Exhibit 10.4
THIS NOTE AND THE COMMON SHARES ISSUABLE UPON
CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS.
THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS
NOTE MAY NOT BE SOLD, TRANSFERRED, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
AS TO THIS NOTE OR AS TO SAID COMMON SHARES UNDER SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO AIRNET COMMUNICATIONS COPORATION THAT
SUCH REGISTRATION IS NOT REQUIRED.
AMENDED AND RESTATED SECURED
CONVERTIBLE MINIMUM BORROWING NOTE
FOR VALUE RECEIVED, each of AIRNET
COMMUNICATIONS CORPORATION, a Delaware corporation (the “
Parent ”), and the other companies listed on
Exhibit A attached hereto (such other companies together
with the Parent, each a “ Company ” and
collectively, the “ Companies ”), jointly and
severally, promises to pay to LAURUS MASTER FUND, LTD., c/o M&C
Corporate Services Limited, P.O. Box 309 GT, Ugland House, South
Church Street, George Town, Grand Cayman, Cayman Islands, Fax:
345-949-8080 or its registered assigns or successors in interest
(collectively, the “ Holder ”), the sum of Four
Million Dollars ($4,000,000) together with any accrued and unpaid
interest hereon, on November 8 , 2008 (the “
Maturity Date ”) if not sooner paid (or converted)
hereunder. This note amends and restates in its entirety (and is
given in substitution for and not in satisfaction of) that certain
$4,000,000 secured convertible minimum borrowing note made by the
Company in favor of Holder on November 8, 2005 and amended and
restated as of December 30, 2005.
Capitalized terms used herein
without definition shall have the meanings ascribed to such terms
in the Security Agreement among the Companies and the Holder dated
as of the date hereof (as amended, modified and/or supplemented
from time to time, the “ Security Agreement
”).
The following terms shall apply to
this Minimum Borrowing Note (this “ Note
”):
ARTICLE I
CONTRACT RATE
1.1 Contract Rate . Subject
to Sections 4.2 and 5.10, interest payable on the outstanding
principal amount of this Note (the “ Principal Amount
”) shall accrue at a rate per annum equal to the “prime
rate” published in The Wall Street Journal from time
to time (the “ Prime Rate ”), plus two percent
(2%) per annum (the “ Contract Rate ”). The
Contract Rate shall be increased or decreased as the case may be
for each increase or decrease in the Prime Rate in an amount equal
to such increase or decrease in the Prime Rate; each change to
be
effective as of the day of the change in the
Prime Rate. The Contract Rate shall not at any time be less than
six percent (6%). Interest shall be (i) calculated on the
basis of a 360 day year, and (ii) payable monthly, in arrears,
commencing on December 1, 2005 on the first business day of
each consecutive calendar month thereafter through and including
the Maturity Date (or any date of prepayment permitted hereunder or
under the Security Agreement) and on the Maturity Date (or any date
of prepayment permitted hereunder or under the Security Agreement),
whether by acceleration or otherwise.
1.2 Contract Rate Adjustments and
Payments . The Contract Rate shall be calculated on the last
business day of each calendar month hereafter (other than for
increases or decreases in the Prime Rate which shall be calculated
and become effective in accordance with the terms of
Section 1.1) until the Maturity Date (each a “
Determination Date ”).
ARTICLE II
LOANS; PAYMENTS UNDER THIS
NOTE
2.1 Loans . All Loans
evidenced by this Note shall be made in accordance with the terms
and provisions of the Security Agreement.
2.2 No Effective Registration
. Notwithstanding anything to the contrary herein, the Holder shall
not be required to accept shares of Common Stock as payment
following a conversion by the Holder if there fails to exist an
effective current Registration Statement (as defined in the
Registration Rights Agreement) covering the shares of Common Stock
to be issued (unless such shares of Common Stock can be transferred
under Rule 144 under the Securities Act without regard to volume
limitation), or if an Event of Default hereunder exists and is
continuing, unless such requirement is otherwise waived in writing
by the Holder in whole or in part at the Holder’s
option.
2.3 Optional Redemption in
Cash . The Companies will have the option of prepaying this
Note (“ Optional Redemption ”) by paying to the
Holder a sum of money equal to (a) one hundred twenty percent
(120%) of the principal balance of this Note plus
(b) accrued but unpaid interest thereon plus
(c) any and all other sums due, accrued or payable to the
Holder arising under this Note, the Security Agreement, or any
other Ancillary Agreement (the “ Redemption Amount
”) outstanding on the Redemption Payment Date (as defined
below). The Company shall deliver to the Holder a written notice of
redemption (the “ Notice of Redemption ”)
specifying the date for such Optional Redemption (the “
Redemption Payment Date ”), which date shall be seven
(7) days after the date of the Notice of Redemption (or if
such day is not a Business Day, the next succeeding Business Day)
(the “ Redemption Period ”). A Notice of
Redemption shall not be effective with respect to any portion of
this Note for which the Holder has previously delivered a Notice of
Conversion (defined below) pursuant to Section 3.1, or for
conversions elected to be made by the Holder pursuant to
Section 3.1 during the Redemption Period. The Redemption
Amount shall be determined as if such Holder’s conversion
elections had been completed immediately prior to the date of the
Notice of Redemption. On the Redemption Payment Date, the
Redemption Amount (plus any additional interest and fees accruing
on the Notes during the Redemption Period) must be irrevocably paid
in full in immediately available funds to the Holder. In the event
the Companies fail to pay the Redemption Amount on the Redemption
Payment Date, then such Redemption Notice shall be null and
void.
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ARTICLE III
CONVERSION RIGHTS AND FIXED
CONVERSION PRICE
3.1 Optional Conversion . Subject to the
terms of Section 2.3 and this Article III, the Holder shall
have the right, but not the obligation, at any time until the
Maturity Date or during an Event of Default (as defined in Article
IV), and, subject to the limitations set forth in Section 3.2,
3.3 and 3.10 hereof, to convert all or any portion of the
outstanding Principal Amount into fully paid and nonassessable
shares of the Common Stock at the Fixed Conversion Price. For
purposes hereof, subject to Section 3.6 hereof, the initial
“ Fixed Conversion Price ” means $1.33;
notwithstanding the foregoing, if the Fixed Conversion Price as
calculated above would be less than the sum of (i) the closing
bid price of the Common Stock on the Principal Market last reported
prior to the execution of this Agreement, plus (ii) $0.025 per
share to reflect the value of the Warrants under applicable Nasdaq
interpretations (such sum the “Nasdaq Market
Calculation”), then the Fixed Conversion Price shall be
increased so as to equal the Nasdaq Market Calculation. The shares
of Common Stock to be issued upon such conversion are herein
referred to as the “ Conversion Shares.
”
3.2 Conversion Limitation . Notwithstanding anything contained herein to
the contrary, the Holder shall not be entitled to convert pursuant
to the terms of this Note an amount that would be convertible into
that number of Conversion Shares which would exceed the difference
between (i) 4.99% of the outstanding shares of Common Stock
and (ii) the number of shares of Common Stock beneficially
owned by the Holder. For purposes of the immediately preceding
sentence, beneficial ownership shall be determined in accordance
with Section 13(d) of the Exchange Act and Regulation 13d-3
thereunder. The Conversion Shares limitation described in this
Section 3.2 shall automatically become null and void following
notice to any Company upon the occurrence and during the
continuance of an Event of Default, or upon 75 days prior notice to
the Parent, except that at no time shall the number of shares of
Common Stock beneficially owned by the Holder exceed 19.99% of the
outstanding shares of Common Stock. Notwithstanding anything
contained herein to the contrary, the number of shares of Common
Stock issuable by the Parent and acquirable by the Holder at an
average price below $1.295 per share pursuant to the terms of this
Note, the Security Agreement or any other Ancillary Agreement,
shall not exceed an aggregate of 2,520,966 shares of Common Stock
(subject to appropriate adjustment for stock splits, stock
dividends, or other similar recapitalizations affecting the Common
Stock) (the “ Maximum Common Stock Issuance ”),
unless the issuance of Common Stock hereunder in excess of the
Maximum Common Stock Issuance shall first be approved by the
Parent’s shareholders. If at any point in time and from time
to time the number of shares of Common Stock issued pursuant to the
terms of this Note, the Security Agreement or any other Ancillary
Agreement, together with the number of shares of Common Stock that
would then be issuable by the Parent to the Holder in the event of
a conversion or exercise pursuant to the terms of this Note, the
Security Agreement or any other Ancillary Agreement, would be
limited by the preceding sentence, the Parent shall promptly call a
shareholders meeting to solicit shareholder approval for the
issuance of the shares of Common Stock hereunder in excess of the
Maximum Common Stock Issuance. Notwithstanding anything contained
herein to the contrary, the provisions of this Section 3.2 are
irrevocable and may not be waived by the Holder or any
Company.
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3.3 Mechanics of Holder’s
Conversion . (a) In the event that the Holder elects to
convert this Note into Common Stock, the Holder shall give notice
of such election by delivering an executed and completed notice of
conversion in substantially the form of Exhibit B hereto
(appropriately completed) (“ Notice of Conversion
”) to the Parent and such Notice of Conversion shall provide
a breakdown in reasonable detail of the Principal Amount that is
being converted. On each Conversion Date (as hereinafter defined)
and in accordance with its Notice of Conversion, the Holder shall
make the appropriate reduction to the Principal Amount as entered
in its records and shall provide written notice thereof to the
Parent within two (2) Business Days after the Conversion Date.
Each date on which a Notice of Conversion is delivered or
telecopied to the Parent in accordance with the provisions hereof
(including Section 5.4) shall be deemed a Conversion Date (the
“ Conversion Date ”). Pursuant to the terms of
the Notice of Conversion, the Parent will issue instructions to the
transfer agent accompanied by an opinion of counsel (if requested
by the Transfer Agent) within three (3) Business Days of the
date of the delivery to the Parent of the Notice of Conversion and
shall cause (to the extent it has the ability to cause) the
transfer agent to transmit the certificates representing the
Conversion Shares to the Holder by crediting the account of the
Holder’s designated broker with the Depository Trust
Corporation (“ DTC ”) through its Deposit
Withdrawal Agent Commission (“ DWAC ”) system
within three (3) Business Days after receipt by the Parent of
the Notice of Conversion in accordance with Section 5.4 (the
“ Delivery Date ”). In the case of the exercise
of the conversion rights set forth herein the conversion
privileg
