(a), WMC and Holding shall be treated as a single entity such that the
Employee Stockholder will be able to sell the product of (x) a fraction, the
numerator of which is the number of shares of common stock of Holding being sold
by Ripplewood, and the denominator of which is the total number of shares of
common stock of Holding owned by Ripplewood, multiplied by (y) the total number
of shares of Common Stock and Option Stock owned by the Employee Stockholder
(e.g., if Ripplewood is selling 75% of its interest in common stock of Holding,
the Employee Stockholder will be able to include 75% of its total ownership of
Common Stock and Option Stock, calculated as though WMC and Holding are a single
entity). Should the Employee Stockholder exercise his or her rights pursuant to
this Section 7(a), the Employee Stockholder shall be required to transfer Common
Stock and Option Stock held by him or her in the following order of priority:
(1) first, shares of Common Stock (until the Employee Stockholder holds no
shares of Common Stock), and (2) second, Option Stock (until the Employee
Stockholder holds no shares of Option Stock). The Employee Stockholder shall
have ten days from the date of receipt of a Tag-Along Notice to exercise his or
<PAGE>
12
her right to sell pursuant to this Section 7(a) by delivering written notice to
Ripplewood of his or her intent to exercise such right. The Employee
Stockholder's right to sell in such transaction pursuant to the above shall
terminate if not exercised within such ten-day period.
(b) If Holding sells a majority or all of its interest in WMC to a
prospective third party purchaser other than a Permitted Ripplewood/Holding
Transferee, Holding shall, as a condition to such transfer, (A) provide a notice
to the Employee Stockholder in writing (a "WMC Sale Tag-Along Notice") of the
material terms of the proposed transfer at least 14 days prior to such transfer
and (B) permit the Employee Stockholder (or cause the Employee Stockholder to be
permitted) to sell (either to the prospective transferee or to another
financially reputable transferee reasonably acceptable to the Employee
Stockholder) a number of its outstanding shares of Option Stock equal to (x) the
percentage of the outstanding shares of WMC Common Stock owned by Holding that
are being sold by Holding (e.g., if there are 2,000 shares of WMC Common Stock
outstanding of which Holding owns 1,800 shares and Holding is selling 180
shares, the percentage under this clause (x) will be 10%) multiplied by (y) the
number of shares of Option Stock owned by the Employee Stockholder. Subject to
Section 7(c), any such sale shall be on the same terms and conditions, subject
to the same agreements and at the same price as the sale by Holding, which sale
shall take place on the date Holding's shares of WMC Common Stock (or such
portion) are transferred to such transferee (or transferees). The Employee
Stockholder shall have ten days from the date of receipt of a WMC Sale Tag-Along
Notice to exercise his or her right to sell pursuant to this Section 7 by
delivering written notice to Holding of his or her intent to exercise such
right. The Employee Stockholder's right to sell in such transaction pursuant to
the above shall terminate if not exercised within such ten-day period.
(c) The Employee Stockholder shall not have the right to transfer any
Options pursuant to this Section 7.
Section 8. Drag-Along Rights. (i) If at any time Ripplewood desires to
transfer all or any portion of its shares of Holding Stock to any third party
purchaser(s), other than Permitted Ripplewood/Holding Transferees, or Holding
desires to transfer all or any portion of its shares of WMC Common Stock to any
third party purchaser(s), other than Permitted Ripplewood/Holding Transferees,
Ripplewood shall have the right to require that the Employee Stockholder and its
Permitted Transferees transfer the same portion of the Employee Stockholder's
and its Permitted Transferees' shares of Common Stock and Option Stock to such
third party purchaser(s) on the same terms and conditions, subject to the same
agreements and at the same price as the sale by Ripplewood. To calculate the
number of outstanding shares of Common Stock and Option Stock that the Employee
Stockholder and its Permitted Transferees can be required to sell pursuant to
this Section 8, WMC and Holding shall be treated as a single entity such that
the Employee Stockholder and its Permitted Transferees (considered as a single
stockholder for this purpose) can be required to sell the product of (x) a
fraction, the numerator of which is the number of shares of Holding Stock being
sold by Ripplewood, and the denominator of which is the total number of shares
of Holding Stock owned by Ripplewood, multiplied by (y) the total number of
<PAGE>
13
shares of Common Stock and Option Stock owned by the Employee Stockholder and
its Permitted Transferees (e.g. if Ripplewood is selling 75% of its interest in
Holding Stock, Ripplewood will have the right to require that the Employee
Stockholder and its Permitted Transferees transfer 75% of their total aggregate
ownership of Common Stock and Option Stock, calculated as though WMC and Holding
are a single entity). Should Ripplewood exercise its rights pursuant to this
Section 8, the Employee Stockholder and its Permitted Transferees shall be
required to transfer Common Stock and Option Stock held by them in the following
order of priority: (1) first, shares of Common Stock (until the Employee
Stockholder and its Permitted Transferees hold no shares of Common Stock), and
(2) second, Option Stock (until the Employee Stockholder and its Permitted
Transferees hold no Option Stock). Ripplewood shall provide a notice to the
Employee Stockholder in writing (a "Drag-Along Notice") of such sale at least 10
days prior to such transfer, and the Drag-Along Notice shall identify such third
party purchaser(s), all material terms of the sale and the date of closing. Upon
the closing of any sale by Ripplewood of all (or such portion) of its shares of
Holding Stock or any sale by Holding of WMC Common Stock, as described in a
Drag-Along Notice, such third party purchaser(s) shall pay to the Employee
Stockholder and/or its Permitted Transferees, as the case may be, the
consideration payable to the Employee Stockholder and/or its Permitted
Transferees, as the case may be, in connection with such sale of all (or such
portion) of its shares of Common Stock and Option Stock, and the Employee
Stockholder's and its Permitted Transferee's shares of Common Stock and Option
Stock (or such portion) shall be deemed transferred to such third party
purchaser(s).
Section 9. Sale Participation Rights. At any time following the expiration
of the period ending 180-days after a Public Offering, the Employee Stockholder
and its Permitted Transferees will have the right to sell all or any portion of
the Stock held by such Employee Stockholder and its Permitted Transferees in any
registered offering of WMC Common Stock initiated by WMC, Holding or Ripplewood.
Such registration rights will be on customary terms and conditions (including,
without limitation, customary cut back and lock-up provisions) established in
good faith by WMC's or Holding's Board of Directors and Ripplewood and notified
to the Employee Stockholder and the Other Employee Stockholders.
Section 10. Voting Agreement. (a) From and after the Closing Date, the
Employee Stockholder and its Permitted Transferees: (i) shall vote all of the
shares of Stock held by him, her or it (including, without limitation, shares
acquired after the date hereof) in the same manner as the shares of Holding held
by Ripplewood (in the case of Holding Stock) or Holding (in the case of WMC
Common Stock) are voted on all matters acted upon at any annual or special
meeting of Stockholders or by written consent in lieu of a meeting and (ii)
irrevocably constitutes and appoints the person who is at the time the Senior
Managing Director of Ripplewood Holdings (or his or her designee, with full
power of substitution) his proxy to vote all of the shares of Common Stock held
by the Employee Stockholder in the same manner as the shares of Holding Stock
held by Ripplewood and appoints the person who is at the time the Chief
Executive Officer of WMC (or his or her designee, with full power of
substitution) his proxy to vote all of the shares of Option Stock held by the
Employee Stockholder and its Permitted Transferees in the
<PAGE>
14
same manner as the shares of WMC Common Stock held by Holding are voted on all
matters acted upon at any annual or special meeting of stockholders or by
written consent in lieu of a meeting; provided that this Section 10 shall be
inapplicable with respect to any matters which would both adversely affect the
rights of shares of Stock held by the Employee Stockholder (or its Permitted
Transferees) and treat the Employee Stockholder (or its Permitted Transferees)
differently from other holders of shares of WMC Common Stock or Holdings Stock
(it being understood that a conversion of Holding to a limited liability company
and a merger or other business combination of Holding and WMC will not be deemed
to adversely affect the rights of the Employee Stockholder (or its Permitted
Transferees) and the Employee Stockholder hereby agrees that his or her shares
of Common Stock will be voted in favor of any such action). The voting
agreements and proxies granted pursuant to this Section 10 are coupled with an
interest and shall be valid for the term of this Agreement. The Employee
Stockholder represents that he or she has not granted and is not party to any
proxy, voting trust or other agreement which in each case is inconsistent with
or conflicts with the provisions of this Agreement, and the Employee Stockholder
shall not grant any proxy or become a party to any voting trust or other
agreement which in each case is inconsistent with or conflicts with the
provisions of this Agreement.
Section 11. Rights to Negotiate Repurchase Price. Nothing in this Agreement
shall be deemed to restrict or prohibit WMC or Holding from purchasing Stock or
Options from the Employee Stockholder or its Permitted Transferees (or any other
Employee Stockholder), at any time, upon such terms and conditions, and for such
price, as may be mutually agreed upon between the Parties, whether or not at the
time of such purchase circumstances exist which specifically grant WMC or
Holding the right to purchase Stock or Options.
Section 12. Covenant Regarding 83(b) Election. Except as WMC may otherwise
agree in writing, the Employee Stockholder hereby covenants and agrees that he
will make an election provided pursuant to Treasury Regulation 1.83-2 with
respect shares of Option Stock to be acquired upon each exercise of the Employee
Stockholder's Options; and the Employee Stockholder further covenants and agrees
that he or she will furnish WMC with copies of the forms of election the
Employee Stockholder files and within 30 days after each exercise of the
Employee Stockholder Options and with evidence that each such election has been
filed in a timely manner.
Section 13. Notice of Change of Beneficiary. Immediately prior to any
transfer of shares of Stock to an Employee Stockholder's Trust, the Employee
Stockholder shall provide WMC and Holding with a copy of the instruments
creating the Employee Stockholder's Trust and with the identity of the
beneficiaries of the Employee Stockholder's Trust. The Employee Stockholder
shall notify WMC and Holding as soon as practicable prior to any change in the
identity of any beneficiary of the Employee Stockholder's Trust.
Section 14. Recapitalizations, etc. The provisions of this Agreement shall
apply, to the full extent set forth herein with respect to Stock or the Options,
to any and all shares of capital shares of WMC and Holding or any capital stock,
partnership units or any other security evidencing
<PAGE>
15
ownership interests in any successor or assign of WMC and Holding (whether by
merger, consolidation, sale of assets or otherwise) which may be issued in
respect of, in exchange for, or substitution of Stock or Options, by reason of
any share dividend, split, reverse split, combination, recapitalization,
liquidation, reclassification, merger, consolidation or otherwise.
Section 15. State Securities Laws. WMC and Holding hereby agree to use
their best efforts to comply with all state securities or "blue sky" laws which
might be applicable to the sale of Stock and the issuance of the Options to the
Employee Stockholder.
Section 16. Binding Effect. The provisions of this Agreement shall be
binding upon and accrue to the benefit of the parties hereto and their
respective heirs, legal representatives, successors and assigns. In the case of
a transferee permitted under Section 3(a) hereof, such transferee shall be
deemed the Employee Stockholder hereunder; provided, however, that no transferee
(including without limitation, transferees referred to in Section 3(a) hereof)
shall derive any rights under this Agreement unless and until such transferee
has delivered to WMC and Holding a valid undertaking and becomes bound by the
terms of this Agreement.
Section 17. Amendment. This Agreement may be amended only by a written
instrument signed by the Parties hereto. Notwithstanding the foregoing, this
Agreement may be amended without the consent of any party hereto other than WMC
to provide for any change in the corporate structure of WMC, including its
conversion to a limited liability company or a merger or other business
combination of Holding and WMC.
Section 18. Closing. Except as otherwise provided herein, the closing of
each purchase and sale of Stock and the payment of the Purchase Price by WMC or
Holding upon exercise of a Call Right, if any, pursuant to this Agreement shall
take place at the principal office of WMC on the tenth business day following
delivery of the notice by any Party of its exercise of the right to purchase or
sell such Stock or Options hereunder, as the case may be.
Section 19. Applicable Law. The laws of the state of Delaware shall govern
the interpretation, validity and performance of the terms of this Agreement. Any
suit, action or proceeding against the Employee Stockholder, WMC or Holding,
with respect to this Agreement, or any judgment entered by any court in respect
of any thereof, may be brought in any court of competent jurisdiction in the
State of Delaware and the Parties each hereby submit to the exclusive
jurisdiction of such courts for the purpose of any such suit, action, proceeding
or judgment. The Parties hereby irrevocably waive any objections which either of
them may now or hereafter have to the laying of the venue of any suit, action or
proceeding arising out of or relating to this Agreement brought in any court of
competent jurisdiction in the State of Delaware, and hereby further irrevocably
waive any claim that any such suit, action or proceeding brought in any such
court has been brought in any inconvenient forum. No suit, action or proceeding
against any of the Parties with respect to this Agreement may be brought in any
court, domestic or foreign, or before any similar domestic or foreign authority
other than in a court of competent jurisdiction in the State of Delaware, and
the Parties hereby irrevocably waive any right which any of them may otherwise
have had to bring such an action in any other court, domestic or foreign, or
before any
<PAGE>
16
similar domestic or foreign authority. Each Party hereto hereby irrevocably and
unconditionally waives trial by jury in any legal action or proceeding in
relation to this Agreement and for any counterclaim therein.
Section 20. Assignability of Certain Rights by WMC, Holding and Ripplewood.
WMC, Holding and Ripplewood shall have the right to assign any or all of their
rights or obligations to purchase Stock or Options pursuant to this Agreement;
provided, however, that such assigning party shall remain obligated to perform
its obligations notwithstanding such assignment in the event that such assignee
fails to perform the obligations so assigned to it. The rights and obligations
of WMC, Holding and Ripplewood under this Agreement shall insure to the benefit
of, and be binding upon, any of their respective successors.
Section 21. Conflicts with Other Agreements. In the event that any
provision of this Agreement conflicts in any way with the Plan or the provisions
of any Stock Option Agreement to which the Employee Stockholder is a party or
bound, the provisions of this Agreement shall govern.
Section 22. Miscellaneous. (a) In this Agreement all references to
"dollars" or "$" are to United States dollars.
(b) If any provision of this Agreement shall be declared illegal, void or
unenforceable by any court of competent jurisdiction, the other provisions shall
not be affected, but shall remain in full force and effect.
(c) WMC and Holding shall have the right to deduct from any cash payment
made under this Agreement to the Employee Stockholder any federal, state or
local income or other taxes required by law to be withheld with respect to such
payment.
Section 23. Notices. All notices and other communications provided for
herein shall be in writing and shall be deemed to have been duly given if
delivered by hand (whether by overnight courier or otherwise) or sent by
registered or certified mail, return receipt requested, postage prepaid, or by
overnight delivery or telecopy, to the Party to whom it is directed:
(a) If to WMC, to it at the following address:
Western Multiplex Corporation
1196 Borregas Avenue
Sunnyvale, CA 94089
Attn: Kim Viera
Facsimile: 408-542-5300
<PAGE>
17
with a copy to:
Simpson Thacher & Bartlett
3373 Hillview Avenue
Suite 250
Palo Alto, CA 94304
Attn: Daniel Cilvner, Esq.
Facsimile: 650-251-5002
(b) If to Holding, to it at the following address:
WMC Holding Corp.
101 California Street
Suite 2825
San Francisco, CA 94111
Attn: Jeffrey M. Hendren
Facsimile: 415-772-9289
with a copy to:
Simpson Thacher & Bartlett
3373 Hillview Avenue
Suite 250
Palo Alto, CA 94304
Attn: Daniel Cilvner, Esq.
Facsimile: 650-251-5002
(c) If to Ripplewood, to it at the following address:
Ripplewood Partners, L.P.
One Rockefeller Plaza
New York, NY 10020
Attn: Jeffrey M. Hendren
Facsimile: 212-218-2721
(d) If to the Employee Stockholder, to him at the address set forth below
under his signature; or at such other address as either party shall have
specified by notice in writing to the other.
Section 24. Expiration of Section Provisions. The provisions contained in
Sections 5, 6 and 7 and any portion of any other provision of this Agreement
which incorporates the provisions of Sections 5, 6 and 7 shall terminate and be
of no further force or effect with respect to any shares of Stock sold by the
Employee Stockholder or any Permitted Transferee pursuant to any Public
Offering.
<PAGE>
18
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
WESTERN MULTIPLEX CORPORATION
By: /s/ Jeffrey M. Hendren
-----------------------
Name: Jeffrey M. Hendren
Title: Vice President
WMC HOLDING CORP.
By: /s/ Jeffrey M. Hendren
-----------------------
Name: Jeffery M. Hendren
Title: Vice President
RIPPLEWOOD PARTNERS, L.P.
By: /s/ Jeffrey M. Hendren
-----------------------
Name: Jeffrey M. Hendren
Title: Principal
EMPLOYEE STOCKHOLDER 31,500
Number of shares of Class A Common Stock
/s/ John H. Saefke of WMC Holding Corp. to be purchased
- -----------------------
Name: John H. Saefke
Address:
50,000
53 Woodhill Drive Number of Assisted Shares to be guaranteed
Redwood City, CA 94061 by Western Multiplex Corporation
50,000
Number of Options to purchase share of Class A
Common Stock of Western Multiplex Corp.
being granted
<PAGE>
EXHIBIT 10.15
1999 WESTERN MULTIPLEX CORPORATION
STOCK INCENTIVE PLAN
1. Purpose of the Plan
The purpose of the Plan is to aid the Company and its Affiliates in
recruiting and retaining key employees, directors or consultants of
outstanding ability and to motivate such employees, directors or consultants
to exert their best efforts on behalf of the Company and its Affiliates by
providing incentives through the granting of Awards. The Company expects
that it will benefit from the added interest which such key employees,
directors or consultants will have in the welfare of the Company as a result
of their proprietary interest in the Company's success.
2. Definitions
The following capitalized terms used in the Plan have the respective
meanings set forth in this Section:
(a) Act: The Securities Exchange Act of 1934, as amended, or
any successor thereto.
(b) Affiliate: With respect to the Company, any entity directly or
indirectly controlling, controlled by, or under common control
with, the Company or any other entity designated by the Board in
which the Company or an Affiliate has an interest.
(c) Award: An Option, Stock Appreciation Right or Other Stock-Based
Award granted pursuant to the Plan.
(d) Beneficial Owner: A "beneficial owner", as such term is defined in
Rule 13d-3 under the Act (or any successor rule thereto).
(e) Board: The Board of Directors of the Company.
(f) Code: The Internal Revenue Code of 1986, as amended, or any
successor thereto.
(g) Committee: The Compensation Committee of the Board.
(h) Change in Control: The occurrence of any of the following events:
(i) any Person (other than Ripplewood Holdings L.L.C. ("Ripplewood
Holdings"), an Affiliate of Ripplewood Holdings L.L.C., or any
Person holding securities representing 10% or more of the combined
voting power of the Company's outstanding securities as of the
<PAGE>
Effective Date, the Company, any trustee or other fiduciary holding
securities under an employee benefit plan of the Company, or any
company owned, directly or indirectly, by the shareholders of the
Company in substantially the same proportions as their ownership of
stock of the Company), becomes the Beneficial Owner, directly or
indirectly, of securities of the Company, representing 50% or more
of the combined voting power of the Company's then-outstanding
securities;
(ii) during any period of twenty-four consecutive months (not
including any period prior to the Effective Date), individuals who
at the beginning of such period constitute the Board, and any new
director (other than (A) a director nominated by a Person who has
entered into an agreement with the Company to effect a transaction
described in Sections 2(e)(i), (iii), (iv) or (v) of the Plan or
(B) a director nominated by any Person (including the Company) who
publicly announces an intention to take or to consider taking
actions (including, but not limited to, an actual or threatened
proxy contest) which if consummated would constitute a Change in
Control) whose election by the Board or nomination for election by
the Company's shareholders was approved by a vote of at least two-
thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute at least a majority thereof;
(iii) the consummation of any transaction or series of
transactions under which the Company is merged or consolidated with
any other company, other than a merger or consolidation which would
result in the shareholders of the Company immediately prior thereto
continuing to own (either by remaining outstanding or by being
converted into voting securities of the surviving entity or its
parent) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity (or its parent)
outstanding immediately after such merger or consolidation; or
(iv) the complete liquidation of the Company or the sale or
disposition by the Company of all or substantially all of the
Company's assets, other than a liquidation of the Company into a
wholly-owned subsidiary.
(i) Company: Western Multiplex Corporation, a Delaware corporation.
(j) Effective Date: The date the Board approves the Plan or the date
the Plan is approved by the Company's shareholders, whichever is
earlier.
-2-
<PAGE>
(k) Fair Market Value: On a given date, the arithmetic mean of the
high and low prices of the Shares as reported on such date on the
Composite Tape of the principal national securities exchange on
which such Shares are listed or admitted to trading, or, if no
Composite Tape exists for such national securities exchange on such
date, then on the principal national securities exchange on which
such Shares are listed or admitted to trading, or, if the Shares
are not listed or admitted on a national securities exchange, the
arithmetic mean of the per Share closing bid price and per Share
closing asked price on such date as quoted on the National
Association of Securities Dealers Automated Quotation System (or
such market in which such prices are regularly quoted), or, if
there is no market on which the Shares are regularly quoted, the
Fair Market Value shall be the value established by the Committee
in good faith. If no sale of Shares shall have been reported on
such Composite Tape or such national securities exchange on such
date or quoted on the National Association of Securities Dealer
Automated Quotation System on such date, then the immediately
preceding date on which sales of the Shares have been so reported
or quoted shall be used.
(l) ISO: An Option that is also an incentive stock option granted
pursuant to Section 6(d) of the Plan.
(m) LSAR: A limited stock appreciation right granted pursuant to
Section 7(d) of the Plan.
(n) Other Stock-Based Awards: Awards granted pursuant to Section 8 of
the Plan.
(o) Option: A stock option granted pursuant to Section 6 of the Plan.
(p) Option Price: The purchase price per Share of an Option, as
determined pursuant to Section 6(a) of the Plan.
(q) Participant: An employee, director or consultant who is selected by
the Committee to participate in the Plan.
(r) Performance-Based Awards: Certain Other Stock-Based Awards granted
pursuant to Section 8(b) of the Plan.
(s) Permanent Disability: Inability of a Participant to perform in all
material respects his duties and responsibilities to the Company,
or any Subsidiary of the Company, by reason of a physical or mental
disability or infirmity which inability is reasonably expected to
be permanent and has continued (i) for a period of six consecutive
months or (ii) such shorter period as the Committee may reasonably
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determine in good faith. The Permanent Disability determination
shall be in the sole discretion of the Committee and a Participant
(or his representative) shall furnish the Committee with medical
evidence documenting the Participant's disability or infirmity
which is satisfactory to the Committee.
(t) Person: A "person", as such term is used for purposes of Section
13(d) or 14(d) of the Act (or any successor section thereto).
(u) Plan: The 1999 Western Multiplex Corporation Stock Incentive Plan.
(v) Shares: Shares of Class A common stock of the Company.
(w) Stock Appreciation Right: A stock appreciation right granted
pursuant to Section 7 of the Plan.
(x) Subsidiary: A subsidiary corporation, as defined in Section 424(f)
of the Code (or any successor section thereto).
3. Shares Subject to the Plan
The total number of Shares which may be issued under the Plan is
4,579,000. The Shares may consist, in whole or in part, of unissued Shares
or treasury Shares. The issuance of Shares or the payment of cash upon the
exercise of an Award shall reduce the total number of Shares available under
the Plan, as applicable. Shares which are subject to Awards which terminate
or lapse may be granted again under the Plan.
4. Administration
(a) The Plan shall be administered by the Committee, which may delegate
its duties and powers in whole or in part to any subcommittee thereof
consisting solely of at least two individuals who are intended to qualify as
"non-employee directors" within the meaning of Rule 16b-3 under the Act (or
any successor rule thereto) and "outside directors" within the meaning of
Section 162(m) of the Code (or any successor section thereto). Awards may,
in the discretion of the Committee, be made under the Plan in assumption of,
or in substitution for, outstanding awards previously granted by the Company
or its affiliates or a company acquired by the Company or with which the
Company combines. The number of Shares underlying such substitute awards
shall be counted against the aggregate number of Shares available for Awards
under the Plan. The Committee is authorized to interpret the Plan, to
establish, amend and rescind any rules and regulations relating to the Plan,
and to make any other determinations that it deems necessary or desirable for
the administration of the Plan. The Committee may correct any defect or
supply any omission or reconcile any inconsistency in the Plan in the manner
and to the extent the Committee deems necessary or desirable. Any decision
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of the Committee in the interpretation and administration of the Plan, as
described herein, shall lie within its sole and absolute discretion and shall
be final, conclusive and binding on all parties concerned (including, but not
limited to, Participants and their beneficiaries or successors). The
Committee shall have the full power and authority to establish the terms and
conditions of any Award consistent with the provisions of the Plan and to
waive any such terms and conditions at any time (including, without
limitation, accelerating or waiving any vesting conditions). The Committee
shall require payment of any amount it may determine to be necessary to
withhold for federal, state, local or other taxes as a result of the exercise
of an Award. Unless the Committee specifies otherwise, the Participant may
elect to pay a portion or all of such withholding taxes by (a) delivery in
Shares or (b) having Shares withheld by the Company from any Shares that
would have otherwise been received by the Participant.
(b) Pursuant to applicable law, the Company shall provide all
Participants with a copy of the Company's financial statements at least
annually.
5. Limitations
No Award may be granted under the Plan after the tenth anniversary
of the Effective Date, but Awards theretofore granted may extend beyond that
date.
6. Terms and Conditions of Options
Options granted under the Plan shall be, as determined by the
Committee, non-qualified or incentive stock options for federal income tax
purposes, as evidenced by the related Award agreements, and shall be subject
to the foregoing and the following terms and conditions and to such other
terms and conditions, not inconsistent therewith, as the Committee shall
determine:
(a) Option Price. The Option Price per Share shall be determined
by the Committee, but shall not be less than 100% of the Fair Market Value of
the Shares on the date an Option is granted; provided, however, that the
Option Price per Share shall not be less than 110% of the Fair Market Value
on the date an Option is granted to any Participant who owns stock in the
Company possessing more than 10% of the total combined voting power of all
classes of stock of the Company or its parent or subsidiary corporations.
(b) Exercisability. Options granted under the Plan shall be
exercisable at such time and upon such terms and conditions as may be
determined by the Committee, but in no event shall an Option be exercisable
at a rate that is less than 20% per year over five years from the date the
Option is granted, subject to reasonable conditions, such as requirement of
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continued employment. However, in the case of an Option granted to officers,
directors, or consultants of the Company or any of its affiliates, the Option
may become fully exercisable, subject to reasonable conditions, such as the
requirement of continued employment, at any time or during any period
established by the Committee more than ten years after the date it is
granted.
(c) Exercise of Options. Except as otherwise provided in the Plan
or in an Award agreement, an Option may be exercised for all, or from time to
time any part, of the Shares for which it is then exercisable. For purposes
of Section 6 of the Plan, the exercise date of an Option shall be the later
of the date a notice of exercise is received by the Company and, if
applicable, the date payment is received by the Company pursuant to clauses
(i), (ii) or (iii) in the following sentence. The purchase price for the
Shares as to which an Option is exercised shall be paid to the Company in
full at the time of exercise at the election of the Participant (i) in cash
or its equivalent (e.g., by check), (ii) in Shares having a Fair Market Value
equal to the aggregate Option Price for the Shares being purchased and
satisfying such other requirements as may be imposed by the Committee;
provided, that such Shares have been held by the Participant for no less than
six months (or such other period as established from time to time by the
Committee or generally accepted accounting principles), (iii) partly in cash
and partly in such Shares or (iv) through the delivery of irrevocable
instruments to a broker to deliver promptly to the Company an amount equal to
the aggregate option price for the shares being purchased. No Participant
shall have any rights to dividends or other rights of a stockholder with
respect to Shares subject to an Option until the Participant has given
written notice of exercise of the Option, paid in full for such Shares and,
if applicable, has satisfied any other conditions imposed by the Committee
pursuant to the Plan.
(d) ISOs. The Committee may grant Options under the Plan that are
intended to be ISOs. Such ISOs shall comply with the requirements of Section
422 of the Code (or any successor section thereto). No ISO may be granted to
any Participant who at the time of such grant, owns more than ten percent of
the total combined voting power of all classes of stock of the Company or of
any Subsidiary, unless (i) the Option Price for such ISO is at least 110% of
the Fair Market Value of a Share on the date the ISO is granted and (ii) the
date on which such ISO terminates is a date not later than the day preceding
the fifth anniversary of the date on which the ISO is granted. Any
Participant who disposes of Shares acquired upon the exercise of an ISO
either (i) within two years after the date of grant of such ISO or
(ii) within one year after the transfer of such Shares to the Participant,
shall notify the Company of such disposition and of the amount realized upon
such disposition.
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(e) Attestation. Wherever in this Plan or any agreement
evidencing an Award a Participant is permitted to pay the exercise price of
an Option or taxes relating to the exercise of an Option by delivering
Shares, the Participant may, subject to procedures satisfactory to the
Committee, satisfy such delivery requirement by presenting proof of
beneficial ownership of such Shares, in which case the Company shall treat
the Option as exercised without further payment and shall withhold such
number of Shares from the Shares acquired by the exercise of the Option.
7. Terms and Conditions of Stock Appreciation Rights
(a) Grants. The Committee also may grant (i) a Stock Appreciation
Right independent of an Option or (ii) a Stock Appreciation Right in
connection with an Option, or a portion thereof. A Stock Appreciation Right
granted pursuant to clause (ii) of the preceding sentence (A) may be granted
at the time the related Option is granted or at any time prior to the
exercise or cancellation of the related Option, (B) shall cover the same
Shares covered by an Option (or such lesser number of Shares as the Committee
may determine) and (C) shall be subject to the same terms and conditions as
such Option except for such additional limitations as are contemplated by
this Section 7 (or such additional limitations as may be included in an Award
agreement).
(b) Terms. The exercise price per Share of a Stock Appreciation
Right shall be an amount determined by the Committee but in no event shall
such amount be less than the greater of (i) the Fair Market Value of a Share
on the date the Stock Appreciation Right is granted or, in the case of a
Stock Appreciation Right granted in conjunction with an Option, or a portion
thereof, the Option Price of the related Option and (ii) an amount permitted
by applicable laws, rules, by-laws or policies of regulatory authorities or
stock exchanges. Each Stock Appreciation Right granted independent of an
Option shall entitle a Participant upon exercise to an amount equal to
(i) the excess of (A) the Fair Market Value on the exercise date of one Share
over (B) the exercise price per Share, times (ii) the number of Shares
covered by the Stock Appreciation Right. Each Stock Appreciation Right
granted in conjunction with an Option, or a portion thereof, shall entitle a
Participant to surrender to the Company the unexercised Option, or any
portion thereof, and to receive from the Company in exchange therefor an
amount equal to (i) the excess of (A) the Fair Market Value on the exercise
date of one Share over (B) the Option Price per Share, times (ii) the number
of Shares covered by the Option, or portion thereof, which is surrendered.
The date a notice of exercise is received by the Company shall be the
exercise date. Payment shall be made in Shares or in cash, or partly in
Shares and partly in cash (any such Shares valued at such Fair Market Value),
all as shall be determined by the Committee. Stock Appreciation Rights may
be exercised from time to time upon actual receipt by the Company of written
notice of exercise stating the number of Shares with respect to which the
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Stock Appreciation Right is being exercised. No fractional Shares will be
issued in payment for Stock Appreciation Rights, but instead cash will be
paid for a fraction or, if the Committee should so determine, the number of
Shares will be rounded downward to the next whole Share.
(c) Limitations. The Committee may impose, in its discretion,
such conditions upon the exercisability or transferability of Stock
Appreciation Rights as it may deem fit.
(d) Limited Stock Appreciation Rights. The Committee may grant
LSARs that are exercisable upon the occurrence of specified contingent
events. Such LSARs may provide for a different method of determining
appreciation, may specify that payment will be made only in cash and may
provide that any related Awards are not exercisable while such LSARs are
exercisable. Unless the context otherwise requires, whenever the term "Stock
Appreciation Right" is used in the Plan, such term shall include LSARs.
8. Other Stock-Based Awards
(a) Generally. The Committee, in its sole discretion, may grant
Awards of Shares, Awards of restricted Shares and Awards that are valued in
whole or in part by reference to, or are otherwise based on the Fair Market
Value of, Shares ("Other Stock-Based Awards"). Such Other Stock-Based Awards
shall be in such form, and dependent on such conditions, as the Committee
shall determine, including, without limitation, the right to receive one or
more Shares (or the equivalent cash value of such Shares) upon the completion
of a specified period of service, the occurrence of an event and/or the
attainment of performance objectives. Other Stock-Based Awards may be
granted alone or in addition to any other Awards granted under the Plan.
Subject to the provisions of the Plan, the Committee shall determine to whom
and when Other Stock-Based Awards will be made, the number of Shares to be
awarded under (or otherwise related to) such Other Stock-Based Awards;
whether such Other Stock-Based Awards shall be settled in cash, Shares or a
combination of cash and Shares; and all other terms and conditions of such
Awards (including, without limitation, the vesting provisions thereof and
provisions ensuring that all Shares so awarded and issued shall be fully paid
and non-assessable).
(b) Performance-Based Awards. Notwithstanding anything to the
contrary herein, certain Other Stock-Based Awards granted under this
Section 8 may be granted in a manner which is deductible by the Company under
Section 162(m) of the Code (or any successor section thereto) ("Performance-
Based Awards"). A Participant's Performance-Based Award shall be determined
based on the attainment of written performance goals approved by the
Committee for a performance period established by the Committee (i) while the
outcome for that performance period is substantially uncertain and (ii) no
more than 90 days after the commencement of the performance period to which
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the performance goal relates or, if less, the number of days which is equal
to 25 percent of the relevant performance period. The performance goals,
which must be objective, shall be based upon one or more of the following
criteria: (i) consolidated earnings before or after taxes (including earnings
before interest, taxes, depreciation and amortization); (ii) net income;
(iii) operating income; (iv) earnings per Share; (v) book value per Share;
(vi) return on shareholders' equity; (vii) expense management; (viii) return
on investment; (ix) improvements in capital structure; (x) profitability of
an identifiable business unit or product; (xi) maintenance or improvement of
profit margins; (xii) stock price; (xiii) market share; (xiv) revenues or
sales; (xv) costs; (xvi) cash flow; (xvii) working capital and (xviii) return
on assets. The foregoing criteria may relate to the Company, one or more of
its Subsidiaries or one or more of its divisions or units, or any combination
of the foregoing, and may be applied on an absolute basis and/or be relative
to one or more peer group companies or indices, or any combination thereof,
all as the Committee shall determine. In addition, to the degree consistent
with Section 162(m) of the Code (or any successor section thereto), the
performance goals may be calculated without regard to extraordinary items.
The Committee shall determine whether, with respect to a performance period,
the applicable performance goals have been met with respect to a given
Participant and, if they have, to so certify and ascertain the amount of the
applicable Performance-Based Award. No Performance-Based Awards will be paid
for such performance period until such certification is made by the
Committee. The amount of the Performance-Based Award actually paid to a
given Participant may be less than the amount determined by the applicable
performance goal formula, at the discretion of the Committee. A Performance-
Based Award shall include a maximum performance level above which no
increased payment will be made. The amount of the Performance-Based Award
determined by the Committee for a performance period shall be paid to the
Participant at such time as determined by the Committee in its sole
discretion after the end of such performance period; provided, however, that
a Participant may, if and to the extent permitted by the Committee and
consistent with the provisions of Section 162(m) of the Code, elect to defer
receipt of a Performance-Based Award.
9. Adjustments Upon Certain Events
Notwithstanding any other provisions in the Plan to the contrary,
the following provisions shall apply to all Awards granted under the Plan:
(a) Generally. In the event of any change in the outstanding
Shares after the Effective Date by reason of any Share dividend or split,
reverse Share split reorganization, recapitalization, merger, consolidation,
spin-off, reclassification, combination or transaction or exchange of Shares
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or other corporate exchange, or any distribution to shareholders of Shares
other than regular cash dividends or any transaction similar to the
foregoing, the Committee in its sole discretion and without liability to any
person may make such substitution or adjustment, if any, as it deems to be
equitable, as to (i) the number or kind of Shares or other securities issued
or reserved for issuance pursuant to the Plan or pursuant to outstanding
Awards, (ii) the Option Price or exercise price of any stock appreciation
right and/or (iii) any other affected terms of such Awards.
(b) Change in Control. In the event of a Change of Control after
the Effective Date, (i) the Committee may, but shall not be obligated to,
provide that any outstanding Awards then held by Participants which are
unexercisable or otherwise unvested shall automatically be deemed exercisable
or otherwise vested, as the case may be, as of immediately prior to such
Change of Control and (ii) the Committee may, but shall not be obligated to,
make provision for a cash payment to the holder of an outstanding Award in
consideration for the cancellation of such Award which, in the case of
Options and Stock Appreciation Rights, shall equal the excess, if any, of the
Fair Market Value of the Shares subject to such Options or Stock Appreciation
Rights over the aggregate exercise price of such Options or Stock
Appreciation Rights.
10. No Right to Employment or Awards
The granting of an Award under the Plan shall impose no obligation
on the Company or any Subsidiary to continue the employment or service or
consulting relationship of a Participant and shall not lessen or affect the
Company's or Subsidiary's right to terminate the employment or service or
consulting relationship of such Participant. No Participant or other Person
shall have any claim to be granted any Award, and there is no obligation for
uniformity of treatment of Participants, or holders or beneficiaries of
Awards. The terms and conditions of Awards and the Committee's
determinations and interpretations with respect thereto need not be the same
with respect to each Participant (whether or not such Participants are
similarly situated).
11. Successors and Assigns
The Plan shall be binding on all successors and assigns of the
Company and a Participant, including without limitation, the estate of such
Participant and the executor, administrator or trustee of such estate, or any
receiver or trustee in bankruptcy or representative of the Participant's
creditors.
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12. Nontransferability of Awards
Unless otherwise determined by the Committee, an Award shall not be
transferable or assignable by the Participant otherwise than by will or by
the laws of descent and distribution; provided, however, that in no event
shall an Option be transferable or assignable by the Participant otherwise
than by will or by the laws of descent and distribution or, under certain
circumstances pursuant to applicable law (including, without limitation,
gifts to "immediate family"members). An Award exercisable after the death of
a Participant may be exercised by the legatees, personal representatives or
distributees of the Participant.
13. Amendments or Termination
The Board may amend, alter or discontinue the Plan, but no
amendment, alteration or discontinuation shall be made which, (a) without the
approval of the shareholders of the Company, would (except as is provided in
Section 9 of the Plan), increase the total number of Shares reserved for the
purposes of the Plan or change the maximum number of Shares for which Awards
may be granted to any Participant or (b) without the consent of a
Participant, would impair any of the rights or obligations under any Award
theretofore granted to such Participant under the Plan; provided, however,
that the Committee may amend the Plan in such manner as it deems necessary to
permit the granting of Awards meeting the requirements of the Code or other
applicable laws. Notwithstanding the foregoing, the total number of Shares
reserved for the purposes of the Plan may in no event be increased to an
amount in excess 30 percent of all outstanding Shares ((on a fully diluted
basis, including Shares underlying convertible preferred or convertible
senior Common Shares) as of the date any such calculation is made.
14. Choice of Law
The Plan shall be governed by and construed in accordance with the
laws of the State of Delaware without regard to conflicts of laws.
15. Effectiveness of the Plan
The Plan shall be effective as of the Effective Date, subject to
the approval of the shareholders of the Company, which shall be obtained
within twelve months of the Effective Date.
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================================================================================
EXHIBIT 10.19
CREDIT AGREEMENT
Dated as of November 1, 1999
among
WESTERN MULTIPLEX CORPORATION
CREDIT SUISSE FIRST BOSTON,
as Lead Arranger and as Agent,
and
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS................................................................1
1.1 Certain Defined Terms.................................................1
1.2 Other Interpretive Provisions........................................19
1.3 Accounting Principles................................................20
ARTICLE II
THE CREDITS...............................................................21
2.1 Amounts and Terms of Commitments.....................................21
2.2 Loan Accounts........................................................22
2.3 Procedure for Borrowing..............................................22
2.4 Conversion and Continuation Elections................................23
2.5 Voluntary Termination or Reduction of Commitments....................24
2.6 Optional Prepayments.................................................24
2.7 Mandatory Prepayments of Loans.......................................25
2.8 Repayment............................................................25
2.9 Interest.............................................................26
2.10 Fees.................................................................27
2.11 Computation of Fees and Interest.....................................27
2.12 Payments by the Company..............................................27
2.13 Payments by Banks to the Agent.......................................28
2.14 Sharing of Payments, Etc.............................................29
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY....................................29
3.1 Taxes................................................................29
3.2 Illegality...........................................................31
3.3 Increased Costs and Reduction of Return..............................32
3.4 Funding Losses.......................................................32
3.5 Inability to Determine Rates.........................................33
3.6 Survival.............................................................33
3.7 Replacement of Banks.................................................34
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Page
ARTICLE IV
CONDITIONS PRECEDENT......................................................34
4.1 Conditions of Initial Loans..........................................34
4.2 Conditions to All Borrowings.........................................37
ARTICLE V
REPRESENTATIONS AND WARRANTIES............................................37
5.1 Corporate Existence and Power........................................37
5.2 Corporate Authorization; No Contravention............................38
5.3 Governmental Authorization...........................................38
5.4 Binding Effect.......................................................38
5.5 Litigation...........................................................39
5.6 No Default...........................................................39
5.7 ERISA Compliance.....................................................39
5.8 Use of Proceeds; Margin Regulations..................................40
5.9 Title to Properties..................................................40
5.10 Taxes................................................................40
5.11 Financial Condition..................................................40
5.12 Environmental Matters................................................41
5.13 Collateral Documents.................................................42
5.14 Regulated Entities...................................................42
5.15 No Burdensome Restrictions...........................................42
5.16 Copyrights, Patents, Trademarks and Licenses, etc....................42
5.17 Subsidiaries.........................................................43
5.18 Insurance............................................................43
5.19 Solvency.............................................................43
5.20 Swap Obligations.....................................................43
5.21 Full Disclosure......................................................43
5.22 Year 2000............................................................43
ARTICLE VI
AFFIRMATIVE COVENANTS.....................................................44
6.1 Financial Statements.................................................44
6.2 Certificates; Other Information......................................44
6.3 Notices..............................................................45
6.4 Preservation of Corporate Existence, Etc.............................46
6.5 Maintenance of Property..............................................47
6.6 Insurance............................................................47
6.7 Payment of Obligations...............................................47
6.8 Compliance with Laws.................................................47
6.9 Inspection of Property and Books and Records.........................48
6.10 Environmental Laws...................................................48
6.11 Use of Proceeds......................................................48
6.12 Security Interests and Guaranties by Subsidiaries....................48
6.13 Pledge Agreement.....................................................49
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Page
ARTICLE VII
NEGATIVE COVENANTS........................................................50
7.1 Limitation on Liens..................................................50
7.2 Disposition of Assets................................................52
7.3 Consolidations and Mergers...........................................52
7.4 Loans and Investments................................................53
7.5 Limitation on Indebtedness...........................................54
7.6 Transactions with Affiliates.........................................55
7.7 Use of Proceeds......................................................55
7.8 Contingent Obligations...............................................56
7.9 Leverage Test........................................................56
7.10 Interest Coverage Test...............................................57
7.11 Fixed Charge Coverage Ratio..........................................57
7.12 Quick Ratio..........................................................57
7.13 Minimum EBITDA.......................................................57
7.14 Restricted Payments..................................................58
7.15 Change in Business...................................................59
7.16 Accounting Changes...................................................59
7.17 Amendments to the Acquisition Agreement..............................59
ARTICLE VIII
EVENTS OF DEFAULT.........................................................59
8.1 Event of Default.....................................................59
8.2 Remedies.............................................................62
8.3 Rights Not Exclusive.................................................62
ARTICLE IX
THE AGENT.................................................................63
9.1 Appointment and Authorization; "Agent"...............................63
9.2 Delegation of Duties.................................................63
9.3 Liability of Agent...................................................63
9.4 Reliance by Agent....................................................64
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Page
9.5 Notice of Default....................................................64
9.6 Credit Decision......................................................64
9.7 Indemnification of Agent.............................................65
9.8 Agent in Individual Capacity.........................................65
9.9 Successor Agent......................................................66
9.10 Withholding Tax.....................................................66
ARTICLE X
MISCELLANEOUS.............................................................68
10.1 Amendments and Waivers..............................................68
10.2 Notices.............................................................69
10.4 Costs and Expenses..................................................69
10.5 Company Indemnification.............................................70
10.6 Payments Set Aside..................................................70
10.7 Successors and Assigns..............................................71
10.8 Assignments, Participations, etc....................................71
10.9 Confidentiality.....................................................73
10.10 Set-off.............................................................73
10.11 Notification of Addresses, Lending Offices, Etc.....................74
10.12 Counterparts........................................................74
10.13 Severability........................................................74
10.14 No Third Parties Benefited..........................................74
10.15 Governing Law and Jurisdiction......................................74
10.16 Waiver, of Jury Trial...............................................75
10.17 Entire Agreement....................................................75
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SCHEDULES
Schedule 2.1 Commitments and Pro Rata Shares
Schedule 5.11 Permitted Liabilities
Schedule 5.12 Environmental Matters
Schedule 5.17 Subsidiaries and Minority Interests
Schedule 5.18 Insurance Matters
Schedule 7.1 Permitted Liens
Schedule 7.4 Investments
Schedule 7.5 Permitted Indebtedness
Schedule 7.8 Contingent Obligations
Schedule 10.2 Eurodollar and domestic Lending Offices. Addresses for Notices
EXHIBITS
Exhibit A Form of Compliance Certificate
Exhibit B Form of Guarantor Security Agreement
Exhibit C Form of /Guaranty
Exhibit D Form of Promissory Note
Exhibit E Form of Notice of Borrowing
Exhibit F Form of Notice of /Conversion/Continuation
Exhibit G Form of Solvency Certificate
Exhibit H Form of Pledge Agreement
Exhibit I Form of Acceptance and Assignment
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CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of November 1. 1999, among WESTERN
MULTIPLEX CORPORATION, a Delaware corporation (the "Company"), the several
financial institutions from time to time party to this Agreement (collectively,
the "Banks"; individually, a "Bank"), and CREDIT SUISSE FIRST BOSTON, as lead
arranger and as agent for Banks.
WHEREAS, Banks have agreed to make available to the Company two term loans
and a revolving credit facility upon the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Defined Terms. The following terms have the following meanings:
"Accounts Payable" means the accounts payable of the Company,
excluding accounts payable in respect of general administration and
marketing to the extent not included in the cost of goods sold as reported
per GAAP.
"Acquisition" means any transaction or series of related transactions
for the purpose of or resulting, directly or indirectly, in (a) the
acquisition of all or substantially all of the assets of a Person, or of
any business or division of a Person, (b) the acquisition of in excess of
50% of the capital stock, partnership interests, membership interests or
equity of any Person, or otherwise causing any Person to become a
Subsidiary, or (c) a merger or consolidation or any other combination with
another Person (other than a Person that is a Subsidiary) provided that the
Company or the Subsidiary is the surviving entity.
"Acquisition Agreement" means the Acquisition Agreement dated as of
September 30, 1999 by and among Glenayre, Glenayre Technologies, Inc., WMC
California and WMC Holding Corp.
"Affiliate" means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common
control with, such Person. A Person shall be deemed to control another
Person if the controlling Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of
the other Person,
<PAGE>
2
whether through the ownership of voting securities, membership interests,
by contract, or otherwise.
"Agent" means CSFB in its capacity as agent for Banks hereunder, and
any successor agent arising under Section 9.9.
"Agent-Related Persons" means CSFB and any successor agent arising
under Section 9.9, together with their respective Affiliates (including, in
the case of CSFB, the Arranger), and the officers, directors, employees,
agents and attorneys-in-fact of such Persons and Affiliates.
"Agent's Payment Office" means the address for payments set forth on
Schedule 10.2 or such other address as the Agent may from time to time
specify.
"Agreement" means this Credit Agreement.
"Applicable Margin" means a per annum interest rate determined in
accordance with the following table:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Base Rate Eurodollar Rate
Loan Type Loan Margin Loan Margin
--------- ----------- -----------
<S> <C> <C>
With respect to Revolving Loans 1.50% 2.50%
With respect to Term Loan A Loans: 1.50% 2.50%
With respect to Term Loan B Loans 4.00% 5.00%
- --------------------------------------------------------------------------------
</TABLE>
"Assignee" has the meaning specified in subsection 10.8(a).
"Attorney Costs" means and includes all reasonable fees and
disbursements of any law firm or other external counsel, the allocated cost
of internal legal services and all disbursements of internal counsel.
"Bank" has the meaning specified in the introductory clause hereto.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (11
U.S.C.ss.101, et seq.).
"Base Rate" means, for any day, the higher of: (a) 0.50% per annum
above the latest Federal Funds Rate; and (b) the rate of interest in effect
for such day as set from time to
<PAGE>
3
time by CSFB in New York, New York, as its "prime lending rate." The Base
Rate is not necessarily the lowest rate of interest charged by CSFB in
connection with extensions of credit.
Any change in the Base Rate shall take effect at the opening of
business on the effective day of such change in the prime lending rate or
the Federal Funds Rate, respectively, specified in the public announcement
of such change.
"Base Rate Loan" means a Loan that bears interest based on the Base
Rate.
"Borrowing" means a borrowing hereunder consisting of Loans of the
same Type made to the Company on the same day by Banks under Article ii,
and, other than in the case of Base Rate Loans, having the same Interest
Period.
"Borrowing Date" means any date on which a Borrowing occurs under
Section 2.3.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in New York City or San Francisco are
authorized or required by law to close and, if the applicable Business Day
relates to any Eurodollar Rate Loan, means a day other than a day on which
commercial banks in New York City or London, England are authorized or
required by law to close.
"Capital Adequacy Regulation" means any guideline, request or
directive of any central bank or other Governmental Authority, or any other
law, rule or regulation, whether or not having the force of law, in each
case, regarding capital adequacy of any bank or of any corporation
controlling a bank.
"Capital Expenditures" means all expenditures for any fixed assets or
improvements or for replacements, substitutions or additions thereto, that
have a useful life of more than one (1) year and which are required to be
capitalized under GAAP.
"Capital Lease Obligation" means, with respect to any capital lease,
the amount of the obligation of the lessee thereunder that, in accordance
with GAAP, would appear on a balance sheet of such Person in respect of
such capital lease or otherwise be disclosed in a note to such balance
sheet.
"Change of Control" means the occurrence after the date of this
Agreement of: (i) any Person or two or more Persons acting in concert
(other than the Permitted Investors) 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,
of securities of the Company (or other securities convertible into such
securities) representing
<PAGE>
4
greater than or equal to 50% of the combined voting power of all securities
of the Company entitled to vote in the election of directors; (ii) any
Person or two or more Persons acting in concert (other than the Permitted
Investors) acquiring by contract or otherwise, or entering into a contract
or arrangement which, upon consummation, will result in its or their
acquisition of, or control over, securities of the Company (or other
securities convertible into such securities) representing greater than or
equal to 50% of the combined voting power of all securities of the Company
entitled to vote in the election of directors; or (iii) at any time
Continuing Directors shall cease to constitute a majority of the board of
directors of the Company; provided, however, that neither (a) an initial
public offering of the Company's Stock nor (b) the Transaction shall be
deemed to constitute a "Change of Control" hereunder.
"Closing Date" means the date on which all conditions precedent set
forth in Section 4.1 are satisfied or waived by all Banks (or, in the case
of subsection 4.1 (e), waived by the Person entitled to receive such
payment).
"Code" means the Internal Revenue Code of 1986, as amended, and
regulations promulgated thereunder.
"Collateral" means all property and interests in property and proceeds
thereof now owned or hereafter acquired by the Company and its Subsidiaries
in or upon which a Lien now or hereafter exists in favor of Banks, or the
Agent on behalf of Banks, whether under this Agreement or under any other
documents executed by any such Person and delivered to the Agent or Banks.
"Collateral Documents" means, collectively, the Security Agreement,
the Guarantor Security Agreement, the Pledge Agreement, the Guaranty, and
all other security agreements, mortgages, deeds of trust, copyright, patent
and trademark assignments, lease assignments, guarantees and other similar
agreements between the Company or any Subsidiary and Banks or the Agent for
the benefit of Banks now or hereafter delivered to Banks or the Agent
pursuant to or in connection with the transactions contemplated hereby, and
all financing statements (or comparable documents now or hereafter filed in
accordance with the Uniform Commercial Code or comparable law) against the
Company or any Subsidiary as debtor in favor of Banks or the Agent for the
benefit of Banks as secured party, and any amendments, supplements,
modifications, renewals, replacements, consolidations, substitutions and
extensions of any of the foregoing.
"Commitment," as to any Bank, means such Bank's Pro Rata Share of the
Term Loan A Commitment, the Term Loan B Commitment and the Revolving
Commitment set forth in Schedule 2.1 hereof.
<PAGE>
5
"Compliance Certificate" means a certificate substantially in the form
of Exhibit A.
"Consolidated Current Assets" means, on a consolidated basis, as at
any date of determination, all current assets of the Company and its
Subsidiaries, as determined and computed in accordance with GAAP.
"Consolidated Current Liabilities" means, on a consolidated basis, as
at any date of determination, all current liabilities of the Company and
its Subsidiaries, as determined and computed in accordance with GAAP, plus,
to the extent not already included therein, the current portion of all
outstanding Loans, exclusive of outstanding Revolving Loans.
"Contingent Obligation" means, as to any Person, any direct or
indirect liability of that Person, whether or not contingent, with or
without recourse, (a) with respect to any Indebtedness, lease, dividend,
letter of credit or other monetary obligation (the "primary obligations")
of another Person (the "primary obligor"), including any obligation of that
Person (i) to purchase, repurchase or otherwise acquire such primary
obligations or any security therefor, (ii) to advance or provide funds for
the payment or discharge of any such primary obligation, or to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency or any balance sheet item, level of
income or financial condition of the primary obligor, (iii) to purchase
property, securities or services primarily for the purpose of assuring the
owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation, or (iv) otherwise to assure or
hold harmless the holder of any such primary obligation against loss in
respect thereof (each, a "Guaranty Obligation"); (b) with respect to any
Surety Instrument issued for the account of that Person or as to which that
Person is otherwise liable for reimbursement of drawings or payments; (c)
to purchase any materials, supplies or other property from, or to obtain
the services of, another Person if the relevant contract or other related
document or obligation requires that payment for such materials, supplies
or other property, or for such services, shall be made regardless of
whether delivery of such materials. supplies or other property is ever made
or tendered, or such services are ever performed or tendered, or (d) in
respect of any Swap Contract. The amount of any Contingent Obligation
shall, in the case of Guaranty Obligations, be deemed equal to the stated
or determinable amount of the primary obligation in respect of which such
Guaranty Obligation is made or, if not stated or if indeterminable, the
maximum reasonably anticipated liability in respect thereof, and in the
case of other Contingent Obligations other than in respect of Swap
Contracts, shall be equal to the maximum reasonably anticipated liability
in respect thereof and, in the case of Contingent Obligations in respect of
Swap Contracts, shall be equal to the Swap Termination Value.
"Continuing Director" means, at any date, an individual (a) who is a
member of the Board of Directors of the Company on the date hereof, (b)
who, as at such date, has been a
<PAGE>
6
member of such Board of Directors for at least the twelve (12) preceding
months, (c) who has been nominated to be a member of such Board of
Directors, directly or indirectly, by the Permitted Investors, or (d) who
has been nominated to be a member of such Board of Directors by a majority
of the other Continuing Directors then in office.
"Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or
agreement to which such Person is a party or by which it or any of its
property is bound.
"Conversion/Continuation Date" means any date on which, under Section
2.4, the Company (a) converts Loans of one Type to another Type, or (b)
continues as Loans of the same Type, but with a new Interest Period, Loans
having Interest Periods expiring on such date.
"CSFB" means Credit Suisse First Boston.
"Default" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured or otherwise
remedied during such time) constitute an Event of Default.
"Dollars", "dollars" and "$" each mean lawful money of the United
States.
"Domestic Subsidiary" means a Subsidiary organized under the laws of a
jurisdiction of the United States of America.
"EBITDA" means, with respect to the Company and its Subsidiaries for
any applicable period, Net Income for such period, plus (a) Net Interest
Expense to the extent included in the determination of Net Income, plus (b)
all amounts treated as expenses for depreciation and the amortization of
intangibles of any kind to the extent included in the determination of Net
Income, plus (c) to the extent deducted in determining Net Income for such
period, the aggregate amount of income taxes, plus (d) non-recurring
merger-related cash expenses, plus (e) non-cash charges, plus (f) losses,
less gains, on asset sales, plus (g) restructuring charges or reserves,
plus (h) any extraordinary, unusual or non-recurring cash or non-cash
expenses or losses, less gains (without duplication of the proviso in the
definition of Net Income). For the purposes of calculating EBITDA for any
period of four consecutive fiscal quarters (each, a "Reference Period")
pursuant to any determination of the Leverage Ratio, (i) if at any time
during such Reference Period the Company or any Subsidiary shall have made
any Material Disposition, the EBITDA for such Reference Period shall be
reduced by an amount equal to the EBITDA (if positive) attributable to the
property that is the subject of such Material Disposition for such
Reference Period or increased by an amount equal to the EBITDA (if
negative) attributable thereto for such Reference Period and (ii) if during
such Reference Period
<PAGE>
7
the Company or any Subsidiary shall have made a Material Acquisition,
EBITDA for such Reference Period shall be calculated after giving pro form
effect thereto as if such Material Acquisition occurred on the first day of
such Reference Period. As used in this definition, "Material Acquisition"
means any acquisition of property or series of related acquisitions of
property that (a) constitutes assets comprising all or substantially all of
an operating unit of a business or constitutes all or substantially all of
the common stock of a Person and (b) involves the payment of consideration
by the Company and its Subsidiaries in excess of $500,000; and "Material
Disposition" means any disposition of property or series of related
dispositions of property that yields gross proceeds to the Company or any
of its Subsidiaries in excess of $500,000.
"Eligible Assignee" means (a) a commercial bank organized under the
laws of the United States, or any state thereof, and having a combined
capital and surplus of at least $100,000,000; (b) a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development (the "OECD"), or a
political subdivision of any such country, and having a combined capital
and surplus of at least $100,000,000, provided that such bank is acting
through a branch or agency located in the country in which it is organized
or another country which is also a member of the OECD; or (c) a Person that
is primarily engaged in the business of commercial banking and that is (i)
a Subsidiary of a Bank, (ii) a Subsidiary of a Person of which a Bank is a
Subsidiary, or (iii) a Person of which a Bank is a Subsidiary.
"Employee Guaranties" has the meaning specified in subsection 7.5 (h).
"Environmental Claims" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or
injury to the environment.
"Environmental Laws" means all federal, state or local laws, statutes,
common law duties, rules, regulations, ordinances and codes, together with
all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental
Authorities, in each case relating to environmental, health, safety and
land use matters.
"Equity Interests" means, with respect to (a) a corporation, the
capital stock thereof; (b) a partnership, a partnership interest therein,
including all rights of a partner in such partnership, whether arising
under the partnership agreement of such partnership or otherwise; (c) a
limited liability company, a membership interest therein, including all
rights of a member of such limited liability company, whether arising under
the limited liability company agreement of such limited liability company
or otherwise; and (d) any other firm, association, trust, business
enterprise or other entity which is similar to any other Person listed in
clauses (a), (b) and (c), and
<PAGE>
8
this clause (d), of this definition, any equity interest therein and any
interest therein which entitles the holder thereof to share in the revenue,
income, earnings or losses thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Company within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code
for purposes of provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a Pension
Plan; (b) a withdrawal by the Company or any ERISA Affiliate from a Pension
Plan subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001 (a)(2) of ERISA) or a
cessation of operations which is treated as such a withdrawal under Section
4062(e) of ERISA; (c) a complete or partial withdrawal by the Company or
any ERISA Affiliate from a Multiemployer Plan or notification that a
Multiemployer Plan is in reorganization; (d) the filing of a notice of
intent to terminate, the treatment of a Plan amendment as a termination
under Section 4041 or 4041A of ERISA, or the commencement of proceedings by
the PBGC to terminate a Pension Plan or Multiemployer Plan; or (e) the
imposition of any liability under Title IV of ERISA, other than PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon the
Company or any ERISA Affiliate.
"ERP" means the enterprise resource planning system (including
hardware, software, installation, training and other costs) to be
implemented by the Company.
"Eurocurrency Reserve Requirements" means for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the rates (as
expressed as a decimal fraction) or reserve requirements in effect on such
day (including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board of Governors of the
Federal Reserve System or other Governmental Authority having jurisdiction
with respect thereto) dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities"
in Regulation D of such Board) maintained by a member bank of such system.
"Eurodollar Base Rate" means the rate per annum, determined by the
Agent at approximately 11:00 a.m. (London time) on the date which is two
Business Days prior to the beginning of the relevant Interest Period (as
specified in the applicable Notice of Borrowing) by reference to the
"British Bankers' Association Interest Settlement Rates" for deposits in
Dollars (as set forth by any service selected by the Agent which has been
nominated by the British Bankers' Association as an authorized information
vendor for the purpose of displaying such
<PAGE>
9
rates) for a period equal to such Interest Period (rounded, if necessary,
upward to the nearest whole multiple of 1/16th of 1%); provided that, to
the extent that an interest rate is not ascertainable pursuant to the
foregoing provisions of this definition, the "Eurodollar Base Rate" shall
be the interest rate per annum determined by the Agent to be the average
(rounded, if necessary, upward to the nearest whole multiple of 1/16th of
1% per annum, if such average is not such a multiple) of the rates per
annum at which deposits in Dollars are offered for such relevant Interest
Period to major banks in the London interbank market in London, England by
the Agent at approximately 11:00 a.m. (London time) on the date which is
two Business Days prior to the beginning of such Interest Period. Any
change in the Eurodollar Base Rate resulting from a change in the
Eurocurrency Reserve Requirements shall become effective on the opening of
business on the day in which such change became effective.
"Eurodollar Rate" means, with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the
nearest 1/100th of 1%):
Eurodollar Base Rate
---------------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Rate Loan" means a Loan that bears interest at the
Eurodollar Rate. AP "Event of Default" means any of the events or
circumstances specified in Section 8.1.
"Exchange Act" means the Securities Exchange Act of 1934, and
regulations promulgated thereunder.
"FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any period, a fluctuating interest
rate equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day
(or, if such day is not a Business Day, for the next preceding Business
Day) by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by Agent from three
Federal funds brokers of recognized standing selected by Agent.
"Fee Letter" has the meaning specified in subsection 2.10(a).
"Fiscal Quarter" means each fiscal quarter of the Company ending on
each March 31, June 30, September 30 and December 31.
<PAGE>
10
"Fiscal Year" means each fiscal year of the Company ending on each
December 31.
"Fixed Charge Coverage Ratio" means, as calculated quarterly as of the
last day of each Fiscal Quarter the ratio of (a) EBITDA for the four
consecutive quarters then ended, plus any Management Fees paid during such
period, to (b) Fixed Charges for the four consecutive quarters then ended.
"Fixed Charges" means, on a consolidated basis, for any period as of
any date of determination, the sum of (a) Net Interest Expense during such
period, plus (b) all scheduled principal payments with respect to the Loans
(after giving effect to any optional prepayments thereof), cash taxes of
the type referred to in clause (c) of the definition of EBITDA and
Management Fees paid by the Company during such period, plus (c) Capital
Expenditures, other than Acquisitions permitted hereunder, made during such
period, minus any payment made by the Company in connection with the ERP
implementation in an aggregate amount not to exceed $1,500,000 at any time.
"Foreign Subsidiary" means a Subsidiary organized under the laws of a
jurisdiction outside of the United States of America.
"FRB" means the Board of Governors of the Federal Reserve System, and
any Governmental Authority succeeding to any of its principal functions.
"Funded Debt" means, as calculated on a consolidated basis as of any
date of determination, the total amount of all interest bearing
Indebtedness for borrowed money and Employee Guaranties, which Indebtedness
shall include the principal amount outstanding under all Loans advanced by
the Lenders hereunder, but shall specifically exclude Capital Lease
Obligations.
"GAAP" means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants
and statements and pronouncements of the Financial Accounting Standards
Board (or agencies with similar functions of comparable stature and
authority within the U.S. accounting profession), which are applicable to
the circumstances as of the Closing Date.
"Glenayre" means GTI Acquisition Corp., a Delaware corporation.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary
or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative
<PAGE>
11
functions of or pertaining to government, and any corporation or other
entity owned or controlled, through stock or capital ownership or
otherwise, by any of the foregoing.
"Gross Interest Expense" means, on a consolidated basis, for any
period as at any date of determination, cash interest expense for such
period (including all commissions, discounts, fees and other charges under
letters of credit and similar instruments and under any Swap Contract)
classified and accounted for as interest in accordance with GAAP.
"Guarantor" means a guarantor under the Guaranty.
"Guarantor Security Agreement" means a Guarantor Security Agreement in
substantially the form attached hereto as Exhibit B.
"Guaranty" means a Guaranty Agreement in substantially the form
attached hereto as Exhibit C.
"Guaranty Obligation" has the meaning specified in the definition of
"Contingent Obligation."
"Holdings" means WMC Holding Corporation, a Delaware corporation.
"Indebtedness" of any Person means, without duplication, (a) all
Indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than
trade payables entered into in the ordinary course of business on ordinary
terms); (c) all non-contingent reimbursement or payment obligations with
respect to Surety Instruments; (d) all obligations evidenced by notes,
bonds, debentures or similar instruments, including obligations so
evidenced incurred in connection with the acquisition of property, assets
or businesses; (e) all indebtedness created or arising under any
conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to property acquired by the Person
(even though the rights and remedies of the seller or bank under such
agreement in the event of default are limited to repossession or sale of
such property); (f) all Capital Lease Obligations of such Person; (g) all
indebtedness referred to in clauses (a) through (f) above secured by (or
for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien upon or in property (including
accounts and contracts rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such
Indebtedness; and (h) all Guaranty Obligations in respect of indebtedness
or obligations of others of the kinds referred to in clauses (a) through
(g) above.
For all purposes of this Agreement, the Indebtedness of any Person
shall include all recourse Indebtedness of any partnership or joint venture
or limited liability company in which such Person is a general partner or a
joint venturer or a member.
<PAGE>
12
"Indemnified Liabilities" has the meaning specified in Section 10.5.
"Indemnified Person" has the meaning specified in Section 10.5.
"Independent Auditor" has the meaning specified in subsection 6.1(a).
"Insolvency Proceeding" means, with respect to any Person, (a) any
case, action or proceeding with respect to such Person before any court or
other Governmental Authority relating to bankruptcy, reorganization,
insolvency, liquidation, receivership, dissolution, winding-up or relief of
debtors, or (b) any general assigmnent for the benefit of creditors,
composition, marshalling of assets for creditors, or other, similar
arrangement in respect of its creditors generally or any substantial
portion of its creditors; undertaken under U.S. Federal, state or foreign
law, including the Bankruptcy Code.
"Interest Coverage Ratio" means, on a consolidated basis, as of the
last day of each Fiscal Quarter, the ratio of (a) EBITDA for the four
consecutive quarters then ended to (b) Net Interest Expense for the four
consecutive quarters then ended.
"Interest Payment Date" means, as to any Loan other than a Base Rate
Loan, the first day of each Interest Period applicable to such Loan and, as
to any Base Rate Loan, the first Business Day of each November, February,
May and August and each date such Loan is converted into another Type of
Loan, provided, however, that if any Interest Period for a Eurodollar Rate
Loan exceeds 90 days or three months, respectively, the date that falls 90
days or three months (as the case may be) after the beginning of such
Interest Period and after each Interest Payment Date thereafter is also an
Interest Payment Date.
"Interest Period" means, as to any Eurodollar Rate Loan, the period
commencing on the Borrowing Date of such Loan or on the
Conversion/Continuation Date on which the Loan is converted into or
continued as a Eurodollar Rate Loan, and ending on the date one, two,
three, six or, if consented to by each Bank under the relevant facility,
nine or twelve months thereafter as selected by the Company in its Notice
of Borrowing or Notice of Conversion/Continuation: provided that:
(i) if any Interest Period would otherwise end on a day that is
not a Business Day, that Interest Period shall be extended to the
following Business Day unless, in the case of a Eurodollar Rate Loan,
the result of such extension would be to carry such Interest Period
into another calendar month, in which event such Interest Period shall
end on the preceding Business Day;
(ii) any Interest Period pertaining to a Eurodollar Rate Loan
that begins on the last Business Day of a calendar month (or on a day
for which there is no numerically corresponding
<PAGE>
13
day in the calendar month at the end of such Interest Period) shall
end on the last Business Day of the calendar month at the end of such
Interest Period; and
(iii) no Interest Period for any Term Loan shall extend beyond
the Term Maturity Date and no Interest Period for any Revolving Loan
shall extend beyond the Revolving Termination Date.
"IRS" means the Internal Revenue Service, and any Governmental
Authority succeeding to any of its principal functions under the Code.
"Lending Office" means, as to any Bank, the office or offices of such
Bank specified as its "ending Office" or "Domestic Lending Office" or
"Eurodollar Lending Office", as the case may be, on Schedule 10.2, or such
other office or offices as such Bank may from time to time notify the
Company and the Agent.
"Leverage Ratio" means, as calculated quarterly as of the last day of
each Fiscal Quarter, the ratio of (a) Funded Debt on such day to (b) EBITDA
for the four consecutive quarters then ended.
"Lien" means any mortgage, pledge, security interest, hypothecation,
assignment, lien (statutory or other) or similar encumbrance (including any
agreement to give any of the foregoing, any conditional sale or other title
retention agreement or any lease in the nature thereof).
"Loan" means an extension of credit by a Bank to the Company under
Article II, and may be a Base Rate Loan or a Eurodollar Rate Loan (each, a
"Type" of Loan), and includes any Revolving Loan or Term Loan.
"Loan Documents" means this Agreement, any Notes, the Fee Letter and
all other documents delivered to the Agent or any Bank in connection
herewith.
"Majority Banks" means (a) at any time until the Closing Date, Banks
which collectively hold in excess of 50% of the Commitments, and (b)
thereafter, Banks which collectively hold in excess of 50% of the sum of
(i) the then aggregate unpaid principal amount of the Term Loans then
outstanding and (ii) the aggregate amount of Revolving Commitments then in
effect.
"Management Fee" has the meaning set forth in Section 7.6.
"Margin Stock" means "margin stock" as such term is defined in
Regulation T, U or X of the FRB.
<PAGE>
14
"Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties or
condition (financial or otherwise) of the Company or the Company and its
Subsidiaries taken as a whole; or (b) a material adverse effect upon the
legality, validity, binding effect or enforceability against the Company or
the Company and its Subsidiaries taken as a whole of any Loan Document.
"Multiemployer Plan" means a "multiemployer plan", within the meaning
of Section 4001(a)(3) of ERISA, to which the Company or any ERISA Affiliate
makes, is making, or is obligated to make contributions or, during the
preceding three calendar years, has made, or been obligated to make,
contributions.
"Negative Pledge" means any agreement, contract or arrangement whereby
any Person is prohibited from, or would otherwise be in default as a result
of, creating, assuming, incurring or suffering to exist, directly or
indirectly, any Lien on any of its assets.
"Net Income" means, for any applicable period, the aggregate of all
amounts which, in accordance with GAAP, would be included as net income (or
net loss (including any extraordinary losses)) on a consolidated statement
of income of the Company and its Subsidiaries for such period; provided,
however, that "Net Income" shall exclude the effect of any extraordinary or
other non-recurring non-cash gain or loss outside the ordinary course of
business.
"Net Interest Expense" means, on a consolidated basis, for any period
as at any date of determination, (a) Gross Interest Expense, less (b)
interest income for that period and Swap Contract payments received.
"Note" means a promissory note executed by the Company in favor of a
Bank pursuant to subsection 2.2(b), which Note shall be substantially in
the form attached hereto as Exhibit D.
"Notice of Borrowing" means a notice in substantially the form of
Exhibit E.
"Notice of Conversion/Continuation" means a notice in substantially
the form of Exhibit F.
"Obligations" means all advances, debts, liabilities and monetary
obligations arising under any Loan Document owing by the Company to any
Bank, the Agent, or any Indemnified Person, whether direct or indirect
(including those acquired by assigmnent), absolute or contingent, due or to
become due, now existing or hereafter arising.
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15
"Organization Documents" means. for any corporation, the certificate
or articles of incorporation, the bylaws, any certificate of determination
or instrument relating to the rights of preferred shareholders of such
corporation, any shareholder rights agreement, and all applicable
resolutions of the board of directors (or any committee thereof) of such
corporation.
"Other Taxes" means any present or future stamp, court or documentary
taxes or any other excise or property taxes, charges or similar levies
which arise from any payment made hereunder or from the execution,
delivery, performance, enforcement or registration of, or otherwise with
respect to, this Agreement or any other Loan Documents.
"Participant" has the meaning specified in subsection 10.8(d).
"PBGC" means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions under
ERISA.
"Pension Plan" means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA which the Company sponsors, maintains,
or to which it makes, is making, or is obligated to make contributions, or
in the case of a multiple employer plan (as described in Section 4064(a) of
ERISA) has made contributions at any time during the immediately preceding
five (5) plan years and could reasonably be expected to have liability
under Section 4064 of ERISA.
"Permitted Investors" means the collective reference to Ripplewood,
all owners of capital stock of the Company as of the Closing Date, their
respective Affiliates and any director, officer or employee of the Company.
"Permitted Liens" has the meaning specified in Section 7.1.
"Permitted Swap Obligations" means all obligations (contingent or
otherwise) of the Company or any Subsidiary existing or arising under Swap
Contracts, provided that such obligations are (or were) entered into by
such Person in the ordinary course of business for the purpose of directly
mitigating risks associated with liabilities, commitments or assets held by
such Person, or changes in the value of securities issued by such Person in
conjunction with a securities repurchase program not otherwise prohibited
hereunder, and not for purposes of speculation or taking a "market view."
"Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture or Governmental Authority.
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16
"Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which the Company sponsors or maintains or to which the Company
makes, is making, or is obligated to make contributions and includes any
Pension Plan.
"Pledge Agreement" has the meaning set forth in Section 6.13.
"Pro Rata Share" means, as to any Bank at any time, the percentage
equivalent (expressed as a decimal, rounded to the ninth decimal place) at
such time of such Bank's Commitment, as set forth in Schedule 2.1, divided
by the combined Commitments of all Banks.
"Quick Ratio" means, at any date of determination, the ratio of
Consolidated Current Assets to Consolidated Current Liabilities.
"Reportable Event" means, any of the events set forth in Section
4043(c) of ERISA or the regulations thereunder, other than any such event
for which the 30-day notice requirement under ERISA has been waived in
regulations issued by the PBGC.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of
a Governmental Authority, in each case applicable to or binding upon the
Person or any of its property or to which the Person or any of its property
is subject.
"Responsible Officer" means the chief executive officer, the president
or any vice president of the Company, or any other officer having
substantially the same authority and responsibility; or, with respect to
compliance with financial covenants, the chief financial officer or the
treasurer of the Company, or any other officer having substantially the
same authority and responsibility.
"Revolving Commitment" means ten million dollars ($ 10,000,000).
"Revolving Loan" has the meaning specified in Section 2.1.
"Revolving Termination Date" means the earlier to occur of
(a) November 1, 2002; and
(b) the date on which the Commitments terminate in accordance with the
provisions of this Agreement.
"Ripplewood" means Ripplewood Partners L.P.
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17
"SEC" means the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal functions.
"Security Agreement" means that certain Security Agreement dated of
even date herewith among the Agent, Banks and the Company.
"Solvent" means, as to any Person at any time, that (a) the fair value
of the property of such Person is greater than the amount of such Person's
liabilities (including disputed, contingent and unliquidated liabilities)
as such value is established and liabilities evaluated for purposes of
Section 101(31) of the Bankruptcy Code and, in the alternative, for
purposes of state law; (b) the present fair saleable value of the property
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 is able to realize upon its property and pay its
debts and other liabilities (including disputed, contingent and
unliquidated liabilities) as they mature in the normal course of business;
(d) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person's ability to pay as such
debts and liabilities mature; and (e) 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.
"Subsidiary" of a Person means any corporation, association,
partnership, limited liability company, joint venture or other business
entity of which more than 50% of the voting stock, membership interests or
other equity interests (in the case of Persons other than corporations), is
owned or controlled directly or indirectly by the Person, or one or more of
the Subsidiaries of the Person, or a combination thereof. Unless the
context otherwise clearly requires, references herein to a "Subsidiary"
refer to a Subsidiary of the Company.
"Surety Instruments" means all letters of credit (including standby
and commercial), banker's acceptances, bank guaranties, shipside bonds,
surety bonds and similar instruments.
"Swap Contract" means any agreement, whether or not in writing,
relating to any transaction that is a rate swap, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap
or option, bond, note or bill option, interest rate option, forward foreign
exchange transaction, cap, collar or floor transaction, currency swap,
cross-currency rate swap, swaption, currency option or any other, similar
transaction (including any option to enter into any of the foregoing) or
any combination of the foregoing, and, unless the context otherwise clearly
requires, any master agreement relating to or governing any or all of the
foregoing.
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18
"Swap Termination Value" means, in respect of any one or more Swap
Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or
after the date such Swap Contracts have been closed out and termination
value(s) determined in accordance therewith, such termination value(s), and
(b) for any date prior to the date referenced in clause (a) the amount(s)
determined as the mark-tomarket value(s) for such Swap Contracts, as
determined by the Company based upon one or more mid-market or other
readily available quotations provided by any recognized dealer in such Swap
Contracts (which may include any Bank).
"Taxes" means any and all present or future taxes, levies,
assessments, imposts, duties, deductions, fees, withholdings or similar
charges, and all liabilities with respect thereto, excluding, in the case
of each Bank and the Agent, respectively, taxes imposed on or measured by
its net income by the jurisdiction (or any political subdivision thereof)
under the laws of which such Bank or the Agent, as the case may be, is
organized or maintains a lending office.
"Term Loan" means any Term Loan A Loan or Term Loan B Loan; and "Term
Loans" means all Term Loan A Loans and Term Loan B Loans.
"Term Loan A Commitment" means ten million dollars ($10,000,000).
"Term Loan A Loan" has the meaning specified in Section 2.1(a).
"Term Loan B Commitment" means twelve million dollars ($12,000,000).
"Term Loan B Loan" has the meaning specified in Section 2.1(b).
"Transaction" means the transactions contemplated by the Acquisition
Agreement.
"Transaction Documents means collectively the Acquisition Agreement
and all other material instruments, agreements and other documents executed
or delivered in connection with the Transaction.
"Type " has the meaning specified in the definition of Loan."
"Unfunded Pension Liability" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of
that Plan's assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the
applicable plan year.
"United States" and "U.S." each means the United States of America.
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19
"Wholly-Owned Domestic Subsidiary" means a Wholly-Owned Subsidiary
that is also a Domestic Subsidiary.
"Wholly-Owned Subsidiary" means any corporation in which (other than
directors' qualifying shares required by law) 100% of the capital stock of
each class having ordinary voting power, and 100% of the capital stock of
every other class, in each case, at the time as of which any determination
is being made, is owned, beneficially and of record, by the Company, or by
one or more of the other Wholly-Owned Subsidiaries, or both.
"WMC California" means Western Multiplex Corporation, a California
corporation.
"Year 2000 Problem" means the risk that any material computer
applications used by the Company or its Subsidiaries may be unable to
recognize and properly perform date sensitive functions involving certain
dates prior to and any date on or after December 31, 1999.
1.2 Other Interpretive Provisions.
(a) The meanings of defined terms are equally applicable to the singular
and plural forms of the defined terms.
(b) The words "hereof, "herein", "hereunder" and similar words refer to
this Agreement as a whole and not to any particular provision of this Agreement;
and subsection, Section, Schedule and Exhibit references are to this Agreement
unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments, documents,
agreements, certificates, indentures, notices and other writings, however
evidenced.
(ii) The term "including" is not limiting and means "including without
limitation."
(iii) In the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including"; the words "to"
and "until" each mean "to but excluding", and the word "through" means to and
including."
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document, and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.
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20
(e) The captions and headings of this Agreement are for convenience of
reference only and shall not affect the interpretation of this Agreement.
(f) This Agreement and other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and shall each be
performed in accordance with their terms. Unless otherwise expressly provided,
any reference to any action of the Agent or Banks by way of consent, approval or
waiver shall be deemed modified by the phrase "in its/their sole discretion."
(g) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agent, the Company
and the other parties, and are the products of all parties. Accordingly, they
shall not be construed against Banks or the Agent merely because of the Agent's
or Banks' involvement in their preparation.
1.3 Accounting Principles. (a) Except as otherwise expressly provided
herein, all accounting terms used herein shall be interpreted, and all financial
statements and certificates and reports as to financial matters required to be
delivered to Banks hereunder shall be prepared, in accordance with GAAP applied
on a consistent basis. All calculations made for the purposes of determining
compliance with this Agreement shall (except as otherwise expressly provided
herein) be made by application of GAAP applied on a basis consistent with the
most recent annual or quarterly financial statements delivered pursuant to
Section 6.1, consistent with the financial statements of the Company and its
Subsidiaries as at December 31, 1998); provided, however, if (a) the Company
shall object to determining such compliance on such basis at the time of
delivery of such financial statements due to any change in GAAP or the rules
promulgated with respect thereto or (b) the Majority Banks shall so object in
writing within 60 days after delivery of such financial statements, then such
calculations shall be made on a basis consistent with the most recent financial
statements delivered by the Company to Banks as to which no such objection shall
have been made.
(b) References herein to "fiscal year" and "fiscal quarter" refer to such
fiscal periods of the Company.
ARTICLE II
THE CREDITS
2.1 Amounts and Terms of Commitments. (a) Term Loan A. Each Bank severally
agrees, on the terms and conditions set forth herein, to make a single loan to
the Company (each such loan, a "Term Loan A Loan") on the Closing Date in an
amount not to
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21
exceed such Bank's Pro Rata Share of the Term Loan A Commitment. Amounts
borrowed as Term Loan A Loans which are repaid or prepaid by the Company may not
be reborrowed.
(b) Term Loan B. Each Bank severally agrees, on the terms and conditions
set forth herein, to make a single loan to the Company (each such loan, a "Term
Loan B Loan") on the Closing Date in an amount not to exceed such Bank's Pro
Rata Share of the Term Loan B Commitment. Amounts borrowed as Term Loan B Loans
which are repaid or prepaid by the Company may not be reborrowed.
(c) The Revolving Credit. Each Bank severally agrees, on the terms and
conditions set forth herein, to make loans to the Company (each such loan, a
"Revolving Loan") from time to time on any Business Day during the period from
the Closing Date to the Revolving Termination Date, in an aggregate principal
amount at any one time outstanding not to exceed the Bank's Pro Rata Share of
the Revolving Commitment. Within the limits of each Bank's Commitment, and
subject to the other terms and conditions hereof, the Company may borrow under
this subsection 2.1(c), prepay under Section 2.6 and reborrow under this
subsection 2.1(c).
2.2 Loan Accounts. (a) The Loans made by each Bank shall be evidenced by
one or more loan accounts or records maintained by such Bank in the ordinary
course of business. The loan accounts or records maintained by the Agent and
each Bank shall be conclusive absent manifest error/rebuttable presumptive
evidence of the amount of the Loans made by Banks to the Company and the
interest and payments thereon. Any failure so to record or any error in doing so
shall not, however, limit or otherwise affect the obligation of the Company
hereunder to pay any amount owing with respect to the Loans.
(b) Upon the request of any Bank made through the Agent, the Loans made by
such Bank may be evidenced by one or more Notes, instead of or in addition to
loan accounts. Each such Bank shall endorse on the schedules annexed to its
Note(s) the date, amount and maturity of each Loan made by it and the amount of
each payment of principal made by the Company with respect thereto. Each such
Bank is irrevocably authorized by the Company to endorse its Note(s) and each
Bank's record shall be conclusive absent manifest error; provided, however, that
the failure of a Bank to make, or an error in making, a notation thereon with
respect to any Loan shall not limit or otherwise affect the obligations of the
Company hereunder or under any such Note to such Bank.
2.3 Procedure for Borrowing. (a) Each Borrowing shall be made upon the
Company's irrevocable written notice delivered to the Agent in the form of a
Notice of Borrowing (which notice must be received by the Agent prior to 1:00
p.m. (New York City time) (i) three Business Days prior to the requested
Borrowing Date, in the case of Eurodollar Rate Loans, and (ii) on or before the
requested Borrowing Date, in the case of Base Rate Loans, specifying:
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22
(i) the amount of the Borrowing, which shall be in an aggregate
minimum amount of $500,000 or any multiple of $100,000 in excess thereof;
(ii) the requested Borrowing Date, which shall be a Business Day;
(iii) the Type of Loans comprising the Borrowing; and
(iv) the duration of the Interest Period applicable to such Loans
included in such notice. If the Notice of Borrowing fails to specify the
duration of the Interest Period for any Borrowing comprised of Eurodollar
Rate Loans, such Interest Period shall be one month.
(b) The Agent will promptly notify each Bank of its receipt of any Notice
of Borrowing and of the amount of such Bank's Pro Rata Share of that Borrowing.
(c) Each Bank will make the amount of its Pro Rata Share of each Borrowing
available to the Agent for the account of the Company at the Agent's Payment
Office by 2:00 p.m. (New York City time), on the Borrowing Date requested by the
Company in funds immediately available to the Agent. The proceeds of all such
Loans will then be made available to the Company by the Agent at such office by
crediting the account of the Company on the books of CSFB with the aggregate of
the amounts made available to the Agent by Banks and in like funds as received
by the Agent.
(d) After giving effect to any Borrowing, unless the Agent shall otherwise
consent, there may not be more than ten (10) different Interest Periods in
effect.
2.4 Conversion and Continuation Elections. (a) The Company may, upon
irrevocable written notice to the Agent in accordance with subsection 2.4(b):
(i) elect, as of any Business Day, in the case of Base Rate Loans, or
as of the last day of the applicable Interest Period, in the case of any
other Type of Loans, to convert any such Loans (or any part thereof in an
amount not less than $500,000, or that is in an integral multiple of
$100,000 in excess thereof) into Loans of any other Type; or
(ii) elect, as of the last day of the applicable Interest Period, to
continue any Loans having Interest Periods expiring on such day (or any
part thereof in an amount not less than $500,000, or that is in an integral
multiple of $100,000 in excess thereof);
provided, that if at any time the aggregate amount of Eurodollar Rate Loans in
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $500,000, such Eurodollar Rate Loans shall
automatically convert into Base Rate Loans, and on
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23
and after such date the right of the Company to continue such Loans as, and
convert such Loans into, Eurodollar Rate Loans shall terminate.
(b) The Company shall deliver a Notice of Conversion/Continuation to be
received by the Agent not later than 1:00 p.m. (New York City time) at least (i)
three Business Days in advance of the Conversion/Continuation Date, if the Loans
are to be converted into or continued as Eurodollar Rate Loans; (ii) one
Business Day in advance of the Conversion/Continuation Date, if the Loans are to
be converted into Base Rate Loans, specifying:
(i) the proposed Conversion/Continuation Date;
(ii) the aggregate amount of Loans to be converted or continued;
(iii) the Type of Loans resulting from the proposed conversion or
continuation; and
(iv) other than in the case of conversions into Base Rate Loans, the
duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to Eurodollar
Rate Loans, the Company has failed to select timely a new Interest Period to be
applicable to such Eurodollar Rate Loans, or if any Default or Event of Default
then exists, the Company shall be deemed to have elected to convert such
Eurodollar Rate Loans into Base Rate Loans effective as of the expiration date
of such Interest Period.
(d) The Agent will promptly notify each Bank of its receipt of a Notice of
Conversion/Continuation, or, if no timely notice is provided by the Company, the
Agent will promptly notify each Bank of the details of any automatic conversion.
All conversions and continuations shall be made ratably according to the
respective outstanding principal amounts of the Loans with respect to which the
notice was given held by each Bank.
(e) Unless the Majority Banks otherwise consent, during the existence and
continuance of an Event of Default, the Company may not elect to have a Loan
converted into or continued as a Eurodollar Rate Loan.
(f) After giving effect to any conversion or continuation of Loans, unless
the Agent shall otherwise consent, there may not be more than ten (10) different
Interest Periods in effect.
2.5 Voluntary Termination or Reduction of Commitments. The Company may,
upon not less than three (3) Business Days' prior notice to the Agent, terminate
the
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24
Commitments, or permanently reduce the Commitments by an aggregate minimum
amount of $1,000,000 or any multiple of $100,000 in excess thereof; unless,
after giving effect thereto and to any prepayments of Loans made on the
effective date thereof, the then-outstanding principal amount of the Loans would
exceed the amount of the combined Commitments then in effect. Once reduced in
accordance with this Section, the Commitments may not be increased. Any
reduction of the Commitments shall be applied to each Bank according to its Pro
Rata Share. All accrued commitment fees to, but not including the effective date
of any reduction or termination of Commitments, shall be paid on the effective
date of such reduction or termination.
2.6 Optional Prepayments. Subject to Section 3.4, the Company may, at any
time or from time to time, upon not less than one (1) Business Days' irrevocable
notice to the Agent in the case of Base Rate Loans and upon not less than three
(3) Business Days' irrevocable notice to the Agent in the case of Eurodollar
Rate Loans, ratably prepay Loans in whole or in part, in minimum amounts of
$500,000 or any multiple of $100,000 in excess thereof. Such notice of
prepayment shall specify the date and amount of such prepayment and the Type(s)
of Loans to be prepaid. The Agent will promptly notify each Bank of its receipt
of any such notice, and of such Bank's Pro Rata Share of such prepayment. If
such notice is given by the Company, the Company shall make such prepayment and
the payment amount specified in such notice shall be due and payable on the date
specified therein, together with accrued interest to each such date on the
amount prepaid and any amounts required pursuant to Section 3.4. Optional
prepayments of Term Loans shall be applied to reduce the then remaining
installments of the Term Loan A Loans and Term Loan B Loans, as the case may be,
pro rata based upon the then remaining principal amount thereof. Notwithstanding
the above, once each calendar year, the Company may apply any optional
prepayment to pay any one installment per tranche as it directs, with the
remainder, if any, of any such optional prepayment applied in the manner set
forth in the immediately preceding sentence.
2.7 Mandatory Prepayments of Loans. The Company shall prepay principal
amounts outstanding under the Term Loans, within five Business Days of the
Company's receipt thereof, (i) in an amount equal to one hundred percent (100%)
of the cash proceeds (net of reasonable transaction costs and taxes) from (A)
non-ordinary course sales of assets or other dispositions of Property owned by
the Company, but excluding such cash proceeds which are reinvested in the
business of the Company within 180 days after the consummation of such sale or
disposition pursuant to a plan for such reinvestment provided to the Agent no
later than ten (10) Business Days after the consummation of such sale or
disposition; (B) the Company's or any of its Subsidiaries' initial public
offering, (C) private placements of equity or equity-linked products of the
Company or its Subsidiaries, other than to Holdings, the Company, any of its
Subsidiaries or any Permitted Investor, and (D) the issuance of senior debt,
other than debt permitted to be incurred under Section 7.5, and (ii) in an
amount equal to one-hundred percent (100%) of the cash proceeds (net of
reasonable transaction costs and taxes) from the issuance of subordinated debt.
Mandatory prepayments of Term Loans shall be applied to reduce the then
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25
remaining installments of the Term Loan A Loans and Term Loan B Loans, as the
case may be, pro rata based upon the then remaining principal amount thereof.
2.8 Repayment. (a) Term Loan A. The Company shall repay to Banks the
principal of the Term Loan A Loans in eleven (11) equal installments commencing
on May 1, 2000 and continuing on each November 1, February 1, May 1 and August 1
thereafter through and including November 1, 2002. Notwithstanding the above,
the Company shall repay all unpaid principal of Term Loan A Loans and all
outstanding interest thereon and all costs, charges and expenses with respect
thereto, on November 1, 2002.
(b) Term Loan B. The Company shall repay to Banks the principal of the Term
Loan B Loans as follows: (i) $120,000 of the principal of the Term Loan B Loans
shall be due and payable on November 1, 2000 and on each November 1 thereafter
through and including November 1, 2003; and (ii) all remaining unpaid principal
of Term Loan B Loans and all outstanding interest thereon and all costs, charges
and expenses with respect thereto, shall be due and payable on November 1, 2004.
(c) The Revolving Credit. The Company shall repay to Banks on the Revolving
Termination Date the aggregate principal amount of Revolving Loans and all
outstanding interest thereon and all costs, charges and expenses with respect
thereto.
2.9 Interest. (a) Each Loan shall bear interest on the outstanding
principal amount thereof from the applicable Borrowing Date at a rate per annum
equal to the Eurodollar Rate or the Base Rate, as the case may be (and subject
to the Company's right to convert to other Types of Loans under Section 2.4),
plus the Applicable Margin.
(b) Interest on each Loan shall be paid in arrears on each Interest Payment
Date. Interest shall also be paid on the date of any prepayment of Loans under
Section 2.6 or 2.7 for the portion of the Loans so prepaid and upon payment
(including prepayment) in full thereof and, during the existence of any Event of
Default, interest shall be paid on demand of the Agent at the request or with
the consent of the Majority Banks.
(c) Notwithstanding subsection (a) of this Section, while any amount owed
by the Company to Banks is past due, the Company shall pay interest (after as
well as before entry of judgment thereon to the extent permitted by law) on such
amount at a rate per annum which is determined by adding 2% per annum to the
Applicable Margin then in effect for such amount and, in the case of past-due
amounts not subject to an Applicable Margin, at a rate per annum equal to the
Base Rate plus 2%; provided, however, that, on and after the expiration of any
Interest Period applicable to any past-due Eurodollar Rate Loan, the past-due
amount of such Loan shall bear interest at a rate per annum equal to the Base
Rate plus 2%.
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26
(d) Anything herein to the contrary notwithstanding, the obligations of the
Company to any Bank hereunder shall be subject to the limitation that payments
of interest shall not be required for any period for which interest is computed
hereunder, to the extent (but only to the extent) that contracting for or
receiving such payment by such Bank would be contrary to the provisions of any
law applicable to such Bank limiting the highest rate of interest that may be
lawfully contracted for, charged or received by such Bank, and in such event the
Company shall pay such Bank interest at the highest rate permitted by applicable
law.
2.10 Fees. (a) Fee Letter. The Company shall pay to the Agent for the
account of Banks, such fees as are set forth in the Fee Letter ("Fee Letter")
between the Company and the Agent dated September 22, 1999.
(b) Commitment Fees. The Company shall pay to the Agent for the account of
each Bank a commitment fee on the average daily unused portion of such Bank's
Revolving Commitment, computed on a quarterly basis in arrears on the first
Business Day of each November, February, May and August based upon the daily
utilization for that quarter as calculated by the Agent, equal to seventy-five
hundredths of one-percent (0.75%) per annum. Such commitment fee shall accrue
from the Closing Date to the Revolving Termination Date and shall be due and
payable quarterly in arrears on the first Business Day of each November,
February, May and August, commencing on February 1, 2000 through the Revolving
Termination Date, with the final payment to be made on the Revolving Termination
Date; provided that, in connection with any reduction or termination of
Commitments under Section 2.5, the accrued commitment fee calculated for the
period ending on such date shall also be paid on the date of such reduction or
termination, with the following quarterly payment being calculated on the basis
of the period from such reduction or termination date to such quarterly payment
date. The commitment fees provided in this subsection shall accrue at all times
after the above-mentioned commencement date, including at any time during which
one or more conditions in Article IV are not met.
2.11 Computation of Fees and Interest. (a) All computations of interest for
Base Rate Loans when the Base Rate is determined by CSFB's "reference rate"
shall be made on the basis of a year of 365 or 366 days, as the case may be, and
actual days elapsed. All other computations of fees and interest shall be made
on the basis of a 360-day year and actual days elapsed. Interest and fees shall
accrue during each period during which such interest or fees are computed from
the first day thereof to the last day thereof.
(b) Each determination of an interest rate by the Agent shall be conclusive
and binding on the Company and Banks in the absence of manifest error. The Agent
will, at the request of the Company or any Bank, deliver to the Company or the
Bank, as the case may be, a statement showing the quotations used by the Agent
in determining any interest rate and the resulting interest rate.
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27
2.12 Payments by the Company. (a) All payments to be made by the Company
shall be made without set-off, recoupment or counterclaim. Except as otherwise
expressly provided herein, all payments by the Company shall be made to the
Agent for the account of Banks at the Agent's Payment Office, and shall be made
in dollars and in immediately available funds, no later than 2:00 p.m. (New York
City time) on the date specified herein. The Agent will promptly distribute to
each Bank its Pro Rata Share (or other applicable share as expressly provided
herein) of such payment in like funds as received. Any payment received by the
Agent later than 2:00 p.m. (New York City time) shall be deemed to have been
received on the following Business Day and any applicable interest or fee shall
continue to accrue.
(b) Subject to the provisions set forth in the definition of "Interest
Period" herein, whenever any payment is due on a day other than a Business Day,
such payment shall be made on the following Business Day, and such extension of
time shall in such case be included in the computation of interest or fees, as
the case may be.
(c) Unless the Agent receives notice from the Company prior to the date on
which any payment is due to Banks that the Company will not make such payment in
full as and when required, the Agent may assume that the Company has made such
payment in full to the Agent on such date in immediately available funds and the
Agent may (but shall not be so required), in reliance upon such assumption,
distribute to each Bank on such due date an amount equal to the amount then due
such Bank. If and to the extent the Company has not made such payment in full to
the Agent, each Bank shall repay to the Agent on demand such amount distributed
to such Bank, together with interest thereon at the Federal Funds Rate for each
day from the date such amount is distributed to such Bank until the date repaid.
2.13 Payments by Banks to the Agent. (a) Unless the Agent receives notice
from a Bank on or prior to the Closing Date or, with respect to any Borrowing
after the Closing Date, at least one Business Day prior to the date of such
Borrowing, that such Bank will not make available as and when required hereunder
to the Agent for the account of the Company the amount of that Bank's Pro Rata
Share of the Borrowing, the Agent may assume that each Bank has made such amount
available to the Agent in immediately available funds on the Borrowing Date and
the Agent may (but shall not be so required), in reliance upon such assumption,
make available to the Company on such date a corresponding amount. If and to the
extent any Bank shall not have made its full amount available to the Agent in
immediately available funds and the Agent in such circumstances has made
available to the Company such amount, that Bank shall on the Business Day
following such Borrowing Date make such amount available to the Agent, together
with interest at the Federal Funds Rate for each day during such period. A
notice of the Agent submitted to any Bank with respect to amounts owing under
this subsection (a) shall be conclusive, absent manifest error. If such amount
is so made available, such payment to the Agent shall constitute such Bank's
Loan on the date of Borrowing for all purposes of this Agreement. If such amount
is not made available to the Agent on the Business Day following the
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28
Borrowing Date, the Agent will notify the Company of such failure to fund and,
upon demand by the Agent, the Company shall pay such amount to the Agent for the
Agent's account, together with interest thereon for each day elapsed since the
date of such Borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Loans comprising such Borrowing.
(b) The failure of any Bank to make any Loan on any Borrowing Date shall
not relieve any other Bank of any obligation hereunder to make a Loan on such
Borrowing Date, but no Bank shall be responsible for the failure of any other
Bank to make the Loan to be made by such other Bank on any Borrowing Date.
2.14 Sharing of Payments, Etc. If, other than as expressly provided
elsewhere herein, any Bank shall obtain on account of the Loans made by it any
payment (whether voluntantary involuntary, through the exercise of any right of
set-off, or otherwise) in excess of its ratable share (or other share
contemplated hereunder), such Bank shall immediately (a) notify the Agent of
such fact, and (b) purchase from the other Banks such participations in the
Loans made by them as shall be necessary to cause such purchasing Bank to share
the excess payment pro rata with each of them; provided, however, that if all or
any portion of such excess payment is thereafter recovered from the purchasing
Bank, such purchase shall to that extent be rescinded and each other Bank shall
repay to the purchasing Bank the purchase price paid therefor, together with an
amount equal to such paying Bank's ratable share (according to the proportion of
(i) the amount of such paying Bank's required repayment to (ii) the total amount
so recovered from the purchasing Bank) of any interest or other amount paid or
payable by the purchasing Bank in respect of the total amount so recovered. The
Company agrees that any Bank so purchasing a participation from another Bank
may, to the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off, but subject to Section 10.10) with respect to
such participation as fully as if such Bank were the direct creditor of the
Company in the amount of such participation. The Agent will keep records (which
shall be conclusive and binding in the absence of manifest error) of
participations purchased under this Section and will in each case notify Banks
following any such purchases or repayments.
2.15 Security. All obligations of the Company and the Subsidiaries under
this Agreement, any Notes and all other Loan Documents shall be secured in
accordance with the Collateral Documents.
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29
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.1 Taxes. (a) Any and all payments by the Company to each Bank or the
Agent under this Agreement and any other Loan Document shall be made free and
clear of, and without deduction or withholding for, any Taxes. In addition, the
Company shall pay all Other Taxes.
(b) If the Company shall be required by law to deduct or withhold any Taxes
or Other Taxes from or in respect of any sum payable hereunder to any Bank or
the Agent, then:
(i) the sum payable shall be increased as necessary so that, after
making all required deductions and withholdings (including deductions and
withholdings applicable to additional sums payable under this Section),
such Bank or the Agent, as the case may be, receives and retains an amount
equal to the sum it would have received and retained had no such deductions
or withholdings been made;
(ii) the Company shall make such deductions and withholdings; and
(iii) the Company shall pay the full amount deducted or withheld to
the relevant taxing authority or other authority in accordance with
applicable law.
(c) The Company agrees to indemnify and hold harmless each Bank and the
Agent for the full amount of (i) Taxes and (ii) Other Taxes, and penalties,
interest and expenses arising therefrom or with respect thereto, whether or not
such Taxes or Other Taxes were correctly or legally asserted. Payment under this
indemnification shall be made within 30 days after the date the Bank or the
Agent makes written demand therefor.
(d) Within 30 days after the date of any payment by the Company of Taxes or
Other Taxes, the Company shall furnish to each Bank or the Agent the original or
a certified copy of a receipt evidencing payment thereof, or other evidence of
payment satisfactory to such Bank or the Agent.
(e) If the Company is required to pay any amount to any Bank or the Agent
pursuant to subsection (b) or (c) of this Section, then such Bank shall use
reasonable efforts (consistent with legal and regulatory restrictions) to change
the jurisdiction of its Lending Office so as to eliminate any such additional
payment by the Company which may thereafter accrue, if such change in the
reasonable judgment of such Bank is not otherwise disadvantageous to such Bank.
(f) Any Bank that is entitled to an exemption from or reduction of tax,
with respect to payments under this Agreement shall deliver to the Company with
a copy to the Agent, at the time or times prescribed by applicable law or
reasonably requested by the Company, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be
made without withholding or at a reduced rate.
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30
(g) Notwithstanding anything herein to the contrary, the Company shall not
be required to pay any additional amounts pursuant to this Section 3.1 with
respect to Taxes or Other Taxes that are (i) attributable to the Bank's failure
to comply with Section 3.1(f), (ii) U. S. withholding taxes that were imposed at
the time the Bank becomes a Bank under this Agreement or (iii) U. S. withholding
taxes that are imposed other than as a result of a change in treaty, law or
regulation or the application or interpretation thereof.
(h) If a Bank or the Agent shall become aware that it is entitled to
receive a refund in respect of amounts paid by the Company pursuant to this
Section, which refund in the good faith judgment of such Bank is allocable to
such payment, it shall promptly notify the Company of the availability of such
refund and shall, within 30 days after the receipt of a request by the Company,
apply for such refund. If any Bank or the Agent receives a refund in respect of
any amounts paid by the Company pursuant to this Section, which refund in the
good faith judgment of such Bank is allocable to such payment, it shall promptly
notify the Company of such refund and shall, within 30 days after receipt, repay
such refund to the Company net of all out-of-pocket expenses of such Bank or the
Agent; provided, however, that the Company, upon the request of such Bank or the
Agent, agrees to repay the amount paid over to the Company to such Bank or the
Agent in the event such Bank or the Agent is required to repay such refund.
3.2 Illegality. (a) If any Bank determines that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has asserted
that it is unlawful, for any Bank or its applicable Lending Office to make
Eurodollar Rate Loans, then, on written notice thereof by the Bank to the
Company through the Agent, any obligation of that Bank to make Eurodollar Rate
Loans shall be suspended until the Bank notifies the Agent and the Company that
the circumstances giving rise to such determination no longer exist.
(b) If a Bank determines that it is unlawful to maintain any Eurodollar
Rate Loan, the Company shall, upon its receipt of notice of such fact and demand
from such Bank (with a copy to the Agent), prepay in full such Eurodollar Rate
Loans of that Bank then outstanding, together with interest accrued thereon and
amounts required under Section 3.4. either on the last day of the Interest
Period thereof, if the Bank may lawfully continue to maintain such Eurodollar
Rate Loans to such day, or immediately, if the Bank may not lawfully continue to
maintain such Eurodollar Rate Loan. If the Company is required to so prepay any
Eurodollar Rate Loan, then concurrently with such prepayment, the Company shall
borrow from the affected Bank, in the amount of such repayment, a Base Rate
Loan.
(c) If the obligation of any Bank to make or maintain Eurodollar Rate Loans
has been so terminated or suspended, the Company may elect, by giving notice to
the Bank through
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31
the Agent, that all Loans which would otherwise be made by the Bank as
Eurodollar Rate Loans shall be instead Base Rate Loans.
3.3 Increased Costs and Reduction of Return. (a) If any Bank determines
that, due to either (i) the introduction of or any change (other than any change
by way of imposition of or increase in reserve requirements included in the
calculation of the Base Rate or the Eurodollar Rate or in respect of the
assessment rate payable by any Bank to the FDIC for insuring U.S. deposits) in
or in the interpretation of any law or regulation or (ii) the compliance by that
Bank with any guideline or request from any central bank or other Governmental
Authority (whether or not having the force of law), there shall be any increase
in the cost to such Bank of agreeing to make or making, funding or maintaining
any Eurodollar Rate Loans, then the Company shall be liable for, and shall from
time to time, upon demand (with a copy of such demand to be sent to the Agent),
pay to the Agent for the account of such Bank, additional amounts as are
sufficient to compensate such Bank for such increased costs.
(b) If any Bank shall have determined that (i) the introduction of any
Capital Adequacy Regulation, (ii) any change in any Capital Adequacy Regulation,
(iii) any change in the interpretation or administration of any Capital Adequacy
Regulation by any central bank or other Governmental Authority charged with the
interpretation or administration thereof, or (iv) compliance by the Bank (or its
Lending Office) or any corporation controlling the Bank with any Capital
Adequacy Regulation, affects or would affect the amount of capital required or
expected to be maintained by the Bank or any corporation controlling the Bank
and (taking into consideration such Bank's or such corporation's policies with
respect to capital adequacy and such Bank's desired return on capital) such Bank
determines that the amount of such capital is increased as a consequence of its
Commitment, loans, credits or obligations under this Agreement, then, upon
demand of such Bank to the Company through the Agent, the Company shall pay to
the Bank, from time to time as specified by the Bank, additional amounts
sufficient to compensate the Bank for such increase.
(c) The Company shall not be required to compensate a Bank pursuant to this
Section 3.3 for any increased costs incurred more than 180 days prior to the
date that such Bank notifies the Company of the change of law or circumstance
giving rise to such increased costs and of such Bank's intention to claim
compensation therefor; provided that, if the change of law or circumstance
giving rise to such increased costs is retroactive, that such 180-day period
referred to above shall be extended to include the period of retroactive effect
thereof.
3.4 Funding Losses. The Company shall reimburse each Bank and hold each
Bank harmless from any loss or expense which the Bank may sustain or incur as a
consequence of:
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(a) the failure of the Company to make on a timely basis any payment
of principal of any Eurodollar Rate Loan;
(b) the failure of the Company to borrow, continue or convert a Loan
after the Company has given (or is deemed to have given) a Notice of
Borrowing or a Notice of Conversion/Continuation;
(c) the failure of the Company to make any prepayment in accordance
with any notice delivered under Section 2.6;
(d) the prepayment (including pursuant to Section 2.7) or other
payment (including after acceleration thereof) of a Eurodollar Rate Loan on
a day that is not the last day of the relevant Interest Period; or
(e) the automatic conversion under Section 2.4 of any Eurodollar Rate
Loan to a Base Rate Loan on a day that is not the last day of the relevant
Interest Period; including any such loss or expense arising from the
Liquidation or reemployment of funds obtained by it to maintain its
Eurodollar Rate Loans or from fees payable to terminate the deposits from
which such funds were obtained, but excluding lost profits. For purposes of
calculating amounts payable by the Company to Banks under this Section and
under subsection 3.3(a), each Eurodollar Rate Loan made by a Bank (and each
related reserve, special deposit or similar requirement) shall be
conclusively deemed to have been funded at the LIBOR used in determining
the Eurodollar Rate for such Eurodollar Rate Loan by a matching deposit or
other borrowing in the interbank eurodollar market for a comparable amount
and for a comparable period, whether or not such Eurodollar Rate Loan is in
fact so funded.
3.5 Inability to Determine Rates. If the Agent determines that for any
reason adequate and reasonable means do not exist for determining the Eurodollar
Rate for any requested Interest Period with respect to a proposed Eurodollar
Rate Loan, or that the Eurodollar Rate applicable pursuant to subsection 2.9(a)
for any requested Interest Period with respect to a proposed Eurodollar Rate
Loan does not adequately and fairly reflect the cost to any Bank of funding such
Loan, the Agent will promptly so notify the Company and each Bank in writing.
Thereafter, the obligation of Banks to make or maintain Eurodollar Rate Loans,
as the case may be, hereunder shall be suspended until the Agent revokes such
notice in writing. Upon receipt of such notice, the Company may revoke any
Notice of Borrowing, or Notice of Conversion/ ontinuation then submitted by it.
If the Company does not revoke such Notice, Banks shall make, convert or
continue the Loans, as proposed by the Company, in the amount specified in the
applicable notice submitted by the Company, but such Loans shall be made,
converted or continued as Base Rate Loans instead of Eurodollar Rate Loans, as
the case may be.
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33
3.6 Survival. The agreements and obligations of the Company in this Article
III shall survive the payment of all other Obligations.
3.7 Replacement of Banks. The Company shall be permitted to replace any
Bank that (a) requests reimbursement for amounts owing pursuant to Section 3.1,
3.3 or 3.4 or (b) defaults in its obligation to make Loans hereunder, with a
replacement financial institution; provided that (i) such replacement does not
conflict with any Requirement of Law, (ii) no Event of Default shall have
occurred and be continuing at the time of such replacement, (iii) prior to any
such replacement, such Bank shall have taken no action under Section 3.1 so as
to eliminate the continued need for payment of amounts owing pursuant to Section
3.1, (iv) the replacement financial institution shall purchase, at par, all
Loans and other amounts owing to such replaced Bank on or prior to the date of
replacement, (v) the replacement financial institution, if not already a Bank,
shall be reasonably satisfactory to the Agent, (vi) the replaced Bank shall be
obligated to make such replacement in accordance with the provisions of Section
10.8 (provided that the Company shall be obligated to pay the registration and
processing fee referred to therein), (vii) until such time as such replacement
shall be consummated, the Company shall pay all additional amounts (if any)
required pursuant to Section 3.1, 3.3 or 3.4, as the case may be, and (viii) any
such replacement shall not be deemed to be a waiver of any rights that the
Company, the Agent or any other Bank shall have against the replaced Bank.
ARTICLE IV
CONDITIONS PRECEDENT
4.1 Conditions of Initial Loans. The obligation of each Bank to make its
initial Loan hereunder is subject to the condition that the Agent shall have
received on or before the Closing Date all of the following, in form and
substance satisfactory to the Agent and each Bank:
(a) Credit Agreement and Notes. This Agreement and the Notes executed
by each party thereto;
(b) Resolutions; Incumbency.
(i) Copies of the resolutions of the board of directors of the Company
and each Subsidiary that may become party to a Loan Document authorizing
the transactions contemplated hereby, certified as of the Closing Date by
the Secretary or an Assistant Secretary of such Person; and
(ii) A certificate of the Secretary or Assistant Secretary of the
Company, and each Subsidiary that may become party to a Loan Document,
certifying the names and true
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34
signatures of the officers of the Company or such Subsidiary authorized to
execute, deliver and perform, as applicable, this Agreement and all other
Loan Documents to be delivered by it hereunder;
(c) Organization Documents; Good Standing. Each of the following
documents:
(i) the articles or certificate of incorporation and the bylaws
of the Company and each Subsidiary party to any Loan Document as in
effect on the Closing Date, certified by the Secretary or Assistant
Secretary of the Company or such Subsidiary as of the Closing Date;
and
(ii) a good standing and tax good standing certificate for the
Company and each Subsidiary party to any Loan Document from the
Secretary of State (or similar, applicable Governmental Authority) of
its state of incorporation and each state where the Company or such
Subsidiary is qualified to do business as a foreign corporation as of
a recent date;
(d) Legal Opinions. An opinion of Simpson Thacher & Bartlett, counsel
to the Company, and addressed to the Agent and Banks, in form and substance
satisfactory to the Agent;
(e) Payment of Fees. Evidence of payment by the Company of all accrued
and unpaid fees, costs and expenses to the extent then due and payable on
the Closing Date, together with Attorney Costs of CSFB to the extent
invoiced prior to or on the Closing Date, plus such additional amounts of
Attorney Costs as shall constitute CSFB's reasonable estimate of Attorney
Costs incurred or to be incurred by it through the closing proceedings
(provided that such estimate shall not thereafter preclude final settling
of accounts between the Company and CSFB); including any such costs, fees
and expenses arising under or referenced in Sections 2.10 and 10.4;
(f) Collateral Documents. The Collateral Documents, executed by the
Company, in appropriate form for recording, where necessary, together with:
(i) copies of all UCC-1 financing statements in form appropriate
to be filed, registered or, recorded to perfect the security interests
of the Agent for the benefit of Banks, or evidence satisfactory to the
Agent that there has been filed, registered or recorded all financing
statements and other filings, registrations and recordings necessary
and advisable to perfect the Liens of the Agent for the benefit of
Banks in accordance with applicable law;
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35
(ii) written advice relating to such Lien and judgment searches
as the Agent shall have requested, and such termination statements or
other documents as may be necessary to confirm that the Collateral is
subject to no other Liens in favor of any Persons (other than
Permitted Liens);
(iii) funds sufficient to pay any filing or recording tax or fee
in connection with any and all UCC-1 financing statements;
(iv) stock certificates together with assignments executed In
blank, evidencing the Company's ownership of each of its Subsidiaries,
as required by the Pledge Agreement; and
(v) evidence that all other actions necessary or, in the
reasonable opinion of the Agent, desirable, to perfect and protect the
first priority security interest created by the Collateral Documents
and to enhance the Agent's ability to preserve and protect its
interests in and access to the Collateral, have been taken including,
without limitation, notification of all financial institutions with
whom the Company maintains a deposit account,
(g) Officer's Certificate. A certificate signed by a Responsible
Officer, dated as of the Closing Date, stating that:
(i) the representations and warranties contained in Article V are
true and correct in all material respects on and as of such date, as
though made on and as of such date;
(ii) no Default or Event of Default exists or would result from
the initial Borrowing; and
(iii) there has occurred since December 31, 1998, no event or
circumstance that has resulted or could reasonably be expected to
result in a Material Adverse Effect;
(h) Solvency Certificate. A certificate in substantially the form
attached hereto as Exhibit G, signed by the Chief Financial Officer of the
Company, dated as of the Closing Date, stating that the Company, after the
consummation of the transactions contemplated by the Acquisition Agreement
and this Agreement, will be solvent;
(i) Transaction Documents. Copies of the fully-executed Transaction
Documents, together with such other information with respect to the
Transaction as the Agent or any Bank may request;
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36
(j) Financial Statements. Audited consolidated financial statements of
the Company for the Fiscal Year ended December 31, 1998; and
(k) Other Documents. Such other approvals, opinions, documents or
materials as the Agent or any Bank may request.
4.2 Conditions to All Borrowings. The obligation of each Bank to make any
Loan to be made by it (including its initial Loan) or to continue or convert any
Loan under Section 2.4 is subject to the satisfaction of the following
conditions precedent on the relevant Borrowing Date or Conversion/Continuation
Date:
(a) Notice of Borrowing or Conversion/Continuation. The Agent shall
have received a Notice of Borrowing or a Notice of Conversion/Continuation,
as applicable;
(b) Continuation of Representations and Warranties. The
representations and warranties in Article V shall be true and correct in
all material respects on and as of such Borrowing Date or
Conversion/Continuation Date with the same effect as if made on and as of
such Borrowing Date or Conversion/Continuation Date (except to the extent
such representations and warranties expressly refer to an earlier date, in
which case they shall be true and correct in all material respects as of
such earlier date); and
(c) No Existing Default. No Default or Event of Default shall exist or
shall result from such Borrowing or continuation or conversion.
Each Notice of Borrowing and Notice of Conversion/Continuation submitted by the
Company hereunder shall constitute a representation and warranty by the Company
hereunder, as of the date of each such notice and as of each Borrowing Date or
Conversion/Continuation Date, as applicable, that the conditions in this Section
4.2 are satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Agent and each Bank that:
5.1 Corporate Existence and Power. The Company and each of its
Subsidiaries:
(a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation;
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(b) has the power and authority and all governmental licenses,
authorizations, consents and approvals to own its assets, carry on its
business and to execute, deliver, and perform its obligations under the
Loan Documents;
(c) is duly qualified as a foreign corporation and is licensed and in
good standing under the laws of each jurisdiction where its ownership,
lease or operation of property or the conduct of its business requires such
qualification or license, other than in such jurisdictions where the
failure to be so qualified or licensed could not reasonably be expected to
have a Material Adverse Effect; and
(d) is in compliance with all Requirements of Law, unless such failure
to comply could not reasonably be expected to have a Material Adverse
Effect.
5.2 Corporate Authorization; No Contravention. The execution, delivery and
performance by the Company and its Subsidiaries of this Agreement and each other
Loan Document to which such Person is party, have been duly authorized by all
necessary corporate action, and do not and will not:
(a) contravene the terms of any of that Person's Organization
Documents;
(b) conflict with or result in any breach or contravention of, or the
creation of any Lien under, any document evidencing any Contractual
Obligation to which such Person is a party or any order, injunction, writ
or decree of any Governmental Authority to which such Person or its
property is subject, in each case the violation of which could reasonably
be expected to have a Material Adverse Effect, or
(c) violate any material Requirement of Law.
5.3 Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority (except for recordings or filings in connection with the
Liens granted to the Agent under the Collateral Documents that may be required)
is necessary or required in connection with the execution, delivery or
performance by, or enforcement against, the Company or any of its Subsidiaries
of the Agreement or any other Loan Document, except for consents,
authorizations, filings, notices or other acts the failure to make or obtain
could not reasonably be expected to have a Material Adverse Effect.
5.4 Binding Effect. This Agreement and each other Loan Document to which
the Company or any of its Subsidiaries is a party constitute the legal, valid
and binding obligations of the Company and any of its Subsidiaries to the extent
it is a party thereto, enforceable against such Person in accordance with their
respective terms, except as enforceability may be limited by
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38
applicable bankruptcy, insolvency, or similar laws affecting the enforcement of
creditors' rights generally or by equitable principles relating to
enforceability, regardless of whether considered in proceedings in equity or at
law and by an implied covenant of good faith and fair dealing.
5.5 Litigation. There are no actions, suits, proceedings, claims or
disputes pending, or to the best knowledge of the Company, threatened or
contemplated, at law, in equity, in arbitration or before any Governmental
Authority, against the Company, or its Subsidiaries or any of their respective
properties which:
(a) purport to affect or pertain to this Agreement or any other Loan
Document, or any of the transactions contemplated hereby or thereby; or
(b) if determined adversely to the Company or its Subsidiaries, would
reasonably be expected to have a Material Adverse Effect. No injunction,
writ, temporary restraining order or any order of any nature has been
issued by any court or other Governmental Authority purporting to enjoin or
restrain the execution, delivery or performance of this Agreement or any
other Loan Document, or directing that the transactions provided for herein
or therein not be consummated as herein or therein provided.
5.6 No Default. No Default or Event of Default exists or would result from
the incurring of any Obligations by the Company. Neither the Company nor any
Subsidiary is in default under or with respect to any Contractual Obligation in
any respect which, individually or together with all such defaults, could
reasonably be expected to have a Material Adverse Effect, or that would, if such
default had occurred after the Closing Date, create an Event of Default under
subsection 8.1(e).
5.7 ERISA Compliance. (a) Except where the liability, individually and in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect: (i) each Plan is in compliance with the applicable provisions of ERISA,
the Code and other federal or state law; (ii) each Plan which is intended to
qualify under Section 401(a) of the Code has received a favorable determination
letter from the IRS and to the knowledge of the Company, nothing has occurred
which would cause the loss of such qualification; and (iii) the Company and each
ERISA Affiliate have made all required contributions to any Plan subject to
Section 412 of the Code, and no application for a funding waiver or an extension
of any amortization period pursuant to Section 412 of the Code has been made
with respect to any Plan.
(b) There are no pending or, to the knowledge of Company, threatened
claims, actions or lawsuits, or action by any Governmental Authority, with
respect to any Plan which has resulted or could reasonably be expected to result
in a Material Adverse Effect. There has been no prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan which
has resulted or could reasonably be expected to result in a Material Adverse
Effect.
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(c) Except where the liability, individually and in the aggregate, could
not reasonably be expected to have a Material Adverse Effect: (i) No ERISA Event
has occurred or is reasonably expected to occur; (ii) neither the Company nor
any ERISA Affiliate has engaged in a transaction that could reasonably be
expected to be subject to Section 4069 or 4212(c) of ERISA; and (iii) "no
non-exempt prohibited transaction" (as defined in Section 406 of ERISA and
Section 4975 of the Code) has occurred with respect to any Plan.
5.8 Use of Proceeds; Margin Regulations. The proceeds of the Loans are to
be used solely for the purposes set forth in and permitted by Section 6.11 and
Section 7.7. Neither the Company nor any Subsidiary is generally engaged in the
business of purchasing or selling Margin Stock or extending credit for the
purpose of purchasing or carrying Margin Stock.
5.9 Title to Properties. The Company and each Subsidiary have good record
and marketable title in fee simple to, or valid leasehold interests in, all real
property necessary or used in the ordinary conduct of their respective
businesses, except for such defects in title as could not, individually or in
the aggregate, have a Material Adverse Effect. As of the Closing Date, the real
property of the Company and its Subsidiaries is subject to no Liens, other than
Permitted Liens.
5.10 Taxes. The Company and its Subsidiaries have filed all Federal and
other material tax returns and reports required to be filed, and have paid all
Federal and other material taxes, assessments, fees and other governmental
charges levied or imposed upon them or their properties, income or assets
otherwise due and payable, except those which are being contested in good faith
by appropriate proceedings and for which adequate reserves have been provided in
accordance with GAAP. There is no proposed tax assessment against the Company or
any Subsidiary that would, if made, have a Material Adverse Effect.
5.11 Financial Condition. (a) The audited consolidated financial statements
of the Company and its Subsidiaries dated December 3 1, 1998, and the related
consolidated statements of income or operations, shareholders' equity and cash
flows for the fiscal year ended on that date:
(i) were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted
therein;
(ii) fairly present the financial condition of the Company and its
Subsidiaries as of the date thereof and results of operations for the
period covered thereby; and
(iii) except as specifically disclosed in Schedule 5.11, show all
material indebtedness and other liabilities, direct or contingent, of the
Company and its
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40
consolidated Subsidiaries as of the date thereof, including liabilities for
taxes, material commitments and Contingent Obligations.
(b) Since December 31, 1998, there has been no Material Adverse Effect.
5.12 Environmental Matters. (a) Except as specifically disclosed in
Schedule 5.12, the on-going operations of the Company and each of its
Subsidiaries comply in all respects with all Environmental Laws, except such
non-compliance which would not (if enforced in accordance with applicable law)
result in liability in excess of $750,000 in the aggregate.
(b) Except as specifically disclosed in Schedule 5.12, the Company and each
of its Subsidiaries have obtained all licenses, permits, authorizations and
registrations required under any Environmental Law ("Environmental Permits") and
necessary for their respective ordinary course operations, all such
Environmental Permits are in good standing, and the Company and each of its
Subsidiaries are in compliance with all material terms and conditions of such
Environmental Permits except to the extent the failure to have such
Environmental Permits or to comply therewith could not reasonably be expected to
have a Material Adverse Effect.
(c) Except as specifically disclosed in Schedule 5.12, none of the Company,
any of its Subsidiaries or any of their respective present property or
operations, is subject to any outstanding written order from or agreement with
any Governmental Authority, nor subject to any judicial or docketed
administrative proceeding, respecting any Environmental Law, Environmental Claim
or Hazardous Material, which would if adversely determined, result in a
liability or in economic loss in excess of $750,000 in the aggregate.
(d) Except as specifically disclosed in Schedule 5.12 there are no
Hazardous Materials or other conditions or circumstances existing with respect
to any property of the Company or any Subsidiary, or arising from operations
prior to the Closing Date, of the Company or any of its Subsidiaries that would
reasonably be expected to give rise to Environmental Claims with a potential
liability of the Company and its Subsidiaries in excess of $750,000 in the
aggregate for any such condition, circumstance or property. In addition, (i)
neither the Company nor any Subsidiary has any underground storage tanks (x)
that are not properly registered or permitted under applicable Environmental
Laws, or (y) that are leaking or disposing of Hazardous Materials off-site, and
(ii) the Company and its Subsidiaries have notified all of their employees of
the existence, if any, of any health hazard arising from the conditions of their
employment and have met all notification requirements under Title III of CERCLA
and all other Environmental Laws, in each case where it could reasonably be
expected to have a Material Adverse Effect.
5.13 Collateral Documents. (a) As of the date hereof, the provisions of
each of the Collateral Documents are effective to create in favor of the Agent
for the benefit of Banks, a
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41
legal, valid and enforceable security interest in all right, title and interest
of the Company and its Subsidiaries in the collateral described therein, and
financing statements have been delivered to the Agent for filing in the offices
in all of the jurisdictions in which Collateral is located and executed Patent
Assignments, Trademark Assignments and Copyright Assignments have been delivered
to the Agent for filing in the U.S. Patent and Trademark Office and the U.S.
Copyright Office and upon the filing of such assignments and such financing
statements in such offices, the Agent, for the benefit of Banks, will have a
perfected first priority security interest (subject only to Permitted Liens) in
the collateral described thereon in which a security interest may be perfected
by the filing of such financing statements or assignments, and upon delivery of
those items of Collateral for which physical possession is the method for
perfection, the Agent, for the benefit of Banks, will have a valid, first
priority security interest thereon.
(b) All representations and warranties of the Company and any of its
Subsidiaries party thereto contained in the Collateral Documents are true and
correct in all material respects.
5.14 Regulated Entities. None of the Company, or any Subsidiary, is an
"Investment Company" within the meaning of the Investment Company Act of 1940.
The Company is not subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, any
state public utilities code, or any other Federal or state statute or regulation
limiting its ability to incur Indebtedness.
5.15 No Burdensome Restrictions. Neither the Company nor any Subsidiary is
a party to or bound by any Contractual Obligation, or subject to any restriction
in any Organization Document, or any Requirement of Law, which could reasonably
be expected to have a Material Adverse Effect.
5.16 Copyrights, Patents, Trademarks and Licenses, etc. The Company or its
Subsidiaries own or are licensed or otherwise have the right to use all of the
material patents, trademarks, service marks, trade names, copyrights,
contractual franchises, authorizations and other rights that are reasonably
necessary for the operation of their respective businesses, without conflict
with the rights of any other Person. To the best knowledge of the Company, no
slogan or other advertising device, product, process, method, substance, part or
other material now employed, or now contemplated to be employed, by the Company
or any Subsidiary infringes upon any rights held by any other Person which could
reasonably be expected to have a Material Adverse Effect. Except as specifically
disclosed in Schedule 5.5, no claim or litigation regarding any of the foregoing
is pending or, to the knowledge of the Company, threatened, and no patent,
invention, device, application, principle or any statute, law, rule, regulation,
standard or code is pending or, to the knowledge of the Company, proposed,
which, in either case, could reasonably be expected to have a Material Adverse
Effect.
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42
5.17 Subsidiaries. As of the Closing Date, the Company has no Subsidiaries
other than those specifically disclosed in part (a) of Schedule 5.17 hereto and
has no equity investments in any other corporation or entity other than those
specifically disclosed in part (b) of Schedule 5.17.
5.18 Insurance. Except as specifically disclosed in Schedule 5.18, the
properties of the Company and its Subsidiaries are insured with financially
sound and reputable insurance companies not Affiliates of the Company, in such
amounts, with such deductibles and covering such risks as are customarily
carried by companies engaged in similar businesses and owning similar properties
in localities where the Company or such Subsidiary operates.
5.19 Solvency. The Company and each of its Subsidiaries are Solvent
5.20 Swap Obligations. Neither the Company nor any of its Subsidiaries has
incurred any outstanding obligations under any Swap Contracts, other than
Permitted Swap Obligations.
5.21 Full Disclosure. None of the representations or warranties made by the
Company or any Subsidiary in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of the Company or any Subsidiary in connection with the Loan
Documents (including the offering and disclosure materials delivered by or on
behalf of the Company to Banks prior to the Closing Date), contains any untrue
statement of a material fact or omits any material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances under which they are made, not misleading as of the time when made
or delivered.
5.22 Year 2000. The Company and its Subsidiaries have reviewed the areas
within their operations and business which could be adversely affected by, and
have developed or are developing a program to address on a timely basis, the
Year 2000 Problem and have made related appropriate inquiry of material
suppliers and vendors, and based on such review and program, the Year 2000
Problem could not reasonably be expected to have a Material Adverse Effect.
<PAGE>
43
ARTICLE VI
AFFIRMATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Majority Banks
waive compliance in writing:
6.1 Financial Statements. The Company shall deliver to the Agent, in form
and detail satisfactory to the Agent and the Majority Banks:
(a) as soon as available, but not later than ninety (90) days after
the end of each fiscal year, a copy of the audited consolidated balance
sheet of the Company and its Subsidiaries as at the end of such year and
the related consolidated statements of income or operations, shareholders'
equity and cash flows for such year, setting forth in each case in
comparative form the figures for the previous fiscal year, and accompanied
by the opinion of Arthur Andersen or another nationally-recognized
independent public accounting firm ("Independent Auditor") which report
shall state that such consolidated financial statements present fairly the
financial position for the periods indicated in conformity with GAAP
applied on a basis consistent with prior years. Such opinion shall not be
qualified or limited because of a restricted or limited examination by the
Independent Auditor of any material portion of the Company's or any
Subsidiary's records; and
(b) as soon as available, but not later than forty-five (45) days
after the end of each fiscal quarter, a copy of the unaudited consolidated
balance sheet of the Company and its Subsidiaries as of the end of such
quarter and the related consolidated statements of income, shareholders'
equity and cash flows for the period commencing on the first day and ending
on the last day of such quarter, and certified by a Responsible Officer as
fairly presenting, in accordance with GAAP (subject to ordinary, good faith
year-end audit adjustments), the financial position and the results of
operations of the Company and the Subsidiaries.
6.2 Certificates; Other Information. The Company shall furnish to the
Agent, with sufficient copies for each Bank:
(a) concurrently with the delivery of the financial statements
referred to in subsection 6.1(a), a certificate of the Independent Auditor
stating that in making the examination necessary therefor no knowledge was
obtained of any Default or Event of Default, except as specified in such
certificate;
(b) concurrently with the delivery of the financial statements
referred to in subsections 6.1(a) and (b), a Compliance Certificate
executed by a Responsible Officer;
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44
(c) promptly, copies of all financial statements and regular,
periodical or special reports (including Forms 10K, 10Q and 8K) that the
Company or any Subsidiary may make to, or file with, the SEC;
(d) promptly, such additional information regarding the business,
financial or corporate affairs of the Company or any Subsidiary as the
Agent, at the request of any Bank, may from time to time reasonably
request; and
(e) promptly following the closing of the Transaction, a certificate
of the Secretary or Assistant Secretary of the Company and each Subsidiary
certifying, as of such date and time, (i) that the resolutions certified
pursuant to Section 4.1(b) remain in full force and effect; (ii) that,
except as specifically set forth in the certificate to be delivered under
this Section 6.2(e), there have been no changes since the delivery of the
certificate described in Section 4.1(b)(ii) to the names and true
signatures of the officers of the Company and each Subsidiary authorized to
execute, deliver and perform, as applicable, all Loan Documents to be
delivered by it hereunder; and (iii) that the articles of incorporation and
the bylaws of the Company and each Subsidiary as in effect on the Closing
Date remain in full force and effect.
6.3 Notices. The Company shall promptly notify the Agent and each Bank in
writing:
(a) promptly after knowledge thereof, of the occurrence of any Default
or Event of Default;
(b) of any matter that has resulted or could reasonably be expected to
result in a Material Adverse Effect, including (i) breach or
non-performance of, or any default under, a Contractual Obligation of the
Company or any Subsidiary; (ii) any dispute, litigation, investigation,
proceeding or suspension between the Company or any Subsidiary and any
Governmental Authority; or (iii) the commencement of, or any material
development in, any litigation or proceeding affecting the Company or any
Subsidiary; including pursuant to any applicable Environmental Laws;
(c) of the occurrence of any of the following events affecting the
Company or any ERISA Affiliate (but in no event more than 30 days after the
Company acquires knowledge of such event), and deliver to the Agent a copy
of any notice with respect to such event that is filed with a Governmental
Authority and any notice delivered by a Governmental Authority to the
Company or any ERISA Affiliate with respect to such event:
<PAGE>
45
(i) an ERISA Event which could reasonably be expected to result
in a Material Adverse Effect;
(ii) a material increase in the Unfunded Pension Liability of any
Pension Plan;
(iii) a "prohibited transaction" (as defined in Section 406 of
ERISA and Section 4975 of the Code) that would result in any liability
to the Company or any ERISA Affiliate that could reasonably be
expected to have a Material Adverse Effect; or
(iv) any challenge by the IRS to the tax qualification of any
Pension Plan under Section 401 or 501 of the Code; and
(d) of any material change in accounting policies or financial
reporting practices by the Company or any of its consolidated Subsidiaries.
Each notice under this Section shall be accompanied by a written statement by a
Responsible Officer setting forth details of the occurrence referred to therein,
and stating what action the Company or any affected Subsidiary proposes to take
with respect thereto and at what time.
6.4 Preservation of Corporate Existence, Etc. The Company shall, and shall
cause each Subsidiary to, other than as permitted by Section 7.3 hereof:
(a) preserve and maintain in full force and effect its corporate
existence and good standing under the laws of its state or jurisdiction of
incorporation, other than with respect to any Subsidiary the failure of
which to do so could not reasonably be expected to have a Material Adverse
Effect;
(b) preserve and maintain in full force and effect all governmental
rights, privileges, qualifications, permits, licenses and franchises
necessary in the normal conduct of its business, other than with respect to
any Subsidiary the failure of which to do so could not reasonably be
expected to have a Material Adverse Effect;
(c) use reasonable efforts, in the ordinary course of business, to
preserve its business organization and goodwill, other than with respect to
any Subsidiary the failure of which to do so could not reasonably be
expected to have a Material Adverse Effect; and
(d) preserve or renew all of its registered patents, trademarks, trade
names and service marks, the non-preservation of which could reasonably be
expected to have a Material Adverse Effect.
<PAGE>
46
6.5 Maintenance of Property. The Company shall maintain, and shall cause
each Subsidiary to maintain, and preserve all its property which is used or
useful in its business in good working order and condition, ordinary wear and
tear excepted, except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect.
6.6 Insurance. The Company shall maintain, and shall cause each Subsidiary
to maintain, with financially sound and reputable independent insurers,
insurance with respect to its properties and business against loss or damage of
the kinds customarily insured against by Persons engaged in the same or similar
business, of such types and in such amounts as are customarily carried under
similar circumstances by such other Persons.
6.7 Payment of Obligations. The Company shall, and shall cause each
Subsidiary to, pay and discharge as the same shall become due and payable, all
their respective obligations and liabilities, except where the failure to do so
could not reasonably be expected to have a Material Adverse Effect, including:
(a) all material tax liabilities, assessments and governmental charges
or levies upon it or its properties or assets, unless the same are being
contested in good faith by appropriate proceedings and adequate reserves in
accordance with GAAP are being maintained by the Company or such
Subsidiary;
(b) all material lawful claims which, if unpaid, would by law become a
Lien upon its property; and
(c) all Indebtedness, as and when due and payable, but subject to any
subordination provisions contained in any instrument or agreement
evidencing such Indebtedness.
6.8 Compliance with Laws. The Company shall comply, and shall cause each
Subsidiary to comply, with all Requirements of Law of any Goverrunental
Authority having jurisdiction over it or its business (including the Federal
Fair Labor Standards Act), except such as may be contested in good faith or as
to which a bona fide dispute may exist, and except where the failure to so
comply could not reasonably be expected to have a Material Adverse Effect.
6.9 Inspection of Property and Books and Records. The Company shall
maintain and shall cause each Subsidiary to maintain proper books of record and
account, in which full, true and correct entries in conformity with GAAP
consistently applied shall be made of all financial transactions and matters
involving the assets and business of the Company and such Subsidiary. The
Company shall permit, and shall cause each Subsidiary to permit, representatives
and independent contractors of the Agent or the Collateral Agent to visit and
inspect any of their respective properties, to examine their respective
corporate, financial and operating records, and
<PAGE>
47
make copies thereof or abstracts therefrom, and to discuss their respective
affairs, finances and accounts with their respective directors, officers, and
independent public accountants, all at the expense of the Company and at such
reasonable times during normal business hours and as often as may be reasonably
desired, upon reasonable advance notice to the Company.
6.10 Environmental Laws. The Company shall, and shall cause each Subsidiary
to, conduct its operations and keep and maintain its property in compliance with
all Environmental Laws except to the extent that the failure to do so could not
reasonably be expected to have a Material Adverse Effect.
6.11 Use of Proceeds. The Company shall use $21,000,000 of the proceeds of
the Term Loans to redeem from Glenayre 42,000,000 shares of the Company's common
stock in accordance with the Acquisition Agreement. The Company shall use the
proceeds of the Revolving Loans and $1,000,000 of the proceeds of the Term Loans
(the portion not used in accordance with the preceding sentence), for the
retirement of existing debt owed by the Company and for working capital and
other general corporate purposes (including, without limitation, fees and
expenses in connection with the Transaction).
6.12 Security Interests and Guaranties by Subsidiaries. The Company shall
cause each of its Domestic Subsidiaries, promptly after formation or otherwise
becoming a Subsidiary, to (a) become a party to the Guarantor Security
Agreement, and thereby grant a lien in favor of Banks in all of such
Subsidiary's assets in accordance with the terms of the Guarantor Security
Agreement; (b) become a party to the Guaranty, and thereby guarantee the
Obligations in accordance with the terms and conditions contained in the
Guaranty; and (c) comply with Section 6.14 below, including, without limitation,
as such compliance relates to requests by the Agent or the Majority Banks in
connection with the security interests and guaranties described in Section
6.12(a) and (b) above.
6.13 Pledge Agreement. The Company shall pledge to the Agent, on behalf of
Banks, as security for the full payment and performance of the Obligations, all
the Equity Interests held by the Company in its Domestic Subsidiaries and
two-thirds (2/3) of the Equity Interests held by the Company in its Foreign
Subsidiaries. The pledge of the Equity Interests described in this Section 6.13
shall be made promptly after an entity becomes a Subsidiary, and shall be made
pursuant to a Pledge Agreement (the "Pledge Agreement") in substantially the
form attached hereto as Exhibit H.
6.14 Further Assurances. (a) The Company shall ensure that all written
information, exhibits and reports furnished to the Agent or Banks do not and
will not contain any untrue statement of a material fact and do not and will not
omit to state any material fact necessary to make the statements contained
therein not misleading in light of the circumstances in which made, and will
promptly disclose to the Agent and Banks and cooperate in the
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48
correction of any defect or error that may be discovered therein or in any Loan
Document or in the execution, acknowledgment or recordation thereof.
(b) Promptly upon request by the Agent or the Majority Banks, the Company
shall (and shall cause any of its Subsidiaries to) do, execute, acknowledge,
deliver, record, rerecord, file, re-file, register and re-register, any and all
such further acts, deeds, conveyances, security agreements, mortgages,
assignments, estoppel certificates, financing statements and continuations
thereof, termination statements, notices of assignment, transfers, certificates,
assurances and other instruments the Agent or such Majority Banks, as the case
may be, may reasonably require from time to time in order (i) to carry out more
effectively, the purposes of this Agreement or any other Loan Document, (ii) to
subject to the Liens created by any of the Collateral Documents any of the
properties, rights or interests covered by any of the Collateral Documents,
except as otherwise provided in the Loan Documents, (iii) to perfect and
maintain the validity, effectiveness and priority of any of the Collateral
Documents and the Liens intended to be created thereby, and (iv) to better
assure, convey, grant, assign, transfer, preserve, protect and confirm to the
Agent and Banks the rights granted or now or hereafter intended to be granted to
Banks under any Loan Document or under any other document executed in connection
therewith.
6.15 Merger of Subsidiary With and Into the Company. Within five (5) days
after the Closing Date, WMC California shall be merged with and into the
Company, with the Company being the surviving corporation.
ARTICLE VII
NEGATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Majority Banks
waive compliance in writing:
7.1 Limitation on Liens. The Company shall not, and shall not suffer
or permit any Subsidiary to, directly or indirectly, enter into or be
subject to a Negative Pledge, make, create, incur, assume or suffer to
exist any Lien upon or with respect to any part of its property, whether
now owned or hereafter acquired, other than the following ("Permitted
Liens"):
(a) any Lien existing on property of the Company or any
Subsidiary on the Closing Date and set forth in Schedule 7.1 securing
Indebtedness outstanding on such date;
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49
(b) any Lien created under any Loan Document;
(c) Liens for taxes, fees, assessments or other governmental
charges which are not delinquent or remain payable without penalty, or
to the extent that non-payment thereof is permitted by Section 6.7,
provided that no notice of lien has been filed or recorded under the
Code;
(d) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other similar Liens arising in the
ordinary course of business which are not delinquent or remain payable
without penalty;
(e) Liens (other than any Lien imposed by ERISA) consisting of
pledges or deposits-required in the ordinary course of business in
connection with workers' compensation, unemployment insurance and
other social security legislation;
(f) Liens on the property of the Company or its Subsidiary
securing (i) the non-delinquent performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, (ii)
contingent obligations on surety and appeal bonds, and (iii) other
nondelinquent obligations of a like nature; in each case, incurred in
the ordinary course of business;
(g) Liens consisting of judgment or judicial attachment liens,
provided that no Event of Default exists in respect thereof pursuant
to Section 8.1(j);
(h) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or
interfere with the ordinary conduct of the businesses of the Company
and its Subsidiaries;
(i) Liens on assets of entities which become Subsidiaries, or on
assets acquired, after the date of this Agreement, provided, however,
that such Liens existed at the time the respective corporations became
Subsidiaries or the assets were acquired and were not created in
anticipation thereof,
(j) purchase money security interests on any property acquired or
held by the Company or its Subsidiaries in the ordinary course of
business, securing Indebtedness incurred or assumed for the purpose of
financing all or any part of the cost of acquiring such property;
provided that (i) any such Lien attached to such property concurrently
with or within 45 days after the acquisition thereof, (ii) such Lien
attaches solely to the property so acquired in such transaction, and
(iii)
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the principal amount of the debt secured thereby does not exceed 100%
of the cost of such property, and (iv) the principal amount of the
Indebtedness secured by any and all such purchase money security
interests shall not at any time exceed, together with Indebtedness
permitted under subsection 7.5(d), $750,000;
(k) Liens securing obligations in respect of capital leases on
assets subject to such leases, provided that such capital leases are
otherwise permitted hereunder;
(l) Liens arising solely by virtue of any statutory or common law
provision relating to banker's liens, rights of set-off or similar
rights and remedies as to deposit accounts or other funds maintained
with a creditor depository institution; provided that (i) such deposit
account is not a dedicated cash collateral account and is not subject
to restrictions against access by the Company in excess of those set
forth by regulations promulgated by the FRB, and (ii) such deposit
account is not intended by the Company or any Subsidiary to provide
collateral to the depository institution;
(m) Liens consisting of pledges of cash collateral or government
securities to secure on a mark-to-market basis Permitted Swap
Obligations only. provided that (i) the counterparty to any Swap
Contract relating to any such Permitted Swap Obligation is under a
similar requirement to deliver similar collateral from time to time to
the Company or the Subsidiary party thereto on a mark-to-market basis;
and (ii) the aggregate value of such collateral so pledged by the
Company and the Subsidiaries together in favor of any counterparty
does not at any time exceed $500,000; and
(n) other Liens securing obligations of up to $500,000 in the
aggregate at any one time outstanding.
7.2 Disposition of Assets. The Company shall not, and shall not suffer or
permit any Subsidiary to, directly or indirectly, sell, assign, lease, convey,
transfer or otherwise dispose of (whether in one or a series of transactions)
any property (including accounts and notes receivable, with or without recourse)
or enter into any agreement to do any of the foregoing, except:
(a) dispositions of inventory, or used, worn-out or surplus equipment,
or other assets, all in the ordinary course of business;
(b) the sale of equipment to the extent that such equipment is
exchanged for credit against the purchase price of similar replacement
equipment, or the proceeds of
<PAGE>
51
such sale are reasonably promptly applied to the purchase price of such
replacement equipment; and
(c) dispositions not otherwise permitted hereunder which are made for
fair market value; provided, that (i) at the time of any disposition, no
Event of Default shall exist or shall result from such disposition, (ii) no
less than 50% of the aggregate sales price from such disposition shall be
paid in cash, and (iii) the aggregate value of all assets so sold by the
Company and its Subsidiaries, together, shall not exceed in any Fiscal Year
$1,000,000.
7.3 Consolidations and Mergers. The Company shall not, and shall not suffer
or permit any Subsidiary to, merge, consolidate with or into, or convey,
transfer, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to or in favor of any Person, except:
(a) any Subsidiary may merge with the Company, provided that the
Company shall be the continuing or surviving corporation, or with any one
or more Subsidiaries, provided that if any transaction shall be between a
Subsidiary and a Wholly-Owned Subsidiary, the Wholly-Owned Subsidiary shall
be the continuing or surviving corporation;
(b) any Subsidiary may sell all or substantially all of its assets
(upon voluntary liquidation or otherwise) to the Company or another
Wholly-Owned Subsidiary;
(c) the Transaction may be consummated in accordance with the
Acquisition Agreement; and
(d) any other transaction permitted elsewhere under this Agreement may
be consummated.
7.4 Loans and Investments. The Company shall not purchase or acquire, or
suffer or permit any Subsidiary to purchase or acquire, any capital stock,
equity interest, or any obligations or other securities of, or any interest in,
any Person, or make any Acquisitions. or make or commit to make any advance,
loan, extension of credit or capital contribution to or any other investment in,
any Person including any Affiliate of the Company (together, "Investments"),
except for:
(a) Investments held by the Company or Subsidiary in the form of cash
equivalents;
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52
(b) extensions of credit in the nature of accounts receivable or notes
receivable arising from the sale or lease of goods or services in the
ordinary course of business;
(c) Acquisitions, provided that, after giving effect to any such
Acquisition, (i) the Company and its Subsidiaries are in full compliance
with the covenants set forth in,Articles VI and VII hereunder and (ii) the
Company's Leverage Ratio does not exceed the following: (A) for the period
commencing on the Closing Date through and including December 31, 2000,
4.00 to 1.00, and (B) for the period commencing on January 1, 2001 and
thereafter, 3.50 to 1.00;
(d) Investments constituting Pertained Swap Obligations or payments or
advances under Swap Contracts relating to Pertained Swap Obligations;
(e) Intercompany Investments by Holdings, the Company or any of its
Subsidiaries in the Company or any Person that, prior to such Investment,
is a Wholly-Owned Domestic Subsidiary, and
(f) Loans and advances to officers, directors and employees of the
Company or any of its Subsidiaries (i) to finance the purchase of capital
stock of the Company and (ii) for additional purposes not contemplated by
subclause (i) above in an aggregate principal amount at any time
outstanding with respect to this clause (ii) not exceeding $1,500,000;
(g) Investments existing on the date hereof and set forth on Schedule
7.4, and any extensions, renewals or reinvestments thereof, so long as the
aggregate amount of all Investments pursuant to this clause (g) is not
increased at any time above the amount of such Investments existing on the
date hereof,
(h) Investments received in connection with the bankruptcy or
reorganization of suppliers or customers and in settlement of delinquent
obligations of, and other disputes with, customers arising in the ordinary
course of business;
(i) Investments payment for which is made solely with capital stock of
the Company; Investments constituting non-cash proceeds of sales. transfers
and other dispositions of assets to the extent permitted by Section 7.2.
and
(j) in addition to Investments otherwise expressly permitted by this
Section. Investments by the Company or any of its Subsidiaries in an
aggregate amount (valued at cost) not to exceed $1,000,000 during the term
of this Agreement.
<PAGE>
53
7.5 Limitation on Indebtedness. The Company shall not, and shall not suffer
or permit any Subsidiary to, create, incur, assume, suffer to exist, or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement;
(b) Indebtedness consisting of Contingent Obligations permitted
pursuant to Section 7.8;
(c) Indebtedness existing on the Closing Date and set forth in
Schedule 7.5, and any refinancing, refunding, renewal or extension thereof;
provided that the principal amount thereof is not increased above the
principal amount thereof outstanding immediately prior to such refinancing,
refunding, renewal or extension;
(d) Indebtedness secured by Liens permitted by subsection 7.1(i), 0)
and (m) in an aggregate amount outstanding not to exceed $750,000;
(e) Indebtedness incurred in connection with leases entered into in
the ordinary course of business;
(f) Indebtedness of the Company to any Subsidiary and of any
Wholly-Owned Domestic Subsidiary to the Company or any other Subsidiary;
(g) Guaranty Obligations incurred in the ordinary course of business
by the Company or any of its Subsidiaries of (x) obligations of any
Wholly-Owned Subsidiary or (y) other obligations elsewhere permitted under
this Agreement;
(h) Guaranty Obligations ("Employee Guaranties") incurred by the
Company or any of its Subsidiaries in connection with any investment made
pursuant to subsection 7.4(f);
(i) Indebtedness in respect of any bankers' acceptance, letter of
credit, warehouse receipt or similar facilities entered into in the
ordinary course of business;
(j) (i) Indebtedness (including Indebtedness arising under capital
leases) incurred within 270 days of the acquisition, construction or
improvement of fixed or capital assets to finance the acquisition,
construction or improvement of such fixed or capital assets and (ii) any
refinancing, refunding, renewal or extension of any Indebtedness specified
in subclause (i) above; provided that the principal amount thereof is not
increased above the principal amount thereof outstanding immediately prior
to such refinancing, refunding, renewal or extension; and
<PAGE>
54
(k) additional Indebtedness of the Company or any of its Subsidiaries
in an aggregate principal amount (for the Company and all Subsidiaries) not
to exceed $750,000 at any one time outstanding.
7.6 Transactions with Affiliates. The Company shall not, and shall not
suffer or permit any Subsidiary to, enter into any transaction with any
Affiliate of the Company, except (i) upon fair and reasonable terms no less
favorable to the Company or such Subsidiary than would obtain in a comparable
arm's-length transaction with a Person not an Affiliate of the Company or such
Subsidiary, and (ii) for payments by the Company or Holdings to Ripplewood or
any of its Affiliates of an annual management fee (the "Management Fee") in an
amount not to exceed 1% of net revenues of the Company in any Fiscal Year.
7.7 Use of Proceeds. The Company shall not, and shall not suffer or permit
any Subsidiary to, use any portion of the Loan proceeds, directly or indirectly,
(i) in a manner that violates Regulation U or X of the Board of Governors of the
Federal Reserve System, or (ii) to acquire any security in any transaction that
is subject to Section 13 or 14 of the Exchange Act.
7.8 Contingent Obligations. The Company shall not, and shall not suffer or
permit any Subsidiary to, create, incur, assume or suffer to exist any
Contingent Obligations except:
(a) endorsements for collection or deposit in the ordinary course of
business;
(b) Permitted Swap Obligations;
(c) Contingent Obligations of the Company and its Subsidiaries
existing as of the Closing Date and listed in Schedule 7.8 and any
refinancing, refunding, renewal or extension thereof, provided that the
principal amount thereof is not increased above the principal amount
thereof outstanding immediately prior to such refinancing, refunding,
renewal or extension;
(d) Contingent Obligations with respect to Surety Instruments incurred
in the ordinary course of business;
(e) Contingent Obligations incurred by the Company or any of its
Subsidiaries in connection with any Investment made pursuant to subsection
7.4(f); and
(f) Contingent Obligations incurred in the ordinary course of business
by the Company or any of its Subsidiaries of (x) obligations of any
Wholly-Owned Subsidiary or (y) other obligations elsewhere permitted under
this Agreement.
<PAGE>
55
7.9 Leverage Test. The Company shall not permit the Leverage Ratio as
measured (a) as of the last day of each Fiscal Quarter and (b) as of the date of
each Borrowing (before and after giving effect to the Borrowing), to be greater
than the following:
<TABLE>
<CAPTION>
Dates Maximum Leverage Ratio
----- ----------------------
<S> <C> <C>
3/31/00 through 12/30/00 4.50 : 1.00
12/31/00 through 6/29/01 4.00 : 1.00
6/30/01 and thereafter 3.50 : 1.00
</TABLE>
7.10 Interest Coverage Test. The Company shall not permit the Interest
Coverage Ratio, as measured as of the last day of each Fiscal Quarter, to be
less than the following:
<TABLE>
<CAPTION>
Minimum Interest
Fiscal Quarter Ending Coverage Ratio
--------------------- --------------
<S> <C> <C>
3/31/00 through 12/31/00 2.50:1.00
3/31/01 through 12/31/01 3.00:1.00
3/31/02 and thereafter 3.50:1.00
</TABLE>
7.11 Fixed Charge Coverage Ratio. The Company shall not permit the Fixed
Charge Coverage Ratio, as measured as of the last day of each Fiscal Quarter, to
be less than the following:
<TABLE>
<CAPTION>
Fiscal Quarter Ending Minimum Fixed Charge Ratio
--------------------- --------------------------
<S> <C> <C>
3/31/00 through 3/31/01 1.05:1.00
6/30/01 and thereafter 1.10:1.00
</TABLE>
7.12 Quick Ratio. The Company shall not permit the Quick Ratio as measured
as of the last day of each Fiscal Quarter, to be less than (a) 1.25 : 1.00 for
each Fiscal Quarter ending on March 31, 2000 through and including September 30,
2001 and (b) 1.50 : 1.00 for each Fiscal Quarter ending on December 31, 2001 and
thereafter; provided, however, that if the
<PAGE>
56
Company's Interest Coverage Ratio at any time after the Closing Date exceeds
3.50 to 1.00, then the Company shall thereafter not be required to comply with
this Section 7.12.
7.13 Minimum EBITDA. The Company will not permit EBITDA, as measured for
the four consecutive Fiscal Quarters ended as of each date described below, to
be less than the amount set forth opposite such date:
<TABLE>
<CAPTION>
Date Minimum EBITDA
---- --------------
<S> <C> <C>
3/31/00 through 9/30/00 $5,500,000
12/31/00 through 9/30/01 $7,000,000
12/31/01 and thereafter $9,500,000
</TABLE>
provided, however, that if the Company's Leverage Ratio at any time after the
Closing Date is less than 3.00 : 1.00, then the Company shall thereafter not be
required to comply with this Section 7.13.
7.14 Restricted Payments. The Company shall not declare or make any
dividend payment or other distribution of assets, properties, cash, rights,
obligations or securities on account of any shares of any class of its capital
stock, or purchase, redeem or otherwise acquire for value any shares of its
capital stock or any warrants, rights or options to acquire such shares, now or
hereafter outstanding; except that the Company may:
(a) declare and make dividend payments or other distributions payable
solely, in its common stock;
(b) purchase, redeem or otherwise acquire shares of its common stock
or warrants or options to acquire any such shares with the proceeds
received from the substantially concurrent issue of new shares of its
common stock;
(c) redeem from Glenayre 42,000,000 shares of the Company's common
stock in accordance with the Acquisition Agreement;
(d) the Company may pay dividends to Holdings to permit Holdings to
pay (i) overhead expenses of Holdings not to exceed 1% of the Company's
fiscal year-end revenue for the previous fiscal year, and in any event not
to exceed $400,000 per fiscal year, (ii) tax obligations of Holdings and
(iii) the Management Fee;
<PAGE>
57
(e) the Company may redeem in whole or in part any capital stock of
the Company for another class of capital stock or rights to acquire capital
stock of the Company, provided that such other class of capital stock
contains terms and provisions at least as advantageous to Banks as those
contained in the capital stock redeemed thereby; and
(f) the Company may repurchase shares of its capital stock (and/or
options or warrants in respect thereof) held by its officers, directors and
employees so long as such repurchase is pursuant to, and in accordance with
the terms of, management and/or employee stock plans, stock subscription
agreements or shareholder agreements.
7.15 Change in Business. The Company shall not, and shall not suffer or
permit any Subsidiary to, engage in any material line of business substantially
different from those lines of business carried on by the Company and its
Subsidiaries on the date hereof and any lines of business related or ancillary
thereto.
7.16 Accounting Changes. The Company shall not, and shall not suffer or
permit any Subsidiary to, make any significant change in accounting treatment or
reporting practices, except as required by GAAP, or change the fiscal year of
the Company or of any Subsidiary.
7.17 Amendments to the Acquisition Agreement. The Company shall not, and
shall not permit any other party to the Acquisition Agreement to, amend or waive
any provision of the Acquisition Agreement, except for any such amendment or
waiver that (i) becomes effective after the Closing Date and (ii) could not
reasonably be expected to have a Material Adverse Effect; provided that the
Agent is provided notice thereof within five (5) Business Days after any such
amendment or waiver.
ARTICLE VIII
EVENTS OF DEFAULT
8.1 Event of Default. Any of the following events occurring and continuing
shall constitute an "Event of Default":
(a) Non-Payment. The Company fails to pay, (i) when and as required to
be paid herein, any amount of principal of any Loan, or (ii) within five
(5) days after the same becomes due, any interest, fee or any other amount
payable hereunder or under any other Loan Document; or
(b) Representation or Warranty. Any representation or warranty by the
Company or any Subsidiary made or deemed made herein, in any other Loan
Document, or which is
<PAGE>
58
contained in any certificate, document or financial or other statement by
the Company, any Subsidiary, or any Responsible Officer, furnished at any
time under this Agreement, or in or under any other Loan Document, is
incorrect in any material respect on or as of the date made or deemed made;
or
(c) Specific Defaults. The Company fails to perform or observe any
term, covenant or agreement contained in any of Section 6.1, 6.3(a), 7.9,
7.10, 7.11, 7.12 or 7.13 in Articles VI or VII as the case may be; or
(d) Other Defaults. The Company or any Subsidiary party thereto fails
to perform or observe any other term or covenant contained in this
Agreement or any other Loan Document, and such default shall continue
unremedied for a period of 30 days after the date upon which written notice
thereof is given to the Company by the Agent or any Bank; or
(e) Cross-Default. (i) The Company or any Subsidiary (A) fails to make
any payment in respect of any Indebtedness or Contingent Obligation (other
than in respect of Swap Contracts), having an aggregate principal amount
(including undrawn committed or available amounts and including amounts
owing to all creditors under any combined or syndicated credit arrangement)
of more than $750,000 when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise); or (B) fails to perform or
observe any other condition or covenant, or any other event shall occur or
condition exist, under any agreement or instrument relating to any such
Indebtedness or Contingent Obligation, if the effect of such failure, event
or condition is to cause, or to permit the holder or holders of such
Indebtedness or beneficiary or beneficiaries of such Indebtedness (or a
trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause such Indebtedness to be declared to be due and
payable prior to its stated maturity, or such Contingent Obligation to
become payable or cash collateral in respect thereof to be demanded; or
(ii) there occurs under any Swap Contract an Early Termination Date (as
defined in such Swap Contract) resulting from (1) any event of default
under such Swap Contract as to which the Company or any Subsidiary is the
Defaulting Party (as defined in such Swap Contract) or (2) any Termination
Event (as so defined) as to which the Company or any Subsidiary is an
Affected Party (as so defined), and, in either event, the Swap Termination
Value owed by the Company or such Subsidiary as a result thereof is greater
than $500,000; or
(f) The Acquisition Agreement. (i) The closing of the Transaction does
not occur within 30 days after the Closing Date; or (ii) the Transaction is
terminated: or
(g) Insolvency; Voluntary Proceedings. The Company or any Subsidiary
(i) ceases or fails to be solvent, or generally fails to pay. or admits in
writing its inability to
<PAGE>
59
pay, its debts as they become due, subject to applicable grace periods, if
any, whether at stated maturity or otherwise; (ii) voluntarily ceases to
conduct its business in the ordinary course: (iii) commences any Insolvency
Proceeding with respect to itself; or (iv) takes any action to effectuate
or authorize any of the foregoing; or
(h) Involuntary Proceedings. (i) Any involuntary Insolvency Proceeding
is commenced or filed against the Company or any Subsidiary, or any writ,
judgment, warrant of attachment, execution or similar process, is issued or
levied against a substantial part of the Company's or any Subsidiary's
properties, and any such proceeding or petition shall not be dismissed, or
such writ, judgment, warrant of attachment, execution or similar process
shall not be released, vacated or fully bonded within 60 days after
commencement, filing or levy; (ii) the Company or any Subsidiary admits the
material allegations of a petition against it in any Insolvency Proceeding,
or an order for relief (or similar order under non-U. S. law) is ordered in
any Insolvency Proceeding; or (iii) the Company or any Subsidiary
acquiesces in the appointment of a receiver, trustee, custodian,
conservator, liquidator, mortgagee in possession (or agent therefor), or
other similar Person for itself or a substantial portion of its property or
business; or
(i) ERISA. (i) An ERISA Event shall occur with respect to a Pension
Plan or Multiemployer Plan which has resulted or could reasonably be
expected to result in liability of the Company under Title IV of ERISA to
the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in
excess of $750,000; or (ii) the Company or any ERISA Affiliate shall fail
to pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under Section
4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess
of $750,000; or
(j) Monetary Judgments. One or more non-interlocutory judgments,
noninterlocutory orders, decrees or arbitration awards is entered against
the Company or any Subsidiary involving in the aggregate a liability (to
the extent not covered by independent thirdparty insurance as to which the
insurer does not dispute coverage) as to any single or related series of
transactions, incidents or conditions, of $750,000 or more, and the same
shall remain unvacated and unstayed pending appeal for a period of 30 days
after the entry thereof; or
(k) Change of Control. There occurs any Change of Control; or
(l) Invalidity of Subordination Provisions. The subordination
provisions of any agreement or instrument governing any Subordinated Debt
in an aggregate principal amount in excess of $750,000 is for any reason
revoked or invalidated, or otherwise cease to be in full force and effect,
any Person contests in any manner the validity or
<PAGE>
60
enforceability thereof or denies that it has any ftirther liability or
obligation thereunder, or the Indebtedness hereunder is for any reason
subordinated or does' not have the priority contemplated by this Agreement
or such subordination provisions; or
(m) Collateral. (i) Any material provision of any Collateral Document
shall for any reason cease to be valid and binding on or enforceable in any
material respect against the Company and its Subsidiaries taken as a whole
or (B) the Company or any Subsidiary shall state that any material
provision of any Collateral Document shall for any reason cease to be valid
and binding on or enforceable against the Company or any Subsidiary party
thereto in writing or bring an action to limit its obligations or
liabilities thereunder; or
(ii) any Collateral Document shall for any reason (other than pursuant
to the terms thereof) cease to create a valid security interest in a
material portion of the Collateral purported to be covered thereby or such
security interest shall for any reason cease to be a perfected and first
priority security interest with respect to any material item of collateral
subject only to Permitted Liens.
8.2 Remedies. If any Event of Default occurs, the Agent shall, at the
request of, or may, with the consent of, the Majority Banks,
(a) declare the commitment of each Bank to make Loans to be
terminated, whereupon such commitments shall be terminated;
(b) declare the unpaid principal amount of all outstanding Loans, all
interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and
payable, without presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived by the Company; and
(c) exercise on behalf of itself and Banks all rights and remedies
available to it and Banks under the Loan Documents or applicable law;
provided, however, that upon the occurrence of any event specified in subsection
(g) or (h) of Section 8.1 (in the case of clause (i) of subsection (h) upon the
expiration of the 60-day period mentioned therein), the obligation of each Bank
to make Loans shall automatically terminate and the unpaid principal amount of
all outstanding Loans and all interest and other amounts as aforesaid shall
automatically become due and payable without further act of the Agent or any
Bank.
<PAGE>
61
8.3 Rights Not Exclusive. The rights provided for in this Agreement and the
other Loan Documents are cumulative and are not exclusive of any other rights,
powers, privileges or remedies provided by law or in equity, or under any other
instrument, document or agreement now existing or hereafter arising.
ARTICLE IX
THE AGENT
9.1 Appointment and Authorization; "Agent". Each Bank hereby irrevocably
(subject to Section 9.9) appoints, designates and authorizes the Agent to take
such action on its behalf under the provisions of this Agreement and each other
Loan Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall the Agent
have or be deemed to have any fiduciary relationship with any Bank, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Agent. Without limiting the generality of the
foregoing sentence, the use of the term "agent" in this Agreement with reference
to the Agent is not intended to connote any fiduciary or other implied (or
express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties.
9.2 Delegation of Duties. The Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.
9.3 Liability of Agent. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of Banks for any recital, statement,
representation or warranty made by the Company or any Subsidiary or Affiliate of
the Company, or any officer thereof, contained in this Agreement or in any other
Loan Document, or for the value of and title to any Collateral, or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Agreement or any
other Loan Document, or the validity, effectiveness,
<PAGE>
62
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of the Company or any other party to any Loan
Document to perform its obligations hereunder or thereunder. No Agent-Related
Person shall be under any obligation to any Bank to ascertain or to inquire as
to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of the Company or any of the Company's Subsidiaries
or Affiliates.
9.4 Reliance by Agent. (a) The Agent shall be entitled to rely, and shall
be fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to the
Company), independent accountants and other experts selected by the Agent. The
Agent shall be fully justified in failing or refusing to take any action under
this Agreement or any other Loan Document unless it shall first receive such
advice or concurrence of the Majority Banks as it deems appropriate and, if it
so requests, it shall first be indemnified to its satisfaction by Banks against
any and all liability and expense which may be incurred by it by reason of
taking or continuing to take any such action. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement or
any other Loan Document in accordance with a request or consent of the Majority
Banks and such request and any action taken or failure to act pursuant thereto
shall be binding upon all of Banks.
(b) For purposes of determining compliance with the conditions specified in
Section 4.1, each Bank that has executed this Agreement shall be deemed to have
consented to, approved or accepted or to be satisfied with, each document or
other matter either sent by the Agent to such Bank for consent, approval,
acceptance or satisfaction, or required thereunder to be consented to or
approved by or acceptable or satisfactory to the Bank.
9.5 Notice of Default. The Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default, except with respect
to defaults in the payment of principal, interest and fees required to be paid
to the Agent for the account of Banks, unless the Agent shall have received
written notice from a Bank or the Company referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"notice of default". The Agent will notify Banks of its receipt of any such
notice. The Agent shall take such action with respect to such Default or Event
of Default as may be requested by the Majority Banks in accordance with Article
VIII; provided, however, that unless and until the Agent has received any such
request, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable or in the best interest of Banks.
<PAGE>
63
9.6 Credit Decision. Each Bank acknowledges that none of the Agent-Related
Persons has made any representation or warranty to it, and that no act by the
Agent hereinafter taken, including any review of the affairs of the Company and
its Subsidiaries, shall be deemed to constitute any representation or warranty
by any Agent-Related Person to any Bank. Each Bank represents to the Agent that
it has, independently and without reliance upon any AgentRelated Person and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and credit worthiness of the Company and
its Subsidiaries, and all applicable bank regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to the Company and its Subsidiaries hereunder.
Each Bank also represents that it will, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, property, financial
and other condition and credit worthiness of the Company. Except for notices,
reports and other documents expressly herein required to be furnished to Banks
by the Agent, the Agent shall not have any duty or responsibility to provide any
Bank with any credit or other information concerning the business, prospects,
operations, property, financial and other condition or credit worthiness of the
Company which may come into the possession of any of the Agent-Related Persons.
9.7 Indemnification of Agent. Whether or not the transactions contemplated
hereby are consummated, Banks shall indemnify upon demand the Agent-Related
Persons (to the extent not reimbursed by or on behalf of the Company and without
limiting the obligation of the Company to do so), pro rata, from and against any
and all Indemnified Liabilities; provided, however that no Bank shall be liable
for the payment to the Agent-Related Persons of any portion of such Indemnified
Liabilities resulting solely from such Person's gross negligence or willful
misconduct. Without limitation of the foregoing, each Bank shall reimburse the
Agent upon demand for its ratable share of any costs or out-of-pocket expenses
(including Attorney Costs) incurred by the Agent in connection with the
preparation, execution, delivery,. administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein
to the extent that the Agent is not reimbursed for such expenses by or on behalf
of the Company, The undertaking in this Section shall survive the payment of all
Obligations hereunder and the designation or replacement of the Agent.
9.8 Agent in Individual Capacity. CSFB and its Affiliates may make loans
to, issue letters of credit for the account of, accept deposits from, acquire
equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with the Company and its
Subsidiaries and Affiliates as though CSFB were not the Agent
<PAGE>
64
hereunder and without notice to or consent of Banks. The Banks acknowledge that,
pursuant to such activities, CSFB or its Affiliates may receive information
regarding the Company or its Affiliates (including information that may be
subject to confidentiality obligations in favor of the Company or such
Subsidiary) and acknowledge that the Agent shall be under no obligation to
provide such information to them. With respect to its Loans, CSFB shall have the
same rights and powers under this Agreement as any other Bank and may exercise
the same as though it were not the Agent, and the terms "Bank" and "Banks"
include CSFB in its individual capacity.
9.9 Successor Agent. The Agent may, and at the request of the Majority
Banks shall, resign as Agent upon 30 days' notice to Banks. If the Agent resigns
under this Agreement, the Majority Banks shall appoint from among Banks a
successor agent for Banks. If no successor agent is appointed prior to the
effective date of the resignation of the Agent, the Agent may appoint, after
consulting with Banks and the Company, a successor agent from among Banks. Upon
the acceptance of its appointment as successor agent hereunder, such successor
agent shall succeed to all the rights, powers and duties of the retiring Agent
and the term "Agent" shall mean such successor agent and the retiring Agent's
appointment, powers and duties as Agent shall be terminated. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Article IX and
Sections 10.4 and 10.5 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent under this Agreement. If no
successor agent has accepted appointment as Agent by the date which is 30 days
following a retiring Agent's notice of resignation, the retiring Agent's
resignation shall nevertheless thereupon become effective and Banks shall
perform all of the duties of the Agent hereunder until such time, if any, as the
Majority Banks appoint a successor agent as provided for above.
9.10 Withholding Tax. (a) If any Bank is a "foreign corporation,
partnership or trust" within the meaning of the Code and such Bank claims
exemption from, or a reduction of, U.S. withholding tax under Sections 1441 or
1442 of the Code, such Bank agrees with and in favor of the Agent. to deliver to
the Agent:
(i) if such Bank claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, two properly completed
and executed copies of IRS Form W-8BEN before the payment of any interest
in the first calendar year and before the payment of any interest in each
third succeeding calendar year during which interest may be paid under this
Agreement;
(ii) if such Bank claims that interest paid under this Agreement is
exempt from United States withholding tax because it is effectively
connected with a United States trade or business of such Bank, two properly
completed and executed copies of IRS Form W-8ECI before the payment of any
interest is due in the first taxable year of such Bank and in each
succeeding taxable year of such Bank during which interest may be paid
under this Agreement; and
<PAGE>
65
(iii) such other form or forms as may be required under the Code or
other laws of the United States as a condition to exemption from, or
reduction of, United States withholding tax.
Such Bank agrees to promptly notify the Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.
(b) If any Bank claims exemption from, or reduction of, withholding tax
under a United States tax treaty by providing IRS Form W-8BEN and such Bank
sells, assigns, grants a participation in, or otherwise transfers all or part of
the Obligations of the Company to an Eligible Assignee, such Bank agrees to
notify the Agent of the percentage amount in which it is no longer the
beneficial owner of Obligations of the Company. To the extent of such percentage
amount, the Agent will treat such Bank's IRS Form W-8BEN as no longer valid.
(c) If any Bank claiming exemption from United States withholding tax
sells, assigns, grants a participation in, or otherwise transfers all or part of
the Obligations of the Company to an Eligible Assignee, such Eligible Assignee
agrees to undertake sole responsibility for complying with the withholding tax
requirements imposed by Sections 1441 and 1442 of the Code.
(d) If any Bank is entitled to a reduction in the applicable withholding
tax, the Agent may withhold from any interest payment to such Bank an amount
equivalent to the applicable withholding tax after taking into account such
reduction. However, if the forms or other documentation required by subsection
(a) of this Section are not delivered to the Agent, then the Agent may withhold
from any interest payment to such Bank not providing such forms or other
documentation an amount equivalent to the applicable withholding tax imposed by
Sections 1441 and 1442 of the Code, without reduction.
(e) If the IRS or any other Governmental Authority of the United States or
other jurisdiction asserts a claim that the Agent did not properly withhold tax
from amounts paid to or for the account of any Bank (because the appropriate
form was not delivered or was not properly executed, or because such Bank failed
to notify the Agent of a change in circumstances which rendered the exemption
from, or reduction of, withholding tax ineffective. or for an other reason) such
Bank shall indemnify the Agent fully for all amounts paid, directly or
indirectly, by the Agent as tax or otherwise, including penalties and interest,
and including any taxes imposed by any jurisdiction on the amounts payable to
the Agent under this Section, together with all costs and expenses (including
Attorney Costs). The obligation of Banks under this subsection shall survive the
payment of all Obligations and the resignation or replacement of the Agent.
<PAGE>
66
ARTICLE X
MISCELLANEOUS
10.1 Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by the Company or any applicable Subsidiary therefrom, shall be
effective unless the same shall be in writing and signed by the Majority Banks
(or by the Agent at the written request of the Majority Banks) and the Company
and acknowledged by the Agent, and then any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that no such waiver, amendment, or consent shall,
unless in writing and signed by all Banks and the Company and acknowledged by
the Agent, do any of the following:
(a) increase or extend the Commitment of any Bank (or reinstate any
Commitment terminated pursuant to Section 8.2);
(b) postpone or delay any scheduled date fixed by this Agreement or
any other Loan Document for any payment of principal, interest, fees or
other amounts due to Banks (or any of them) hereunder or under any other
Loan Document;
(c) reduce the principal of, or the rate of interest specified herein
on any Loan, or (subject to clause (ii) below) any fees or other amounts
payable hereunder or under any other Loan Document;
(d) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which is required for Banks or any of
them to take any action hereunder;
(e) amend this Section, or Section 2.14, or any provision herein
providing for consent or other action by all Banks; or
(f) release all or substantially all of the Collateral except as
otherwise may specifically be provided for;
and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the Agent in addition to the Majority Banks or all Banks,
as the case may be, affect the rights or duties of the Agent under this
Agreement or any other Loan Document, and (ii) the Fee Letters may be amended,
or rights or privileges thereunder waived, in a writing executed by the parties
thereto.
10.2 Notices. (a) All notices. requests. consents, approvals, waivers and
other communications shall be in writing (including, unless the context
expressly otherwise provides. bv facsimile transmission, provided that any
matter transmitted by the Company by facsimile
<PAGE>
67
shal1 be followed promptly by delivery of a hard copy original thereof) and
mailed, faxed or delivered, to the address or facsimile number specified for
notices on Schedule 10.2; or, as directed to the Company or the Agent, to such
other address as shall be designated by such party in a written notice to the
other parties, and as directed to any other party, at such other address as
shall be designated by such party in a written notice to the Company and the
Agent.
(b) All such notices, requests and communications shall, when transmitted
by overnight delivery, or faxed, be effective when delivered for overnight
(next-day) delivery, or transmitted in legible form by facsimile machine,
respectively, or if mailed, upon the third Business Day after the date deposited
into the U.S. mail, or if delivered, upon delivery; except that notices pursuant
to Article II or IX to the Agent shall not be effective until actually received
by the Agent.
(c) Any agreement of the Agent and Banks herein to receive certain notices
by telephone or facsimile is solely for the convenience and at the request of
the Company. The Agent and Banks shall be entitled to rely on the authority of
any Person purporting to be a Person authorized by the Company to give such
notice and the Agent and Banks shall not have any liability to the Company or
other Person on account of any action taken or not taken by the Agent or Banks
in reliance upon such telephonic or facsimile notice. The obligation of the
Company to repay the Loans shall not be affected in any way or to any extent by
any failure by the Agent and Banks to receive written confirmation of any
telephonic or facsimile notice or the receipt by the Agent and Banks of a
confirmation which is at variance with the terms understood by the Agent and
Banks to be contained in the telephonic or facsimile notice.
10.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Agent or any Bank, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege.
10.4 Costs and Expenses. The Company shall:
(a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse CSFB (including in its capacity as Agent)
within five Business Days after demand (subject to subsection 4.1(e)) for
all costs and expenses incurred by CSFB (including in its capacity as
Agent) in connection with the development, preparation, delivery,
administration and execution of, and any amendment, supplement, waiver or
modification to (in each case, whether or not consummated), this Agreement,
any Loan Document and any other documents prepared in connection herewith
or therewith, and the consummation of the transactions contemplated hereby
and thereby, including
<PAGE>
68
reasonable Attorney Costs incurred by CSFB (including in its capacity as
Agent) with respect thereto; and
(b) pay or reimburse the Agent, the Collateral Agent and each Bank
within five Business Days after demand (subject to subsection 4.1(e)) for
all costs and expenses (including Attorney Costs for one firm of counsel)
incurred by them in connection with the enforcement, attempted enforcement,
or preservation of any rights or remedies under this Agreement or any other
Loan Document during the existence of an Event of Default or after
acceleration of the Loans (including in connection with any "workout" or
restructuring regarding the Loans, and including in any Insolvency
Proceeding or appellate proceeding).
10.5 Company Indemnification. Whether or not the transactions contemplated
hereby are consummated, the Company shall indemnify, defend and hold the
Agent-Related Persons, and each Bank and each of its respective officers,
directors, employees, counsel, agents and attomeys-in-fact (each, an
"Indemnified Person") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses and disbursements (including Attorney Costs for one firm of
counsel) of any kind or nature whatsoever which may at any time (including at
any time following repayment of the Loans and the termination, resignation or
replacement of the Agent or replacement of any Bank) be imposed on, incurred by
or asserted against any such Person in any way relating to or arising out of
this Agreement or any document contemplated by or referred to herein, or the
transactions contemplated hereby, or any action taken or omitted by any such
Person under or in connection with any of the foregoing, including with respect
to any investigation, litigation or proceeding (including any Insolvency
Proceeding or appellate proceeding) related to or arising out of this Agreement
or the Loans or the use of the proceeds thereof, whether or not any Indemnified
Person is a party thereto (all the foregoing, collectively, the "Indemnified
Liabilities"); provided, that the Company shall have no obligation hereunder to
any Indemnified Person with respect to Indemnified Liabilities resulting solely
from the gross negligence or willful misconduct of such Indemnified Person. The
agreements in this Section shall survive payment of all other Obligations.
10.6 Payments Set Aside. To the extent that the Company makes a payment to
the Agent or Banks, or the Agent or Banks exercise their right of set-off, and
such payment or the proceeds of such set-off or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required (including pursuant to any settlement entered into by the Agent or
such Bank in its discretion) to be repaid to a trustee, receiver or any other
party, in connection with any Insolvency Proceeding or otherwise, then (a) to
the extent of such recovery the obligation or part thereof originally intended
to be satisfied shall be revived and continued in full force and effect as if
such payment had not been made or such set-off had not
<PAGE>
69
occurred, and (b) each Bank severally agrees to pay to the Agent upon demand its
pro rata share of any amount so recovered from or repaid by the Agent.
10.7 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Company may not assign or transfer any
of its rights or obligations under this Agreement without the prior written
consent of the Agent and each Bank.
10.8 Assignments, Participations, etc. (a) Any Bank may, with the written
consent of the Company (except no consent shall be required from the Company
when a Default or an Event of Default Exists, and in any event shall not be
unreasonably withheld) and Agent (which consent shall not be unreasonably
withheld), at any time assign and delegate to one or more Eligible Assignees
(provided that no written consent of the Company or Agent shall be required in
connection with any assignment and delegation by a Bank to an Eligible Assignee
that is an Affiliate of such Bank) (each an "Assignee") all, or any ratable part
of all, of the Loans, the Commitments and the other rights and obligations of
such Bank hereunder, in a minimum amount of $2,500.000: provided, however, that
the Company and the Agent may continue to deal solely and directly with such
Bank in connection with the interest so assigned to an Assignee until (i)
written notice of such assignment, together with payment instructions, addresses
and related information with respect to the Assignee, shall have been given to
the Company and the Agent by such Bank and the Assignee; (ii) such Bank and its
Assignee shall have delivered to the Company and the Agent an Assignment and
Acceptance in substantially the form attached hereto as Exhibit I together with
any Note or Notes subject to such assignment and (iii) the assignor Bank or
Assignee has paid to the Agent a processing fee in the amount of $3,500.
(b) From and after the date that the Agent notifies the assignor Bank that
it has received (and provided its consent with respect to) an executed
Assignment and Acceptance and payment of the above-referenced processing fee,
(i) the Assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a Bank under
the Loan Documents, and (ii) the assignor Bank shall, to the extent that rights
and obligations hereunder and under the other Loan Documents have been assigned
by it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Loan Documents.
(c) Within five Business Days after its receipt of notice by the Agent that
it has received an executed Assignment and Acceptance and payment of the
processing fee, the Company shall upon request execute and deliver to the Agent,
new Notes evidencing such Assignee's assigned Loans and Commitment and, if the
assignor Bank has retained a portion of its Loans and its Commitment,
replacement Notes in the principal amount of the Revolving Loans retained by the
assignor Bank (such Notes to be in exchange for, but not in payment of, the
<PAGE>
70
Notes held by such Bank). Immediately upon each Assignee's making its processing
fee payment under the Assignment and Acceptance, this Agreement shall be deemed
to be amended to the extent, but only to the extent, necessary to reflect the
addition of the Assignee and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Bank pro tanto.
(d) Any Bank may at any time sell to one or more commercial banks or other
Persons not Affiliates of the Company (a "Participant") participating interests
in any Loans, the Commitment of that Bank and the other interests of that Bank
(the "originating Bank") hereunder and under the other Loan Documents; provided,
however, that (i) the originating Bank's obligations under this Agreement shall
remain unchanged, (ii) the originating Bank shall remain solely responsible for
the performance of such obligations, (iii) the Company and the Agent shall
continue to deal solely and directly with the originating Bank in connection
with the originating Bank's rights and obligations under this Agreement and the
other Loan Documents, and (iv) no Bank shall transfer or grant any participating
interest under which the Participant has rights to approve any amendment to, or
any consent or waiver with respect to, this Agreement or any other Loan
Document, except to the extent such amendment, consent or waiver would require
unanimous consent of Banks as described in the first proviso to Section 10.1. In
the case of any such participation, the Participant shall be entitled to the
benefit of Sections 3.1, 3.3 and 10.5 as though it were also a Bank hereunder,
except that no Participant shall be entitled to any greater amount than the Bank
from which such participating interest was purchased would have been entitled,
and if amounts outstanding under this Agreement are due and unpaid, or shall
have been declared or shall have become due and payable upon the occurrence of
an Event of Default, each Participant shall be deemed to have the right of
set-off in respect of its participating interest in amounts owing under this
Agreement to the same extent as if the amount of its participating interest were
owing directly to it as a Bank under this Agreement.
(e) Notwithstanding any other provision in this Agreement, any Bank may at
any time create a security interest in, or pledge, all or any portion of its
rights under and interest in this Agreement and the Note held by it in favor of
any Federal Reserve Bank in accordance with Regulation A of the FRB or U.S.
Treasury Regulation 31 CFR ss.203.14, and such Federal Reserve Bank may enforce
such pledge or security interest in any manner permitted under applicable law.
10.9 Confidentiality. Each Bank agrees to take and to cause its Affiliates
to take normal and reasonable precautions and exercise due care to maintain the
confidentiality of all information identified as "confidential" or "secret" by
the Company and provided to it by the Company or any Subsidiary, or by the Agent
on the Company's or such Subsidiary's behalf, under this Agreement or any other
Loan Document, and neither it nor any of its Affiliates shall use any such
information other than in connection with or in enforcement of this Agreement
and the other Loan Documents or in connection with other business now or
hereafter existing or
<PAGE>
71
contemplated with the Company or any Subsidiary; except to the extent such
information (i) was or becomes generally available to the public other than as a
result of disclosure by the Bank, or (ii) was or becomes available on a
non-confidential basis from a source other than the Company, provided that such
source is not bound by a confidentiality agreement with the Company known to the
Bank; provided, however, that any Bank may disclose such information (A) at the
request or pursuant to any requirement of any Governmental Authority to which
the Bank is subject or in connection with an examination of such Bank by any
such authority; (B) pursuant to subpoena or other court process; (C) when
required to do so in accordance with the provisions of any applicable
Requirement of Law; (D) to the extent reasonably required in connection with any
litigation or proceeding to which the Agent, any Bank or their respective
Affiliates may be party; (E) to the extent reasonably required in connection
with the exercise of any remedy hereunder or under any other Loan Document; (F)
to such Bank's independent auditors and other professional advisors; (G) to any
Participant or Assignee, actual or potential, provided that such Person agrees
in writing to keep such information confidential to the same extent required of
Banks hereunder; (H) as to any Bank or its Affiliate, as expressly permitted
under the terms of any other document or agreement regarding confidentiality to
which the Company or any Subsidiary is party or is deemed party with such Bank
or such Affiliate; and (I) to its Affiliates.
10.10 Set-off. In addition to any rights and remedies of Banks provided by
law, if an Event of Default exists and is continuing or the Loans have been
accelerated, each Bank is authorized at any time and from time to time. without
prior notice to the Company, any such notice being waived by the Company to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held bv,
and other indebtedness at any time owing by, such Bank to or for the credit or
the account of the Company against any and all Obligations due and payable
(whether at the stated maturity, by acceleration or otherwise), now or hereafter
existing, irrespective of whether or not the Agent or such Bank shall have made
demand under this Agreement or any Loan Document and although such Obligations
may be contingent or unmatured. Each Bank agrees promptly to notify the Company
and the Agent in writing after any such set-off and application made by such
Bank; provided, however, that the failure to give such notice shall not affect
the validity of such set-off and application.
10.11 Notification of Addresses, Lending Offices, Etc. Each Bank shall
notify the Agent in writing of any changes in the address to which notices to
the Bank should be directed, of addresses of any Lending Office, of payment
instructions in respect of all payments to be made to it hereunder and of such
other administrative information as the Agent shall reasonably request.
10.12 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.
<PAGE>
72
10.13 Severability. The illegality or unenforceability of any provision of
this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
10.14 No Third Parties Benefited. This Agreement is made and entered into
for the sole protection and legal benefit of the Company, Banks, the Agent and
the Agent-Related Persons, and their permitted successors and assigns, and no
other Person shall be a direct or indirect legal beneficiary of, or have any
direct or indirect cause of action or claim in connection with, this Agreement
or any of the other Loan Documents.
10.15 Governing Law and Jurisdiction
(a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK; PROVIDED THAT THE AGENT AND
THE BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF
THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY, THE AGENT AND THE BANKS
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NONEXCLUSIVE
JURISDICTION OF THOSE COURTS, EACH OF THE COMPANY, THE AGENT AND THE BANKS
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE COMPANY, THE AGENT AND THE
BANKS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS,
WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.
10.16 Waiver, of Jury Trial. THE COMPANY, THE BANKS AND THE AGENT EACH
WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST
ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE,
<PAGE>
73
WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE COMPANY,
THE BANKS AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL
BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE
PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED
BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF.
THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
10.17 Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the Company,
Banks and the Agent, and supersedes all prior or contemporaneous agreements and
understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof.
<PAGE>
74
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
WESTERN MULTIPLEX CORPORATION
By: /s/ Jeffrey M. Hendren
-------------------------------
Title: Vice President
By: /s/ RL
-------------------------------
Title: CFO
CREDIT SUISSE FIRST BOSTON, as Lead
Arranger and as Agent
By: /s/ Chris Horgan
-------------------------------
Title: Vice President
By: /s/ Kristin Lepri
-------------------------------
Title: Associate
CREDIT SUISSE FIRST BOSTON, as Bank
By: /s/ Chris Horgan
-------------------------------
Title: Vice President
By: /s/ Kristin Lepri
-------------------------------
Title: Associate
<PAGE>
EXHIBIT 10.20
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT ("Agreement") dated October 18, 1999 by
and between WESTERN MULTIPLEX CORPORATION, a California corporation ("WMC") and
GLENAYRE ELECTRONICS, INC., a Colorado corporation ("GEI").
Statement of Purpose
GEI, as tenant, entered into that certain lease agreement dated July 1, 1996
("Lease") with Yercaf, N.V. ("Landlord") covering the premises at 1196 Borregas
Avenue, Sunnyvale, California ("Premises"), a complete and correct copy of which
is attached hereto as Attachment A. GEI desires to assign the Lease to its
affiliate, WMC and WMC desires to assume all such interests. The purpose of this
Agreement is to set forth the parties' understanding regarding the assignment
and assumptions of the Lease.
NOW, THEREFORE, in consideration of the foregoing Statement of Purpose and the
mutual agreements set forth herein, the parties, intending to be legally bound,
do hereby agree as follows:
1. Assignment. Subject to WMC's agreement under Paragraph 2 below, all of
GEI's a right, title and interest in and to the Lease are hereby
transferred, conveyed and assigned to WMC. Both parties shall reasonably
cooperate and execute such further documentation or take any further action
as may be permitted and necessary to effectuate the transfer of the Lease
to WMC.
2. Assumption. WMC does hereby assume and agree to pay, perform and discharge,
as and when due, all of the obligations of the Lease (the "Assumed
Obligations"). Without limiting the generality of the foregoing, WMC
further agrees that its current use and any future use will be a permitted
use under the Lease. Notwithstanding anything to the contrary, WMC agrees
to defend, indemnify and hold GEI and GTI harmless for its failure to
perform and discharge the Assumed Obligations.
3. Miscellaneous.
3.1. This Agreement contains the final, complete and exclusive statement of
the agreement between the parties with respect to the transactions
contemplated herein and all prior or contemporaneous written or oral
agreements with respect to the subject matter hereof are merged
herein. No modification or amendment hereof shall be effective unless
in writing and executed by each of the parties hereto.
3.2. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
<PAGE>
2
3.3. The captions herein are for convenience of reference only and shall
not be construed as a part of this Agreement. If any provisions of the
Agreement is deemed to be invalid or unenforceable, the parties agree
to substitute a mutually agreed-upon valid and enforceable provision
which reflect the parties' original intent. Notwithstanding, the
invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of the remaining
portions of this Agreement or any part thereof. This Agreement shall
be construed, interpreted, enforced and governed by and under the laws
of the State of North Carolina.
3.4. This Agreement may be exercised in any number of counterparts, each of
which shall be deemed an original, but all of which shall constitute
one and the same agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed by WMC and GEI and
shall be effective as of October 30, 1999.
Western Multiplex Corporation Glenayre Electronics, Inc.
By: /s/ Stanley Ciepcielinski By: /s/ Billy C. Layton
----------------------------- -------------------------------
Name: Stanley Ciepcielinski Name: Billy C. Layton
--------------------------- -----------------------------
Title: Chief Financial Officer Title: Vice President
-------------------------- ----------------------------
<PAGE>
LEASE
1196 Borregas Avenue
Sunnyvale, California
between
YERCAF N.V.
"LANDLORD"
and
GLENARYE ELECTRONICS, INC.
"TENANT"
Dated July 1, 1996
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE 1
DEMISE, DELIVERY OF POSSESSION AND DEFINITIONS...............1
1.1 Demise.................................................................1
1.2 Delivery of Possession.................................................1
1.3 Definitions............................................................2
ARTICLE 2
USE OF PREMISES..............................4
2.1 Permitted Uses.........................................................4
2.2 Prohibited Uses........................................................4
2.3 Compliance with Laws...................................................4
ARTICLE 3
LEASE TERM.................................5
3.1 Initial Term...........................................................5
3.2 Option to Extend.......................................................5
3.3 Delivery of Premises...................................................5
3.4 Surrender of the Premises..............................................6
3.5 Early Termination......................................................6
ARTICLE 4
BASE RENT.................................7
4.1 Base Rent..............................................................7
4.2 Additional Rent........................................................7
ARTICLE 5
TENANT'S..................................7
5.1 Tenant's Expenses......................................................7
5.2 Definition of Property Taxes...........................................9
ARTICLE 6
SECURITY DEPOSIT..............................9
6.1 Security Deposit.......................................................9
- i -
<PAGE>
ARTICLE 7
HAZARDOUS SUBSTANCES...........................10
7.1 Compliance with Law...................................................10
7.2 Tenant's Indemnification..............................................10
7.3 Tenant's Responsibilities.............................................10
7.4 Notification of Hazardous Substances..................................10
7.5 Handling of Hazardous Substances......................................10
7.6 Testing by Landlord...................................................10
ARTICLE 8
REPAIRS AND MAINTENANCE.........................11
8.1 Landlord's Responsibilities...........................................11
8.2 Tenant's Responsibilities.............................................11
8.3 HVAC; Windows.........................................................12
8.4 Standards for Repairs.................................................12
8.5 Tenant's Failure to Perform...........................................12
ARTICLE 9
ALTERATIONS...............................12
9.1 Landlord's Consent....................................................12
9.2 Requirements for Commencement of Alterations..........................13
9.3 Payment for Alterations...............................................13
9.4 Ownership of Alterations..............................................13
9.5 Required Alterations..................................................14
ARTICLE 10
TRADE FIXTURES..............................14
10.1 Tenant's Trade Fixtures...............................................14
10.2 Abandonment of Trade Fixtures.........................................14
ARTICLE 11
INSURANCE................................14
11.1 Tenant's Insurance....................................................14
11.1.2 Landlord's Insurance..................................................15
11.2 Tenant's Payment of Increases.........................................15
11.3 Waiver of Subrogation.................................................15
- ii -
<PAGE>
ARTICLE 12
DAMAGE AND DESTRUCTION..........................15
12.1 Uninsured Casualty....................................................15
12.2 Insured Casualty......................................................16
12.3 Substantial Damage....................................................16
12.4 Abatement of Base Rent................................................16
12.5 No Right of Offset....................................................16
12.6 Tenant's Leasehold Improvements.......................................16
ARTICLE 13
CONDEMNATION...............................17
13.1 Condemnation..........................................................17
ARTICLE 14
ASSIGNMENT AND SUBLETTING........................17
14.1 Landlord's Consent....................................................17
14.2 Landlord's Costs......................................................18
14.3 Evidence of Assignment................................................18
14.4 Effect of Tenant's Assignment.........................................18
14.5 Procedure to Assign...................................................18
14.6 Conditions to Landlord's Consent......................................19
14.7 Landlord's Discretion.................................................19
14.8 Tenant Remains Liable.................................................19
14.9 Attornment............................................................19
14.10 Binding on Assignee...................................................19
14.11 No Further Assignment.................................................19
14.12 Effect of Assignment on Default.......................................19
ARTICLE 15
INDEMNITY................................19
15.1 Tenant's Indemnification of Landlord..................................19
15.2 Exculpation of Landlord...............................................20
ARTICLE 16
DEFAULT.................................20
16.1 Event of Default......................................................20
- iii -
<PAGE>
ARTICLE 17
REMEDIES.................................21
17.1 Landlord's Remedies...................................................21
17.2 Termination of Lease..................................................22
17.3 Revenues from Reletting...............................................22
17.4 Landlord's Right to Cure..............................................22
17.5 No Defense to Action..................................................22
17.6 Rights Not Exclusive..................................................23
17.7 Default by Landlord...................................................23
ARTICLE 18
LATE CHARGES AND INTEREST........................23
18.1 Late Charges..........................................................23
18.2 Interest..............................................................23
ARTICLE 19
SUBORDINATION; TRANSFER BY LANDLORD...................24
19.1 Subordination.........................................................24
19.2 Attornment............................................................24
19.3 Transfer by Landlord..................................................24
ARTICLE 20
ESTOPPEL CERTIFICATES..........................24
20.1 Estoppel Certificates.................................................24
20.2 Failure to Deliver....................................................25
20.3 Guarantor's Financial Statements......................................25
ARTICLE 21
MISCELLANEOUS..............................25
21.1 Severability..........................................................25
21.2 Time of Essence.......................................................25
21.3 Additional Rent.......................................................25
21.4 Entire Agreement......................................................25
21.5 Notices...............................................................26
21.6 Waivers...............................................................26
21.7 No Recording..........................................................26
21.8 Holding Over..........................................................26
21.9 Cumulative Remedies...................................................26
21.10 Covenants and Conditions..............................................26
21.11 Binding Effect........................................................27
- iv -
<PAGE>
21.12 Attorneys' Fees.......................................................27
21.13 Rights Reserved by Landlord...........................................27
21.14 Signs.................................................................27
21.15 No Merger.............................................................27
21.16 Security Measures.....................................................28
21.17 Easements.............................................................28
21.18 Authority.............................................................28
21.19 Governing Law.........................................................28
21.20 Counterparts..........................................................28
21.21 No Offer..............................................................28
21.22 Memorandum of Lease...................................................28
- v -
<PAGE>
3
LEASE
This Lease (the "Lease") is entered into as of July 1, 1996 between YERCAF
N.V., a Delaware corporation ("Landlord") and GLENAYRE ELECTRONICS, INC., a
Colorado corporation ("Tenant").
RECITALS
A. Landlord desires to lease to Tenant and Tenant desires to lease from
Landlord the premises (including all improvements thereon) constituting the
approximately 45,709 square foot two-story building and the land located at 1196
Borregas Avenue, Sunnyvale, California (the "Premises"), as more particularly
described on Exhibit A attached hereto and incorporated herein.
B. Landlord and Tenant desire to set forth the terms and conditions
pursuant to which Tenant shall lease and occupy the Premises.
C. Tenant's corporate parent, Glenayre Technologies, Inc., a Delaware
corporation ("Guarantor") has agreed to guarantee the performance of Tenant's
obligations hereunder.
NOW THEREFORE, in consideration of the Premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Landlord and Tenant hereby agree as follows:
ARTICLE 1
DEMISE, DELIVERY OF POSSESSION AND DEFINITIONS
1.1 Demise. Landlord leases to Tenant and Tenant leases from Landlord the
Premises for the term, at the rental, and upon all other terms, covenants, and
conditions in this Lease. If Tenant disagrees with the rentable square footage
of the Premises set forth in Recital A, then, upon Tenant's request made no
later than fifteen (15) days after execution of this Lease, Landlord's architect
shall calculate and certify in writing to Landlord and Tenant the rentable area
of the Premises. If Tenant disagrees with the determination of the rentable area
of the premises as calculated by the architect, Tenant shall provide Landlord
with written notice of Tenant's disapproval thereof within fifteen (15) days
after the date on which Tenant receives the architect's calculation. If the
architect determines that the rentable area of the Premises is different from
45,709 square feet, then all Rent that is based thereon (and the Basic Allowance
and the Additional Allowance, as those terms are defined in the Work Letter
Agreement) shall be adjusted in accordance with that determination.
1.2 Delivery of Possession. Landlord shall deliver possession of the
Premises to Tenant in the condition required by Section 8.1, and Tenant shall
accept possession of the
<PAGE>
4
Premises subject to all applicable laws, ordinances, and regulations governing
and regulating the use of the Premises, and any recorded covenants or
restrictions.
1.3 Definitions. As used in this Lease the following terms shall have the
following meanings.
(a) "Alterations" is defined in Section 9.1.
(b) "Base Rent" is defined in Section 4.1.
(c) "Commencement Date" is the later of (i) July 1, 1996, and (ii)
substantial completion of the Tenant Improvements, as defined in Section 3
of the Work Letter Agreement, attached hereto as Exhibit B and incorporated
herein.
(d) "Environmental Laws" means all federal, state, local, or municipal
laws, rules, orders, regulations, statutes, ordinances, codes, decrees, or
requirements of any government authority regulating, relating to, or
imposing liability or standards of conduct concerning any Hazardous
Substance (as hereinafter defined), or pertaining to occupational health or
industrial hygiene, occupational or environmental conditions on, under, or
about the Property, as now or may at any later time be in effect, including
without limitation, the Comprehensive Environmental Response, Compensation
and Liability Act of 1980 (CERCLA) [42 USCS ss.ss. 9601 et seq.]; the
Resource Conservation and Recovery Act of 1976 (RCRA) [42 USCS ss.ss. 6901
et seq.]; the Clean Water act, also known as the Federal Water Pollution
control Act (FWPCA) [33 USCS ss.ss. 1251 et seq.]; the Toxic Substances
Control Act (TSCA) [15 USCS ss.ss. 2601 et seq.]; the hazardous Materials
Transportation Act (HMTA) [49 USCS ss.ss. 1801 et seq.]; the Occupational
Safety and Health Act [29 USCS ss.ss. 655 and 657]; the California
Underground Storage of Hazardous Substances Act [H&SC ss.ss. 25280 et
seq.]; the California Underground Storage of Hazardous Substances Act [H&SC
ss.ss. 25280 et seq.]; the California Hazardous Substances Account Act
[H&SC ss.ss. 25380 et seq.]; the California Hazardous Waste Control Act
[H&SC ss.ss. 25180 et seq.]; the California Safe Drinking Water Toxic
enforcement Act [H&SC ss.ss. 24249 et seq.]; the Porter-Cologne Water
Quality Act [Wat C ss.ss. 13000 et seq.] equal with any amendment of or
regulations promulgated under the statutes cited above, and any other
federal, state, or local law, statute, ordinance, or regulation now in
effect or later enacted that pertains to occupational health or industrial
hygiene, or the regulation or protection of the environment, including
ambient air, soil, soil vapor, groundwater, surface water, or land use.
(e) "Event of Default" is defined in Section 16.1
(f) "Extended Term" is defined in Section 3.2.
(g) "Hazardous Substances" includes without limitation any substance:
(i) the presence of which requires investigation or remediation under any
Environmental Law; (ii) which is or becomes defined as a "hazardous waste,"
"hazardous substance," pollutant
<PAGE>
5
or contaminant under any Environmental Law; (iii) which is toxic,
explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic or otherwise hazardous and is or becomes regulated by any
governmental authority, agency, department, commission, board, agency or
instrumentality of the United States, the State of California or any
political subdivision thereof; (iv) which contains gasoline, diesel fuel or
other petroleum hydrocarbons; (v) which contains polychlorinated biphenyls,
asbestos or urea formaldehyde foam insulation; or (vi) radon gas.
(h) "Initial Term" is defined in Section 3.1.
(i) "Landlord's Parties" shall mean Landlord's officers, directors,
partners, members, employees, agents and contractors.
(j) "Law" shall mean any constitution, statute, ordinance, regulation,
rule, judicial decision, administrative order, or other requirement of any
governmental entity.
(k) "Liabilities" shall mean any and all liabilities, losses, claims,
costs, expenses, damages, injuries, penalties, fines, judgments and court
costs (including without limitation, attorneys' fees and costs whether or
not suit is commenced or judgment is entered).
(l) "Option Notice" is defined in Section 3.2.
(m) "Option Rent" is defined in Section 3.2.
(n) "Potential Default" is defined in Section 3.2.
(o) "Property Taxes" is defined in Section 5.2.
(p) "Security Deposit" is defined in Section 6.1.
(q) "Tenant Delays" is defined in Section 3 of the Work Letter
Agreement.
(r) "Tenant's Expenses" is defined in Section 5.1.
(s) "Tenant's Improvements" is defined in Section 1(a) of the Work
Letter Agreement.
(t) "Termination Date" is defined in Section 3.5.
(u) "Termination Fee" is defined in Section 3.5.
(v) "Termination Notice" is defined in Section 3.5.
(w) "Trade Fixtures" is defined in Section 10.1.
<PAGE>
6
ARTICLE 2
USE OF PREMISES
2.1 Permitted Uses. The Premises shall be used by Tenant or any subsidiary
or affiliate thereof (including, without limitation, Western Multiplex
Corporation) for general office and light assembly purposes and other legally
permitted uses incidental and ancillary thereto (including the use of
approximately 5,000 square feet on the first floor of the premises for
warehouse, shipping and receiving), or as otherwise approved by landlord in
writing (which consent shall not be unreasonably withheld or delayed) and for no
other purpose. Tenant shall insure that its use of the Premises complies with
Law and any covenants, conditions or restrictions applicable to the Premises.
2.2 Prohibited Uses. i. Tenant shall not do or permit any act that is
likely to cause any structural damages to the Premises.
(a) Tenant shall not operate or permit the operation of any equipment or
machinery on the Premises that is likely to (i) materially damage the Premises,
(ii) impair the efficient operation of the Premises' heating, ventilation, or
air conditioning system, (iii) block or otherwise impede the operation of the
Premises' sprinkler system, (iv) overload or otherwise place an undue strain on
the Premises' electrical and mechanical systems, or (v) damage, overload, or
corrode the Premises' sanitary sewer system.
(b) Tenant shall not install or attach anything in the Premises in excess
of the load limits established for the Premises and disclosed to Tenant. Tenant
shall contain and dispose of all dust, fumes, or waste products generated by
Tenant's use of the Premises so as to avoid (i) unreasonable fire or health
hazards, (ii) damage to the Premises, and (iii) any violation of any Law.
2.3 Compliance with Laws.
(a) Except as may be approved by Landlord in advance and in writing, Tenant
shall not change the exterior of the Premises or install any equipment,
machinery, or antennas on or make any penetrations of the exterior or roof of
the Premises. If Tenant desires to install an antenna atop the Premises, Tenant
shall provide Landlord at least thirty (30) days' advance written notice of its
intention to install an antenna, together with detailed plans and specifications
therefor, and such installation shall require Landlord's approval, which shall
not be unreasonably withheld. Tenant shall, upon Landlord's request, execute an
agreement pertaining to the installation, maintenance, repair and removal
thereof in form and substance acceptable to Landlord. Tenant shall not commit
any waste in or around the Premises and shall keep the Premises in a neat,
clean, attractive and orderly condition, free of any nuisances. Tenant shall use
and maintain only standard window coverings, as approved by Landlord, to cover
all windows in the Premises. Tenant shall not conduct on any portion of the
Premises any sale of any kind, including but not limited to any public or
private auction, going out-of-business sale, distress sale, or other liquidation
sale.
<PAGE>
7
(b) As provided in Section 8.1, Landlord shall deliver the Premises in
compliance with all Laws, recorded covenants and restrictions and requirements
of any fire insurance or rating bureaus. Tenant shall use the Premises in
compliance with all Laws, recorded covenants and restrictions, and requirements
of any fire insurance underwriters or rating bureaus, now or later in effect.
ARTICLE 3
LEASE TERM
3.1 Initial Term. The initial term of this Lease shall be for ten (10) (the
"Initial Term") commencing on the Commencement Date, unless sooner terminated
according to this Lease.
3.2 Option to Extend. Tenant shall have the option to extend the term of
this Lease for one (1) period of five (5) years following the expiration of the
Initial Term (the "Extended Term") on all of the terms and conditions in this
Lease, except that during that Extended Term, Tenant shall not have the further
option to extend the term described in this Section and the Base Rent during the
Extended Term shall be equal to the monthly rent, including all escalations, at
which, as of the commencement date of the Extended Term, landlords are offering
for lease non-sublease, non-encumbered, non-equity space comparable in size and
location to the Premises for terms of five (5) years, as reasonably determined
by Landlord (the "Option Rent'); provided, however, that in no event shall the
Option Rent be less than the Base Rent, as escalated pursuant to the terms of
this Lease, due and payable during the last month of the Initial Term. To
exercise this option, Tenant must give Landlord written notice of exercise of
the option (the "Option Notice") no earlier than nine (9) months and no later
than six (6) months prior to the expiration of the Initial Term. However, if, as
of Landlord's receipt of the Option Notice, Tenant is in default under this
Lease, or has committed or failed to perform acts that with the giving of notice
or the lapse of time would constitute a default under this Lease (a "Potential
Default"), the Option Notice shall, at Landlord's election, be ineffective. If
after giving the Option Notice, Tenant is in default under this Lease, or if a
Potential Default has occurred, and that default or Potential Default remains
uncured as of the expiration of the Initial term, this Lease shall, at the
election of Landlord, terminate as of the expiration of the Initial Term. Tenant
shall have no right to extend the term of this Lease beyond the additional term
set forth above.
3.3 Delivery of Premises. If Landlord fails to deliver possession of the
Premises to tenant by the Commencement Date, Landlord shall not be liable for
any damages resulting from that failure, nor shall that failure cause a
termination of this Lease or Tenant's obligations under this Lease, nor shall
that failure extend the term of this Lease; provided, however, that if Landlord
does not deliver the Premises on or before November 1, 1996, and such delay is
not due to any Tenant Delay, as defined in the work letter agreement attached
hereto as Exhibit B or other cause beyond Landlord's control (and, for this
purpose, failure by Tenant to execute and deliver to Landlord this Lease on or
before July 8, 1996, shall be deemed a Tenant Delay), then Tenant may terminate
this Lease.
<PAGE>
8
3.4 Surrender of the Premises.
(a) Condition upon Surrender. Upon the expiration or earlier termination of
this Lease, Tenant shall surrender the Premises to Landlord broom clean, with
all equipment in good operating condition and with the Premises in its condition
existing as of the date hereof, ordinary wear and tear excepted. The phrase
"ordinary wear and tear" means wear which manifests itself solely through the
passage of time and ordinary use. Items which are not deemed "ordinary wear and
tear" shall include, but not be limited to, the following items, which items
shall be Tenant's obligation to repair or correct (i) material damage to or
defacement of portions of any walls, partitions, woodwork, plaster or surface
finishes or any other portion of the Premises from any cause (including, without
limitation, from nails or screws); (ii) material damage to the flooring
(including stains, marks or soiling); (iii) material damage to the Premises from
any cause except for any casualty not caused by Tenant or Tenant's agents; and
(iv) any other materially damaged or non-functioning improvements within the
Premises, such as light fixtures, electrical outlets, telephone jacks, door
knobs and ceiling panels.
(b) Removal of Alterations. Tenant shall remove from the Premises all of
Tenant's Alterations and Trade Fixtures required to be removed pursuant to this
Lease and all Tenant's personal property, and shall repair any damage and
perform any restoration work caused by such removal. If Tenant is then in
default, then notwithstanding any other provision of this Lease and/or the terms
of any other previous notice given by Landlord to Tenant, Tenant shall only
remove such Alterations, Trade Fixtures and Tenant's personal property as are
specified in a written notice from Landlord to Tenant. If Tenant fails to remove
such Alterations, Trade Fixtures and Tenant's personal property on or before the
termination of this Lease (or on any such earlier date that Tenant abandons or
surrenders the Premises), Landlord may retain such property and, at Landlord's
option, (i) apply it toward the satisfaction of Tenant's obligations under this
Lease pursuant to Landlord's security interest in such property as set forth in
this Lease, and all rights of Tenant with respect to such property shall cease,
or (ii) place all or any portion of such property in public storage for Tenant's
account. Tenant shall be liable to Landlord for costs of removal of any such
Alterations and Tenant's personal property and storage and transportation costs
of same, and the cost of repairing and restoring the Premises, together with
interest at the rate of ten percent (10%) per annum from the date of expenditure
by Landlord.
(c) Indemnification of Landlord. If the Premises are not surrendered to
Landlord in accordance with the terms of this Section, then Tenant shall
indemnify, defend and hold harmless Landlord and Landlord's Parties against all
Liabilities resulting from Tenant's default and/or delay in so surrendering the
Premises, including, without limitation, any claims made by any succeeding
tenant, losses to Landlord due to lost opportunities to lease to succeeding
tenants, and attorneys' fees and costs.
3.5 Early Termination. At the end of the eighty-fourth (84th) month of the
Initial Term (the "Termination Date"), Tenant may elect to cancel the Lease
provided that Tenant delivers at least six (6) months' prior written notice
thereof to Landlord (the "Termination Notice"), which Termination Notice if so
given shall be conditionally effective as of the
<PAGE>
9
Termination Date; provided, however, that Tenant shall pay Landlord a
termination fee (the "Termination Fee") equal to the following: (a) the amount
of the Basic Allowance and the Additional Allowance that has not yet been
amortized as of the Termination Date; and (b) the amount of leasing commissions
incurred by Landlord in connection with this Lease that has not yet been
amortized as of the Termination Date. Tenant acknowledges that if Tenant so
elects to terminate this Lease pursuant to this Section, Landlord will suffer
damages due to the fact that Landlord will have incurred expenses based on the
full term of this Lease and Landlord will lose the benefit of the rentals
provided for the balance of the Initial Term. The Termination Fee shall
constitute compensation for such damages and payment for Tenant's privilege of
terminating the Lease. The Termination Fee shall be made by certified or
cashier's check and delivered to Landlord with the Termination Notice, and the
Termination Notice shall be of no force or effect unless it is accompanied by
the Termination Fee.
ARTICLE 4
BASE RENT
4.1 Base Rent. Commencing on the Commencement Date and continuing
thereafter; on the first day of each month until the end of the terms of this
Lease, Tenant shall pay to Landlord, in advance, base rent in the amount set
forth below for the following periods (the "Base Rent"), all without offset or
reduction, except as otherwise provided herein. Tenant shall pay Landlord, upon
execution of this Lease, an amount equal to Ninety-One Thousand Four Hundred
Eighteen Dollars ($91,418.00), representing the Base Rent for the first month of
the Lease Term and the Security Deposit.
<TABLE>
<CAPTION>
Period (Lease Years) Base Rent (Monthly)
-------------------- -------------------
<S> <C> <C>
0-5 $45,709.00
6-10 $52,565.35
</TABLE>
Rent shall be payable in lawful money of the United States to Landlord at
the address stated in this Lease or to any other address that Landlord may
designate from time to time.
4.2 Additional Rent. In the event that Landlord contributes the Additional
Allowance pursuant to Section 2(b) of the work Letter Agreement, then Tenant
shall repay the Additional Allowance in monthly installments together with the
Base Rent. Such payments shall be calculated as set forth in Section 2(b) of the
Work Letter Agreement and shall be deemed "additional rent" for purposes of this
Lease.
ARTICLE 5
TENANT'S
5.1 Tenant's Expenses. Tenant shall promptly pay, as additional rent, as
they become due, all charges for water, gas, heat, light, power, telephone,
garbage and trash removal and other utilities and services supplied to the
Premises (including but not limited to any
<PAGE>
10
connection or hook-up fees beyond building standard connections and hookups for
water, sewer and electricity, and any penalties for discontinued or interrupted
service), together with any taxes thereon, and all other reasonable costs
incurred in connection with the operation, management, maintenance and repair of
the Premises ("Tenant's Expenses"). Tenant's Expenses shall include, limitation,
the following:
(a) all costs and expenses for the following (which may be subject to
amortization in accordance with Section 8.2): (i) the maintenance, repair,
operation, and replacement of the Premises' hearing, ventilation or air
conditioning systems; (ii) the maintenance, repair, cleaning, resurfacing
or painting, as appropriate, of the premises's roof and walls; (iii) the
maintenance of all landscaping in the Premise, including the maintenance of
irrigation systems, the re-planting (as necessary) and maintenance of
shrubs, trees, flowering plants, and ground cover; (iv) the compliance with
all Laws enacted or implemented after the Commencement Date; (v) the
installation, repair, and maintenance of all light fixtures and signs
located in the Premises; (vi) the provision of security to the Premises;
(vii) the maintenance, repair, cleaning, painting, and resurfacing of all
parking areas, roadways, sidewalks, walkways, driveways, striping, fences,
and gates contained in the Premises; (viii) the maintenance and repair of
all the prevention and detection systems, including smoke detectors and
sprinkler systems; and
(b) Property Taxes as described in Section 5.2;
(c) the cost of any insurance maintained by Landlord with respect to
the premises;
(d) the amount of any uninsured loss resulting from damage to the
Premises (unless uninsured due to Landlord's failure to maintain insurance
as required by this Lease); and
(e) a management/administrative fee equal to Five Hundred Dollars
($500.00) per month.
Commencing with the Commencement Date, Tenant shall pay an amount reasonably
estimated by Landlord to be sufficient to pay Tenant's Expenses on a monthly
basis. The foregoing estimated monthly payment may be adjusted by Landlord at
the end of any calendar quarter, on the basis of Landlord's experience and
anticipated costs. Within one hundred twenty (120) days following the end of the
calendar year during the term, Landlord shall endeavor to give Tenant a
statement showing the total of Tenant's Expenses incurred for the prior calendar
year. The first and last such statements during the term shall be prorated from
the Commencement Date and the expiration of the Term or earlier termination of
this Lease. In the event the total of the monthly payments which Tenant has made
for the prior calendar year shall be less than the actual amount of Tenant's
Expenses incurred, then Tenant shall pay the difference to Landlord within
thirty (30) days after receipt of such statement from Landlord. In the event the
total of the monthly payments which Tenant has made for the prior calendar year
shall be more than the actual Tenant's Expenses, then Tenant shall be entitled
to a credit in the amount of such excess against
<PAGE>
11
Tenant's monthly payment of Tenant's expenses next coming due during this Lease,
and the monthly amount to be paid by Tenant for the ensuing year for Tenant's
Expenses will be proportionately adjusted based on the prior year's actual
expenses and reasonable projections for the ensuing year.
5.2 Definition of Property Taxes. As used in this Lease, the term "Property
Taxes" shall mean any and all taxes, assessments, levies, and other charges of
any kind, general and special, foreseen and unforeseen (including all
installments of principal and interest required to pay any existing or future
general or special assessments, and any increases resulting from reassessments
made in connection with a change in ownership, new construction, or any other
cause), now or later imposed by any governmental or quasi-governmental authority
or special district having the power to tax or levy assessments, which are
levied or assessed against or with respect to the value of all or any portion of
the Premises (as now constructed or as may at any later time be constructed,
altered, or otherwise changed) or Landlord's interest in the Premises, the
fixtures, equipment, and other property of Landlord, real or personal, that are
part of and located on the Premises. If at any time during the term of this
Lease, the method of taxation or assessment of the Premises prevailing as of the
Commencement Date is altered so that in lieu of or in addition to any Property
Tax described above there shall be levied, assessed, or imposed by governmental
authority (whether because of a change in the method of taxation or assessment,
creation of a new tax or charge, or any other cause) an alternate or additional
tax or charge (a) on the value, use, or occupancy of the Premises or Landlord's
interest in the Premises, or (b) on or measured by the gross receipts, income or
rentals from the Premises, then any tax or charge, however designated, shall be
included within the meaning of the term Property Taxes for purposes of this
Lease. However, the term Property Taxes shall not include estate, inheritance,
transfer, gift, or franchise taxes of Landlord or the federal or state net
income tax imposed on Landlord's income from all sources.
ARTICLE 6
SECURITY DEPOSIT
6.1 Security Deposit. Tenant agrees to deposit with Landlord on the date of
this Lease the sum of Forty-Five Thousand Seven Hundred Nine Dollars ($45,709)
(the "Security Deposit"), which shall be held by Landlord, without interest, as
security for the performance of Tenant's covenants and obligations under this
Lease, it being expressly understood and agreed that the deposit is not an
advance rental deposit or a measure of the Landlord's damages in case or
Tenant's default. Upon the occurrence of any Event of Default by Tenant,
Landlord may, from time to time and without prejudice to any other remedy
provided by this Lease or by law, use and apply the Security Deposit to any
arrears of rent or other payments, damages or liability caused by the Event of
Default. Tenant shall pay to landlord on demand the amount that was applied in
order to restore the Security Deposit to the amount then required under this
Lease. Although the Security Deposit shall be deemed the property of Landlord,
any remaining balance of the Security Deposit shall promptly be returned by
Landlord to Tenant at the time after termination of this Lease that all of
Tenant's obligations under this Lease have been fulfilled. Landlord shall not be
required to keep the Security Deposit separate from the general accounts of
Landlord.
<PAGE>
12
ARTICLE 7
HAZARDOUS SUBSTANCES
7.1 Compliance with Law. Tenant agrees that any and all handling,
transportation, storage, treatment, disposal, or use of Hazardous Substances in
or about the Premises by Tenant, its employees, agents, contractors, invitees
and any others controlled by Tenant or for whom Tenant is otherwise responsible
shall comply with all applicable Environmental Laws.
7.2 Tenant's Indemnification. Tenant agrees to indemnify, defend and hold
harmless Landlord from any Liabilities, remediation costs, investigation costs,
or other expenses resulting from or arising from or arising out of the use,
storage, treatment, transportation, release, or disposal of Hazardous Substances
in, on, under or about the Premises.
7.3 Tenant's Responsibilities. Tenant shall comply with all Environmental
Laws in connection with its use of the Premises. If any Hazardous Substances
come to be located on or about the Premises or any other property or any water
or soil on, around, about, or beneath the Premises or any other property, Tenant
shall promptly take all action necessary to investigate, remove and remedy that
contamination to the extent required by the governmental authority enforcing the
Environmental Laws.
7.4 Notification of Hazardous Substances. Tenant agrees to promptly notify
Landlord of any communication received from any governmental entity concerning
Hazardous Substances or the violation of Environmental Laws that relate to the
Premises.
7.5 Handling of Hazardous Substances. Tenant shall not use, handle, store,
transport, generate, release, or dispose of any Hazardous Substances in, on,
under or about the Premises, except that Tenant may use small quantities of
common chemicals which are common office products such as office copier toner
and cleaning fluids in order to conduct business at the Premises, which shall be
stored and used safely and in compliance with all Laws. At any time during the
term of this Lease, Tenant shall within ten (10) days after written request from
Landlord, disclose in writing all Hazardous Substances other than those
permitted above in this Section 7.5 that are being used by Tenant on the
Premises, the nature of the use, and the manner of storage and disposal.
7.6 Testing by Landlord. At any time and upon prior written notice to
Tenant, Landlord may require testing wells or other apparatus to be placed or
drilled on the Premises and may require the ground water to be tested to detect
the presence of Hazardous Substances by the use of any tests that are then
customarily used for those purposes. The reasonable cost of these tests and of
the installation, maintenance, repair, and replacement of the wells shall be
paid by the Tenant if the tests disclose the existence of facts that give rise
to liability of Tenant with respect to Hazardous Substances pursuant to this
Article.
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ARTICLE 8
REPAIRS AND MAINTENANCE
8.1 Landlord's Responsibilities. Landlord shall deliver the Premises at the
commencement of this Lease in compliance with all applicable laws (including
then applicable building codes), including the then applicable provisions of
Title III of the Americans with Disabilities Act, and Tenant shall be
responsible for any compliance necessitated by Tenant's Use, Tenant's
Improvements, and any changes in Tenant's use and any subsequent improvements,
installations or alterations made by or for Tenant. Landlord shall have no
responsibility for any repair and maintenance costs in connection with the
Premises. Tenant expressly waives the benefits of any statute now or later in
effect that would otherwise give Tenant the right to make repairs at Landlord's
expense and deduct that cost from rent owing to Landlord. Landlord warrants that
the roof, exterior walls, structural support elements, and utility systems shall
be in good working order and repair at the Commencement Date, and Landlord shall
enforce for Tenant's benefit all warranties received by Landlord in connection
with the construction and/or installation thereof. Further, and notwithstanding
anything to the contrary set forth in this Lease, Landlord shall maintain and
repair the foundation, the structural portions of the exterior walls and the
structural components of the roof (provided that, as respects the roof, it shall
be Tenant's responsibility to maintain the roof membrane to guard against and
prevent leakage and deterioration). Landlord's maintenance and repair
obligations pursuant to this Section 8.1 shall include those that are
necessitated by the enactment of a new Law, unless such obligations arise from
or are triggered by one of the conditions set forth in Section 9.5.
8.2 Tenant's Responsibilities. Subject to the provisions of Section 8.1,
Tenant shall maintain in good order, condition, and repair and replace when
necessary each and every portion of the Premises including, without limitation,
the following: (a) all plumbing and sewage facilities in the Premises, including
but not limited to all plumbing fixtures, pipes, fittings, or other parts of the
plumbing system in the Premises; (b) all fixtures, interior walls, floors,
carpets, draperies, window coverings, and ceilings in the Premises; (c) the
non-structural components of the roof (including the roof membrane in a
water-tight condition) and exterior of the Premises; (d) all windows, doors,
entrances, and plate glass in the Premises; (e) all electrical facilities and
all equipment in the Premises, including all light fixtures, lamps, bulbs,
tubes, fans, vents, exhaust equipment, and systems; and (f) all heating, air
condition, ventilation or other equipment or utility facilities serving the
Premises, keeping them in good condition through regular inspection and
servicing; (g) any fire detection or extinguisher equipment in the Premises. If
Tenant properly repairs and maintains said systems and facilities (including
those items set forth in section 5.1(a)), but due to ordinary wear and tear or
the enactment of a new Law, subsequent to the Commencement Date but on or before
the expiration of this Lease, such system and/or facility (which shall include
those items set forth in Section 5.1(a)) must be replaced to keep it in good
working order and in compliance with such new Law, and the cost thereof would
exceed $7,500 for such item and otherwise be characterized as a capital
expenditure as determined in accordance with generally accepted accounting
principles, then Landlord shall pay for such item and the cost thereof shall be
amortized over its useful life as reasonably determined by Landlord with the
annual amount to amortized payable by Tenant during the term of this Lease as
part of Tenant's Expenses under Section 5.1.
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8.3 HVAC; Windows. Tenant shall maintain continuously throughout the term
of the lease a service contract for the maintenance of all hearing, air
conditioning, and ventilation equipment with a licensed repair and maintenance
contractor approved by Landlord, the contract shall provide for periodic
inspections and servicing of the hearing, air conditioning, and ventilation
equipment at least once every ninety (90) days during the term of the Lease.
Tenant will use its best efforts to cause its maintenance contractor to provide
to Tenant and Landlord a written inspection/service report describing the
condition of the equipment and any service or repair recommendations within
fifteen (15) days after each inspection. If Landlord reasonably suspects that
facilities are not being maintained, Landlord may elect at any time during the
term of the Lease to assume responsibility at Tenant's expense for the
maintenance, repair, and replacement of the heating, air conditioning, and
ventilation equipment that serves the Premises.
Tenant shall maintain continuously throughout the term of the Lease a
service contract for the washing of all windows, both interior and exterior
surfaces, at the Premises at commercially reasonable times.
8.4 Standards for Repairs. All repairs and replacements required of Tenant
shall be promptly made with new materials of like kind and qualify. If the work
affects the mechanical or structural parts or exterior appearances of the
Premises or if the estimated cost of any item of repair or replacement is in
excess of Five Thousand Dollars ($5,000), Tenant shall first obtain Landlord's
written approval of the scope of the work, the plans for the work, the materials
to be used, and the contractor hired to perform the work. Upon completion of any
work performed by or for Tenant, Tenant shall deliver as-built plans to
Landlord.
8.5 Tenant's Failure to Perform. If Tenant fails to perform Tenant's
obligations under this Section or under any other section of this Lease, and
does not commence performance five (5) days' after written notice to Tenant and
thereafter diligently and continuously prosecute such cure to completion, in any
case completing such cure within the cure period specified in Section 16.1(b),
except in an emergency when no notice shall be required, Landlord may, in
addition and without prejudice any other of Landlord's rights or remedies, enter
the Premises, perform the obligations on Tenant's behalf, and recover the
reasonable cost of performance, together with interest at the maximum rate then
allowed by law, as additional rent payable by Tenant with the next installment
of Base Rent.
ARTICLE 9
ALTERATIONS
9.1 Landlord's Consent. Tenant shall not construct any alterations,
improvements, or additions or otherwise alter the Premises (collectively,
"Alternations") without Landlord's prior written consent; provided, however,
that Tenant shall be entitled, without Landlord's prior consent, to make
Alterations (i) that do not affect the structural or mechanical components or
systems, the exterior sections, or water-tight nature of the Premises, and (ii)
the reasonably estimated cost of which does not exceed Twenty-Five Thousand
Dollars ($25,000). If Landlord's approval for any Alterations is required.
Tenant shall not undertake the Alterations
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until Landlord has given written consent to the plans and specifications, and
the Alterations shall be constructed in compliance with plans and specifications
approved by a licensed contractor and by Landlord. All Alterations shall be
constructed by a licensed contractor in accordance with all Laws using new
material of good quality. Upon completion of any work performed by or for
Tenant, Tenant shall deliver as-built plans to Landlord.
9.2 Requirements for Commencement of Alterations. Tenant shall not commence
construction of any Alterations until: (a) all required governmental approvals
and permits have been obtained, (b) all requirements regarding insurance imposed
by this Lease have been satisfied, and (c) Tenant has given Landlord at least
ten (10) days' prior written notice of Tenant's intention to commence
construction.
9.3 Payment for Alterations. Tenant shall pay, when due, all claims for
labor or materials furnished or alleged to have been furnished in connection
with the Alterations that are or may become mechanics' or materialmen's liens
against the Premises or any interest therein. Tenant shall have the right to, in
good faith, contest the validity of any lien, claim, or demand, provided that
Tenant shall, at Tenant's sole expense, defend Landlord against the lien, claim,
or demand, and, upon the request of Landlord, Tenant shall furnish to Landlord a
surety bond or other commercially reasonable assurance reasonably acceptable to
Landlord, in an amount equal to the contested lien, claim, or demand
indemnifying Landlord against liability and holding the Premises free from the
effect of the lien, claim, or demand. In addition, Landlord may require Tenant
to pay Landlord's attorneys' fees and costs in connection with the defense of
any lien, claim, or demand. Tenant shall pay and satisfy any adverse judgment
that may be rendered to enforce the lien, claim, or demand against the Landlord
or the Premises.
9.4 Ownership of Alterations. All Alterations shall be and remain the
property of Tenant during the term of this Lease but shall not be altered or
removed from the Premises. At the expiration or sooner termination of the term
of this Lease, all Alterations shall become the property of Landlord, and
Landlord shall have no obligation to reimburse Tenant for any portion of the
value or cost. Notwithstanding the foregoing, if Tenant gives notice to Landlord
gives notice to Landlord at the time of the installation of a custom trade
fixture that Tenant desires to remove such fixture at the end of the term, then
Tenant shall be permitted to remove such fixture provided that it can and does
so without damage to the Premises, and, in any event, repairs any damage
occasioned by the installation or removal of such fixture and restores the
Premises to its condition existing prior to such installation. However, Landlord
shall have the right to require Tenant to remove any Alterations; in that case,
Tenant shall remove the Alterations prior to the expiration or sooner
termination of the term of this Lease. Notwithstanding the foregoing, Tenant
shall not be obligated to remove any Alterations with respect to which (a)
Tenant was required or selected to obtain the consent of Landlord; (b) at the
time Tenant requested the consent of Landlord, Tenant requested that Landlord
inform Tenant of whether Landlord would require Tenant to remove the Alteration
at the expiration of the term of this Lease; and (c) at the time Landlord
granted consent, Landlord notified Tenant that Landlord would not require the
removal of the Alteration at the expiration of the term of this Lease.
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9.5 Required Alterations. Except as provided in Section 8.1, Tenant shall
make all alterations, additions, or charges of any sort to the Premises that are
required by any Law and result from: (a) Tenant's use or change of use of the
Premises; (b) Tenant's application for any permit or governmental approval; or
(c) Tenant's construction or installation of any Alterations.
ARTICLE 10
TRADE FIXTURES
10.1 Tenant's Trade Fixtures. Tenant shall have the right, at any time and
from time to time during the Term and any renewal or extension, at Tenant's sole
cost and expense, to install and affix in, to, or on the Premises items for use
in Tenant's trade or business that Tenant, in Tenant's reasonable discretion,
deems advisable (collectively, "Trade Fixtures"). Trade Fixtures or any other
equipment installed in the Premises by Tenant shall remain the property of
Tenant and may be removed at the expiration of the Term or any extension,
provided that any damage to the Premises caused by the removal of Trade Fixtures
or equipment shall be repaired by Tenant, and further provided that Landlord
shall have the right to keep any Trade Fixtures or equipment that Tenant
otherwise elects to abandon.
10.2 Abandonment of Trade Fixtures. Any Trade Fixtures that are not removed
from the Premises by Tenant within thirty (30) days after the Termination Date
shall be deemed abandoned by Tenant and shall automatically become the property
of Landlord as the owner of the real property to which they are affixed and not
due to the lien provided to Landlord in Section 10.2.
ARTICLE 11
INSURANCE
11.1 Tenant's Insurance. Tenant shall, Tenant's expense, obtain and keep in
force during the term of this Lease:
(a) Commercial general liability insurance, including property damage,
against liability for bodily injury, personal injury, death, and damage to
property occurring on the Premises with combined single limit coverage of
at least Two Million Dollars ($2,000,000) per occurrence and a general
aggregate combined single limit of bodily injury and property damage
liability of at least Five Million Dollars ($5,000,000); that policy shall
include contractual liability, insuring Tenant's performance of
indemnification obligations contained in this Lease; and
(b) Fire and all risk property damage insurance, insuring any
Alterations and all of Tenant's equipment and Trade Fixtures located on the
Premises for full replacement cost.
(c) Where applicable, each policy of insurance required to be carried
by Tenant pursuant to this Section: (i) shall name Landlord and any other
parties in interest
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that Landlord reasonably designates as additional insureds; (ii) shall be
primary insurance that provides that the insurer shall be liable for the
full amount of the loss without the right of contribution from any other
insurance coverage of Landlord; (iii) shall be in a form satisfactory to
Landlord; (iv) shall be carried with companies reasonably acceptable to
Landlord; (v) shall provide that the policy shall not be subject to
cancellation, lapse, or change, except after at least thirty (30) days'
prior written notice to Landlord; (vi) shall not have a deductible in
excess of any amount reasonably approved by Landlord; (vii) shall contain a
cross liability endorsement; and (viii) shall contain a severability
clause.
(d) If Tenant has in full force a blanket policy of liability
insurance with the same coverage for the Premises as described in this
Section, that blanket insurance shall satisfy the requirements of this
Section, provided that the blanket policy specifically states the address
of the Premises as being covered with at least the policy amounts specified
herein for that location. A copy of each policy evidencing the insurance
required to be carried by Tenant pursuant to this Section or a certificate
of the insurer, certifying that the policy has been issued, which provides
the coverage required by this Section and which contains the specified
provisions, shall be delivered to Landlord prior to the time Tenant takes
possession of the Premises and upon renewal of those policies, not less
than thirty (30) days prior to the expiration of the term of the coverage.
11.1.2 Landlord's Insurance. Landlord shall maintain fire and all-risk
property damage insurance, with extended coverage and a commercially reasonable
deductible, in the amount of the full replacement cost of the Premises.
Landlord's insurance shall not be required to cover the property which Tenant is
obligated to insure hereunder. Landlord shall provide Tenant with a certificate
of insurance evidencing such coverage on an annual basis. Landlord's insurance
will include provision for notice to Tenant of any cancellation, non-renewal
and/or material reduction of coverage.
11.2 Tenant's Payment of Increases. Tenant shall pay any increase in
Landlord's property insurance over the amount of the premium immediately prior
to the commencement of the Term that is attributed by Landlord's insurance
carrier to the nature of Tenant's occupancy or any act or omission of Tenant.
11.3 Waiver of Subrogation. Tenant and Landlord each release the other and
waive the entire right of recovery against the other for any damage or liability
arising out of or incident to the perils insured against, whether due to the
negligence of Landlord, Tenant, or their respective employees, agents,
contractors, and invitees. Prior to obtaining the required policies of
insurance, Tenant and Landlord shall notify their respective insurance carriers
that the previous waiver of subrogation is in this Lease.
ARTICLE 12
DAMAGE AND DESTRUCTION
12.1 Uninsured Casualty. If the Premises are destroyed or damaged to the
extent of twenty percent (20%) or more of the then full replacement cost from a
cause not
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required to be insured against under either Landlord's or Tenant's casualty
insurance policy, Landlord shall have the right to terminate this Lease by
giving written notice of termination to Tenant within thirty (30) days after the
date of the damage or destruction, in which case this Lease shall terminate as
of the receipt by Tenant of Landlord's notice. If the Lease is not so
terminated, then Landlord shall diligently proceed to repair and restore the
Premises; provided that if Landlord undertakes such repair and restoration but
fails to substantially complete same within 150 days after the date of damage or
destruction, then Tenant shall have the right to terminate this Lease by written
notice to Landlord given within thirty (30) days of the expiration of such
150-day period.
12.2 Insured Casualty. If the Premises are destroyed or damaged to the
extent of twenty percent (20%) or more of the then full replacement cost from a
cause covered by either Tenant's or Landlord's casualty insurance, and that
damage or destruction may be repaired or restored within ninety (90) days after
commencement of repair or restoration, then Landlord shall proceed to repair and
restore the Premises. If Landlord reasonably determines that the Premises cannot
be repaired or restored within that period, then Landlord shall have the right
to terminate this Lease by written notice to Tenant given within thirty (30)
days after the date of damage or destruction; Tenant's obligation to pay rent
and other charges under this Lease shall terminate as of the date of the receipt
by Tenant of Landlord's notice.
12.3 Substantial Damage. If the Premises are damaged to the extent of fifty
percent (50%) or more of its replacement cost, and a contractor mutually
agreeable to Landlord and Tenant determines that the Premises cannot be repaired
or restored within 180 days after commencement of repair or restoration, then
Landlord or Tenant may elect to terminate this Lease by written notice to the
other given within thirty (30) days after the date of such determination, in
which case this Lease shall terminate as of the receipt of such notice.
12.4 Abatement of Base Rent. If, in any case that is the subject of this
Article 12, the Premises or any portion of the Premises is rendered unfit for
use and occupancy and this Lease is not terminated as provided above, a just
proportion of the Base Rent, in light of the nature and extent of the damage,
shall be abated until the Premises are restored by Landlord as provided above,
excluding any fixtures or items installed or paid for by Tenant that Tenant is
entitled or required to remove under this Lease.
12.5 No Right of Offset. Except as expressly provided in this Lease, damage
to or destruction of the Premises shall not terminate this Lease or result in
any abatement of rentals. Tenant waives any right of offset against Tenant's
rental obligations that may be provided by any statute or rule of law in
connection with Landlord's duties of repair and restoration under the provisions
of this Lease.
12.6 Tenant's Leasehold Improvements. Landlord shall not be responsible for
any loss, damage, or destruction to Tenant's leasehold improvements or to
fixtures, inventory, or other Tenant-owned improvements or property, unless
caused solely by the negligence or willful misconduct of Landlord.
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ARTICLE 13
CONDEMNATION
13.1 Condemnation. If any part of the Premises is condemned or otherwise
taken under the power of eminent domain or conveyed in lieu of condemnation, and
the condemnation or taking materially and adversely affects Tenant's occupancy
of the Premises, either party shall, at each party's option, have the right to
terminate this Lease; provided that Landlord shall not exercise such option to
terminate this Lease unless the taking or conveyance in lieu of condemnation
affects at least twenty percent (20%) of the value or area of the Premises. In
either event, except as set forth below in this paragraph, Landlord shall
receive any award that may be paid in connection with any condemnation or
taking, and Tenant shall have no claim or interest in any award, whether or not
the award or any part of it is attributable to the value of the unexpired term
of this Lease. If a part of the Premises is condemned or taken, and neither
party elects to terminate this Lease, but the Premises have been damaged as a
consequence, Landlord shall not be required to repair or restore any damage to
the Premises, provided that the Base Rent for the remainder of the term of this
Lease shall be proportionately reduced, based on the degree of interference with
Tenant's use of the Premises. If the Premises is temporarily condemned or taken,
this Lease shall be unaffected, and Tenant shall continue to pay all rent
payable under this Lease; provided, however, that in such case, Tenant shall be
entitled to receive that portion of any award that represents compensation for
its use or occupancy of the Premises. Notwithstanding anything to the contrary
set forth hereinabove, Tenant shall have the right to pursue a separate claim
for the diminution of the value of its leasehold estate so long as it can do so
without interfering or reducing any condemnation claim by Landlord.
ARTICLE 14
ASSIGNMENT AND SUBLETTING
14.1 Landlord's Consent. The terms and conditions in this Lease were
offered solely to Tenant as an inducement to lease the Premises for its use or
the use by any of its subsidiaries or affiliates, as permitted under the terms
of Section 2.1. Landlord would not necessarily lease the Premises to another
tenant on such favorable terms and conditions, it being understood that Landlord
is specifically relying on the identity of Tenant in agreeing to the terms and
conditions in this Lease. Tenant acknowledges that the lease terms and
conditions are for Tenant's benefit only so long as Tenant, or any of its
subsidiaries or affiliates, operates the business allowed by this Lease, and
that Tenant is not entering into this Lease for any other purpose, such as the
recognition of a leasehold value that it could later sell. It is understood and
agreed that any value, upon the early termination of Tenant's occupancy of the
Premises, shall revert to Landlord, either by termination of this Lease or as a
condition of assignment or subletting, as provided in this Section. But for
these reasons, Landlord would not enter into this Lease. Therefore, Tenant shall
not voluntarily, involuntarily, or by operation of laws, without the prior
written consent of Landlord, which consent shall not be unreasonably withheld or
delayed, (a) sublet all or any part of the Premises or allow it to be sublet,
occupied, or used by any person or entity other than Tenant; (b) assign Tenant's
interest in this Lease; (c) mortgage or encumber the Lease, or otherwise use the
Lease as a security device in any manner; or (d) amend or modify an assignment,
sublease, or other transfer that has been previously approved by Landlord.
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Notwithstanding the foregoing, Tenant may without the consent of Landlord, but
following at least fifteen (15) days advance written notice, assign this Lease
to a subsidiary of Tenant or affiliate under common ownership with Tenant
provided, however, that (x) no such assignment shall result in Tenant being
released or discharged from any obligation or liability under this Lease, (y)
the proposed Assignee agrees in writing to be bound by all of the terms and
conditions of this Lease in an instrument reasonably acceptable to Landlord, and
(z) the use proposed by the proposed Assignee is a permitted use under this
Lease.
Any action taken or proposed to be taken pursuant to this Section shall be
collectively referred to as an "Assignment," and any third party succeeding to
all or a portion of Tenant's interest under this Lease or proposed to succeed to
all or a portion of Tenant's interest under this Lease shall be referred to as
an Assignee.
14.2 Landlord's Costs. Tenant shall pay to Landlord, as additional rent,
all reasonable costs and attorney fees incurred by Landlord in connection with
the evaluation, processing, or documentation of any requested Assignment,
whether or not Landlord's consent is granted. Landlord's reasonable costs shall
include the reasonable cost of any review or investigation performed by Landlord
or consultant acting on behalf of Landlord of (a) any Hazardous Substances used,
stored, released, or disposed of by the proposed Assignee, or (b) violations of
any Environmental Law by the Tenant or the proposed Assignee.
14.3 Evidence of Assignment. Any Assignment approved by Landlord shall not
be effective until Tenant has delivered to Landlord an executed counterpart of
the document evidencing the Assignment that (a) is in form and substance
reasonably satisfactory to Landlord, and (b) contains the same terms and
conditions as stated in Tenant's notice given to Landlord pursuant to this
Section.
14.4 Effect of Tenant's Assignment. Except as otherwise expressly permitted
hereby, any attempted Assignment without Landlord's consent shall constitute an
Event of Default and shall be voidable at Landlord's option. Landlord's consent
to any one Assignment shall not constitute a waiver of the provisions of this
Article as to any subsequent Assignment or a consent to any subsequent
Assignment. No Assignment, even with the consent of Landlord, shall relieve
Tenant of the obligation to pay the rent and to perform all of the other
obligations to be performed by Tenant. The acceptance of rent by Landlord from,
any person shall not be deemed to be a waiver by Landlord of any provision of
this Lease, nor to be a consent to any Assignment.
14.5 Procedure to Assign. Except as otherwise expressly permitted hereby,
at least sixty (60) days before a proposed Assignment is to become effective,
Tenant shall give Landlord written notice of the proposed terms of the
Assignment and request Landlord's approval, which notice shall include the
following: (a) the name and legal composition of the Assignee; (b) a current
financial statement of the Assignee, financial statements of the Assignee
covering the preceding three (3) years, if they exist, and, if available, an
audited financial statement of the Assignee for a period ending not more than
one (1) year prior to the proposed effective date of the Assignment, all of
which are to be prepared in accordance with generally
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accepted accounting principles; (c) the nature of the Assignee's business to be
carried on in the Premises; (d) a statement of all consideration to be given on
account of the Assignment; and (e) any other information that Landlord requests.
14.6 Conditions to Landlord's Consent. Landlord's consent to a requested
Assignment shall not be unreasonably withheld, and shall be subject to the
payment to Landlord of one-half of all consideration paid or to be paid or to be
paid by the Assignee which exceeds the rent payable by Tenant under this Lease.
14.7 Landlord's Discretion. EXCEPT AS OTHERWISE EXPRESSLY PERMITTED HEREIN,
ANY ASSIGNMENT, SUBLETTING, OCCUPANCY, OR USE WITHOUT THE PRIOR WRITTEN CONSENT
OF LANDLORD, SHALL BE VOID AND SHALL CONSTITUTE AN EVENT OF DEFAULT UNDER THIS
LEASE. TENANT SPECIFICALLY UNDERSTANDS AND AGREES THAT AT ANY TIME AN EVENT OF
DEFAULT OCCURS AND IS CONTINUING, TENANT SHALL HAVE NO RIGHT TO ASSIGN TENANT'S
INTEREST IN THIS LEASE, AND LANDLORD SHALL HAVE NO OBLIGATION TO GIVE LANDLORD'S
APPROVAL UNDER THIS ARTICLE IF TENANT ATTEMPTS AN ASSIGNMENT OR SUBLETTING WHILE
IN DEFAULT.
14.8 Tenant Remains Liable. If an Event of Default occurs and is
continuing, Landlord may proceed directly against Tenant, any Assignee, any
guarantors or any other party responsible for the performance of this Lease,
without first exhausting Landlord's remedies against any other party responsible
to Landlord, or resorting to any security held by Landlord.
14.9 Attornment. If an Event of Default occurs and is continuing, Landlord
may require any subtenant to attorn to Landlord, in which event Landlord shall
undertake the obligations of Tenant under any sublease, provided, however, that
Landlord shall not be liable for any amounts paid by the subtenant to Tenant or
for any defaults by Tenant under the sublease.
14.10 Binding on Assignee. Every provision of this Article shall be binding
on any Assignee as if that Assignee were the tenant under this Lease.
14.11 No Further Assignment. No Assignee shall further assign or sublet the
Premises without Landlord's prior written consent.
14.12 Effect of Assignment on Default. Landlord's consent to any Assignment
shall not constitute an acknowledgement that no default exists under this Lease,
nor shall consent be deemed a waiver of any existing default, except as
otherwise stated by Landlord at the time.
ARTICLE 15
INDEMNITY
15.1 Tenant's Indemnification of Landlord. Tenant agrees to indemnify,
defend, and hold harmless Landlord and Landlord's Parties from Liabilities
arising by reason of any death, bodily injury, personal injury, or property
damage resulting from (a) any cause
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occurring in or about or resulting from an occurrence in or about the Premises
during the Lease Term (except if caused solely by Landlord's negligence or
willful misconduct), (b) the negligence or willful misconduct of Tenant or
Tenant's agents, employees, and contractors, wherever it occurs, or (c) an Event
of Tenant's Default. The provisions of this Section shall survive the expiration
or sooner termination of this Lease.
15.2 Exculpation of Landlord. Except as otherwise provided in this Lease,
Landlord shall not be liable to Tenant, nor shall Tenant be entitled to
terminate this Lease or to any abatement of rent for any damage to Tenant's
property or any injury to Tenant or any of Tenant's employees, agents, or
invitees, or loss to Tenant's business arising out of any cause (except if
caused solely by Landlord's negligence or willful misconduct), including, but
not limited to: (a) the failure, interruption, or installation of any heating,
air conditioning, or ventilation equipment; (b) the loss or interruption of any
utility service; (c) the failure to furnish or delay in furnishing any utilities
or services when the failure or delay is caused by fire or other casualty, the
elements, labor disputes, acts of God, or any other circumstance beyond the
control of Landlord; (d) the limitation, curtailment, rationing, or restriction
on the use of water or electricity, gas or any other form of utility; (e)
vandalism, malicious mischief, or forcible entry by unauthorized persons or the
criminal act of any person; or (f) seepage, flooding, or other penetration of
water into any portion of the Premises.
ARTICLE 16
DEFAULT
16.1 Event of Default. Each of the following shall constitute an event of
default under this Lease (each an "Event of Default"):
(a) Tenant's failure to make any payment required under this Lease
within five (5) days after written notice thereof from Landlord;
(b) The failure of Tenant to perform any of the covenants, conditions,
or provisions of this Lease to be performed by Tenant, other than those
requiring any payment to Landlord, where this failure continues for a
period of thirty (30) days after written notice from Landlord to Tenant.
However, if the nature of Tenant's failure requires more than thirty (30)
days for cure, Tenant shall not be deemed to be in default if Tenant
commences to cure within thirty (30) days after notice from Landlord and
thereafter diligently continues this cure to completion;
(c) Any of the following:
(i) The making by Tenant of any general arrangements or
assignments for the benefit of creditors;
(ii) Tenant's becoming a debtor as defined in 11 USCss.101 or any
successor statute, unless, in the case of a petition filed against
Tenant, it is dismissed within sixty (60) days after filing;
<PAGE>
23
(iii) The appointment of a trustee or receiver to take possession
of substantially all of Tenant's assets at the Premises or of Tenant's
interest in this Lease, where possession is not restored to Tenant
within sixty (60) days of this appointment; or
(iv) The attachment, execution, or other judicial seizure of
substantially all of Tenant's assets located at the Premises of or
Tenant's interest in this Lease, where this seizure is not discharged
within thirty (30) days after the seizure.
(d) Tenant's Assignment in violation of Article 14.
ARTICLE 17
REMEDIES
17.1 Landlord's Remedies. Upon the occurrence of an Event of Default,
Landlord, in addition to any other rights or remedies available to Landlord at
law or in equity, shall have the right to:
(a) terminate this Lease and all rights of Tenant by giving Tenant
written notice that this Lease is terminated, in which case Landlord may
recover from Tenant the sum of:
(i) the worth at the time of award of any unpaid rent that had
been earned at the time of termination;
(ii) the worth at the time of award of the amount by which (A)
the unpaid rent that would have been earned after termination until
the time of award exceeds (B) the amount of rental loss, if any, as
Tenant affirmatively proves could have been reasonable avoided;
(iii) the worth at the time of award of the amount by which (A)
the unpaid rent for the balance of the term after the time of award
exceeds (B) the amount of rental loss, if any, as Tenant affirmatively
proves could be reasonably avoided;
(iv) any other amount reasonably necessary to compensate Landlord
for all the detriment proximately caused by Tenant's failure to
perform Tenant's obligations or that, in the ordinary course of
things, would be likely to result therefrom; and
(v) all other amounts in addition to or in lieu of those
previously stated as may be permitted from time to time by California
law.
As used in clauses (i) and (ii) of this Section, the "worth at the
time of award" is computed by allowing interest at the rate of ten percent
(10%) per annum. As used in clause (iii) of this Section, the "worth at the
time of award" is computed by discounting that amount at the discount rate
of the Federal Reserve Bank of San Francisco at the time of award plus one
percent (1%). As used int his Section the term "rent" shall include Base
Rent, additional rent, and any other payments required by Tenant.
<PAGE>
24
(b) continue this Lease, and from time to time, without terminating
this Lease, either (i) recover all rent and other amounts payable as they
become due or (ii) relet the Premises or any part of the Premises on behalf
of Tenant for any term, at any rent, and pursuant to any other provisions
as Landlord deems advisable, all with the right, at Tenant's cost, to make
reasonably necessary alterations and repairs to the Premises.
(c) Upon the occurrence of an Event of Default, 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. Landlord
may cause property so removed from the Premises to be stored in a public
warehouse or elsewhere at the expense and for the account of Tenant.
17.2 Termination of Lease. No remedial actions, including the following
actions taken singly or in combination, shall be construed as an election by
Landlord to terminate this Lease unless Landlord has in fact given Tenant
written notice that this Lease is terminated or unless a court of competent
jurisdiction decrees termination of this Lease; any act by landlord to maintain
or preserve the Premises; any efforts by Landlord to relet the Premises; any
re-entry, repossession, or reletting of the Premises; or any re-entry,
repossession, or reletting of the Premises by Landlord pursuant to this Article.
If Landlord takes any of the foregoing remedial actions without terminating this
Lease, Landlord may nevertheless at any time after taking any remedial action
terminate this Lease by written notice to Tenant.
17.3 Revenues from Reletting. If Landlord relets the Premises, Landlord
shall apply the revenue as follows: first, to the payment of any indebtedness,
other than rent due from Tenant to landlord; second, to the payment of any
reasonable cost of reletting, including without limitation finder's fees and
leasing commissions; third, to the payment of the cost of any maintenance and
repairs to the Premises; and fourth, to the payment of rent and other amounts
due and unpaid. Landlord shall hold and apply the residue, if any, to payment of
future amounts payable as they become due. Should revenue from reletting during
any months, after application pursuant to the foregoing provisions, be less than
the sum of (i) Landlord's expenditures for the Premises during that month and
(ii) the amounts due from Tenant during that month, Tenant shall pay the
deficiency to Landlord immediately upon demand.
17.4 Landlord's Right to Cure. After the occurrence of an Event of Default,
Landlord, in addition to or in lieu of exercising other remedies, may, but
without any obligation to do so, cure the breach underlying the Event of Default
for the account and at the expense of Tenant; provided that Landlord by prior
notice shall first allow Tenant a reasonable opportunity to cure, except in
cases of emergency, where Landlord may proceed without prior notice to Tenant.
Tenant shall, upon demand, immediately reimburse Landlord for all costs,
including reasonable costs of settlements, defense, court costs, and attorney
fees, that Landlord may incur in the course of any cure.
17.5 No Defense to Action. No security or guaranty for the performance of
Tenant's obligations, which Landlord may now or hereafter hold, shall in any way
constitute a bar or defense to any action initiated by Landlord for unlawful
detainer or for the recovery of the
<PAGE>
25
Premises, for enforcement of any obligation of Tenant, or for the recovery of
damages caused by a breach of this Lease by Tenant or by an Event of Default.
17.6 Rights Not Exclusive. Except insofar as this is inconsistent with or
contrary to any provisions of this Lease, no right or remedy conferred upon or
reserved to either party is intended to be exclusive of any other right or
remedy given now or later or existing at law or in equity or by statute. Except
to the extent that either party may have otherwise agreed in writing, no waiver
by that party of any violation or nonperformance by the other party of any
obligations, agreements, or covenants shall be deemed to be a waiver of any
subsequent violation or nonperformance of the same or any other covenant,
agreement, or obligation, nor shall any forbearance by either party to exercise
a remedy for any violation or nonperformance by the other party be deemed a
waiver by that party of rights or remedies with respect to that violation or
nonperformance.
17.7 Default by Landlord. Landlord shall not be in default unless Landlord
fails to perform obligations required of Landlord within thirty (30) days after
written notice by Tenant to Landlord and to the holder of any first mortgage or
deed of trust covering the Premises, the name and address for that holder having
been furnished to Tenant in writing, specifying in what respect Landlord has
failed to perform the obligation. However, if Landlord's obligation requires
more than thirty (30) days for performance, Landlord shall not be in default if
Landlord commences to perform within thirty (30) days after notice from Tenant
and afterwards diligently completes it.
ARTICLE 18
LATE CHARGES AND INTEREST
18.1 Late Charges. Tenant acknowledges that late payment of sums due under
this Lease will cause Landlord to incur costs not contemplated by this Lease,
the exact amount of which will be extremely difficult to ascertain. Therefore,
if any sum due from Tenant is not received by Landlord when due, then without
any requirement for notice to Tenant, Tenant shall pay to Landlord a late charge
equal to the greater of fifty dollars ($50.00) or two percent (2%) of the
overdue sum. The parties agree that the late charge represents a fair and
reasonable estimate of the costs Landlord will incur because of late payment by
Tenant. Acceptance of the late charge by Landlord shall not constitute a waiver
of Tenant's default for the overdue sum, nor prevent Landlord from exercising
any of the other rights and remedies in this Lease.
18.2 Interest. Any amount that is due to Landlord and not paid when due
shall bear interest from the date due at the maximum rate then allowable by law,
not to exceed twelve percent (12%) per annum; provided, however, that interest
shall not be payable on late charges incurred by Tenant. Payment of the interest
shall not cure any default by Tenant under this Lease.
<PAGE>
26
ARTICLE 19
SUBORDINATION; TRANSFER BY LANDLORD
19.1 Subordination. This Lease shall be subordinate to any ground lease,
mortgage, deed of trust, or any other hypothecation for security now or later
placed upon the Premises and to any advances made on the security of it or
Landlord's interest in it, and to all renewals, modifications, consolidations,
replacements, and extensions of it. However, if any mortgagee, trustee, or
ground landlord elects to have this Lease prior to the lien of the mortgage or
deed or trust or prior to the ground lease, and gives notice of that to Tenant,
this Lease shall be deemed prior to the mortgage, deed of trust, or ground
lease, whether this Lease is dated prior or subsequent to the date of the
mortgage, deed of trust, or ground lease, or the date of recording. If any
mortgage or deed of trust to which this Lease is subordinate is foreclosed or a
deed in lieu of foreclosure is given to the mortgagee or beneficiary, Tenant
shall attorn to the purchaser at the foreclosure sale or to the grantee under
the deed in lieu of foreclosure. If any ground lease to which this Lease is
subordinate is terminated, Tenant shall attorn to the ground lessor. Tenant
agrees to execute any documents, in form and substance reasonably acceptable to
Tenant, required to subordinate, to make this Lease prior to the lien of any
mortgage or deed of trust or ground lease, or to evidence the attornment.
19.2 Attornment. If any mortgage or deed of trust to which this Lease is
subordinate is foreclosed or a deed in lieu of foreclosure is given to the
mortgagee or beneficiary, or if any ground lease to which this Lease is
subordinate is terminated, this Lease shall not be barred, terminated, cut off,
or foreclosed. Neither shall the rights and possession of Tenant under this
Lease be disturbed, if Tenant is not then in default in the payment of rental
and other sums due under this Lease or otherwise in default under the terms of
this Lease, and if Tenant attorns to the purchaser, grantee, or ground lessor as
provided in Section 19.1 or, if requested, enters into a new lease for the
balance of the term of this Lease on the same terms and provisions in this
Lease. Tenant's covenant under Section 19.1 to subordinate this Lease to any
ground lease, mortgage, deed of trust, or other hypothecation later executed is
conditioned on each senior instrument containing the commitments specified in
this Section.
19.3 Transfer by Landlord. If Landlord transfers the Premises, Landlord
shall be relieved of all liability for the performance of Landlord's obligations
arising after the date of the transfer. However, any prepaid rent or Security
Deposit held by Landlord at the time of the transfer shall be delivered to the
transferee.
ARTICLE 20
ESTOPPEL CERTIFICATES
20.1 Estoppel Certificates. At all times during the term of this Lease,
Tenant agrees, following any request by Landlord, promptly to execute and
deliver to Landlord within ten (10) business days following delivery of a
request an estoppel certificate: (a) certifying that this Lease is unmodified
and in full force, or if modified stating the nature of the modification and
certifying that this Lease, as so modified, is in full force, (b) stating the
date to which the rent and other charges are paid in advance, if any, (c)
acknowledging that there are not any uncured
<PAGE>
27
defaults on the part of Tenant, or if there are uncured defaults, specifying the
nature of the defaults, and (d)certifying any other information about the Lease
as may be requested by Landlord.
20.2 Failure to Deliver. Tenant's failure to deliver an estoppel
certificate within ten (10) business days after delivery of a request shall be a
conclusive admission that, as of the date of the request for such statement: (a)
this Lease is unmodified except as may be represented by Landlord in the request
and is in full force, (b) there are no uncured defaults in Landlord's
performance, and (c) no rent has been paid more than thirty (30) days in
advance.
20.3 Guarantor's Financial Statements. At any time during the term of this
Lease, Tenant shall, upon ten (10) days' prior written notice from Landlord,
provide Guarantor's most recent consolidated financial statement and financial
statements covering the three (3) year period prior to the date of the most
recent financial statement to any existing or potential lender or buyer of the
Premises. The statements shall be prepared in accordance with generally accepted
accounting principles.
ARTICLE 21
MISCELLANEOUS
21.1 Severability. If any provision of this Lease is held by a court of
competent jurisdiction to be either invalid or unenforceable, the remaining
provisions of this Lease shall remain in effect, unimpaired by the holding.
21.2 Time of Essence. Time is of the essence under this Lease.
21.3 Additional Rent. All monetary obligations of Tenant to Landlord under
the Lease, including but not limited to the Base Rent and additional rent, shall
be deemed rent. Except as otherwise provided herein, all additional rent shall
be paid by Tenant within ten (10) days after receipt of an invoice therefor.
21.4 Entire Agreement. This Lease constitutes the entire agreement between
Landlord and Tenant, and there are no agreements or representations between the
parties except as expressed in this Lease. Tenant acknowledges that neither
Landlord nor Landlord's representatives have made any legally binding
representation or warranty as to any matter except those expressly set forth,
including any warranty as to: (i) whether the Premises may be used for Tenant's
intended use under existing law, (ii) the suitability of the Premises for the
conduct of Tenant's business, or (iii) the condition of any improvements. There
are no oral agreements between Landlord and Tenant affecting this Lease, and
this Lease supersedes and cancels all previous negotiations, arrangements,
brochures, agreements, and understandings, if any, between Landlord and Tenant
with respect to the subject matter of this Lease. This instrument shall not be
legally binding until it is executed by both Landlord and Tenant. No subsequent
change or addition to this Lease shall be binding unless in writing and signed
by Landlord and Tenant.
<PAGE>
28
21.5 Notices. Except as otherwise expressly provided by law, all notices or
other communications required or permitted by this Lease or by law to be served
on or given to either party to this Lease by the other party shall be in writing
and shall be deemed given when personally delivered to the party to whom they
are directed, or in lieu of the personal service, upon deposit in the United
States Mail, certified or registered, return receipt requested, postage prepaid,
addressed to Tenant at the Premises, with a copy to each of: (i) Glenayre
Electronics, Inc., 5935 Carnegie Boulevard, Charlotte, North Carolina, 28209,
Attention: Chief Financial Officer, and (ii) Kennedy Covington Lobdell &
Hickman, L.L.P., NationsBank Corporate Center, 100 North Tryon Street, Suite
4200, Charlotte, NC 28202-4006, Attention: Eugene C. Pridgen, Esq., or to
Landlord in care of Dennis Henry, CB Commercial Real Estate Group, Inc., 155
Grand Avenue, Suite 100, Oakland, CA 94612. Either party may change its address
for the purpose of this Section by giving written notice of the change to the
other party in the manner provided in this Section.
21.6 Waivers. The waiver by Landlord of any agreement, condition or
provision contained in this Lease shall not be deemed to be a waiver of any
subsequent breach of the agreement, condition or provision or any other
agreement, condition or provision contained in this Lease, nor shall any custom
or practice that may arise between the parties in the administration of the
terms of this Lease be construed to waive or to lessen the right of Landlord to
the performance by Tenant in strict accordance with these terms. Landlord's
consent to or approval of any act by Tenant shall not waive the necessity for
Landlord's consent to or approval of any subsequent act by Tenant. Landlord's
acceptance of rent shall not be a waiver of any preceding breach of Tenant,
other than Tenant's failure to pay the rent that Landlord accepted, regardless
of Landlord's knowledge of the preceding breach at the time of acceptance of the
rent.
21.7 No Recording. Tenant shall not execute, acknowledge, or record a
memorandum of this Lease without the express written consent of Landlord.
21.8 Holding Over. At the end of the Term, or any extension, if Tenant
holds over for any reason, it is hereby agreed that in the absence of a written
agreement to the contrary that tenancy shall be from month-to-month only and not
a renewal of this Lease, nor an extension for any further term. In that case,
Tenant shall pay Base Rent in an amount equal to one hundred twenty-five percent
(125%) of the amount of the Base Rent payable prior to the end of the term or
any extension for the first two (2) months of any such holdover and, with
respect to any continuing holdover thereafter, one hundred fifty percent (150%)
of the amount of the Base Rent payable prior to the end of the Term or any
extension, and the month-to-month tenancy shall be subject to every other term,
covenant, and condition contained in this Lease that is consistent with and not
contrary to a month-to-month tenancy.
21.9 Cumulative Remedies. No remedy of election under this Lease shall be
deemed exclusive but shall, wherever possible, be cumulative with all other
remedies at law or in equity.
21.10 Covenants and Conditions. Each term of this Lease performable by
Tenant shall be deemed both a covenant and a condition.
<PAGE>
29
21.11 Binding Effect. Subject to Article 14, this Lease shall be binding on
and inure to the benefit of the parties and their successors and assigns.
21.12 Attorneys' Fees. In any action among the parties to enforce any of
the terms of this Lease, to seek a declaration of any rights under this Lease,
or to recover damages for a breach of this Lease, the prevailing party shall be
entitled to recover reasonable attorneys' fees together with any costs and
expenses, to resolve the dispute and to enforce the final judgment. The
"prevailing party" shall include, without limitation, (a) a party who dismisses
an action in exchange for sums allegedly due; (b) a party who receives
performance from the other party for an alleged breach of covenant or who
receives a desired remedy that is substantially equal to the relief sought in an
action; or (c) a party determined to be the prevailing party by a court of law.
21.13 Rights Reserved by Landlord.
(a) Landlord and its agents may enter the Premises at any reasonable time
after giving at least forty-eight (48) hours' prior written notice to Tenant,
and immediately in the case of emergency, for the purpose of (i) inspecting the
Premises; (ii) posting notices of nonresponsibility; (iii) supplying any service
to be provided by Landlord to Tenant; (iv) showing the Premises to prospective
purchasers, mortgagees, or Tenants within six (6) months of the Termination
Date; (v) making necessary alterations, additions or repairs; (vi) performing
Tenant's obligations when Tenant has failed to do so after written notice from
Landlord; (vii) placing on the Premises ordinary for lease signs within six (6)
months of the Termination Date or for sale signs; and (viii) responding to an
emergency.
(b) Landlord shall have the right to use any means Landlord deems
reasonably necessary and proper to enter the Premises in an emergency. Any entry
into the Premises obtained by Landlord in accordance with this Section shall not
be a forcible or unlawful entry into, or a detainer of, the Premises, or an
eviction, actual or constructive, of Tenant from the Premises.
21.14 Signs. Tenant shall not place, maintain, nor permit on any exterior
door, wall, or window of the Premises any sign, awning, canopy, marquee, or
other advertising without the express prior written consent of Landlord, which
shall not be unreasonably withheld or delayed. Furthermore, Tenant shall not
place any decoration, lettering, or advertising matter on the glass of any
exterior window of the Premises without the written approval of Landlord. If
Landlord consents to any sign, awning, canopy, marquee, decoration, or
advertising matter, Tenant shall, at its sole cost and in compliance with all
applicable Laws, covenants, conditions and restrictions, maintain it in good
appearance and repair at all times during this Lease. If at the end of the term
of this Lease, any of the items mentioned in this Section are not removed from
the Premises by Tenant, that item may, without liability, be disposed of by
Landlord with the removal and any repair necessary to the Premises in connection
therewith at Tenant's sole cost.
21.15 No Merger. To the extent permitted by Law, the voluntary or other
surrender of this Lease by Tenant, a mutual cancellation of this Lease, or a
termination by Landlord shall not cause a merger, and shall, at the option of
Landlord, terminate all existing
<PAGE>
30
subtenancies or may, at the option of Landlord, cause an assignment to a
Landlord of all such subtenancies.
21.16 Security Measures. Tenant acknowledges that Landlord shall have no
obligation to provide any guard service or other security measures to the
Premises, and Tenant assumes all responsibility for the protection of tenant,
Tenant's agents, invitees, and customers, and the property of Tenant and of
Tenant's agents, invitees, and customers form acts of third parties.
21.17 Easements. Landlord reserves the right to grant easements, rights,
and dedications that Landlord deems necessary or desirable, and to record parcel
maps and restrictions, so long as these easements, rights, dedications, maps,
and restrictions do not unreasonably interfere with Tenant's use of the
Premises. Tenant agrees to sign any of these documents as soon as practicable
upon request of Landlord.
21.18 Authority. If Tenants is a corporation or partnership, each
individual executing this Lease on behalf of Tenant represents and warrants that
individual is duly authorized to execute and deliver this Lease on behalf of the
corporation in accordance with the by-laws of the corporation, or on behalf of
the partnership in accordance with the partnership agreement of the partnership,
and that this lease is binding upon the corporation or partnership, as
applicable, in accordance with its terms. Each of the persons executing this
Lease on behalf of a corporation covenants and warrants that the party for whom
the person is executing this Lease is a duly authorized and existing
corporation, that it is qualified to do business in California, and that the
corporation has full right and authority to enter into and perform its
obligations under this Lease.
21.19 Governing Law. This Lease shall be governed by California law.
21.20 Counterparts. This Lease may be executed in any number of
counterparts, all of which when taken together shall be deemed one and the same
original.
21.21 No Offer. Preparation of this Lease by Landlord or Landlord's agent
and submission to Tenant shall not be deemed an offer to lease. This lease shall
become binding on Landlord and Tenant only when fully executed by Landlord and
Tenant.
21.22 Memorandum of Lease. Landlord and Tenant agree to execute
concurrently herewith a customary memorandum of lease document evidencing the
terms hereof in recordable form and to permit the recordation of same in the
county records for the county in which the Premises are located. Upon the
expiration or earlier termination of this Lease, Tenant shall execute,
acknowledge and deliver to Landlord for recording purposes a quitclaim or other
instrument sufficient to terminate the effect of the Memorandum of Lease of
record. Should Tenant fail or refuse to deliver such quitclaim or other
appropriate Instrument, Tenant shall indemnify, defend, and hold Landlord
harmless from and against all damages, liabilities, claims and costs (including
reasonable attorneys' fees and costs) resulting therefrom. The form of
Memorandum of Lease is attached hereto as Exhibit C.
<PAGE>
31
IN WITNESS WHEREOF, the parties have executed this Lease as of the date
first set forth above.
LANDLORD:
YERCAF N.V.,
a Delaware corporation
By: /s/ Denise Jackson
-------------------------------
Name: Denise Jackson
-------------------------
Title: Director
-------------------------
TENANT:
GLENAYRE ELECTRONICS, INC.
a Colorado corporation
By: /s/ Stanley Ciepcielinski
-------------------------------
Name: Stanley Ciepcielinski
-------------------------
Title: Chief Financial Officer
-------------------------
<PAGE>
EXHIBIT 10.21
REDWOOD BUSINESS PARK
NET LEASE
BASIC LEASE INFORMATION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1. DATE 2/27/98
2. LANDLORD G & W/Copley Redwood Business Park, L.P.
3. TENANT Ubiquity Communication, Inc.,
a California corporation
4. PREMISES REFERENCE
a. Project Sequoia Court Paragraph 1
b. Building Building C
c. Address 1367 Redwood Way
d. Assessor's Parcel # 137-160-011 thru 014
e. Suite
f. Usable Sq. Ft. 3,315
g. Rentable Sq. Ft. 3,315
5. TERM Paragraph 2
a. Estimated Commencement Date March 15, 1998
b. Length of Term 2 years
6. BASE RENT Paragraph 3
a. Monthly Base Rent See Addendum
b. Advanced Base Rent $1,050
(Paid Upon Lease Execution)
c. Adjustment Date of Monthly Month 4
Base Rent
7. PROPERTY TAXES AND OPERATING EXPENSES Paragraph 4
a. Initial Monthly Allocation per
rentable Sq. Ft. $0.21
b. Premises v. Building Sq. Ft. Ratio
3315/16382 = 20%
c. Premises v. Project Sq. Ft. Ratio
3315/87713 = 3.8%
8. SECURITY DEPOSIT $6,962 Paragraph 16
9. TENANT IMPROVEMENTS Turn-key up to $10/sf Exhibit B
10. USE General office Paragraph 6
11. TENANT'S ADDRESS FOR NOTICES Paragraph 20
1367 Redwood Way
Petaluma, CA 94954
12. LANDLORD'S ADDRESS FOR NOTICES Paragraph 20
G & W/Copley Redwood Business Park, L.P.
c/o G&W Management Co.
P.O. Box 808030
Petaluma, CA 94975-8030
1318 Redwood Way, Suite 140
Petaluma, CA 94954
With a Copy to:
13. REAL ESTATE BROKERS Paragraph 23
Keegan & Coppin
G & W Management Co.
EXHIBITS AND ADDENDUM
Exhibit A: Diagram of Premises
Exhibit A-1: Diagram of the Project
Exhibit B: Work Letter Agreement
Exhibit B-1: Space Plan
Exhibit C: Rules and Regulations
Exhibit D: Hazardous Materials List
Exhibit E: Tenant's Financial Statement
</TABLE>
<PAGE>
REDWOOD BUSINESS PARK
NET LEASE
THIS LEASE, dated February 27, 1998, is made and entered into by and between G &
W/Copley Redwood Business Park, L.P. ("Landlord"), and Ubiquity Communication,
Inc., a California corporation ("Tenant").
1. Premises.
Landlord leases to Tenant, and Tenant hereby leases from Landlord for the
term of this Lease ("Term") and at the rent and upon the conditions set forth
below, the Premises described in the Basic Lease Information and identified on
the floor plan attached hereto as Exhibit A. The Premises are located within the
Building described in the Basic Lease Information, and constitute part of the
Project described in the Basic Lease Information and as shown in Exhibit A-1
attached hereto, at the Redwood Business Park, located in Petaluma, California.
All areas and facilities outside the Buildings and within the exterior
boundaries of the Project that are provided and designated by Landlord from time
to time for the general nonexclusive use and convenience of the tenants of the
Project shall be known as "Common Areas".
2. Term.
(a) The Term shall commence upon the date ("Commencement Date") which is
the earlier of: (i) substantial completion of the Premises, as the term
"substantial completion" is defined in the WorkLetter Agreement, attached hereto
as Exhibit B; or (ii) the date substantial completion would have occurred but
for Tenant Delays (as the term is defined in the Work Letter Agreement). The
Estimated Commencement Date is set forth in the Basic Lease Information, which
date may be postponed due to a delay in delivering the Premises as provided in
Paragraph 2(b) below. A "Lease Year" is a period of twelve (12) consecutive
calendar months. A "Lease Month" is a calendar month. The initial Term of this
Lease shall be determined as follows:
(1) If the Commencement Date of this Lease occurs on the first calendar day
of a calendar month, the Term shall be for a period of Lease Years and Months as
specified in the Basic Lease Information, unless terminated sooner as provided
in this Lease.
(2) If the Commencement Date of this Lease occurs on other than the first
calendar day of a calendar month, the Term shall be for a period of Lease Years
and Months as specified in the Basic Lease Information, plus the number of days
remaining in the calendar month in which the Commencement Date occurs, unless
terminated sooner as provided in this Lease.
(b) Subject to the provisions of Paragraph 22 below, in the event the
Premises are not substantially completed (in accordance with the Work Letter
Agreement) on or within six (6) months after the Estimated Commencement Date,
then Tenant may, at Tenant's option, by notice in writing to Landlord within ten
(10) days thereafter, cancel this Lease, in which event, (i) this Lease shall be
deemed null and void and have no further force or effect, (ii) all security or
other
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deposits made herewith shall be promptly returned to Tenant, and (iii) the
parties shall have no further obligation to each other; provided further,
however, that if such written notice of Tenant is not received by Landlord
within said 10-day period, Tenant's right to cancel this Lease hereunder shall
terminate and be of no further force or effect.
3. Rent.
(a) For purposes of this Lease, the term "Rent" shall mean the Base Rent,
Advanced Base Rent, all additional rent, and all of the other monetary
obligations of Tenant under this Lease. Upon execution of this Lease, Tenant
shall pay to Landlord the Advanced Base Rent set forth in the Basic Lease
Information. Tenant shall pay to Landlord the Base Rent specified in the Basic
Lease Information, payable on or before the first day of each and every
successive calendar month following the Commencement Date. If the Term commences
on other than the first day of a calendar month, the first payment of Base Rent
shall be appropriately prorated, on the basis of a 30-day month. Tenant's
payment of any Advanced Base Rent (excluding that portion attributable to last
month's rent, if any) shall be credited against Tenant's obligation to pay Base
Rent beginning as of the Commencement Date.
(b) Tenant shall pay, as additional rent, all amounts of money required to
be paid to Landlord by Tenant under this Lease in addition to monthly Base Rent,
whether or not the same be designated "additional rent." If such amounts are not
paid at the time provided in this Lease, they shall nevertheless be collectable
as additional rent with the next installment of monthly Base Rent thereafter
falling due, but nothing herein contained shall be deemed to suspend or delay
the payment of any amount of money at the time the same becomes due and payable
hereunder, or limit any other remedy of Landlord.
(c) Tenant acknowledges that late payment by Tenant to Landlord of Rent
after the expiration of any applicable grace period 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,
processing and accounting charges, and late charges which may be imposed on
Landlord by the terms of any trust deed covering the Premises. Accordingly, if
any installment of Rent or any other sums due from Tenant shall not be received
by Landlord when due, Tenant shall pay to Landlord a late charge equal to six
percent (6%) of such overdue amount. The parties 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.
(d) Any amount due to Landlord, if not paid when due, shall bear interest
from the date due until paid at the rate of ten percent (10%) per annum. Payment
of interest shall not excuse or cure any default hereunder by Tenant.
(e) All payments due from Tenant to Landlord hereunder shall be made to
Landlord without deduction or offset, in lawful money of the United States of
America at Landlord's address for notices hereunder, or to such other person or
at such other place as Landlord may from time to time designate in writing to
Tenant.
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4. Taxes and Operating Expenses.
(a) In addition to the Base Rent, Tenant shall pay (i) Tenant's Percentage
Share of Property Taxes (according to the percentage set forth in the Basic
Lease Information) relating to those Property Taxes (as the term is defined
under Paragraph 4(a)(1) below) which are assessed during the Term, and (ii)
Tenant's Percentage Share of Operating Expenses (according to the percentage set
forth in the Basic Lease Information) relating to those Operating Expenses (as
the term is defined under Paragraph 4(a)(2) below) which are paid or incurred by
Landlord during the Term.
(1) "Property Taxes" shall mean all real property taxes, bonds and
assessments and governmentally imposed fees or charges (and any tax levied
wholly or partly in lieu thereof) levied, assessed, confirmed, imposed or which
have become a lien against the Building (which for the purposes of defined
"Property Taxes" shall include the tax parcel of which the Building is a part)
and Common Areas.
(2) "Operating Expenses" shall mean the following: (A) all costs of
management, operation, maintenance and repair of the Building and Common Areas,
including, without limitation, property management expenses, maintenance and
repair materials, supplies and equipment; (B) all costs of water, power,
electricity, refuse collection, parking lot sweeping, landscaping, and other
services relating to the Common Areas; (C) all costs of alterations or
improvements to the Building or Common Areas made to achieve compliance with
federal, state and local law including, without limitation, the Americans with
Disabilities Act (42 U.S.C. Section 12101 et seq.), which costs will be
amortized over the useful life of each alteration or improvement; (D) all costs
of public liability and casualty insurance maintained by Landlord with respect
to the Building and Common Areas; (E) all costs incurred by Landlord for making
any capital improvements, structural repairs or modifications to the Building or
Common Areas or making any improvements or modifications to reduce the operating
expenses, which costs will be amortized over the useful life of each capital
improvement, structural repair or modification; (F) all costs of maintaining
machinery, equipment and directional signage or other markers; and (G) the share
allocable to the Building of dues and assessments payable under any reciprocal
easement or common area maintenance agreements or declarations or by any owners'
associations affecting the Building. That portion of the Operating Expenses
relating to the property management expenses for the Building and Common Areas
which shall be charged to Tenant shall be four percent (4%) of both Tenant's
annual Base Rent and the subtotal of Tenant's share of Operating Expenses of the
Building. In the event that Landlord calculates the Operating Expenses based
upon the Project instead of the Building, as indicated on the Basic Lease
Information, then the term "Project" shall be substituted in the place of all
references to the term "Building" in this paragraph.
(b) The Property Taxes to be paid by Tenant shall be determined by
multiplying the total amount of the Property Taxes by Tenant's Percentage Share
of Property Taxes (which percentage is determined by multiplying 100% by a
fraction, the numerator of which is the rentable area of the Premises and the
denominator of which is the total rentable area of all improvements located
within the tax parcel of which the Premises are a part). Landlord may cause the
Common Areas of the Project to be separately assessed from other areas and
buildings of the Project. In such case, Tenant's Percentage Share of Property
Taxes attributable to the Common Areas shall be
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determined by the ratio that the total rentable square feet in the Premises
bears to the total number of square feet of rentable area which is included in
the property subject to the assessment.
(c) Operating Expenses for each calendar year shall be adjusted to equal
Landlord's reasonable estimate of Operating Expenses as though ninety-five
percent (95%) of the total rentable area of the Building had been occupied. When
the Building is one hundred percent (100%) occupied, the Operating Expenses
shall be adjusted to reflect a 100% occupied building. The Operating Expenses to
be paid by Tenant shall be determined by multiplying the total amount of the
Operating Expenses as adjusted above by Tenant's Percentage Share of Operating
Expenses (which percentage is determined by multiplying 100% by a fraction, the
numerator of which is the rentable area of the Premises and the denominator of
which is the total rentable area located within the Building, if the Operating
Expenses are calculated for the Building, or within the Project, if the
Operating Expenses are calculated for the Project).
(d) Tenant shall pay to Landlord each month at the same time and in the
same manner as monthly Base Rent one-twelfth (1/12th) of Landlord's estimate of
the amount of Property Taxes and one- twelfth (1/12th) of Landlord's estimate of
Operating Expenses payable by Tenant for the then- current calendar year. The
initial monthly amount shall be as set forth in the Basic Lease Information.
Within one hundred twenty (120) days after the close of each calendar year, or
as soon after such 120-day period as practicable, Landlord shall deliver to
Tenant a statement in reasonable detail of the actual amount of Property Taxes
and Operating Expenses payable by Tenant in accordance with this Paragraph 4 for
such calendar year. Tenant may request further information if desired.
Landlord's failure to provide such statement to Tenant within the 120-day period
shall not act as a waiver and shall not excuse Tenant or Landlord from making
the adjustments to reflect actual costs as provided herein. If on the basis of
such statement Tenant owes an amount that is less than the estimated payments
for such calendar year previously made by Tenant, Landlord shall credit such
excess to Tenant against future additional rent due under this Paragraph 4. If
on the basis of such statement Tenant owes an amount that is more than the
estimated payments for such calendar year previously made by Tenant, Tenant
shall pay the deficiency to Landlord within fifteen (15) days after delivery of
the statement. The obligations of Landlord and Tenant under this Paragraph 4(d)
with respect to the reconciliation between the estimated and actual amounts of
Property Taxes and Operating Expenses payable by Tenant for the last year of the
Term shall survive the termination of the Lease. When the final determination is
made of the actual amounts of Property Taxes and Operating Expenses payable by
Tenant for the year in which this Lease terminates, Tenant shall immediately pay
any increase due over the estimated payments and, conversely, any overpayment
made by Tenant shall be immediately reimbursed to Tenant by Landlord.
5. Other Taxes.
In addition to Tenant's obligations under Paragraph 4 above, Tenant shall
pay or reimburse Landlord for (i) any taxes upon, measured by or reasonably
attributable to the cost or value of Tenant's equipment, furniture, fixtures,
and other personal property located in the Premises or leasehold improvements
made in or to the Premises at Tenant's expense, (ii) for taxes, if any, measured
by or reasonably attributable to tenant improvements paid for by Tenant, and
(iii) for
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any taxes, assessments, fees, or charges imposed by any public authority or
private community maintenance association upon or by reason of the development,
possession, use or occupancy of the Premises or the parking facilities used by
Tenant in connection with the Premises. On request by Landlord, Tenant shall
furnish Landlord with satisfactory evidence of payment of Tenant's business
personal property taxes and deliver copies of such business personal property
tax bills to Landlord.
6. Use.
6.1 Prohibited Uses.
(a) The Premises shall be used and occupied by Tenant solely for the use
set forth in the Basic Lease Information. Tenant shall, at Tenant's expense,
comply promptly with all applicable federal, state and local laws, regulations,
ordinances, rules, orders, and requirements in effect during the Term relating
to the condition, use or occupancy of the Premises. Tenant shall not use or
permit the use of the Premises in any manner that will tend to create waste or a
nuisance, or that unreasonably disturbs other tenants of the Building or
Project, nor shall Tenant place or maintain any signs, antennas, awnings,
lighting or plumbing fixtures, loudspeakers, exterior decoration or similar
devises on or visible from the exterior of the Premises, without Landlord's
prior written consent, which may be withheld in Landlord's sole discretion.
Tenant shall not use any corridors, sidewalks, stairs, elevators, or other areas
outside of the Premises for storage or any purpose other than access to the
Premises. Tenant shall not use, keep, or permit to be used or kept on the
Premises any foul or noxious gas or substance, nor shall Tenant do or permit to
be done anything in and about the Premises, either in connection with activities
hereunder expressly permitted or otherwise, which would cause an increase in
premiums for or a cancellation of any policy of insurance (including fire
insurance) maintained by Landlord in connection with the Premises or the
Building or which would violate the terms of any covenants, conditions, or
restrictions, or the design guidelines, or the sign guidelines affecting the
Building or the land on which it is located, or the Rules (as the term is
defined under Paragraph 6.3(b) below).
(b) Tenant shall not attach any signage to or on any part of the outside of
the Premises, the Building or the Project, or in the halls, lobbies, windows or
elevator banks of the Building without Landlord's prior written consent, which
consent may be withheld in Landlord's sole discretion. Any signage so permitted
shall be subject to prior approval of and conformance with the requirements of
the design review committee of the Project and the design review agency of the
city. At Tenant's expense, Tenant shall (i) maintain all permitted signage, and
(ii) upon the expiration or termination of this Lease, remove such signage and
repair any damage caused by their removal. If Tenant fails to do so, Landlord
may maintain, repair or remove such signage without notice to Tenant and at
Tenant's expense, the cost of which shall be payable by Tenant as additional
rent in accordance with Paragraph 14(b)(2) below.
6.2 Suitability. Tenant acknowledges that neither Landlord nor any agent of
Landlord has made any representation or warranty with respect to the Premises or
the Building or with respect to the suitability or fitness of either for the
conduct of Tenant's business or for any other purpose. Nor has Landlord agreed
to undertake any modification, alteration or improvement to the Premises except
as provided in this Lease. Tenant acknowledges that the Premises are located in
a 100-
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year flood zone and that the finished floor elevations of the Building are
designed to be at least one (1) foot above the federal government's estimate of
the 100-year flood level at the time of initial construction.
6.3 Use of Common Areas.
(a) Landlord gives Tenant and its authorized employees, agents, customers,
representatives, and invitees the nonexclusive right to use the Common Areas,
with others who are entitled to use the Common Areas, subject to Landlord's
rights as set forth in this Paragraph 6.3.
(b) All Common Areas shall be subject to the exclusive control and
management of Landlord and Landlord shall have the right to establish, modify,
amend, and enforce reasonable rules and regulations with respect to the Common
Areas. Tenant acknowledges receipt of a copy of the current rules and
regulations, attached hereto as Exhibit C, and agrees that they may, from time
to time, be modified or amended by Landlord in a commercially reasonable manner
(the "Rules"). Tenant agrees to abide by and conform with such Rules; to cause
its concessionaires and its and their employees and agents to abide by such
Rules; and to use its best efforts to cause its customers, invitees, and
licensees to abide by such Rules.
(c) Landlord shall have the right to close temporarily any portion of the
Common Areas for the purpose of discouraging use by parties who are not tenants
or customers of tenants; to use portions of the Common Areas while engaged in
making additional improvements or repairs or alterations to the Property; to use
or permit the use of the Common Areas by others to whom Landlord may grant or
have granted such rights; and to do and perform such acts in, to, and with
respect to, the Common Areas as in the use of good business judgment Landlord
shall determine to be appropriate for the Project.
(d) Landlord shall have the unqualified right to increase or reduce the
Common Areas, provided the Project meets the parking requirement under Paragraph
6.5 below.
(e) Tenant shall cooperate with Landlord and other tenants in the Project
in recycling waste paper, cardboard, or such other materials identified under
any trash recycling program that may be established in order to reduce trash
collection costs.
6.4 Environmental Matters.
(a)(1) The term "Hazardous Materials" as used herein means any petroleum
products, asbestos, polychlorinated biphenyls, P.C.B.'s, chemicals, compounds,
materials, mixtures or substances that are now or hereafter defined or listed
in, or otherwise classified as a "hazardous substance", "hazardous material",
"hazardous waste", "extremely hazardous waste", "infectious waste", "toxic
substance", "toxic pollutant" or any other formulation intended to define, list
or classify substances by reason of deleterious properties such asignitability,
corrosivity, reactivity, carcinogenicity or toxicity pursuant to any federal,
state or local environmental law, regulation, ordinance, resolution, order or
decree relating to industrial hygiene, environmental protection or the use,
analysis, generation, manufacture, storage, release, disposal or transportation
of the same ("Hazardous Materials Laws").
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(2) Except for ordinary office supplies and janitorial cleaning materials
which in common business practice are customarily and lawfully used, stored and
disposed of in small quantities, and except for those Hazardous Materials listed
on Exhibit D attached hereto, Tenant shall not use, manufacture, store, release,
dispose or transport any Hazardous Materials in, on, under or about the
Premises, the Building or the Project without giving prior written notice to
Landlord and obtaining Landlord's prior written consent, which consent Landlord
may withhold in its sole discretion. Subject to Landlord's prior written
consent, Hazardous Materials may be added to Exhibit D on an annual review
basis; any such amendments to Exhibit D shall be signed by each party and
attached hereto. Tenant shall at its own expense procure, maintain in effect,
and comply with all conditions of any and all permits, licenses, and other
governmental and regulatory approvals required in connection with Tenant's
generation, use, storage, disposal and transportation of Hazardous Materials.
Except as discharged into the sanitary sewer in strict accordance and conformity
with all applicable Hazardous Materials Laws, Tenant shall cause any and all
Hazardous Materials removed from the Premises to be removed and transported
solely by duly licensed haulers to duly licensed facilities for final disposal
of such materials and wastes. Regardless whether permitted under the Hazardous
Material Laws, Tenant shall not maintain in, on, under, or about the Premises,
the Building or the Project any above or below ground storage tanks, clarifiers,
or sumps, nor shall any wells for the monitoring of ground water, soils, or
subsoils be allowed.
(3) Tenant shall immediately notify Landlord in writing of: (a) any
enforcement, cleanup, removal or other governmental or regulatory action
instituted, completed or threatened pursuant to any Hazardous Materials Law; (b)
any claim made or threatened by any person or entity against Tenant or the
Premises relating to damage, contribution, cost, recovery, compensation, loss or
injury resulting from or claimed to result from any Hazardous Materials; and (c)
any reports, information, inquiries or demands made, ordered, or received by or
on behalf of Tenant which arise out of or in connection with the existence or
potential existence of any Hazardous Materials in, on, under or about the
Premises, the Building, or the Project, including, without limitation, any
complaints, notices, warnings, asserted violations, or mandatory or voluntary
informational filings with any governmental agency in connection therewith, and
immediately supply Landlord with copies thereof.
(b) Tenant shall indemnify, defend (by counsel reasonably acceptable to
Landlord), protect, and hold Landlord, and each of Landlord's partners,
officers, directors, partners, employees, affiliates, joint ventures, members,
trustees, owners, shareholders, principals, agents, representatives, attorneys,
successors and assigns, free and harmless from and against any and all claims,
liabilities, damages, fines, penalties, forfeitures, losses, cleanup and
remediation costs or expenses (including attorneys' fees) or death of or injury
to any person or damage to any property whatsoever, arising from or caused in
whole or in part, directly or indirectly, by (i) Tenant's use, analysis,
generation, manufacture, storage, release, disposal, or transportation of
Hazardous Materials by Tenant, Tenant's agents, employees, contractors,
licensees or invitees to, in, on, under, about or from the Premises, the
Building, or the Project, or (ii) Tenant's failure to comply with any Hazardous
Materials Law. Tenant's obligations hereunder shall include, without limitation,
and whether foreseeable or unforeseeable, all costs of any required or necessary
repair, cleanup, detoxification or decontamination of the Premises, the
Building, or the Project and the
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preparation and implementation of any closure, remedial action or other required
plans in connection therewith, and shall survive the expiration or earlier
termination of this Lease.
(c) Landlord shall have the right to enter the Premises during regular
business hours upon reasonable prior notice at all times for the purposes of
ascertaining compliance by Tenant with all applicable Hazardous Materials Laws,
provided, however, that in the instance of any emergency Landlord's entry onto
the Premises shall not be restricted to regular business hours nor shall notice
be required.
(d) Landlord shall have the option to declare a default of this Lease for
the release or discharge of Hazardous Materials by Tenant's employees, agents,
contractors, or invitees on the Premises, Building or Project or in violation of
law or in deviation from prescribed procedures in Tenant's use or storage of
Hazardous Materials. If Tenant fails to comply with any of the provisions under
this Paragraph 6.4, Landlord shall have the right (but not the obligation) to
remove or otherwise cleanup any Hazardous Materials from the Premises, the
Building or the Project. In such case, the costs of any Hazardous Materials
investigation, removal or other clean up (including, without limitation,
transportation, storage, disposal and attorneys' fees and costs) will be
additional rent due under this Lease, whether or not a court has ordered the
cleanup, and will become due and payable on demand by Landlord.
6.5 Parking. Landlord grants to Tenant and Tenant's customers, suppliers,
employees and invitees a nonexclusive license to use unassigned and unreserved
parking spaces in the Common Areas for the use of motor vehicles during the Term
subject to rights reserved to Landlord as specified in this Paragraph 6.5.
Landlord reserves the right to grant similar nonexclusive and unassigned and
unreserved use to other tenants; to promulgate rules and regulations relating to
the use of the Common Areas including parking by tenants and employees of
tenants; to make changes in the parking layout from time to time; and to do and
perform any other acts in and to these areas and improvements as Landlord
determines to be advisable. Tenant agrees not to overburden the parking
facilities and to abide by and conform with the rules and regulations and to
cause its employees and agents to abide by and conform to the rules and
regulations. Upon request, Tenant shall provide Landlord with license plate
numbers of all vehicles driven by its employees and to cause Tenant's employees
to park only in spaces specifically designated for tenant parking. Landlord
shall have the unqualified right to rearrange or reduce the number of
parkingspaces; provided, however, the ratio of the number of parking spaces
available to Tenant will be no less than four (4) spaces per 1,000 usable square
feet of the Premises.
7. Services.
(a) Tenant shall pay for all water, sewer, gas, electricity, heat, cooling,
telephone, refuse collection, and other utility-type services furnished to
Tenant or the Premises, together with all related installation or connection
charges or deposits. Wherever it is practical to do so such services shall be
separately metered or charged to Tenant by the provider thereof and paid for
directly by Tenant. To the extent any of the foregoing services are provided by
Landlord, Tenant shall reimburse Landlord for all costs incurred by Landlord in
connection with the provision of such services based on Landlord's reasonable
estimate of the level of Tenant's use or consumption of such services. Landlord
shall bill Tenant on a monthly or other periodic basis for
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such services and payment shall be made by Tenant within ten (10) days after
submittal of Landlord's statement.
(b) Landlord shall not be in default hereunder or be liable for any damages
or personal injuries to any person directly or indirectly resulting from nor
shall there be any Rent abatement by reason of, any interruption or curtailment
whatsoever in utility services.
8. Maintenance, Repairs and Alterations.
(a) Tenant shall, at Tenant's expense, maintain every part of the Premises
in good order, condition and repair, including without limitation, (i) all
interior surfaces, ceilings, walls, door frames, window frames, floors, carpets,
draperies, window coverings and fixtures, (ii) all windows, doors, locks and
closing devices, entrances, plate glass, and signs, (iii) all plumbing and
sewage pipes, fixtures and fittings, (iv) all phone lines, electrical wiring,
equipment, switches, outlets, and light bulbs, (v) any fire detection, fire
sprinkler or extinguisher equipment, (vi) all of Tenant's personal property,
improvements and alterations, and (vii) all other fixtures and special items
installed by or for the benefit of, or at the expense of Tenant. Tenant shall,
at its expense, cause to be maintained in good operating condition and repair,
all heating, ventilating, and air conditioning equipment installed in, or on the
roof of the Premises. Tenant shall keep in force a preventive maintenance
contract with a qualified maintenance company covering all heating, ventilating
and air conditioning equipment and shall annually provide Landlord with a copy
of this contract. Tenant shall not enter onto the roof area of the Building,
except for the purpose of maintaining the heating, ventilating, and air
conditioning equipment and provided that Tenant shall repair any damage to the
roof area caused by its entry. Tenant shall be responsible for its own
janitorial service. Landlord shall incur no expense (nor have any obligation) of
any kind whatsoever in connection with the maintenance of the Premises.
(b) Landlord shall keep in good condition and repair the foundation, roof
structure, exterior walls and other structural parts of the Building, and all
other portions of the Building not the obligation of Tenant or any other tenant
in the Building. Tenant expressly waives the benefits of any statute, including
Civil Code Sections 1941 and 1942, which would afford Tenant the right to make
repairs at Landlord's expense or to terminate this Lease due to Landlord's
failure to keep the Building in good order, condition and repair. Landlord shall
have no liability to Tenant for any damage, inconvenience, or interference with
the use of the Premises by Tenant as the result of Landlord performing any such
maintenance and repair work.
(c) In the event Tenant fails to perform Tenant's obligations under this
Paragraph 8, Landlord may, but shall not be required to, give Tenant notice to
do such acts as are reasonably required to so maintain the Premises. If Tenant
shall fail to commence such work and diligently prosecute it to completion, then
Landlord shall have the right (but not the obligation) to do such acts and
expend such funds at the expenses of Tenant as are reasonably required to
perform such work. Any amounts so expended by Landlord will be additional rent
due under this Lease, and such amounts will become due and payable on demand by
Landlord. Landlord shall have no liability to Tenant for any such damages,
inconvenience, or interference with the use of the Premises by Tenant as a
result of performing such work.
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(d) Upon the expiration or earlier termination of this Lease, Tenant shall
surrender the Premises in good condition and repair, only ordinary wear and tear
excepted. Tenant, at its sole cost and expense, agrees to repair any damages to
the Premises caused by or in connection with the removal of any articles of
personal property, business or trade fixtures, signs, machinery, equipment,
cabinetwork, furniture, moveable partitions, or permanent improvements or
additions, including, without limitation thereto, repairing the floor and
patching and painting the walls where required by Landlord, to Landlord's
reasonable satisfaction. Tenant shall indemnify Landlord against any loss or
liability resulting from delay by Tenant in so surrendering the Premises,
including without limitation, any claims made by any succeeding tenant resulting
from such delay.
(e) Tenant shall not make any alterations, improvements, or additions in,
on, or about the Premises without Landlord's prior written consent, except that
Tenant may make alterations, improvements, or additions without Landlord's prior
written consent where (i) the reasonably estimated cost does not exceed $2,500,
and (ii) such alterations, improvements, or additions do not affect or involve
the structural integrity, roof membrane, exterior areas, building systems, or
water-tight nature of the Premises, the Building or the Project. In requesting
Landlord's consent, Tenant shall, at Tenant's sole cost, submit to Landlord
complete drawings and specifications describing such work and the identity of
the proposed contractor at least ten (10) business days prior to the
commencement of any work.
With respect to any alterations, improvements or additions made to the
Premises by Tenant:
(1) Before commencing any work relating to alterations, additions, or
improvements affecting the Premises, Tenant shall notify Landlord of the
expected date of commencement thereof and of the anticipated cost thereof.
Landlord shall then have the right at any time and from time to time to
post and maintain on the Premises such notices as Landlord reasonably deems
necessary to protect the Premises and Landlord from mechanics' liens or any
other liens.
(2) Tenant shall pay when due all claims for labor or materials
furnished to Tenant for use in the Premises. Tenant shall not permit any
mechanics' liens or any other liens to be levied against the Premises for
any labor or materials furnished to Tenant in connection with work
performed on the Premises by or at the direction of Tenant. Tenant shall
indemnify, hold harmless and defend Landlord (by counsel reasonably
satisfactory to Landlord) from any liens and encumbrances arising out of
any work performed or materials furnished by, or at the direction of
Tenant. In the event that Tenant shall not, within twenty (20) days
following the imposition of any such lien, cause such lien to be released
of record by payment or posting of a proper bond, Landlord shall have, in
addition to all other remedies provided herein by law, the right, but not
the obligation, to cause the same to be released by such means as it shall
deem proper, including payment of the claim giving rise to such lien. All
such sums paid by Landlord and all expenses incurred by it in connection
therewith, including attorneys' fees and costs, shall be payable to
Landlord by Tenant on demand with interest at the rate of ten percent (10%)
per annum.
(3) All alterations, improvements or additions in or about the
Premises performed by or on behalf of Tenant shall be done in a
first-class, workmanlike manner, shall not unreasonably lessen the value of
leasehold improvements in the Premises, and shall be completed in
compliance with all
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applicable laws, ordinances, regulations and orders of any governmental
authority having jurisdiction thereover, as well as the requirements of
insurers of the Premises and the Building.
(4) Upon Landlord's request, Tenant shall remove any contractor,
subcontractor or material supplier from the Premises and the Building if
the work or presence of such person or entity results in labor disputes in
or about the Building or Project or damage to the Premises, Building or
Project.
(5) Landlord, at Landlord's sole discretion, may refuse to grant
Tenant permission for alterations, improvements or additions which require,
because of application of Americans with Disabilities Act or other laws,
substantial improvements or alterations to be made to the Common Areas.
(6) Landlord may, up to sixty (60) days prior to the expiration of the
Term, require that Tenant, at Tenant's expense, remove any such
alterations, improvements or additions prior to or upon the expiration of
this Lease, and restore the Premises to their condition prior to such
alterations, improvements or additions.
(7) Unless Landlord requires their removal, as set forth above, all
alterations, improvements, or additions made to the Premises shall become
the property of Landlord and remain upon and be surrendered with the
Premises upon the expiration of this Lease; provided, however, that
Tenant's machinery, equipment, and trade fixture, other than any which may
be affixed to the Premises so that they cannot be removed without material
damage to the Premises, shall remain the property of Tenant and may be
removed by Tenant subject to the provisions of Paragraph 8(d) above.
9. Construction of Tenant Improvements.
Landlord shall be responsible for constructing the tenant improvements
("Tenant Improvements") in the Premises, as provided in the Work Letter
Agreement, attached hereto as Exhibit B.
10. Insurance and Indemnity.
10.1 Insurance.
(a) Tenant shall obtain and maintain during the Term commercial general
liability insurance with a combined single limit for personal injury and
property damage in an amount of not less than $2,000,000 (in a form, with a
deductible amount, and with carriers reasonably acceptable to Landlord) and
employer's liability and workers' compensation insurance as required by law. The
insurance carrier shall be authorized to do business in the State of California,
with a policyholders and financial rating of at least A:IX Class status as rated
in the most recent edition of Best's Key-Rating guide. Tenant's comprehensive
general liability insurance policy shall be endorsed to provide that (i) it may
not be canceled or altered in such a manner as to adversely affect the coverage
afforded thereby without thirty (30) days' prior written notice to Landlord,
(ii) Landlord is designated as an additional insured, (iii) the insurer
acknowledges acceptance of the mutual waiver of claims by Landlord and Tenant
pursuant to Paragraph 10.2(b) below, and (iv)
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such insurance is primary with respect to Landlord and that any other insurance
maintained by Landlord is excess and noncontributing with such insurance. If, in
the opinion of Landlord's lender or in the commercially reasonable opinion of
Landlord's insurance adviser, the specified amounts of coverage are no longer
adequate, such coverage shall, within 30 days written notice to Tenant, be
appropriately increased. Prior to the commencement of the Term, Tenant shall
deliver to Landlord a duplicate of such policy or a certificate thereof to
Landlord for retention by it, with endorsements. At least thirty (30) days prior
to the expiration of such policy or any renewal or modification thereof, Tenant
shall deliver to Landlord a replacement or renewal binder, followed by a
duplicate policy or certificate within a reasonable time thereafter. If Tenant
fails to obtain such insurance or to furnish Landlord any such duplicate policy
or certificate as herein required, Landlord may, at its election, without notice
to Tenant and without any obligation to do so, procure and maintain such
coverage and Tenant shall reimburse Landlord on demand as additional rent for
any premium so paid by Landlord.
(b) Landlord waives all claims against Tenant, and Tenant's officers,
directors, partners, employees, agents and representatives for loss or damage to
the extent that such loss or damage is insured against under any valid and
collectable insurance policy insuring Landlord or would have been insured
against but for any deductible amount under any such policy. Tenant waives all
claims against Landlord, and Landlord's officers, directors, partners,
employees, affiliates, joint venturers, members, trustees, owners, shareholders,
principals, agents, representatives, successors and assigns, for loss or damage
to the extent such loss or damage is insured against under any valid and
collectable insurance policy insuring Tenant or required to be maintained by
Tenant under this Leased, or would have been insured against but for any
deductible amount under any such policy. The insuring party shall, upon
obtaining the policies of insurance required under this Lease, give notice to
the insurance carrier or carriers that the foregoing mutual waiver of
subrogation is contained in this Lease. Tenant agrees that in the event of a
sale, assignment or transfer of the Premises by Landlord, this waiver of
subrogation shall continue in favor of the original Landlord and any subsequent
Landlord.
(c) Tenant shall at its own cost maintain on all its personal property,
Tenant's improvements, and alterations, in, on, or about the Premises, a policy
of standard fire and extended coverage insurance, with vandalism and malicious
mischief endorsements, to the extent of at least one hundred percent (100%) of
their full replacement value. The proceeds from any such policy shall be used by
Tenant for the replacement of personal property and the restoration of Tenant's
improvements or alterations. Notwithstanding any other provisions of the Lease,
Landlord shall have no liability for damage to or destruction of Tenant's
personal property, regardless of whether the damage or destruction results from
the acts or omissions of Landlord.
(d) During the Term, Landlord shall keep the Building, and improvements
within which the Premises are located, insured against loss or damage by (i)
fire, with extended coverage and vandalism, malicious mischief and special
extended perils (all risk) endorsements or their equivalents, in amounts not
less than one hundred percent (100%) of the replacement cost of the Building and
structures insured, and (ii) flood, in the maximum amount provided for by FEMA
under its flood loss insurance program, with loss payable thereunder to Landlord
and to any authorized encumbrancer of Landlord (with standard mortgagee loss
payable clause) in accordance with their respective interests. Landlord may
maintain rent insurance, for the benefit
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of Landlord, equal to at least one year's Base Rent hereunder. If the Lease is
terminated as a result of damage by fire, casualty or earthquake as set forth in
this Paragraph 10, all insurance proceeds shall be paid to and retained by
Landlord, subject to the rights of any authorized encumbrancer of Landlord.
(e) Tenant acknowledges that Landlord does not, at the time of the signing
of this Lease, insure the Building for earthquake damage. Landlord may, when
Landlord deems the premiums to be reasonable, insure the Building fully or
partially for earthquake damage. At such time, the premium for earthquake
insurance will be added to the Operating Expenses for purposes of determining
additional rent.
10.2 Indemnity.
(a) Tenant waives all claims against Landlord for damage to any property or
injury to or death of any person in, on, or about the Premises, the Building, or
any other portion of the Project arising at any time and from any cause, unless
caused by the active negligence or willful misconduct of Landlord, its agents,
employees, or contractors. Tenant shall indemnify, defend (by counsel reasonably
satisfactory to Landlord) and hold harmless Landlord, and Landlord's officers,
directors, partners, employees, affiliates, joint venturers, members, trustees,
owners, shareholders, principals, agents, representatives, successors and
assigns, from and against all claims, costs, damages, actions, indebtedness and
liabilities (except such as may arise from the active negligence or willful
misconduct of Landlord, and Landlord's officers, directors, partners, employees,
affiliates, joint venturers, members, trustees, owners, shareholders,
principals, agents, representatives, successors and assigns) arising by reason
of any death, bodily injury, personal injury, property damage or any other
injury or damage in connection with (i) any condition or occurrence in or about
or resulting from any condition or occurrence in or about the Premises during
the Term, or (ii) any act or omission of Tenant, or Tenant's agents,
representatives, officers, directors, shareholders, partners, employees,
successors and assigns, wherever it occurs. The foregoing indemnity obligation
of Tenant shall include reasonable attorneys' fees, and all other reasonable
costs and expenses incurred by Landlord from the first notice that any claim or
demand is to be made. The provisions of this Paragraph 10.2 shall survive the
termination or expiration of this Lease with respect to any damage, injury, or
death occurring prior to such expiration or termination.
(b) Neither party shall be liable to the other for any unauthorized or
criminal entry of third parties into the Premises, Building, Project, Common
Areas, or parking facilities, or for any damage to person or property, or loss
of property in and about the Premises, Building, Project, Common Areas, parking
facilities and the approaches, entrances, streets, sidewalks, stairs, elevators,
restrooms, or corridors thereto, by or from any unauthorized or criminal acts of
third parties, regardless of any breakdown, malfunction or insufficiency of any
security measures, practices or equipment provided by Landlord or Tenant. Tenant
shall immediately notify Landlord in writing of any breakdown or malfunction of
any security measures, practices or equipment provided by Landlord as to which
Tenant has knowledge.
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(c) Any diminution or interference with light, air or view by any structure
which may be erected on land adjacent to the Building or resulting from any
other cause shall in no way alter this Lease or impose any liability on
Landlord.
(d) Tenant agrees that in no event shall Landlord be liable for
consequential damages, including injury to Tenant's business or any loss of
income therefrom.
(e) In the event that Landlord or any successor owner of the Building sells
or conveys the Building, then all liabilities and obligations of Landlord or the
successor owner under this Lease accruing after the sale or conveyance shall
terminate and become binding on the new owner, and Tenant shall release Landlord
from all liability under this Lease (including, without limitation, the Security
Deposit, as defined under Paragraph 16 (below), except for acts or omissions of
Landlord occurring prior to such sale or conveyance.
(f) Tenant expressly agrees that so long as Landlord is a corporation,
limited liability company, trust, partnership, joint venture, unincorporated
association or other form of business entity, (i) the obligations of Landlord
shall not constitute personal obligations of the officers, directors, partners,
employees, affiliates, joint ventures, members, trustees, owners, shareholders,
or other principals, agents or representatives of such business entity ("Member
of Landlord"), and (ii) Tenant shall have recourse only to the interest of such
business entity in the Building of which the Premises are a part of the
satisfaction of such obligations and not against the assets of such Member of
Landlord other than to the extent of their respective interests in the Building.
In this regard, Tenant agrees that in the event of any actual or alleged
failure, breach or default by Landlord of its obligations under this Lease, that
(i) no Member of Landlord shall be sued or named as a party in any suit or
action (except as any be necessary to secure jurisdiction of Landlord), (ii) no
judgment will be taken against any Member of Landlord, and any judgment taken
against any Member of Landlord may be vacated and set aside at any time without
hearing, (iii) no writ or execution will ever be levied against the assets of
any Member of Landlord, and (iv) these agreements by Tenant are enforceable both
by Landlord and by any Member of Landlord.
11. Damage or Destruction.
(a) Subject to the provisions of Paragraph 11(b) and 11(c) below, if,
during the Term, the Premises are totally or partially destroyed from any
insured casualty, Landlord shall, within ninety (90) days after the destruction,
commence to restore the Premises to substantially the same condition as they
were in immediately before the destruction and prosecute the same diligently to
completion. Such destruction shall not terminate this Lease. Landlord's
obligation shall not include repair or replacement of Tenant's alterations or
Tenant's equipment, furnishings, fixtures and personal property. If the existing
laws do not permit the Premises to be restored to substantially the same
condition as they were in immediately before destruction, and Landlord is unable
to get a variance to such laws to permit the commencement of restoration of the
Premises within the 90-day period, then either party may terminate this Lease by
giving written notice to the other party within thirty (30) days after
expiration of the 90-day period.
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(b) Despite the provisions of Paragraph 11(a) above, Landlord may decide
within ninety (90) days after such destruction to demolish the Building rather
than rebuild it, in which case this Lease will terminate as of the date of the
destruction. Landlord shall give Tenant written notice of its intention within
ninety (90) days after the destruction.
(c) If any destruction occurs to the Premises during the last six (6)
months of the initial Term or during the last six (6) months of any extension
period, regardless of the nature and extent of the destruction, either party can
elect to terminate this Lease within thirty (30) days after the destruction
occurs. If this Lease does not terminate pursuant to this Paragraph 11(c), the
provisions of Paragraph 11(a) above shall apply.
(d) If the Premises are damaged from any uninsured casualty to any extent
whatsoever, Landlord may within ninety (90) days following the date of such
damage: (i) commence to restore the Premises to substantially the same condition
as they were in immediately before the destruction and prosecute the same
diligently to completion, in which event this Lease shall continue in full force
and effect; or (ii) within the 90-day period Landlord may elect not to so
restore the Premises, in which event this Lease shall cease and terminate. In
either such event, Landlord shall give Tenant written notice of its intention
within the 90-day period.
(e) In the event of destruction or damage to the Premises which materially
interferes with Tenant's use of the Premises, if this Lease is not terminated as
above provided, there shall be an abatement or reduction of Base Rent between
the date of destruction and the date Landlord substantially completes its
reconstruction obligations, based upon the extent to which the destruction
materially interferes with Tenant's use of the Premises. All other obligations
of Tenant under this Lease shall remain in full force and effect. Except for
abatement of Base Rent, Tenant shall have no claim against Landlord for any loss
suffered by Tenant due to damage or destruction of the Premises or any work of
repair undertaken as herein provided.
(f) the provisions of California Civil Code Sections 1932(2) and 1933(4),
and any successor statutes, are inapplicable with respect to any destruction of
the Premises, such sections providing that a lease terminates upon the
destruction of the Premises unless otherwise agreed between the parties to the
contrary.
12. Eminent Domain.
(a) If all or any part of the Premises shall be taken as a result of the
exercise of the power of eminent domain, this Lease shall terminate as to the
part so taken as of the date of taking. In the case of a partial taking of
greater than fifty percent (50%) of the rentable area of the Premises, either
Landlord or Tenant shall have the right to terminate this Lease as to the
balance of the Premises by notice to the other within thirty (30) days after the
date of the taking. In the event of a partial taking of the Premises which does
not result in a termination of this Lease, the monthly Base Rent thereafter to
be paid shall be equitably reduced on a square footage basis. If the continued
occupancy of Tenant is materially interfered with for any time during the
partial taking, notwithstanding the partial taking does not terminate this Lease
as to the part not so taken, the Base Rent shall proportionately abate so long
as Tenant is not able to continuously occupy the part remaining and not so
taken.
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(b) All compensation awarded or paid upon a total or partial taking of the
fee title shall belong to Landlord whether such compensation be awarded or paid
as compensation for diminution in value of the leasehold or of the fee except:
Tenant shall retain and have a claim for the following, to the extent
specifically designated by the condemning authority: (i) the unamortized value
over the Term of Tenant's leasehold improvements (to the extent Landlord has not
contributed to the cost thereof); (ii) that portion (if any) of the award made
to Landlord as a result of removing fixtures, removable by Tenant herein, under
the terms of this Lease but which are required to be taken by the condemnor or
are so acquired by the condemnor; and (iii) all relocation assistance, moving
and relocation expenses to the extent (if any) provided by the condemning
authority directly to Tenant.
13. Assignment and Subletting.
(a) Tenant shall not assign, sublet or hypothecate this Lease or any
interest herein or sublet the Premises or any part thereof or permit the use of
the Premises by any party other than Tenant without the prior written consent of
Landlord, which consent shall not be unreasonably withheld. Any of the foregoing
acts without Landlord's consent shall be void and shall, at the option of
Landlord, terminate this Lease. In connection with each consent requested by
Tenant, Tenant shall submit to Landlord the terms of the proposed transaction,
the identity of the parties to the transaction, the proposed documentation for
the transaction, current financial statements of any proposed assignee or
sublessee and all other information reasonably requested by Landlord concerning
the proposed transaction and the parties involved therein.
(b) As used in this Paragraph 13, the term "assign" or "assignment" shall
include, without limitation, any sale, transfer, or other disposition of all or
any portion of Tenant's estate under this Lease, whether voluntary or
involuntary, and whether by operation of law or otherwise, including any of the
following:
(1) if Tenant is a corporation or a limited liability company: (A) any
dissolution, merger, consolidation, or other reorganization of Tenant; or
(B) a sale or other transfer of more than fifty percent (50%) of the value
of the assets of Tenant; or (C) if Tenant is a corporation with fewer than
500 shareholders, a sale or other transfer of a controlling percentage of
the capital stock of Tenant; or (D) if Tenant is a limited liability
company, a sale or other transfer of a controlling percentage of the
interest in Tenant. The phrase "controlling percentage" means the ownership
of, and the right to vote, stocks or interests possessing at least fifty
percent (50%) of the total combined voting power of the limited liability
company or, in the case of a corporation, of all classes of Tenant's stock
issues, outstanding and permitted to vote for the election of directors of
the corporation;
(2) if Tenant is a trust, the transfer of more than fifty percent
(50%) of the beneficial interest of Tenant, or the dissolution of the
trust;
(3) if Tenant is a partnership or joint venture, the withdrawal, or
the transfer of the interest, of any general partner or joint venturer or
the dissolution of the partnership or joint venture; and
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(4) if Tenant is composed of tenants-in-common, the transfer of
interest of any cotenants or the partition or dissolution of the cotenancy.
(c) No sublessee shall have a right further to sublet, and any assignment
by a sublessee of its sublease shall be subject to Landlord's prior written
consent in the same manner as if Tenant were entering into a new sublease.
(d) Regardless of Landlord's consent, no subletting or assignment shall
release Tenant of Tenant's obligation, or alter the primary liability of Tenant
to pay the Rent and to perform all other obligations to be performed by Tenant
hereunder. The acceptance of Rent by Landlord from any other person shall not be
deemed to be a waiver by Landlord of any provisions hereof. Consent to one
assignment or subletting shall not be deemed consent to any subsequent
assignment or subletting. In the event of default by any assignee of Tenant or
any successor of Tenant in the performance of any of the terms hereof, Landlord
may proceed directly against Tenant without the necessity of exhausting remedies
against such assignee or successor.
(e) In the event Tenant shall assign or sublet the Premises or request the
consent of Landlord to any assignment or subletting, then Tenant shall reimburse
Landlord for reasonable costs and attorney's fees incurred in connection
therewith in an amount not to exceed $1,000.00.
14. Default by Tenant.
(a) The following events shall constitute events of default under this
Lease:
(1) a failure by Tenant to pay any Rent or to deliver an estoppel
certificate (as provided in Paragraph 17 below) where such failure
continues for five (5) days after written notice by Landlord to Tenant;
(2) the bankruptcy or insolvency of Tenant, any transfer by Tenant to
defraud creditors, any assignment by Tenant for the benefit of creditors,
or the commencement of any proceedings of any kind by or against Tenant
under any provision of the Federal Bankruptcy Act or under any
other insolvency, bankruptcy or reorganization act unless, in the event any
such proceedings are involuntary, Tenant is discharged from the same within
sixty (60) days thereafter; the appointment of a receiver for a substantial
part of the assets of Tenant; or the levy upon this Lease or any estate of
Tenant hereunder by any attachment or execution;
(3) the abandonment or vacation of the Premises;
(4) the discovery by Landlord that any financial statement given to
Landlord by Tenant, any assignee of Tenant, any subtenant of Tenant, any
successor in interest of Tenant or any guarantor of Tenant's obligation
hereunder, and any of them, was materially false; and
(5) a failure by Tenant to perform any of the terms, covenants,
agreements or conditions of this Lease to be observed or performed by
Tenant (excluding any event of default under Paragraph 14(a)(1) above),
where such failure continues for thirty (30) days after written notice
thereof by Landlord to Tenant; provided, however, that if the nature of the
default is such that the same
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cannot reasonably be cured within the 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.
(b) In the event of any material default or breach by Tenant, Landlord may
at any time thereafter, without limiting Landlord in the exercise of any right
or remedy at law or in equity which Landlord may have by reason of such default
or breach:
(1) Pursue the remedy described in California Civil Code Section
1951.4 whereby Landlord may continue this Lease in full force and effect
after Tenant's breach and abandonment and recover the Rent and any other
monetary charges as they become due, without terminating Tenant's right to
sublet or assign this Lease, subject only to reasonable limitations as
herein provided. During the period Tenant is in default, Landlord shall
have the right to do all acts necessary to preserve and maintain the
Premises as Landlord deems reasonable and necessary, including removal of
all persons and property from the Premise, and Landlord can enter the
Premises and relet them, or any part of them, to third parties for Tenant's
account. Tenant shall be liable immediately to Landlord for all costs
Landlord incurs in reletting the Premises, including, without limitation,
brokers' commissions, expenses of remodeling the Premises required by the
reletting, and like costs. Reletting can be for a period shorter or longer
than the remaining Term.
(2) Pay or perform such obligation due (but shall not be obligated to
do so), if Tenant fails to pay or perform any obligations when due under
this Lease within the time permitted for their payment or performance. In
such case, the costs incurred by Landlord in connection with the
performance of any such obligation will be additional rent due under this
Lease and will become due and payable on demand by Landlord.
(3) Terminate Tenant's rights to possession by any lawful means, in
which case this Lease shall terminate and Tenant shall immediately
surrender possession of the Premises to Landlord. In such event Landlord
shall be entitled to recover from Tenant all damages incurred by Landlord
by reason of Tenant's default, including, without limitation, the
following: (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 which would have been
earned after termination until the time of award exceeds the amount of such
Rent loss that is proved 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 Term after the time of award exceeds the amount of such Rent
loss that is proved 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 its obligations under this Lease or which in
the ordinary course of events would be likely to result therefrom; plus (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 State law.
Upon any such termination of Tenant's possessory interest in and to the
Premises, Tenant (and at Landlord's sole election, Tenant's sublessees)
shall no longer have any interest in the Premises, and Landlord shall have
the right to make any reasonable repairs, alterations or modifications to
the Premises which Landlord in its sole discretion deems reasonable and
necessary. The "worth at the time of award" of the amounts referred to in
subparagraphs (A) and (B) above is computed by allowing interest at the
maximum rate an individual is permitted by
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law to charge. The worth at the time of award of the amount referred to in
subparagraph (C) above is computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of
award plus one percent (1%).
(4) Pursue any other legal or equitable remedy available to Landlord.
Unpaid installments of Rent and other unpaid monetary obligations of Tenant
under the terms of this Lease shall bear interest from the date due at the
rate of ten percent (10%) per annum.
(c) In the event Tenant is evicted or Landlord takes possession of the
Premises by reason of any default by Tenant hereunder, Tenant hereby waives any
right of redemption or relief from forfeiture as provided by law.
(d) Even though Tenant has breached this Lease and abandoned the Premises,
this Lease shall continue in effect for so long as Landlord does not terminate
Tenant's right to possession, and Landlord may enforce all its rights and
remedies under this Lease, including the right to recover Rent as it becomes due
under this Lease. Acts of maintenance or preservation, efforts to relet the
Premises, or the appointment of a receiver upon initiative of Landlord to
protect Landlord's interest under this Lease, shall not constitute a termination
of Tenant's right to possession.
(e) In the event Tenant is in material default under any provision of this
Lease then, at Landlord's sole election: (i) Tenant shall not have the right to
exercise any available right, option or election under this Lease ("Tenant's
Exercise Rights") if at such time Tenant is in default hereunder, (ii) Tenant
shall not have the right to consummate any transaction or event triggered by the
exercise of any of Tenant's Exercise Rights if at such time Tenant is in default
hereunder, and (iii) Landlord shall not be obligated to give Tenant any required
notices or information relating to the exercise of any of Tenant's Exercise
Rights hereunder.
15. Default by Landlord, Notice to Mortgagee.
Landlord shall not be in default unless Landlord, or the holder of any
mortgage, deed of trust or ground lease covering the Premises, fails to perform
obligations required of Landlord within a reasonable time, but in no event later
than thirty (30) days after written notice by Tenant to Landlord certified mail,
postage prepaid, and to the holder of any first mortgage, deed of trust or
ground lease covering the Premises whose name and address shall have been
furnished to Tenant in writing, specifying wherein Landlord has failed to
perform such obligations; provided, however, that if the nature of Landlord's
obligation is such that more than thirty (30) days are required for performance
then Landlord shall not be in default if Landlord or the holder of any such
mortgage, deed of trust or ground lease commences performance within such 30-day
period and thereafter diligently prosecutes the same to completion. In no event
shall Tenant be entitled to terminate this Lease by reason of Landlord's
default, and Tenant's remedies shall be limited to an action for monetary
damages at law.
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16. Security Deposit.
On execution of this Lease, Tenant shall deposit with Landlord the sum
specified in the Basic Lease Information (the "Security Deposit"). The Security
Deposit shall be held by Landlord as security for the performance by Tenant of
all of the provisions of this Lease. If Tenant fails to pay Rent or other
charges due hereunder, or otherwise defaults with respect to any provision of
this Lease, Landlord may use, apply, or retain all or any portion of the
Security Deposit for the payment of any Rent or other charge in default, or the
payment of any other sum to which Landlord may become obligated by reason of
Tenant's default, or to compensate Landlord for any loss or damage which
Landlord may suffer thereby. If Landlord so uses or applies all or any portion
of the Security Deposit, then within ten (10) days after demand therefor Tenant
shall deposit cash with Landlord in an amount sufficient to restore the deposit
to the full amount thereof, and Tenant's failure to do so shall be a material
breach of this Lease. Landlord shall not be required to keep the Security
Deposit separate from its general accounts. If Tenant performs all of Tenant's
obligations hereunder, the Security Deposit, or so much thereof as has not
theretofore been applied by Landlord, shall be returned, without payment of
interest for its use, to Tenant (or, at Landlord's option to the last assignee,
if any, of Tenant's interest hereunder) at the expiration of the Term, and after
Tenant has vacated the Premises. No trust relationship is created herein between
Landlord and Tenant with respect to the Security Deposit.
17. Estoppel Certificate.
(a) Tenant shall within ten (10) days of notice from Landlord execute,
acknowledge and deliver to Landlord a statement certifying (i) that this Lease
is unmodified and in full force and effect (or, if modified, stating the nature
of such modification and certifying that this Lease, as so modified, is in full
force and effect), (ii) amount of the Security Deposit, (iii) the date to which
the Rent has been paid, (iv) acknowledging that there are not, to Tenant's
knowledge, any uncured defaults on the part of Landlord hereunder, or specifying
such defaults, if any are claimed, and (v) such other matters as may reasonably
be requested by Landlord. Any such statement may be conclusively relied upon by
any prospective purchaser or encumbrancer of the Building.
(b) Tenants failure to deliver such statement within such time shall be
conclusive upon Tenant, (i) that this Lease is in full force and effect, without
modification except as may be represented by Landlord, (ii) that there are no
uncured defaults in Landlord's performance, and (iii) that not more than one
month's Base Rent has been paid in advance.
(c) If Landlord desires to finance or refinance the Building, Tenant agrees
to deliver to any lender designated by Landlord such financial statements of
Tenant as may be reasonably required by such lender. All such financial
statements shall be received by Landlord in confidence and shall be used for the
purposes herein set forth.
18. Subordination
This Lease, at Landlord's sole option, shall be subordinate to any ground
lease, mortgage, deed of trust, or any other hypothecation for security now or
hereafter placed upon the Building and to any and all advances made on the
security thereof and to all renewals, modifications,
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consolidations, replacements, refinancings and extensions thereof.
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, unless this Lease is otherwise terminated pursuant to its terms. If any
mortgagee, trustee, or ground lessor shall elect to have this Lease prior to the
lien of its mortgage, dead of trust or ground lease, and shall give notice
thereof to Tenant, this Lease shall be deemed prior to such mortgage, deed of
trust, or ground lease, whether this Lease is dated prior to or subsequent to
the date of said mortgage, deed of trust or ground lease or the date of
recording thereof. If any mortgage or deed of trust to which this Lease is
subordinate is foreclosed or a deed in lieu of foreclosure is given to the
mortgagee or beneficiary, Tenant shall attorn to the purchaser at the
foreclosure sale or to the grantee under the deed in lieu of foreclosure; if any
ground lease to which this Lease is subordinate is terminated, Tenant shall
attorn to the ground lessor. Tenant agrees to execute any documents required to
effectuate such subordination or to make this Lease prior to the lien of any
mortgage, deed of trust or ground lease, as the case may be, or to evidence such
attornment. Any such document of attornment shall also provide that the
successor shall not disturb Tenant in its use of the Premises in accordance with
this Lease.
19. Attorneys.
In the event legal action is initiated by either party, the prevailing
party shall be entitled to recover all costs and expenses incurred in such
action, including, without limitation, reasonable attorneys' fees and costs,
including attorneys' fees incurred at trial and on appeal, if any.
20. Notices.
All notices, consents, demands, and other communications from one party to
the other given pursuant to the terms of this Lease shall be in writing and
shall be personally delivered, delivered by courier service, sent via facsimile
(confirmation receipt required), or deposited in the United States mail,
certified or registered, postage prepaid, and addressed as follows: To Tenant at
the address specified in the Basic Lease Information or to such other place as
Tenant may from time to time designate in a notice to Landlord; to Landlord at
the address specified in the Basic Lease Information, or to such other place and
to such other parties as Landlord may from time to time designate in a notice to
Tenant. All notices shall be effective upon delivery or refusal of delivery.
21. General Provisions.
(a) This Lease shall be governed by and construed in accordance with the
internal laws of the State of California, notwithstanding any choice of law
statutes, regulations, provisions or requirements to the contrary.
(b) The invalidity of any provision of this Lease, as determined by a court
of competent jurisdiction, shall in no way affect the validity of any other
provision hereof.
(c) This Lease including attached Exhibits, Addenda, and Basic Lease
Information contains all agreements and understandings of the parties and
supersedes and cancels any and all prior or contemporaneous written or oral
agreements, instruments, understandings and communications
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of the parties with respect to the subject matter herein. This Lease, including
the attached Exhibits, Addenda, and Basic Lease Information, may be modified
only in a writing signed by each of the parties.
(d) No waiver of any provision hereof by either party shall be deemed by
the other party to be a waiver of any other provision, or of any subsequent
breach of the same provision. Landlord's or Tenant's consent to, or approval of,
any act shall not be deemed to render unnecessary the obtaining of Landlord's or
Tenant's consent to, or approval of, any subsequent act by the other party.
(e) If Tenant remains in possession, with the expressed consent of
Landlord, of all or any part of the Premises after the expiration of the Term,
such tenancy shall be from month to month only, and not a renewal hereof or an
extension for any further term, and in such case, Rent shall be payable in the
amount of the last month's Base Rent and all other charges under the Lease and
such month-to-month tenancy shall be subject to every other term, covenant and
agreement contained herein.
(f) Subject to the provisions of this Lease restricting assignment or
subletting by Tenant, this Lease shall bind the parties, their personal
representatives, successors, and assigns.
(g) Upon reasonable prior notice to Tenant (which notice shall not be
required in the event of an emergency), Landlord and Landlord's representatives
and agents shall have the right to enter the Premises during regular business
hours for the purpose of inspecting the same, showing the same to prospective
purchasers or lenders, and making such alterations, repairs, improvements, or
additions to the Premises, the Building or the Common Areas as Landlord may deem
necessary or desirable. Landlord may at any time during the last one hundred
twenty (120) days of the Term place on or about the Premises any ordinary "For
Lease" sign. Landlord may at any time place on or about the Premises any
ordinary "For Sale" sign.
(h) The voluntary or other surrender of this Lease by Tenant, the mutual
cancellation thereof or the termination of this Lease by Landlord as a result of
Tenant's default shall, at the option of Landlord, terminate all or any existing
subtenancies or may at the option of Landlord, operate as an assignment to
Landlord of any or all of such subtenancies.
(i) If Tenant is a corporation, limited liability company or partnership,
each individual executing this Lease on behalf of Tenant represents and warrants
that he is duly authorized to execute and deliver this Lease on behalf of the
corporation, company or partnership in accordance with, where applicable, a duly
adopted resolution of the board of directors of the corporation, the vote of the
members of the limited liability company or the vote of the partners within the
partnership, and that this Lease is binding upon the corporation, company or
partnership in accordance with its respective articles of incorporation and
bylaws, operating agreement or partnership agreement.
(j) Time is expressly declared to be of the essence of this Lease and of
each and every covenant, term, condition, and provision hereof, except as to the
conditions relating to the delivery of possession of the Premises to Tenant.
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(k) If there is more than one party comprising Tenant, the obligations
imposed on Tenant shall be joint and several.
(l) The language in all parts of this Lease shall be in all cases construed
as a whole according to its fair meaning and not strictly for nor against either
Landlord or Tenant.
(m) As used in this Lease and whenever required by the context thereof,
each number, both singular and plural, shall include all numbers and in each
gender shall include all genders. Landlord and Tenant, as used in this Lease or
in any other instrument referred to in or made a part of this Lease, shall
likewise include both the singular and the plural, a corporation, limited
liability company, partnership, individual or person acting in any fiduciary
capacity as executor, administrator, trustee or in any other representative
capacity.
(n) The Exhibits and Addendum if any, specified in the Basic Lease
Information are attached to this Lease and by this reference made a part hereof.
22. Force Majeure.
Any delay in construction, repairs, or rebuilding any building, improvement
or other structure herein shall be excused and the time limit extended to the
extent that the delay is occasioned by reason of acts of God, labor troubles,
laws or regulations of general applicability, acts of Tenant or Tenant Delays
(as the term is defined in the Work Letter Agreement attached hereto as Exhibit
B), or other occurrences beyond the reasonable control of Landlord.
Accordingly, Landlord's obligation to perform shall be excused for the
period of the delay and the period for performance shall be extended for a
period equal to the period of such delay.
23. Broker's Fee.
Each party represents that it has not had dealings with any real estate
broker, finder, or other person, with respect to this Lease in any manner,
except the brokerage firm(s) specified in the Basic Lease information. Each
party shall hold harmless the other party from all damages resulting from any
claim that may be asserted against the other party by any broker, finder, or
other person with whom the other party has or purportedly had dealt. Landlord
shall pay any commissions of fees that are payable to the broker or finder
specified in the Basic Lease Information, with respect to this Lease in
accordance with the provisions of a separate commission contract.
24. Financial Statement.
It is acknowledged by all parties hereto that the attached financial
declaration of Tenant is incorporated as a pat of this Lease as Exhibit E, that
the information contained therein is true and correct in all material respects,
and that the accuracy of the information is a significant fact upon which
Landlord has relied in the granting of this Lease.
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TENANT: LANDLORD:
Ubiquity Communication, Inc. G & W/Copley Redwood Business Park, L.P.
a California corporation a limited partnership
By: G & W Management Co.
Its: Manager
By: /s/ Joseph J. Tavormina
--------------------------------
Joseph J. Tavormina
Its: President and CEO
By: /s/ William C. White
-------------------------------
William C. White, President
G & W Management Co.
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Exhibit 23.1
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the use of our
reports and to all references to our Firm included in or made a part of this
registration statement.
/s/ Arthur Andersen LLP
San Jose, California
May 4, 2000
