Exhibit 4.1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report:
(Exact Name of Registrant as Specified in Its Charter)
| (State or other jurisdiction of incorporation) |
(Commission File Number) | (I.R.S. Employer Identification) |
(Address of principal executive offices) (Zip Code)
(
(Registrant’s Telephone Number, Including Area Code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a -12) |
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b)) |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e -4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
INTRODUCTORY NOTE
Unless the context otherwise requires, “we,” “us,” “our,” “Airspan” and the “Company” refer to Airspan Networks Holdings Inc., a Delaware corporation (f/k/a New Beginnings Acquisition Corp.), and its consolidated subsidiaries following the Closing (as defined below). Unless the context otherwise requires, references to “New Beginnings” refer to New Beginnings Acquisition Corp. prior to the Closing. All references herein to the “Board” refer to the board of directors of the Company.
Terms used in this Current Report on Form 8-K (this “Report”) but not defined herein, or for which definitions are not otherwise incorporated by reference herein, shall have the meaning given to such terms in the Proxy Statement/Prospectus/Consent Solicitation Statement (as defined below) in the section entitled “Frequently Used Terms” beginning on page 2 thereof, and such definitions are incorporated herein by reference.
Item 1.01 Entry into a Material Definitive Agreement.
As disclosed under the sections entitled “Proposal No. 1—The Business Combination Proposal – The Business Combination” and “Proposal No. 1—The Business Combination Proposal—The Business Combination Agreement” beginning on pages 106 and 123, respectively, of the proxy statement/prospectus/consent solicitation statement (the “Proxy Statement/Prospectus/Consent Solicitation Statement”) as filed with the Securities and Exchange Commission (the “SEC”) on July 26, 2021 by New Beginnings, New Beginnings entered into that certain Business Combination Agreement (the “Business Combination Agreement”) dated March 8, 2021, with Artemis Merger Sub Corp., a Delaware corporation and newly formed, wholly-owned direct subsidiary of New Beginnings (“Merger Sub”), and Airspan Networks Inc., a Delaware corporation (“Legacy Airspan”). Pursuant to the Business Combination Agreement, Merger Sub was merged with and into Legacy Airspan, with Legacy Airspan surviving the merger and becoming a wholly-owned direct subsidiary of New Beginnings (the “Business Combination” and, together with the other transactions contemplated by the Business Combination Agreement, the “Transactions”).
On August 11, 2021, New Beginnings held a special meeting of the stockholders (the “Special Meeting”), at which the New Beginnings stockholders considered and voted on, among other matters, a proposal to approve and adopt the Business Combination Agreement and the Transactions.
Pursuant to the terms and subject to the conditions set forth in the Business Combination Agreement, following the Special Meeting on August 13, 2021, the Transactions were consummated (the “Closing”).
Item 2.01 of this Report discusses the consummation of the Transaction and the entry into agreements relating thereto and is incorporated herein by reference.
Registration Rights and Lock-Up Agreement
On August 13, 2021, the Company, certain stockholders of New Beginnings (the “Sponsor Holders”) and certain stockholders of Legacy Airspan (collectively with the Sponsor Holders, the “Holders”) entered into that certain Registration Rights and Lock-Up Agreement (the “Registration Rights and Lock-Up Agreement”).
Pursuant to the terms of the Registration Rights and Lock-Up Agreement, the Company is obligated to file a shelf registration statement to register the resale of certain securities of the Company held by the Holders. In addition, subject to certain requirements and customary conditions, including with regard to the number of demand rights that may be exercised, the Holders may demand at any time or from time to time, to sell all or any portion of their registrable securities in an underwritten offering pursuant to a shelf registration statement so long as (i) the total offering price is reasonably expected to exceed $50 million or (ii) if such requesting Holder reasonably expects to sell all of the registerable securities held by such Holder in such underwritten offering pursuant to a shelf registration statement, the total offering price is reasonably expected to exceed $10 million. The Registration Rights and Lock-Up Agreement will also provide the Holders with “piggy-back” registration rights, subject to certain requirements and customary conditions.
1
Subject to certain exceptions, the Registration Rights and Lock-Up Agreement further provides for the securities of the Company held by Oak Investment Partners XI, Limited Partnership, Oak Investment Partners XIII, Limited Partnership, Qualcomm Incorporated and SoftBank Group Capital Limited to be locked-up for a period of six months following the Closing, while the Founder Shares held by the Sponsor will be locked-up for a period of one year following the Closing, in each case subject to earlier release upon (i) the date on which the last reported sale price of the common stock of the Company equals or exceeds $12.50 per share for any 20 trading days within any 30-day trading period or (ii) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction after the Closing that results in all of the Company’s stockholders having the right to exchange their shares of common stock of the Company for cash, securities or other property.
The foregoing description of the Registration Rights and Lock-Up Agreement is qualified in its entirety by reference to the full text of the Registration Rights and Lock-Up Agreement, a copy of which is filed as Exhibit 10.1 to this Report, and incorporated herein by reference.
Stockholders Agreement
On August 13, 2021, New Beginnings, the Sponsor and certain stockholders of Legacy Airspan entered into the Stockholders Agreement, which provides, among other things, that the Board consists of eight directors. Additionally, the Stockholders Agreement provides that, from and after the Closing and until such time as the Sponsor beneficially owns less than 1,535,000 shares of the Company’s Common Stock, the Sponsor will have the right to nominate the Sponsor Director, who is initially Michael Liebowitz. The Stockholders Agreement also provides that for so long as the Sponsor Director is an independent director, the Sponsor Director will be appointed to, and serve on, the nominating and corporate governance committee of the Board (or, if there is no nominating and corporate governance committee of the Board, such other committee of the Board that is primarily responsible for nominating and corporate governance matters).
The foregoing description of the Stockholders Agreement is qualified in its entirety by reference to the full text of the Stockholders Agreement, a copy of which is filed as Exhibit 10.2 to this Report, and incorporated herein by reference.
Warrants
On August 13, 2021, New Beginnings and Continental Stock Transfer & Trust Company, as warrant agent (the “Warrant Agent”) entered into a warrant agreement (the “Post-Combination Company Warrant Agreement”), which provides for the form and provisions of the Post-Combination Company Warrants, the terms upon which the Post-Combination Company Warrants will be issued and exercised, and the respective rights, limitation of rights, and immunities of Airspan, the Warrant Agent, and the holders of the Post-Combination Company Warrants. The Post-Combination Company Warrants to be issued pursuant to the Post-Combination Company Warrant Agreement include: (i) 3,000,000 Post-Combination Company $12.50 Warrants; (ii) 3,000,000 Post-Combination Company $15.00 Warrants; and (iii) 3,000,000 Post-Combination Company $17.50 Warrants. Under the Post-Combination Company Warrants, New Beginnings may redeem the warrants upon 30 days’ prior written notice if the sales price of the shares of New Beginnings Common Stock exceeds certain thresholds over a 30-trading day period.
The foregoing description of the Post-Combination Company Warrant Agreement is qualified in its entirety by reference to the full text of the Post-Combination Company Warrant Agreement, a copy of which is filed as Exhibit 4.4 to this Report, and incorporated herein by reference.
Amended Credit Agreement
At Closing, on August 13, 2021, the Company, Legacy Airspan and certain of its subsidiaries who are party to the Fortress Credit Agreement entered into a Waiver and Consent, Second Amendment, Restatement, Joinder and Omnibus Amendment to Credit Agreement and Other Loan Documents relating to the Fortress Credit Agreement (the “Fortress Amendment”) with Fortress to, among other things, add the Company as a guarantor, recognize and account for the Business Combination, recognize and account for the Convertible Notes (as defined below) and provide updated procedures for replacement of LIBOR. The foregoing description of the Fortress Amendment is qualified in its entirety by reference to the full text of the Fortress Amendment, a copy of which is filed as Exhibit 10.3 to this Report, and incorporated herein by reference.
2
The Fortress Credit Agreement is described in the Proxy Statement/Prospectus/Consent Solicitation Statement in the section entitled “Certain Airspan Relationships and Related Party Transactions — Equity Financings — SoftBank” beginning on page 219 thereof, and such description is incorporated by reference herein. This description of the Fortress Credit Agreement is qualified in its entirety by reference to the full text of the Fortress Credit Agreement and related amendments, which are filed as Exhibits 10.42 through 10.45 to this Report.
Convertible Notes
Immediately prior to Closing, on August 13, 2021, the Company issued $50,000,000 aggregate principal amount of senior secured convertible notes (the “Convertible Notes”) under a Senior Secured Convertible Note Purchase and Guarantee Agreement (the “Purchase Agreement”) by and among the Company, as issuer, Merger Sub, as guarantor, DBFIP ANI LLC, as agent, collateral agent and trustee, and FIP UST LP, Drawbridge Special Opportunities Fund LP, DBDB Funding LLC, Fortress Lending II Holdings L.P., FLF II Holdings Finance L.P., Fortress Lending Fund II MA-CRPTF LP, Fortress Lending I Holdings L.P. and FLF I Holdings Finance L.P. At Closing, Legacy Airspan and certain of its subsidiaries who are party to the Fortress Credit Agreement entered into a joinder agreement to add Legacy Airspan and such subsidiaries as guarantors under the Purchase Agreement (the “Joinder Agreement”). The foregoing description of the Joinder Agreement is qualified in its entirety by reference to the full text of the Joinder Agreement, a copy of which is filed as Exhibit 10.48 to this Report, and incorporated herein by reference. SoftBank has an indirect, non-controlling beneficial interest in Fortress, which is the collateral agent under the Purchase Agreement and the Convertible Notes. Softbank has an indirect, non-controlling beneficial interest in each purchaser of Convertible Notes as of the Note Closing (as defined below).
The Convertible Notes bear interest at a rate equal to 7.0% per annum (the “Base Rate”), payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year, beginning on September 30, 2021. Under certain circumstances, a default interest will apply following an event of default under the Convertible Notes at a per annum rate equal to the lower of (i) the Base Rate plus 3.75% and (ii) the maximum amount permitted by law. The Convertible Notes mature on December 30, 2024, unless earlier accelerated, converted, redeemed or repurchased. The Convertible Notes are secured by substantially all of the assets of the Company and a pledge of the capital stock of its subsidiaries.
Each Convertible Note, together with all accrued but unpaid interest thereon, are convertible, in whole or in part, at the option of the holder thereof, at any time prior to the payment in full of the principal amount thereof (together with all accrued but unpaid interest thereon), into shares of common stock of the Company at a conversion price equal to $12.50 per share. The conversion price with respect to the Convertible Notes is subject to adjustment to reflect stock splits and subdivisions, stock and other dividends and distributions, recapitalizations, reclassifications, combinations and other similar changes in capital structure. The conversion price with respect to the Convertible Notes is subject to a broad-based weighted average anti-dilution adjustment in the event the Company issues, or is deemed to have issued, shares of Company common stock, other than certain excepted issuances, at a price below the conversion price then in effect. Notwithstanding the above, the number of shares of Company common stock that may be acquired by a holder upon any conversion of a Convertible Note will be limited to the extent necessary to insure that, following such conversion, the total number of shares of Company common stock then beneficially owned by that holder and its affiliates and any other person whose beneficial ownership of Company common stock would be aggregated with the holder’s for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) does not exceed 4.999% of the total number of issued and outstanding shares of Company common stock (including the shares of Company common stock issuable upon such conversion).
3
Upon the occurrence of a change of control, or if the Company common stock or other securities into which the Convertible Notes are then convertible cease to be listed for trading on a U.S. national securities exchange, in each case, prior to the maturity date of the Convertible Notes, a holder of Convertible Notes will have the right, at its option, to require the Company to repurchase for cash all or a portion of the holder’s Convertible Notes at a repurchase price equal to the sum of (i) all of the principal to be repurchased, (ii) any accrued and unpaid interest thereon through the date of repurchase, and (iii) any applicable make-whole amount. In addition, a future voluntary prepayment of Legacy Airspan’s existing senior secured debt under the Fortress Credit Agreement will grant a holder of Convertible Notes the right, at its option, to require the Company to repurchase for cash a proportionate amount of the holder’s Convertible Notes at a repurchase price equal to the sum of (a) the principal to be repurchased, (b) any accrued and unpaid interest thereon to the date of repurchase, and (c) any applicable make-whole amount. In the event certain other events occur or conditions exist, including the issuance of certain Indebtedness (as defined in the Purchase Agreement), certain asset dispositions, and certain issuances of equity, a holder of Convertible Notes will have the right, at its option, to require the Company to repurchase for cash a portion of the holder’s Convertible Notes at a repurchase price equal to the sum of (x) the principal to be repurchased, (y) any accrued and unpaid interest thereon to the date of repurchase, and (z) any applicable make-whole amount. In the event certain cash flow thresholds are exceeded or certain proceeds of condemnation or insurance are received and not reinvested, a holder of Convertible Notes will have the right, at its option, to require the Company to repurchase for cash a portion of the holder’s Convertible Notes at a repurchase price equal to the sum of (A) all of the principal to be repurchased, and (B) any accrued and unpaid interest thereon to or through, as applicable, the date of repurchase.
The Convertible Notes will not be redeemable by the Company prior to the second anniversary of the issuance of the Convertible Notes (the “Note Closing”). On or after the second anniversary of the Note Closing, the Convertible Notes will be redeemable, in whole or in part, by the Company for cash, shares of Company common stock or any combination thereof, at the Company’s option, if the last reported sale price of the Company common stock has been at least 130% of the conversion price then in effect for the 30 consecutive trading days ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption to the holders of Convertible Notes at a redemption price equal to (i) all of the principal to be redeemed, (ii) any accrued and unpaid interest thereon through the date of redemption, and (iii) any applicable make-whole amount.
The terms of the Convertible Notes and the Purchase Agreement contains representations and warranties, events of default and affirmative and negative covenants, which include, among other things, certain restrictions on the ability to pay dividends, create liens, incur additional indebtedness, make investments, dispose of assets, consummate business combinations (except for permitted investments, as defined in the Note Purchase Agreement), and make distributions. In addition, financial covenants apply, including, (a) minimum liquidity of $5.0 million, (b) minimum last twelve-month revenue and (c) minimum last twelve-month Earnings before Interest, Taxes, Depreciation, and Amortization (“EBITDA”) and certain other expenses including stock compensation, non-recurring costs in connection with the loan documentation and the merger transaction, warrant liabilities, and other noncash amortization expenses, in each case, determined in accordance with GAAP. Revenue and EBITDA financial covenants are tested quarterly. The Convertible Notes are pari passu in right of payment and lien priority and are secured by a security interest in (a) all of the real, personal and mixed property in which liens are granted or purported to be granted pursuant to any of the collateral documents as security for the obligations (b) all products, proceeds, rents and profits of such property, (c) all of each loan party’s book and records (d) all of the foregoing whether now owned or existing, in each case excluding certain excluded assets.
The foregoing description of the Convertible Notes and Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Purchase Agreement, a copy of which is included as Exhibit 10.47 to this Report, and the full text of the form of Convertible Note, a copy of which is included as Annex A to the Purchase Agreement in Exhibit 10.47 to this Report, each of which are incorporated herein by reference.
Item 2.01 Completion of Acquisition or Disposition of Assets.
As described above, on August 11, 2021, New Beginnings held the Special Meeting, at which the New Beginnings stockholders considered and voted in favor of, among other matters, a proposal to approve and adopt the Business Combination Agreement and the Transactions. On August 13, 2021, the parties consummated the Business Combination (the “Closing” and such date the “Closing Date”). In connection with the Closing, the Company changed its name from New Beginnings Acquisition Corp. to Airspan Networks Holdings Inc.
Holders of an aggregate of 9,997,049 shares of New Beginnings common stock sold in its initial public offering properly exercised their right to have such shares redeemed for a full pro rata portion of the trust account holding the proceeds from New Beginnings’ initial public offering, calculated as of two (2) business days prior to the consummation of the Business Combination, which was approximately $10.10 per share, or $100,998,810.93 in the aggregate.
4
As a result of the Business Combination, each share of Legacy Airspan common stock, Legacy Airspan Class B common stock, Legacy Airspan Class C common stock and Legacy Airspan preferred stock outstanding immediately prior to the effective time (excluding Airspan Restricted Stock that is not Airspan Accelerated Restricted Stock) of the Business Combination was converted into 59,726,486 shares of Company Common Stock and 9,000,000 Post-Combination Company Warrants.
Pursuant to subscription agreements entered into in connection with the Business Combination Agreement (collectively, the “Subscription Agreements”), certain investors agreed to subscribe for an aggregate of 7,500,000 newly-issued shares of the Company’s common stock at a purchase price of $10.00 per share, for an aggregate purchase price of $75,000,000 (the “PIPE Investment”). The Company consummated the PIPE Investment immediately prior to Closing on August 13, 2021.
After giving effect to the Transactions, the redemption of public shares as described above, and the consummation of the PIPE Investment, there are 72,024,437 shares of the Company’s common stock issued and outstanding as of the date of this Report.
The Company’s common stock commenced trading on the NYSE American under the symbol “MIMO” on August 16, 2021, and the Company’s warrants commenced trading on the NYSE American under the symbols “MIMO WS”, “MIMO WSA”, “MIMO WSB” and “MIMO WSC” in each case, subject to the Company’s satisfaction of all listing criteria following the Business Combination.
FORM 10 INFORMATION
Item 2.01(f) of Form 8-K states that if the registrant was a shell company, as the Company was immediately before the Business Combination, then the registrant must disclose the information that would be required if the registrant were filing a general form for registration of securities on Form 10. Accordingly, the Company is providing below the information that would be included in a Form 10 if it were to file a Form 10. Please note that the information provided below relates to the combined company after the consummation of the Business Combination, unless otherwise specifically indicated or the context otherwise requires.
Cautionary Note Regarding Forward-Looking Statements
This Report, including the documents incorporated by reference into this Report, includes statements that express the Company’s opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, “forward-looking statements.” These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar expressions, or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this Report (including in information that is incorporated by reference into this Report) and include statements regarding our intentions, beliefs or current expectations concerning, among other things, the Transactions and the benefits of the Transactions, including results of operations, financial condition, liquidity, prospects, growth, strategies and the markets in which the Company operates. Such forward-looking statements are based on available current market material and management’s expectations, beliefs and forecasts concerning future events impacting the Company. Factors that may impact such forward-looking statements include:
| ● | the ability to maintain the listing of the shares of common stock of the Company on the NYSE American; |
| ● | the price of the Company’s securities may be volatile due to a variety of factors, including changes in the competitive and highly regulated industries in which the Company operates and plans to operate, variations in performance across competitors, changes in laws and regulations affecting the Company’s business and changes in the combined capital structure; |
| ● | the ability of the Company to grow and manage growth profitably and retain its key employees; |
5
| ● | changes in the Company’s strategy, future operations, financial position, estimated revenues and losses, forecasts, projected costs, prospects and plans; |
| ● | the implementation, market acceptance and success of the Company’s products; |
| ● | demand for the Company’s products and the drivers of that demand; |
| ● | the Company’s estimated total addressable market and other industry projections, and the Company’s projected market share; |
| ● | competition in the Company’s industry, the advantages of the Company’s products and technology over competing products and technology existing in the market, and competitive factors including with respect to technological capabilities, cost and scalability; |
| ● | the Company’s ability to scale in a cost-effective manner and maintain and expand its manufacturing relationships; |
| ● | the Company’s ability to enter into production supply agreements with customers, the terms of those agreements, and customers’ utilization of the Company’s products and technology; |
| ● | the Company’s expected reliance on Tier 1 customers; |
| ● | developments and projections relating to the Company’s competitors and industry, including with respect to investment in 5G networks; |
| ● | the Company’s expectation that it will incur substantial expenses and continuing losses for the foreseeable future and that it will incur increased expenses as a public company; |
| ● | the risk of downturns and the possibility of rapid change in the highly competitive industry in which the Company operates; |
| ● | costs related to being a public company; |
| ● | the risk that the Company may never achieve or sustain profitability; |
| ● | the risk that the Company is unable to secure or protect its intellectual property; |
| ● | the impact of the COVID-19 pandemic on the financial condition and results of operations of the Company; |
| ● | expectations regarding the time during which the Company will be an emerging growth company under the JOBS Act; |
| ● | the Company’s future capital requirements and sources and uses of cash; |
| ● | the Company’s ability to obtain funding for its operations; |
| ● | the Company’s business, expansion plans and opportunities; |
| ● | anticipated financial performance, including gross margin, and the expectation that the Company’s future results of operations will fluctuate on a quarterly basis for the foreseeable future; |
| ● | expected capital expenditures, cost of revenue and other future expenses, and the sources of funds to satisfy the liquidity needs of the Company; |
| ● | the outcome of any known and unknown litigation and regulatory proceedings; and |
| ● | other risks and uncertainties described in the Proxy Statement/Prospectus/Consent Solicitation Statement, including those under the section entitled “Risk Factors.” |
The forward-looking statements contained in this Report are based on the Company’s current expectations and beliefs concerning future developments and their potential effects on the Transactions and the Company. There can be no assurance that future developments affecting the Company will be those that the Company has anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond the Company’s control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described or incorporated by reference under the heading “Risk Factors” below. Should one or more of these risks or uncertainties materialize, or should any of the assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. The Company will not and does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
Business
The business of the Company is described in the Proxy Statement/Prospectus/Consent Solicitation Statement in the section entitled “Information About Airspan” beginning on page 180 thereof and that information is incorporated herein by reference.
6
Risk Factors
The risks associated with the Company’s business are described in the Proxy Statement/Prospectus/Consent Solicitation Statement in the section entitled “Risk Factors” beginning on page 45 thereof and are incorporated herein by reference. A summary of the risks associated with the Company’s business are also described on page 34 of the Proxy Statement/Prospectus/Consent Solicitation Statement under the heading “Summary Risk Factors” and are incorporated herein by reference.
Financial Information
The financial information of New Beginnings for the period from August 20, 2020 (inception) through December 31, 2020, and as of December 31, 2020, is described in the Proxy Statement//Prospectus/Consent Solicitation Statement in the sections entitled “Summary Historical Financial Information of New Beginnings” and “New Beginnings Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on pages 39 and 255 thereof, respectively, and are incorporated herein by reference. The financial information of New Beginnings for the three and six months ended June 30, 2021, and as of June 30, 2021 is included in Items 1 and 2 of the Company’s Quarterly Report on Form 10-Q, filed with the SEC on August 12, 2021, and incorporated herein by reference.
Reference is made to the disclosure set forth in Item 9.01 of this Report relating to the financial information of Legacy Airspan, and to Exhibits 99.3 and 99.4, all of which are incorporated herein by reference.
The Audited Financial Statements of Legacy Airspan for the years ended December 31, 2020 and 2019 set forth in the Proxy Statement/Prospectus/Consent Solicitation Statement in the Section entitled “Airspan Networks Inc. Financial Statements as of December 31, 2020 and 2019 and for the Years Ended December 31, 2020, 2019 and 2018” beginning on page F-44 thereof and that information is incorporated herein by reference.
The Management’s Discussion and Analysis of Financial Condition and Results of Operation of Legacy Airspan for the years ended December 31, 2020 and 2019 set forth in the Proxy Statement/Prospectus/Consent Solicitation Statement in the section entitled “Airspan Management’s Discussion and Analysis of Financial Condition and Results of Operation” beginning on page 196 thereof and that information is incorporated herein by reference.
Reference is made to the disclosure set forth in Item 9.01 of this Report relating to the pro forma financial information of the Company and Exhibit 99.5, all of which are incorporated herein by reference.
Properties
The facilities of the Company are described in the Proxy Statement/Prospectus/Consent Solicitation Statement in the section entitled “Information About Airspan” beginning on page 187 thereof and that information is incorporated herein by reference.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information known to the Company regarding the beneficial ownership of the Company’s common stock immediately following consummation of the Transactions by:
| ● | each person who is the beneficial owner of more than 5% of the outstanding shares of common stock; |
| ● | each of the Company’s named executive officers and directors; and |
| ● | all of the Company’s executive officers and directors as a group. |
Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power over that security, which includes the power to dispose of or to direct the disposition of the security or has the right to acquire such powers within 60 days. In computing the number of shares of the Company’s common stock beneficially owned by a person or entity and the percentage ownership, the Company deemed outstanding shares of its common stock subject to options and warrants held by that person or entity that are currently exercisable or exercisable within 60 days of the Closing Date. The Company did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person or entity.
7
Unless otherwise noted in the footnotes to the following table, and subject to applicable community property laws, the Company believes that the persons and entities named in the table have sole voting and investment power with respect to their beneficially owned common stock.
Unless otherwise noted, the address of each beneficial owner is c/o Airspan Networks Holdings Inc., 777 Yamato Road, Suite 310, Boca Raton, FL 33431.
The beneficial ownership of the Company’s common stock is based on 72,024,437 shares of common stock issued and outstanding immediately following consummation of the Transactions, including the redemption of public shares as described above and the consummation of the PIPE Investment.
Beneficial Ownership Table
| Name and Address of Beneficial Owner(1) | Number of shares of common stock | % | ||||||
| Directors and Executive Officers(1) | ||||||||
| Eric D. Stonestrom(2) | 1,207,483 | 1.7 | % | |||||
| David Brant(3) | 596,246 | * | ||||||
| Henrik Smith-Petersen(4) | 400,392 | * | ||||||
| Thomas S. Huseby(5) | 297,179 | * | ||||||
| Bandel L. Carano(6) | 32,949,384 | 43.2 | % | |||||
| Michael T. Flynn(7) | 117,606 | * | ||||||
| Scot B. Jarvis(8) | 353,916 | * | ||||||
| Mathew Oommen | — | — | ||||||
| Dominic Trempont(9) | 65,036 | * | ||||||
| Michael S. Liebowitz(10) | 3,285,061 | 4.6 | % | |||||
| All Directors and Executive Officers as a Group (12 individuals) | 39,635,512 | 50.1 | % | |||||
| Five Percent Holders: | ||||||||
| Oak Investment Partners(6) | 32,949,384 | 43.2 | % | |||||
| SoftBank Group Capital Limited(11) | 13,783,886 | 19.0 | % | |||||
| * | Less than 1% |
| (1) | Unless otherwise noted, the address of each beneficial owner is c/o Airspan Networks Inc., 777 Yamato Road, Suite 310, Boca Raton, Florida 33431. |
| (2) | Common stock consists of (i) 16,285 shares of common stock; (ii) 1,035,017 shares of common stock issuable on exercise of options that are exercisable within 60 days from August 19, 2021, (iii) 153,712 shares of restricted common stock and (iv) 2,469 shares of common stock issuable upon exercise of Post-Combination Company Warrants. |
| (3) | Common stock consists of (i) 1,633 shares of common stock, (ii) 517,508 shares of common stock issuable on exercise of options that are exercisable within 60 days from August 19, 2021, (iii) 76,856 shares of restricted common stock and (iv) 249 shares of common stock issuable upon exercise of Post-Combination Company Warrants. |
| (4) | Common stock consists of (i) 381,177 shares of common stock issuable on exercise of options that are exercisable within 60 days from August 19, 2021, and (ii) 19,215 shares of restricted common stock. |
| (5) | Common stock consists of (i) 258,754 shares of common stock issuable on exercise of options that are exercisable within 60 days from August 19, 2021, and (ii) 38,425 shares of restricted common stock. |
| (6) | Includes 4,310,325 shares of common stock issuable upon exercise of Post-Combination Company Warrants. Shares are held by Oak Investment Partners XI, Limited Partnership and Oak Investment Partners XIII, Limited Partnership (collectively, “Oak Investment Partners”). The address of the entities affiliated with Oak Investment Partners is 901 Main Avenue, Suite 600, Norwalk, CT 06851. Mr. Carano has shared power to vote and dispose of the shares held by Oak Investment Partners. Mr. Carano disclaims beneficial ownership of the shares held by Oak Investment Partners, except to the extent of his pecuniary interest therein. |
8
| (7) | Common stock consists of (i) 92,247 shares of common stock issuable on exercise of options that are exercisable within 60 days from August 19, 2021, and (ii) 25,359 shares of restricted common stock. |
| (8) | Common stock consists of (i) 251,910 shares of common stock held by Connis Point Partners, LLC, of which Mr. Jarvis is the Managing Member, (ii) 38,181 shares of common stock issuable upon exercise of Post-Combination Company Warrants held by Connis Point Partners, LLC and (iii) 63,825 shares of common stock issuable on exercise of options that are exercisable within 60 days from August 19, 2021. The address of Connis Point Partners, LLC is 3825 Issaquah Pine Lake Rd. SE, Sammamish, Washington 98075. |
| (9) | Common stock consists of 65,036 shares of common stock issuable on exercise of options that are exercisable within 60 days from August 19, 2021. |
| (10) | The Sponsor is the record holder of 3,241,000 shares of common stock reported herein. Mr. Liebowitz is a managing member of the Sponsor. Consequently, Mr. Liebowitz may be deemed the beneficial owner of the shares held by the Sponsor and have voting and dispositive control over such securities. Mr. Liebowitz disclaims beneficial ownership of any shares other than to the extent he may have a pecuniary interest therein, directly or indirectly. |
| (11) | Includes 1,938,071 shares of common stock issuable upon exercise of Post-Combination Company Warrants. The address of SoftBank Group Capital Limited is 69 Grosvenor Street, London, W1K 3JP United Kingdom. Shares are subject to the the irrevocable proxy and power of attorney dated March 8, 2021, as further described in the Proxy Statement/Prospectus/Consent Solicitation Statement in the section entitled “Certain Agreements Related to the Business Combination — SoftBank Irrevocable Proxy” beginning on page 145 thereof, which is incorporated herein by reference. |
Directors and Executive Officers
The Company’s directors and executive officers upon the Closing are described in the Proxy Statement/Prospectus/Consent Solicitation Statement in the section entitled “Management of the Post-Combination Company Following the Business Combination” beginning on page 264 thereof and that information is incorporated herein by reference.
Directors
Pursuant to the approval of New Beginnings stockholders from the Special Meeting, the Board is comprised of the individuals designated as provided in the Stockholders Agreement, as further described in the Proxy Statement/Prospectus/Consent Solicitation Statement in the section entitled “Management of the Post-Combination Company Following the Business Combination—Management and Board of Directors,” which is incorporated herein by reference.
Mathew Oommen and Eric D. Stonestrom were each appointed Class I directors, with each of their terms expiring at the Company’s 2022 annual meeting of stockholders; Bandel L. Carano, Michael T. Flynn and Scot B. Jarvis were each appointed Class II directors, with each of their terms expiring at the Company’s 2023 annual meeting of stockholders; and Thomas S. Huseby, Michael S. Liebowitz and Dominique Trempont were appointed Class III directors, with each of their terms expiring at the Company’s 2024 annual meeting of stockholders.
Biographical information for these individuals is set forth in the Proxy Statement/Prospectus/Consent Solicitation Statement in the section titled “Management of the Post-Combination Company Following the Business Combination” beginning on page 264, which is incorporated herein by reference.
Independence of Directors
NYSE American listing standards require that a majority of our Board be independent. An “independent director” is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship which in the opinion of the company’s board of directors, would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director. Our board of directors has determined that Messrs. Flynn, Huseby, Jarvis, Leibowitz and Trempont are “independent directors” as defined in the NYSE American listing standards and applicable SEC rules. Our independent directors will have regularly scheduled meetings at which only independent directors are present.
9
Committees of the Board of Directors
Effective as of the Closing, the standing committees of the Board consist of an audit committee (the “Audit Committee”), a compensation committee (the “Compensation Committee”) and a nominating and corporate governance committee (the “Nominating and Corporate Governance Committee”). Each of the committees reports to the Board.
Effective as of the Closing, the Board appointed Messrs. Jarvis, Liebowitz and Trempont to serve on the Audit Committee, with Mr. Trempont as chair. The Board appointed Messrs. Flynn, Huseby and Jarvis to serve on the Compensation Committee, with Mr. Jarvis as chair. The Board appointed Messrs. Huseby, Liebowitz and Trempont to serve on the Nominating and Corporate Governance Committee, with Mr. Huseby as chair.
Executive Officers
Effective as of the Closing, Mr. Leibowitz resigned as Chief Executive Officer. Effective as of the Closing, the Board appointed Mr. Stonestrom to serve as President and Chief Executive Officer, Mr. Huseby to serve as Chairman, Mr. Brant to serve as Senior Vice President and Chief Financial Officer, Mr. Smith-Petersen to serve as President, Global Business Development, Mr. Shalev to serve as Chief Operating Officer, and Mr. Leizerovitz to serve as Head of Products. Biographical information for Messrs. Stonestrom, Brant, Smith-Petersen, Shalev and Leizerovitz is set forth in the Proxy Statement/Prospectus/Consent Solicitation Statement in the section titled “Management of the Post-Combination Company Following the Business Combination” beginning on page 264, which is incorporated herein by reference.
Executive Compensation
Executive Compensation
The executive compensation of the Company’s named executive officers and directors is described in the Proxy Statement/Prospectus/Consent Solicitation Statement in the sections entitled “Management of The Post-Combination Company Following the Business Combination—Compensation of Directors and Officers” and “Airspan’s Executive Compensation” beginning on pages 269 and 191 thereof, respectively, and are incorporated herein by reference.
Compensation Committee Interlocks and Insider Participation
None of our executive officers serves as a member of the Board or Compensation Committee (or other committee performing equivalent functions) of any entity that has one or more executive officers serving on our Board or Compensation Committee.
Certain Relationships and Related Transactions, and Director Independence
Certain Relationships and Related Person Transactions
Certain relationships and related person transactions are described in the Proxy Statement/Prospectus/Consent Solicitation Statement in the sections entitled “Certain Airspan Relationships and Related Party Transactions” and “Certain New Beginnings Relationships and Related Party Transactions” beginning on pages 218 and 262 thereof, respectively, and are incorporated herein by reference.
10
Risk Oversight
Our risk management oversight is described in the Proxy Statement/Prospectus/Consent Solicitation Statement in the section entitled “Management of the Post-Combination Company Following the Business Combination—Risk Oversight” beginning on page 269 thereof and that information is incorporated herein by reference.
Legal Proceedings
Reference is made to the disclosure regarding legal proceedings in the section of the Proxy Statement/Prospectus/Consent Solicitation Statement titled “Information About Airspan—Legal Proceedings” beginning on page 187, which is incorporated herein by reference.
Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters
Price Range of Securities and Dividends
The market price of, and dividends on, New Beginnings common equity, warrants and units and related stockholder matters is described in the Proxy Statement/Prospectus/Consent Solicitation Statement in the Section entitled “Market Price and Dividend Information” beginning on page 284 thereof and that information is incorporated herein by reference.
As of the Closing Date and following the consummation of the Business Combination, the Company had approximately 72,024,437 shares of Company’s common stock issued and outstanding held of record by 84 holders.
Prior to the Closing, the Company’s publicly traded units, common stock and warrants were listed on the NYSE American under the symbols “NBA.U,” “NBA,” and “NBA WS,” respectively. Upon the Closing, the Company’s common stock was listed on NYSE American under the symbol “MIMO” and the Company’s warrants were listed on the NYSE American under the symbols “MIMO WS,” “MIMO WSA”, “MIMO WSB”, and “MIMO WSC”. New Beginnings publicly traded units automatically separated into their component securities upon the Closing, and as a result, no longer trade as a separate security and were delisted from the NYSE American.
The Company has not paid any cash dividends on shares of its common stock to date. The payment of cash dividends by the Company in the future will be dependent upon the Company’s revenues and earnings, if any, capital requirements and general financial condition. The payment of any cash dividends will be within the discretion of the Board at such time. The Company’s ability to declare dividends may also be limited by restrictive covenants pursuant to any debt financing agreements.
Holders of Record
As of the Closing and following the completion of the Transactions, including the redemption of public shares as described above and the consummation of the PIPE Investment, the Company had 72,024,437 shares of common stock outstanding held of record by 84 holders. Such amounts do not include DTC participants or beneficial owners holding shares through nominee names.
Securities Authorized for Issuance Under Equity Compensation Plans
Reference is made to the disclosure described in the Proxy Statement/Prospectus/Consent Solicitation Statement in the section entitled “Proposal No. 5—The Stock Incentive Plan Proposal” beginning on page 169 thereof, which is incorporated herein by reference.
At the Special Meeting, New Beginnings stockholders approved the Airspan Networks Holdings Inc. 2021 Stock Incentive Plan (the “2021 Plan”) and the material terms thereunder, including the authorization of the initial share reserve thereunder.
11
Recent Sales of Unregistered Securities
Reference is made to the disclosure set forth under Item 3.02 of this Report relating to the issuance of the Company’s common stock in connection with the Transactions, which is incorporated herein by reference.
Description of Registrant’s Securities to be Registered
The Company’s securities are described in the Proxy Statement/Prospectus/Consent Solicitation Statement in the section entitled “Description of the Post-Combination Company’s Securities” beginning on page 270 thereof and that information is incorporated herein by reference. As described below, the Company’s Second Amended and Restated Certificate of Incorporation was approved by New Beginnings stockholders at the Special Meeting and became effective as of the Closing.
Indemnification of Directors and Officers
The indemnification of our directors and officers is described in the Proxy Statement/Prospectus/Consent Solicitation Statement in the section entitled “Description of the Post-Combination Company’s Securities—Limitation on Liability and Indemnification of Directors and Officers” beginning on page 277 thereof and that information is incorporated herein by reference.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Reference is made to the disclosure set forth under Item 4.01 of this Report relating to the change in New Beginnings certifying accountant, which is incorporated herein by reference.
Item 2.02 Results of Operation and Financial Condition.
On August 19, 2021, the Company issued a press release announcing its second quarter 2021 financial results. A copy of the Company’s August 19, 2021 press release is furnished herewith as Exhibit 99.2 and is incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
Reference is made to the disclosure set forth under Item 1.01 of this Report relating to the amendment to the Credit Agreement, which is incorporated herein by reference.
Item 3.02 Unregistered Sale of Equity Securities.
At the Closing, the Company consummated the PIPE Investment. The disclosure under Item 2.01 of this Report relating to the PIPE Investment is incorporated herein by reference.
Immediately prior to Closing, New Beginnings issued the Convertible Notes. The disclosure under Item 1.01 of this Report relating to the Convertible Notes is incorporated herein by reference.
The Company issued the foregoing securities under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and/or Rule 506 of Regulation D promulgated under the Securities Act, as a transaction not requiring registration under Section 5 of the Securities Act. The parties receiving the securities represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution, and appropriate restrictive legends were affixed to the certificates representing the securities (or reflected in restricted book entry with the Company’s transfer agent). The parties also had adequate access, through business or other relationships, to information about the Company.
Item 3.03 Material Modification to Rights of Security Holders.
The information set forth in Item 5.03 of this Report is incorporated herein by reference.
12
Item 4.01 Change in Registrant’s Certifying Accountant.
On August 13, 2021, the Audit Committee approved the engagement of Grant Thornton LLP (“Grant Thornton”) as the Company’s independent registered public accounting firm to audit the Company’s consolidated financial statements for the year ended December 31, 2021. Grant Thornton served as the independent registered public accounting firm of Airspan Networks Inc. prior to the Business Combination. Accordingly, Marcum LLP (“Marcum”), the Company’s independent registered public accounting firm prior to the Business Combination, was informed that it would be replaced by Grant Thornton as the Company’s independent registered public accounting firm following the consummation of the Business Combination on August 13, 2021.
Marcum’s report on the Company’s financial statements as of December 31, 2020 and the related statements of operations, changes in stockholders’ equity and cash flows for the period from August 20, 2020 (inception) through December 31, 2020 did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles, but was modified to contain an explanatory paragraph indicating correction of misstatements.
During the period from August 20, 2020 (inception) through December 31, 2020, and in the subsequent interim period through August 13, 2021 (the “Relevant Period”) there have been no disagreements, as the term is defined in Item 304(a)(1)(iv) and the related instructions of Regulation S-K, promulgated by the Securities and Exchange Commission (“SEC”) pursuant to the Securities Exchange Act of 1934, as amended, with Marcum on any matter of accounting principles or practices, financial statement disclosures or audited scope or procedures, which disagreements if not resolved to Marcum’s satisfaction would have caused Marcum to make reference to the subject matter of the disagreement in connection with its report on the Company’s financial statements.
During the Relevant Period, there were no “reportable events,” as that term is defined in Item 304(a)(1)(v) of Regulation S-K , except that in connection with the Company’s internal control over financial reporting there was a material weakness. As previously reported, management has identified a specific deficiency related to controls over proper classification of certain warrants that the Company issued with its initial public offering and private placement that constituted a material weakness in the Company’s internal controls over financial reporting as of December 31, 2020. We did not maintain effective internal controls related to the proper classification and accounting of warrants that were a part of initial public offering and private placement during the period from August 20, 2020 (inception) through December 31, 2020. This material weakness resulted in material misstatements and audit adjustments to warrant liability, common stock subject to possible redemption, common stock, additional paid-in capital, accumulated deficiency, warrant issuance costs and change in fair value of warrants to the consolidated financial statements for the period from August 20, 2020 (inception) through December 31, 2020.
During the Relevant Period, neither the Company, nor (to the Company’s knowledge) anyone acting on its behalf consulted with Grant Thornton with respect to either (i) the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Company’s financial statements, and no written report or oral advice was provided to the Company by Grant Thornton that Grant Thornton concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement, as that term is described in Item 304(a)(1)(iv) of Regulation S-K under the Exchange Act and the related instructions to Item 304 of Regulation S-K under the Exchange Act, or a reportable event, as that term is defined in Item 304(a)(1)(v) of Regulation S-K under the Exchange Act.
The Company has provided Marcum with a copy of the disclosures made by the Company in response to this Item 4.01 and has requested that Marcum furnish the Company with a letter addressed to the SEC stating whether it agrees with the statements made by the registrant in response to this Item 304(a) and, if not, stating the respects in which it does not agree. A letter from Marcum is attached as Exhibit 16.1 to this Report.
Item 5.01 Change in Control of the Registrant.
The information set forth above under Item 1.01 and Item 2.01 of this Report is incorporated herein by reference.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
The information set forth above in the sections titled “Directors and Executive Officers,” “Executive Compensation,” “Certain Relationships and Related Transactions, and Director Independence” and “Indemnification of Directors and Officers” in Item 2.01 of this Report is incorporated herein by reference.
As previously disclosed in the Proxy Statement/Prospectus/Consent Solicitation Statement under the sections titled “Proposal No. 1 — The Business Combination —Interests of Airspan Directors and Executive Officers in the Business Combination,” beginning on page 120, which is incorporated herein by reference, certain of the Company’s directors and officers received cash awards and MIP RSUs in full satisfaction of their rights under the Legacy Airspan Management Incentive Plan.
13
As previously disclosed, at the Special Meeting, the stockholders of New Beginnings considered and approved the 2021 Plan which became effective immediately upon the Closing. A description of the 2021 Plan is included in the Proxy Statement/Prospectus/Consent Solicitation Statement in the section entitled “Proposal No. 5—The Incentive Award Plan Proposal” beginning on page 169 thereof, which is incorporated herein by reference.
The foregoing description of the 2021 Plan is qualified in its entirety by the full text of the 2021 Plan and the related forms of award agreements under the 2021 Plan, which are attached hereto as Exhibits 10.9 through 10.15, and each of which are incorporated herein by reference.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On August 13, 2021, in connection with the consummation of the Transactions, the Company amended and restated its certificate of incorporation effective as of the Closing (as amended, the “A&R Charter”), and amended and restated its bylaws (as amended, the “A&R Bylaws”) effective as of Closing.
Copies of the A&R Charter and the A&R Bylaws are attached as Exhibit 3.1 and Exhibit 3.2 to this Report, respectively, and are incorporated herein by reference.
The material terms of each of the A&R Charter and the A&R Bylaws and the general effect upon the rights of holders of the Company’s capital stock are included in the Proxy Statement/Prospectus/Consent Solicitation Statement under the sections titled “Proposal No. 2—The Charter Amendment Proposal,” “Proposal Nos. 3A-3H—The Governance Proposals,” “Comparison of Airspan Stockholders’ Rights” and “Description of the Post-Combination Company’s Securities” beginning on pages 156, 166, 223 and 270 of the Proxy Statement/Prospectus/Consent Solicitation Statement, respectively, which are incorporated herein by reference.
Item 5.06 Change in Shell Company Status.
As a result of the Business Combination, the Company ceased to be a shell company. Reference is made to the disclosure in the Proxy Statement/Prospectus/Consent Solicitation Statement in the sections entitled “Proposal No. 1—The Business Combination Proposal” beginning on page 106 thereof, which is incorporated herein by reference.
Item 7.01 Regulation FD
The information set forth in Item 2.02 of this Report is incorporated by reference into this Item 7.01.
The information in Item 2.02 and Item 7.01 to this Report, including Exhibit 99.2, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.
Item 8.01 Other Events.
On August 16, 2021, the parties issued joint press release announcing, among other things, the completion of the Business Combination, a copy of which is furnished as Exhibit 99.1 hereto.
14
Item 9.01 Financial Statements and Exhibits.
(a) Financial statements of businesses acquired
The unaudited interim financial statements of Legacy Airspan for the three and six months period ended June 30, 2021 are filed as Exhibit 99.3 hereto and are incorporated herein by reference.
(b) Pro forma financial information
The unaudited pro forma condensed combined financial information of the Company is filed as Exhibit 99.5 hereto and incorporated herein by reference.
(d) Exhibits
15
16
17
| # | Indicates management contract or compensatory plan or arrangement. |
| † | Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The Company agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request. |
| ^ | Certain provisions of this Exhibit have been omitted in accordance with Regulation S-K Item 601(a)(6) |
| * | Certain provisions of this Exhibit have been omitted in accordance with Regulation S-K Item 601(b)(10)(iv). |
18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Dated: August 19, 2021 | Airspan Networks Holdings Inc. | |
| By: | /s/ David Brant | |
| David Brant | ||
| Senior Vice President, Chief Financial Officer, Treasurer and Secretary | ||
19
EXHIBIT INDEX
20
21
22
| # | Indicates management contract or compensatory plan or arrangement. |
| † | Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The Company agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request. |
| ^ | Certain provisions of this Exhibit have been omitted in accordance with Regulation S-K Item 601(a)(6) |
| * | Certain provisions of this Exhibit have been omitted in accordance with Regulation S-K Item 601(b)(10)(iv). |
23
Exhibit 3.1
SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
NEW BEGINNINGS ACQUISITION CORP.
August 13, 2021
New Beginnings Acquisition Corp. (the “Corporation”), a corporation existing under the General Corporation Law of the State of Delaware (the “DGCL”), hereby certifies as follows:
1. The name of the Corporation is “New Beginnings Acquisition Corp.”. The Corporation was incorporated by the filing of its original Certificate of Incorporation with the Secretary of State of the State of Delaware on August 20, 2020 (the “Original Certificate”).
2. An Amended and Restated Certificate of Incorporation, which amended and restated the Original Certificate in its entirety, was filed with the Secretary of State of the State of Delaware on October 29, 2020 (the “Existing Certificate”).
3. This Second Amended and Restated Certificate of Incorporation (this “Second Amended and Restated Certificate”), which changes the name of the Corporation to “Airspan Networks Holdings Inc.” and amends and restates the Existing Certificate in its entirety, has been approved by the Board of Directors of the Corporation (the “Board of Directors”) in accordance with Sections 242 and 245 of the DGCL and has been adopted by the stockholders of the Corporation at a meeting of the stockholders of the Corporation in accordance with the provisions of Section 211 of the DGCL.
4. This Second Amended and Restated Certificate shall become effective upon filing with the Secretary of State of the State of Delaware.
5. The text of the Existing Certificate is hereby amended and restated in its entirety to read in full as follows:
ARTICLE I
NAME
The name of the Corporation is “Airspan Networks Holdings Inc.”.
ARTICLE II
REGISTERED AGENT
The registered office of the Corporation in the State of Delaware is 251 Little Falls Drive, Wilmington, New Castle County, Delaware, 19808. The name of its registered agent at that address is Corporation Service Company.
ARTICLE III
PURPOSE
The purpose of the Corporation shall be to engage in any lawful act or activity for which corporations may be organized under the DGCL as it now exists or may hereafter be amended and supplemented. In addition to the powers and privileges conferred upon the Corporation by law and those incidental thereto, the Corporation shall possess and may exercise all the powers and privileges that are necessary or convenient to the conduct, promotion or attainment of the business or purposes of the Corporation.
ARTICLE IV
CAPITALIZATION
A. Classes of Stock. The total number of shares of all classes of capital stock that the Corporation shall have authority to issue is 260,000,000, of which 250,000,000 shares shall be Common Stock, $0.0001 par value per share (the “Common Stock”), and 10,000,000 shares shall be Preferred Stock, $0.0001 par value per share (the “Preferred Stock”). The number of authorized shares of Common Stock or Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the then outstanding shares of Common Stock, without a vote of the holders of the Preferred Stock, or of any series thereof, unless a vote of any such holders of Preferred Stock is required pursuant to the provisions established by the Board of Directors in the resolution or resolutions providing for the issue of such Preferred Stock, and if such holders of such Preferred Stock are so entitled to vote thereon, then the only stockholder approval required shall be the affirmative vote of a majority of the voting power of the Common Stock and the Preferred Stock so entitled to vote, voting together as a single class, irrespective of Section 242(b)(2) of the DGCL (or any successor provision thereto).
B. Preferred Stock. The Preferred Stock may be issued from time to time in one or more series, as determined by the Board of Directors. The Board of Directors is expressly authorized to provide for the issue, in one or more series, of all or any of the remaining shares of the Preferred Stock and to establish for each such series the number of its shares, the voting powers, full or limited, of the shares of such series, or that such shares shall have no voting powers, and the designations, preferences and relative, participating, optional or other special rights of the shares of such series, and the qualifications, limitations or restrictions thereof as shall be stated and expressed in the resolution or resolutions adopted by the Board of Directors providing for the issue of such series (a “Preferred Stock Designation”), all to the fullest extent now or hereafter permitted by the DGCL. The Board of Directors is also expressly authorized (unless forbidden in the applicable Preferred Stock Designation) to increase or decrease (but not below the number of shares thereof then outstanding) the number of shares of any series subsequent to the issuance of shares of that series. In case the number of shares of any such series shall be so decreased, the shares constituting such decrease shall resume the status they had prior to the adoption of the resolution originally fixing the number of shares of such series. Except as otherwise expressly provided in any Preferred Stock Designation, (a) any new series of Preferred Stock may be designated, fixed and determined as provided herein by the Board of Directors without approval of the holders of Common Stock or the holders of Preferred Stock, or any series thereof, and (b) any such new series may have powers, preferences and rights, including, without limitation, voting rights, dividend rights, liquidation rights, redemption rights and conversion rights, senior to, junior to or pari passu with the rights of the Common Stock, the Preferred Stock or any future class or series of Preferred Stock or Common Stock.
| 2 |
C. Common Stock.
1. Relative Rights of Preferred Stock and Common Stock. All preferences, voting powers, relative, participating, optional or other special rights and privileges, and qualifications, limitations or restrictions of the Common Stock are expressly made subject and subordinate to those that may be fixed with respect to any shares of the Preferred Stock.
2. Voting Rights. Except as otherwise provided herein or expressly required by law or as otherwise provided in any Preferred Stock Designation, the holders of the Common Stock shall exclusively possess all voting power, and each holder of Common Stock shall have one vote in respect of each share of stock held by such holder of record on the books of the Corporation for the election of directors and on all matters submitted to a vote of stockholders of the Corporation. Except as otherwise required by law, holders of Common Stock, as such, shall not be entitled to vote on any amendment to this Second Amended and Restated Certificate (including any Preferred Stock Designation) that relates solely to the rights, powers, preferences (or the qualifications, limitations or restrictions thereof) or other terms of one or more outstanding series of Preferred Stock if the holders of such affected series of Preferred Stock are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to this Second Amended and Restated Certificate (including any Preferred Stock Designation) or pursuant to the DGCL.
3. Dividends. Subject to applicable law and the rights and preferences of any holders of any outstanding series of Preferred Stock, the holders of the shares of Common Stock shall be entitled to receive, when, as and if declared by the Board of Directors, out of the assets of the Corporation which are by law available therefor, dividends payable either in cash, in property or in shares of capital stock.
4. Dissolution, Liquidation or Winding Up. In the event of any dissolution, liquidation or winding up of the affairs of the Corporation, after distribution in full of the preferential amounts, if any, to be distributed to the holders of shares of outstanding Preferred Stock, the remaining assets of the Corporation of whatever kind available for distribution shall be distributed to the holders of Common Stock ratably in proportion to the number of shares of Common Stock held by them and to the holders of any outstanding series of Preferred Stock entitled thereto. For purposes of this Paragraph C.4 of Article IV (and, for the avoidance of doubt, except with respect to any series of Preferred Stock if provided for in the Preferred Stock Designation with respect to such series of Preferred Stock), the voluntary sale, conveyance, lease, exchange or transfer (for cash, shares of capital stock, securities or other consideration) of all or substantially all of the assets of the Corporation or a merger involving the Corporation and one or more other entities (whether or not the Corporation is the entity surviving such merger) shall not be deemed to be a dissolution, liquidation or winding up of the affairs of the Corporation.
| 3 |
ARTICLE V
BOARD OF DIRECTORS
The following provisions are inserted for the management of the business and for the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders:
A. Election of directors need not be by written ballot unless the Amended and Restated Bylaws of the Corporation (as amended and/or restated from time to time, the “Bylaws”) so provide.
B. In furtherance and not in limitation of the powers conferred by statute, but subject to that certain Stockholders Agreement, dated as of August 13, 2021, by and among the Corporation and certain of its stockholders (as amended from time to time, the “Stockholders Agreement”), the Board of Directors is expressly authorized to adopt, amend or repeal the Bylaws, without any action on the part of the stockholders, by the vote of at least a majority of the directors of the Corporation then in office. In addition to any vote of the holders of any class or series of stock of the Corporation required by applicable law or this Second Amended and Restated Certificate (including any Preferred Stock Designation), the Bylaws may also be adopted, amended or repealed by the affirmative vote of the holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting power of the shares of the capital stock of the Corporation entitled to vote in the election of directors, voting as one class.
C. The books of the Corporation may be kept at such place within or without the State of Delaware as the Bylaws may provide or as may be designated from time to time by the Board of Directors.
D. Except as otherwise expressly provided by the DGCL or this Second Amended and Restated Certificate, the business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. The number of directors which shall constitute the whole Board of Directors shall, subject to the Stockholders Agreement, be fixed exclusively by one or more resolutions adopted from time to time by the Board of Directors. Other than those directors elected by the holders of any series of Preferred Stock, which shall be as provided for or fixed pursuant to a Preferred Stock Designation, the directors of the Corporation shall be classified with respect to the time for which they severally hold office into three (3) classes, designated as Class I directors, Class II directors and Class III directors, respectively (the “Classified Board”). Subject to the Stockholders Agreement, the Board of Directors is authorized to assign members of the Board of Directors already in office to such classes of the Classified Board, which assignments shall become effective at the same time the Classified Board becomes effective. Subject to the Stockholders Agreement, directors shall be assigned to each class in accordance with a resolution or resolutions adopted by the Board of Directors, with the number of directors in each class to be divided as nearly equal as reasonably possible. The initial Class I directors shall serve for a term expiring at the first annual meeting of the stockholders following the date of this Second Amended and Restated Certificate; the initial Class II directors shall serve for a term expiring at the second annual meeting of the stockholders following the date of this Second Amended and Restated Certificate; and the initial Class III directors shall serve for a term expiring at the third annual meeting following the date of this Second Amended and Restated Certificate. At each annual meeting of the stockholders of the Corporation beginning with the first annual meeting of the stockholders following the date of this Second Amended and Restated Certificate, subject to the special rights of the holders of one or more outstanding series of Preferred Stock to elect directors, which shall be as provided for or fixed pursuant to a Preferred Stock Designation, the successors of the class of directors whose term expires at that meeting shall be elected to hold office for a term expiring at the annual meeting of the stockholders held in the third year following the year of their election. Each director shall hold office until the annual meeting at which such director’s term expires and until his or her successor shall be duly elected and qualified at an annual meeting of stockholders in accordance with the terms of this Second Amended and Restated Certificate and the Bylaws or until his or her earlier resignation, removal from office, death or incapacity.
| 4 |
E. Subject to the special rights, if any, of the holders of any series of Preferred Stock then outstanding, newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the Board of Directors resulting from death, disability, resignation, retirement, disqualification, removal from office or other cause shall be filled solely by a majority vote of the directors then in office, although less than a quorum, or by a sole remaining director. If there are no directors in office, then an election of directors may, subject to the Stockholders Agreement, be held in the manner provided by statute. Directors chosen pursuant to any of the foregoing provisions shall hold office until the expiration of the term of the class for which elected and until their successors are duly elected and qualified or until their earlier resignation, removal from office, death or incapacity. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director. In the event of a vacancy in the Board of Directors, the remaining directors, except as otherwise provided by law, the Stockholders Agreement or the Bylaws, may exercise the powers of the full Board of Directors until the vacancy is filled.
F. Subject to the special rights, if any, of the holders of any series of Preferred Stock then outstanding, the Board of Directors or any individual director may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting power of all the then outstanding shares of voting stock of the Corporation with the power to vote at an election of directors, voting as a single class.
ARTICLE VI
STOCKHOLDERS
A. Any action required or permitted to be taken by the stockholders of the Corporation must be effected at an annual or special meeting of the stockholders of the Corporation, and shall not be taken by written consent in lieu of a meeting, and the power of stockholders to consent in writing, without a meeting, to the taking of any action is specifically denied. Notwithstanding the foregoing, any action required or permitted to be taken by the holders of any series of Preferred Stock, voting separately as a series or separately as a class with one or more such other series, may be taken without a meeting, without prior notice and without a vote, to the extent expressly so provided by the applicable Preferred Stock Designation relating to such series of Preferred Stock, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding shares of the relevant series of Preferred Stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation in accordance with the applicable provisions of the DGCL.
| 5 |
B. Subject to the special rights, if any, of the holders of any series of Preferred Stock, special meetings of the stockholders of the Corporation may be called, for any purpose or purposes, at any time only by or at the direction of the Board of Directors, the Chairperson of the Board of Directors or the Chief Executive Officer, and shall not be called by any other person or persons.
C. Advance notice of stockholder nominations for the election of directors and of business to be brought by stockholders before any meeting of the stockholders of the Corporation shall be given in the manner and to the extent provided in the Bylaws.
ARTICLE VII
LIMITED LIABILITY; INDEMNIFICATION
A. Limitation on Liability. To the fullest extent permitted by the DGCL, as the same exists or as may hereafter be amended (including, but not limited to, Section 102(b)(7) of the DGCL), a director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. If the DGCL hereafter is amended to further eliminate or limit the liability of directors, then the liability of a director of the Corporation, in addition to the limitation on personal liability provided herein, shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended. Any repeal or modification of this Paragraph A of Article VII by the stockholders of the Corporation shall be prospective only and shall not adversely affect any right or protection of a director of the Corporation with respect to events occurring prior to the time of such repeal or modification.
B. Indemnification. Each person who is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, employee benefit plan or other enterprise (including the heirs, executors, administrators or estate of such person) shall be indemnified and advanced expenses by the Corporation, in accordance with the Bylaws, to the fullest extent authorized or permitted by the DGCL, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such amendment), or any other applicable laws as presently or hereinafter in effect.
C. Insurance. The Corporation may, to the fullest extent permitted by law, purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise against any expense, liability or loss incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such expense, liability or loss under the DGCL.
| 6 |
D. Repeal and Modification. Any repeal or modification of the foregoing provisions of this Article VII shall not adversely affect any right or protection existing hereunder immediately prior to such repeal or modification.
ARTICLE VIII
FORUM SELECTION
A. Unless the Corporation consents in writing to the selection of an alternative forum, (a) the Court of Chancery (the “Chancery Court”) of the State of Delaware (or, in the event that the Chancery Court does not have jurisdiction, the federal district court for the District of Delaware or other state courts of the State of Delaware) shall, to the fullest extent permitted by law, be the sole and exclusive forum for (i) any derivative action, suit or proceeding brought on behalf of the Corporation, (ii) any action, suit or proceeding asserting a claim of breach of a fiduciary duty owed by any director, officer or stockholder of the Corporation to the Corporation or to the Corporation’s stockholders, (iii) any action, suit or proceeding arising pursuant to any provision of the DGCL or the Bylaws or this Second Amended and Restated Certificate (as either may be amended from time to time) or (iv) any action, suit or proceeding asserting a claim against the Corporation governed by the internal affairs doctrine; and (b) subject to the preceding provisions of this Article VIII, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended. If any action the subject matter of which is within the scope of clause (a) of the immediately preceding sentence is filed in a court other than the courts in the State of Delaware (a “Foreign Action”) in the name of any stockholder, such stockholder shall be deemed to have consented to (x) the personal jurisdiction of the state and federal courts in the State of Delaware in connection with any action brought in any such court to enforce the provisions of clause (a) of the immediately preceding sentence and (y) having service of process made upon such stockholder in any such action by service upon such stockholder’s counsel in the Foreign Action as agent for such stockholder.
B. Any person or entity purchasing or otherwise acquiring any interest in any security of the Corporation shall be deemed to have notice of and consented to this Article VIII. Notwithstanding the foregoing, the provisions of this Article VIII shall not apply to suits brought to enforce any liability or duty created by the Securities Exchange Act of 1934, as amended, or any other claim for which the federal courts of the United States have exclusive jurisdiction.
| 7 |
ARTICLE IX
AMENDMENTS
A. The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Second Amended and Restated Certificate, and any other provisions authorized by the DGCL may be added or inserted, in the manner now or hereafter prescribed by law; and all rights, preferences and privileges of whatsoever nature conferred upon stockholders, directors or other persons whomsoever by and pursuant to this Second Amended and Restated Certificate in its present form or as hereafter amended are granted subject to the right reserved in this Article IX. Notwithstanding any other provision of this Second Amended and Restated Certificate or any provision of law that might otherwise permit a lesser vote or no vote and, subject to any affirmative vote of the holders of any series of Preferred Stock required by law, by this Second Amended and Restated Certificate or by any Preferred Stock Designation, the affirmative vote of the holders of a majority in voting power of the stock of the Corporation entitled to vote thereon shall be required to amend, alter, change or repeal any provision of this Second Amended and Restated Certificate, or to adopt any new provision of this Second Amended and Restated Certificate; provided, however, that the affirmative vote of the holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting power of all the then outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to amend in any respect or repeal Paragraph B of Article IV, Article V, Article VI, Article VII, Article VIII or this Article IX. Any amendment, repeal or modification of any of Paragraph B of Article IV, Article V, Article VI, Article VII, Article VIII or this Article IX shall not adversely affect any right or protection of any person existing thereunder with respect to any act or omission occurring prior to such repeal or modification.
B. If any provision or provisions of this Second Amended and Restated Certificate shall be held to be invalid, illegal or unenforceable as applied to any person or entity or circumstance for any reason whatsoever, then, to the fullest extent permitted by law, the validity, legality and enforceability of such provision or provisions in any other circumstance and of the remaining provisions of this Second Amended and Restated Certificate (including, without limitation, each portion this Second Amended and Restated Certificate containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) and the application of such provision to other persons or entities and circumstances shall not in any way be affected or impaired thereby.
[Signature Page Follows]
| 8 |
IN WITNESS WHEREOF, the Corporation has caused this Second Amended and Restated Certificate to be signed by Michael S. Liebowitz, its Chief Executive Officer, as of the 13th day of August, 2021.
| /s/ Michael S. Liebowitz | ||
| Name: | Michael S. Liebowitz | |
| Title: | Chief Executive Officer | |
[Signature Page to Second Amended and Restated Certificate of Incorporation]
Exhibit 3.2
AMENDED AND RESTATED BYLAWS
OF
AIRSPAN NETWORKS INC.
(Adopted as of August 13, 2021)
These Amended and Restated Bylaws are promulgated pursuant to the General Corporation Law of the State of Delaware (the “General Corporation Law”) and the Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) of Airspan Networks Inc. (the “Corporation”).
ARTICLE
I
STOCKHOLDERS
1.1 Annual Meeting. The annual meeting of the stockholders of the Corporation for the election of Directors and for the transaction of such other business as may properly come before the meeting shall be held each year at a place (either within or without the State of Delaware), day, and time to be set by the Board of Directors. Rather than holding an annual meeting at any designated place, the Board of Directors may determine that an annual meeting shall be held solely by means of remote communications, which means shall meet the requirements of the General Corporation Law.
1.2 Special Meetings. Special meetings of the stockholders for any purpose or purposes may be called at any time by the Board of Directors, the President or the Secretary, to be held at such time and place as the Board of Directors or the Chairman (if one be appointed) or the President may prescribe, and no other person or persons may call a special meeting. Rather than holding a special meeting at any designated place, the Board of Directors may determine that a special meeting shall be held solely by means of remote communications, which means shall meet the requirements of the General Corporation Law.
1.3 Notice of Meetings. Except as otherwise provided in the General Corporation Law, the Secretary or Assistant Secretary shall give, in any manner permitted by law, not less than ten (10) nor more than sixty (60) days before the date of any meeting of stockholders, written notice stating the place, day, and time of the meeting, the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and the record date for determining stockholders entitled to vote at the meeting, if such date is different from the record date for determining stockholders entitled to notice of the meeting, to each stockholder of record entitled to vote at the meeting as of the record date for determining the stockholders entitled to notice of the meeting. If mailed, notice to a stockholder shall be effective when mailed, with first-class postage thereon prepaid, correctly addressed to the stockholder at the stockholder’s address as it appears on the current record of stockholders of the Corporation. If given by a form of electronic transmission consented to by the stockholder to whom notice is given, notice shall be deemed given at the times specified with respect to the giving of notice by electronic transmission in the General Corporation Law. Otherwise, written notice shall be effective at the earliest of the following: (a) when received; or (b) on the date shown on the return receipt, if sent by registered or certified mail, return receipt requested, and the receipt is signed by or on behalf of the addressee. If the voting list for the meeting is to be made available by means of an electronic network or if the meeting is to be held solely by remote communication, the notice shall include the information required to access the reasonably accessible electronic network on which the Corporation will make its voting list available either prior to the meeting or, in the case of a meeting held solely by remote communication, during the meeting.
1.3.1 Notice of Special Meeting. In the case of a special meeting, the written notice shall also state with reasonable clarity the purpose or purposes for which the meeting is called and the general nature of the business proposed to be transacted at the meeting. No business other than that within the purpose or purposes specified in the notice may be transacted at a special meeting.
1.3.2 Affidavit of Mailing. An affidavit of the mailing or other means of giving any notice of any stockholders meeting, executed by the Secretary or Assistant Secretary, or any agent of the Corporation giving the notice, shall be prima facie evidence of the giving of such notice.
1.3.3 Waiver of Notice. A stockholder may waive notice of any meeting at any time, either before or after such meeting. Except as provided below, the waiver must be in writing, be signed by the stockholder entitled to the notice and be delivered to the Corporation for inclusion in the minutes or filing with the corporate records. A stockholder’s attendance at a meeting in person or by proxy waives objection to lack of notice or defective notice of the meeting unless the stockholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting on the ground that the meeting is not lawfully called or convened. A stockholder waives objection to consideration of a particular matter that is not within the purpose or purposes described in the meeting notice unless the stockholder objects to considering the matter when it is presented.
1.4 Quorum; Vote Requirement. A quorum shall exist at any meeting of stockholders if a majority of the votes entitled to be cast is represented in person or by proxy; provided, however, that where a separate vote by class or series or classes or series is required, a majority of the outstanding shares of such class or series or classes or series represented in person or by proxy shall constitute a quorum entitled to take action with respect to the vote on that matter. Once a share is represented for any purpose at a meeting other than solely to object to holding the meeting or transacting business at the meeting, it is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or must be set for that adjourned meeting.
If a quorum exists, action on a matter (other than the election of directors) is approved by a voting group if the votes cast within the voting group favoring the action exceed the votes cast within the voting group opposing the action unless a greater number of affirmative votes is required by law or by the Certificate of Incorporation. The stockholders shall elect directors by plurality of the voting power of the stock present, in person or by proxy, and the meeting and entitled to vote on the matter.
2
1.5 Adjourned Meetings. An adjournment or adjournments of any stockholders meeting, whether by reason of the failure of a quorum to attend or otherwise, may be taken to such date, time and place as the Chairman of the meeting may determine without new notice being given if the date, time and place of the adjourned meeting and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. However, if the adjournment is for more than thirty (30) days from the date set for the original meeting, a new record date or record dates for the adjourned meeting shall be fixed and a new notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the adjourned meeting, in accordance with the provisions of Section 1.3 of these Bylaws. In addition, if after the adjournment a new record date for stockholders entitled to vote is fixed for the adjourned meeting, a new record date for notice of such adjourned meeting shall be fixed and a new notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at such adjourned meeting as of the record date fixed for notice of such adjourned meeting, in accordance with Section 1.3 of these Bylaws. At any adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting. Any meeting at which Directors are to be elected shall be adjourned only from day to day until such Directors are elected.
1.6 Fixing Record Date. For the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders (or, subject to Section 1.5 above, any adjournment thereof), the Board of Directors may fix in advance a date as the record date for any such determination of stockholders, such date in any case to be not less than ten (10) days nor more than sixty (60) days prior to the meeting. If no such record date is fixed for the determination of stockholders entitled to notice of or to vote at a meeting of stockholders, then the close of business on the day next preceding the day on which notice is given shall be the record date for such determination of stockholders. If no notice is given because all stockholders entitled to notice have waived notice, then the record date for the determination of stockholders entitled to notice of or to vote at a meeting shall be at the close of business on the date next preceding the day on which the meeting is held. When a determination of stockholders entitled to vote at any meeting of stockholders has been made as provided in this section, such determination shall apply to any adjournment thereof, except as provided in Section 1.5 of these Bylaws. If no notice is given because stockholders holding of record or otherwise entitled to vote in the aggregate not less than the minimum number of votes necessary in order to take such action by written consent have signed a consent, the record date for determining stockholders entitled to take action without a meeting is the date the first stockholder signs the consent.
1.7 Stockholders’ List for Meeting. The Corporation shall cause to be prepared an alphabetical list of the names of all of its stockholders who are entitled to vote at a stockholders meeting or any adjournment thereof; provided, however, if the record date for determining stockholders entitled to vote is less than ten (10) days before the meeting date, the list shall reflect the stockholders entitled to vote as of the tenth (10th) day before the meeting date. The list must be arranged by voting group (and within each voting group by class or series of shares) and show the address of and the number of shares held by each stockholder. The stockholders’ list must be available for inspection by any stockholder, beginning at least ten (10) days prior to the meeting, and continuing through the meeting, either on a reasonably accessible electronic network (provided that the information required to gain access to the list is provided with the notice of the meeting) or during ordinary business hours at the principal place of business of the Corporation. Such list shall be produced and kept open at the time and place of the meeting. During such period, and during the whole time of the meeting, the stockholders’ list shall be subject to the inspection of any stockholder, or the stockholder’s agent or attorney, for any purpose germane to the meeting. If the list is made available on an electronic network, the Corporation may take reasonable steps to ensure that it is available only to stockholders. In cases where the record date for determining stockholders entitled to vote is fewer than ten (10) days prior to the meeting, because notice has been waived by all stockholders, the Secretary shall keep such record available for a period from the date the first waiver of notice was delivered to the date of the meeting. Subject to Section 219 of the General Corporation Law, failure to comply with the requirements of this Section 1.7 shall not affect the validity of any action taken at the meeting.
3
1.8 Remote Communications. The Board of Directors may permit the stockholders and their proxy holders to participate in meetings of the stockholders (whether such meetings are held at a designated place or solely by means of remote communication) using one or more methods of remote communication that satisfy the requirements of the General Corporation Law. The Board of Directors may adopt such guidelines and procedures applicable to participation in stockholders meetings by means of remote communication as it deems appropriate. Participation in a stockholders meeting by means of a method of remote communication permitted by the Board of Directors shall constitute presence in person at the meeting.
1.9 Action By Less than Unanimous Consent. To the extent permitted by the General Corporation Law, the taking of action by stockholders without a meeting by less than unanimous written consent of all stockholders entitled to vote on the action shall be permitted. Prompt notice in any manner permitted by the General Corporation Law of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders or members who have not consented in writing and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for notice of such meeting had been the date that written consents signed by a sufficient number of holders or members to take the action were delivered to the Corporation.
ARTICLE
II
BOARD OF DIRECTORS
2.1 Responsibility of Board of Directors. The business and affairs and property of the Corporation shall be managed under the direction of a Board of Directors. A Director shall discharge the duties of a Director, including duties as a member of a committee, in good faith, with the care an ordinarily prudent person in a like position would exercise under similar circumstances, and in a manner the director reasonably believes to be in the best interests of the Corporation.
2.2 Number of Directors; Qualification. The Board of Directors shall consist of two (2) Directors or such other number as may hereafter be fixed from time to time by resolution of the Board of Directors. No reduction of the authorized number of Directors shall have the effect of removing any Director before that Director’s term of office expires. No Director need be a stockholder of the Corporation or a resident of the State of Delaware. Each Director must be at least eighteen (18) years of age.
4
2.3 Term of Office. Each director shall hold office until his or her successor is elected or until his or her earlier death, resignation or removal.
2.4 Vacancies. Except as otherwise provided by law or in the Certificate of Incorporation, any vacancy occurring in the Board of Directors (whether caused by resignation, death, enlargement of the Board of Directors or otherwise) may be filled by the affirmative vote of a majority of the Directors present at a meeting of the Board at which a quorum is present, or, if the Directors in office constitute less than a quorum, by the affirmative vote of a majority of all of the Directors in office. Notice shall be given to all of the remaining Directors that such vacancy will be filled at the meeting. A Director elected to fill any vacancy shall hold office until the next meeting of stockholders at which Directors are elected, and until his or her successor shall have been elected and qualified.
2.5 Removal. Except as otherwise provided in the Certificate of Incorporation, one or more members of the Board of Directors (including the entire Board) may be removed, with or without cause, by the holders of a majority of the votes entitled to be cast at an election of directors; provided, that if a Director (or the entire Board) has been elected by one or more voting groups, only those voting groups may participate in the vote as to removal; provided further, that if the Certificate of Incorporation grants stockholders the right to cumulate their votes in the election of Directors, if less than the entire Board of Directors is to be removed, no Director may be removed without cause if the votes cast against such Director’s removal would be sufficient to elect such director if then cumulatively voted at an election of the entire Board of Directors, or, if there be classes of Directors, at an election of the class of Directors of which such Director is a part.
2.6 Resignation. A Director may resign at any time by delivering written notice to the Board of Directors, its Chairman (if one be appointed), the President or the Secretary. A resignation is effective when the notice is delivered unless the notice specifies a later effective date.
2.7 Regular Meetings. Regular meetings of the Board of Directors may be held at such place, day and time as shall from time to time be fixed by resolution of the Board without notice other than the delivery of such resolution as provided in Section 2.9 below. A regular meeting may be held without notice immediately after and at the same place as the annual meeting of the stockholders.
2.8 Special Meetings. Special meetings of the Board of Directors may be called by the President or the Chairman of the Board (if one be appointed) or any Director, to be held at such place, day and time as specified by the person or persons calling the meeting.
2.9 Notice of Meeting. Notice of the place, day and time of any meeting of the Board of Directors for which notice is required shall be given, at least two (2) days preceding the day on which the meeting is to be held, by the Secretary or an Assistant Secretary, or by the person or persons calling the meeting, in any manner permitted by law, including orally. Any oral notice given by personal communication over the telephone or otherwise may be communicated either to the Director or to a person at the office of the Director who, the person giving the notice has reason to believe, will promptly communicate it to the Director. Notice shall be deemed to have been given on the earliest of (a) the day of actual receipt, (b) five (5) days after the day on which written notice is deposited in the United States mail, as evidenced by the postmark, with first-class postage prepaid, and correctly addressed, or (c) the date shown on the return receipt, if sent by registered or certified mail, return receipt requested, and the receipt is signed by or on behalf of the addressee.
5
No notice of any regular meeting need be given if the place, day and time thereof have been fixed by resolution of the Board of Directors and a copy of such resolution has been given to each Director, either by personally delivering the copy to the Director at least two (2) days, or by depositing the copy in the United States mail with first class postage prepaid and correctly addressed to the Director at the Director’s address as it appears on the records of the Corporation at least five (5) days (as evidenced by the postmark), prior to the day of the first meeting held in pursuance thereof.
Notice of a meeting of the Board of Directors need not be given to any Director if it is waived by the Director in writing, whether before or after such meeting is held. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting unless required by law, the Certificate of Incorporation or these Bylaws.
A Director’s attendance at or participation in a meeting shall constitute a waiver of notice of such meeting except when a Director attends or participates in a meeting for the express purpose of objecting on legal grounds prior to or at the beginning of the meeting (or promptly upon the Director’s arrival) to the holding of the meeting or the transaction of any business and does not thereafter vote for or assent to action taken at the meeting. Any meeting of the Board of Directors shall be a legal meeting if all of the Directors have received valid notice thereof, are present without objecting or waive notice thereof, or any combination thereof.
2.10 Quorum of Directors. Except in particular situations where a lesser number is expressly permitted by law, and unless a greater number is required by the Certificate of Incorporation or these Bylaws, a majority of the number of Directors specified in or fixed in accordance with these Bylaws shall constitute a quorum for the transaction of business, and the affirmative vote of a majority of the Directors present at a meeting at which a quorum is present shall be the act of the Board of Directors; provided, that if the number of Directors in office at any time is less than the number specified in or fixed in accordance with these Bylaws, then a quorum shall consist of a majority of the number of Directors in office; provided further, that in no event shall a quorum consist of fewer than one-third of the number specified in or fixed in accordance with these Bylaws.
Directors at a meeting of the Board of Directors at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of Directors, provided such withdrawal does not reduce the number of Directors attending the meeting below the level of a quorum.
A majority of the Directors present, whether or not constituting a quorum, may adjourn any meeting of the Board of Directors to another time and place. If the meeting is adjourned for more than forty eight (48) hours, then notice of the time and place of the adjourned meeting shall be given before the adjourned meeting takes place, in the manner specified in Section 2.9 of these Bylaws, to the Directors who were not present at the time of the adjournment.
6
2.11 Dissent by Directors. Any Director who is present at any meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless the Director objects at the beginning of the meeting (or promptly upon the Director’s arrival) to the holding of, or the transaction of business at, the meeting; or unless the Director’s dissent or abstention shall be entered in the minutes of the meeting; or unless the Director delivers written notice of the Director’s dissent or abstention to the presiding officer of the meeting before the adjournment thereof or to the Corporation within a reasonable time after the adjournment of the meeting. Such right to dissent or abstention shall not be available to any Director who votes in favor of such action.
2.12 Action by Directors Without a Meeting. Any action required by law to be taken or which may be taken at a meeting of the Board of Directors may be taken without a meeting if one or more consents in writing, setting forth the action so taken, shall be signed by all of the Directors and delivered to the Corporation for inclusion in the minutes or filing with the corporate records. Such consent shall have the same effect as a meeting vote. Action taken under this section is effective when the last Director signs the consent, unless the consent specifies a later effective date.
2.13 Telephonic Meetings. Except as may be otherwise restricted by the Certificate of Incorporation, members of the Board of Directors may participate in a meeting of the Board by means of conference telephone or other communications equipment by means of which all persons participating in the meeting may simultaneously hear each other during the meeting. Participation by such means shall constitute presence in person at a meeting.
2.14 Compensation. By resolution of the Board of Directors, the Directors may be paid their expenses, if any, and may be paid a fixed sum or a stated salary as a Director, for attendance at each meeting of the Board. No such payment shall preclude any Director from serving the Corporation in any other capacity and receiving compensation therefor.
2.15 Committees. The Board of Directors, by resolution adopted by the greater of (a) a majority of all of the Directors in office or (b) the number of Directors required by the Certificate of Incorporation or these Bylaws to take action may from time to time create, and appoint individuals to, one or more committees, each committee to consist of one (1) or more Directors. Committees of Directors may exercise the authority of the Board of Directors to the extent specified by such resolution or in the Certificate of Incorporation or these Bylaws. However, no committee shall:
(a) approve or adopt, or recommend to stockholders, any action or matter expressly required to be submitted to stockholders for approval; or
(b) adopt, amend, or repeal Bylaws.
Committees shall be governed by the same provisions as govern the meetings, actions without meetings, notice and waiver of notice, quorum and voting requirements and standards of conduct of the Board of Directors. All committees shall keep regular minutes of their meetings and shall cause them to be recorded in books kept for that purpose at the office of the Corporation.
7
ARTICLE
III
OFFICERS
3.1 Appointment. The officers of the Corporation shall be appointed by the Board of Directors. Except in the case of death, resignation or removal, unless a different term is specified in the resolution electing the officer, each officer shall hold office until his or her successor is appointed and qualified.
3.2 Qualification. None of the officers of the Corporation need be a Director, except as specified below. Any two or more of the corporate offices may be held by the same person.
3.3 Officers Enumerated. Except as otherwise provided by resolution of the Board of Directors, the officers of the Corporation and their respective powers and duties shall be as follows:
3.3.1 Chairman of the Board. The Chairman of the Board (if such an officer be appointed) shall be a Director and shall perform such duties as shall be assigned to him or her by the Board of Directors and in any employment agreement. The Chairman shall preside at all meetings of the stockholders and at all meetings of the Board at which he or she is present. The Chairman may sign deeds, mortgages, bonds, contracts and other instruments, except when the signing thereof has been expressly delegated by the Board or by these Bylaws to some other officer or agent of the Corporation or is otherwise required by law to be signed by some other officer or in some other manner. If the President dies or becomes unable to act, the Chairman shall perform the duties of the President, except as may be limited by resolution of the Board of Directors, with all the powers of and subject to all the restrictions upon the President.
3.3.2 President. Subject to such supervisory powers as may be given by the Board of Directors to the Chairman of the Board (if such an officer be appointed), the President shall be the Chief Executive Officer of the Corporation unless some other officer is so designated by the Board and, subject to the control of the Board, shall supervise and control all of the assets, business and affairs of the Corporation. The President may sign certificates for shares of the Corporation, deeds, mortgages, bonds, contracts and other instruments, except when the signing thereof has been expressly delegated by the Board or by these Bylaws to some other officer or agent of the Corporation or is otherwise required by law to be signed by some other officer or in some other manner. The President shall vote the shares owned by the Corporation in other corporations, domestic or foreign, unless otherwise prescribed by law or resolution of the Board. In general, the President shall perform all duties incident to the office of President and such other duties as may be prescribed by the Board from time to time. In the absence of the Chairman of the Board, the President, if a Director, shall preside over all meetings of the stockholders and over all meetings of the Board of Directors. The President shall have the authority to appoint one or more Assistant Secretaries and Assistant Treasurers, as he or she deems necessary.
8
3.3.3 Vice Presidents. If no Chairman of the Board has been appointed, in the absence or disability of the President, the Vice Presidents, if any, in order of their rank as fixed by the Board of Directors or, if not ranked, a Vice President designated by the Board, shall perform all the duties of the President and when so acting shall have all the powers of, and be subject to all the restrictions upon, the President; provided that no such Vice President shall assume the authority to preside as Chairman of meetings of the Board unless such Vice President is a member of the Board. The Vice Presidents shall have such other powers and perform such other duties as from time to time may be respectively prescribed for them by the Board, these Bylaws, the President or the Chairman of the Board (if one be appointed).
3.3.4 Secretary. The Secretary shall:
(a) have responsibility for preparing minutes of meetings of the stockholders and the Board of Directors, to be kept in a book for that purpose, and for authenticating records of the Corporation;
(b) see that all notices are duly given in accordance with the provisions of these Bylaws and as required by law;
(c) be custodian of the corporate records and seal of the Corporation, if one be adopted;
(d) keep a register of the post office address of each stockholder and Director;
(e) attest certificates for shares of the Corporation;
(f) have general charge of the stock transfer books of the Corporation;
(g) when required by law or authorized by resolution of the Board of Directors, sign with the President, or other officer authorized by the President or the Board, deeds, mortgages, bonds, contracts and other instruments; and
(h) in general, perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned by the President or the Board of Directors.
In the absence of the Secretary, an Assistant Secretary may perform the duties of the Secretary.
3.3.5 Treasurer. If required by the Board of Directors, the Treasurer shall give a bond for the faithful discharge of his or her duties in such sum and with such surety or sureties as the Board shall determine. The Treasurer shall:
(a) have charge and custody of and be responsible for all funds and securities of the Corporation;
(b) receive and give receipts for moneys due and payable to the Corporation from any source whatsoever and deposit all such moneys in the name of the Corporation in banks, trust companies or other depositories selected in accordance with the provisions of these Bylaws; and
9
(c) in general, perform all of the duties incident to the office of Treasurer and such other duties as from time to time may be assigned by the President or the Board of Directors.
In the absence of the Treasurer, an Assistant Treasurer may perform the duties of the Treasurer.
3.4 Delegation. In case of the absence or inability to act of any officer of the Corporation and of each person herein authorized to act in his or her place, the Board of Directors may from time to time delegate the powers and duties of such officer to any other officer or other person whom it may select.
3.5 Resignation. Any officer may resign at any time by delivering written notice to the Corporation. Any such resignation shall take effect at the time the notice is delivered unless the notice specifies a later effective date. Unless otherwise specified therein, acceptance of such resignation by the Corporation shall not be necessary to make it effective. Any resignation shall be without prejudice to the rights, if any, of the Corporation under any contract to which the officer is a party.
3.6 Removal. Any officer or agent may be removed by the Board with or without cause. An officer empowered to appoint another officer or assistant officer also has the power with or without cause to remove any officer or assistant officer he or she would have the power to appoint whenever in his or her judgment the best interests of the Corporation would be served thereby. The removal of an officer or agent shall be without prejudice to the contract rights, if any, of the Corporation or the person so removed. Appointment of an officer or agent shall not of itself create contract rights.
3.7 Vacancies. A vacancy in any office because of death, resignation, removal, disqualification, creation of a new office or any other cause may be filled by the Board of Directors for the unexpired portion of the term or for a new term established by the Board.
3.8 Other Officers and Agents. Such other officers and assistant officers as may be deemed necessary or advisable may be appointed by the Board of Directors or, to the extent provided in Section 3.3.2 above, by the President. Such other officers and assistant officers shall hold office for such periods, have such authorities and perform such duties as are provided in these Bylaws or as may be provided by resolution of the Board. Any officer may be assigned by the Board any additional title that the Board deems appropriate. The Board may delegate to any officer or agent the power to appoint any such assistant officers or agents and to prescribe their respective terms of office, authorities and duties.
3.9 Compensation. Compensation, if any, for officers and other agents and employees of the Corporation shall be determined by the Board of Directors, or by a committee or officer appointed by the Board. No officer shall be prevented from receiving compensation in such capacity by reason of the fact that he or she is also a Director of the Corporation.
10
ARTICLE
IV
CONTRACTS, CHECKS AND DRAFTS
4.1 Contracts. The Board of Directors may authorize any officer or officers or agent or agents to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Corporation. Such authority may be general or confined to specific instances.
Subject to the limitations set forth in Sections 144 and 203 of the General Corporation Law, to the extent applicable:
(a) The Corporation may enter into contracts and otherwise transact business as vendor, purchaser, lender, borrower or otherwise with its Directors and stockholders and with corporations, associations, firms and entities in which they are or may be or become interested as Directors, officers, stockholders, members or otherwise.
(b) Any such contract or transaction shall not be affected or invalidated or give rise to liability by reason of the Director’s or stockholder’s having an interest in the contract or transaction.
4.2 Checks, Drafts, Etc. All checks, drafts and other orders for the payment of money, notes and other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or officers or agent or agents of the Corporation and in such manner as may be determined from time to time by resolution of the Board of Directors.
4.3 Deposits. All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositories as the Treasurer, subject to the direction of the Board of Directors, may select.
ARTICLE
V
STOCK
5.1 Issuance of Shares. No shares of the Corporation shall be issued unless authorized by the Board of Directors, which authorization shall include the maximum number of shares to be issued, the consideration to be received for each share and, if the consideration is in a form other than cash, the determination of the value of the consideration.
5.2 Certificates. The Corporation’s shares may but need not be represented by certificates. The rights and obligations of stockholders are identical whether or not their shares are represented by certificates. Share certificates shall be numbered in the order of their issue and shall be signed by or in the name of the Corporation by (i) the Chief Executive Officer, President or a Vice President and (ii) the Chief Financial Officer, Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary. Any or all of the signatures on a certificate may be a facsimile. In case any officer who signed or whose facsimile signature has been placed upon a certificate shall have ceased to be an officer before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer at the date of issue. Each certificate that is subject to any restriction on the transfer or registration of transfer of shares shall have conspicuously noted on its face or back either the full text of the restriction or a statement of the existence of the restriction. If the Corporation is authorized to issue different classes of shares or different series within a class, each certificate shall have on its face or back a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof, and the qualifications, limitations or restrictions of such preferences and/or rights.
11
5.3 Stock Records. The Corporation or its agent shall maintain at the registered office or principal office of the Corporation a record of its stockholders, in a form that permits preparation of a list of the names and addresses of all stockholders in alphabetical order by class of shares showing the number and class of shares held by each. The person in whose name shares stand on the books of the Corporation shall be deemed by the Corporation to be the owner thereof for all purposes.
5.4 Restrictions on Transfer. The Board of Directors shall have the authority to issue shares of the capital stock of this Corporation and the certificates therefor subject to such transfer restrictions and other limitations as it may deem necessary to promote compliance with applicable federal and state securities laws, and to regulate the transfer thereof in such manner as may be calculated to promote such compliance or to further any other reasonable purpose. Except to the extent that the Corporation has obtained an opinion of counsel acceptable to the Corporation that transfer restrictions are not required under applicable securities laws, all certificates representing shares of the Corporation shall bear the following legend (or a legend of substantially the same import) on the face of the certificate or on the reverse of the certificate if a reference to the legend is contained on the face:
NOTICE: RESTRICTIONS ON TRANSFER
The securities represented by this certificate have not been registered under the Securities Act of 1933, or any state securities laws, and may not be offered, sold, transferred, encumbered, or otherwise disposed of except upon satisfaction of certain conditions. Information concerning these conditions may be obtained from the Corporation or its legal counsel. Any offer or disposition of these securities without satisfaction of said conditions will be wrongful and will not entitle the transferee to register ownership of the securities with the Corporation.
5.5 Transfers. Registration of transfers of shares shall be made only upon the share transfer records of the Corporation, which records shall be kept at the registered office of the Corporation or at its principal place of business. The Board of Directors may, by resolution, open a share register in any state of the United States, and may employ an agent or agents to keep such register and to record transfers of shares therein. Certificated shares shall be transferred by delivery of the certificates therefor, accompanied either by an assignment in writing on the back of the certificate or an assignment separate from certificate, or by a written power of attorney to sell, assign and transfer the same, signed by the holder of said certificate. No certificated shares shall be transferred on the records of the Corporation until the outstanding certificates therefor have been surrendered to the Corporation or to its transfer agent or registrar. Uncertificated shares shall be transferred upon receipt by the Corporation of a written request for transfer signed by the stockholder. The Board of Directors may make further rules and regulations concerning the transfer and registration of shares.
12
ARTICLE
VI
FISCAL YEAR
The fiscal year of the Corporation shall be the calendar year unless otherwise expressly determined by the Board of Directors.
ARTICLE VII
INDEMNIFICATION OF OFFICERS AND DIRECTORS
7.1 Indemnification. The Corporation shall indemnify and hold harmless each person who is or was serving as a Director or officer of the Corporation or who, serving as a Director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, to which the person is a party or is threatened to be made a party because of such service, and shall make advances of expenses (including attorneys’ fees) incurred by an officer or Director in defending any civil, criminal, administrative or investigative action, suit or proceeding, to the fullest extent permitted by law; provided that no such indemnity shall be made in respect of any matter as to which a Director or officer shall have been adjudged to be liable to the Corporation, unless and only to the extent that the court in which such action or suit was brought shall determine, upon application, that, despite the adjudication of liability but in view of all the circumstances of the case, such Director or officer is fairly and reasonably entitled to indemnity for such expenses which the court deems proper.
7.2 Insurance. The Corporation may purchase and maintain insurance on behalf of any person who is or was a Director, officer, employee or agent of the Corporation or who, while a Director, officer, employee or agent of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise against liability asserted against such person and incurred by such person in that capacity or arising from such person’s status as a Director, officer, employee or agent, whether or not the Corporation would have power to indemnify such person against such liability under Section 145 of the General Corporation Law.
7.3 Amendments to the General Corporation Law. If, after the effective date of this Article IX, the General Corporation Law is amended to authorize further indemnification of directors or officers, then Directors and officers of the Corporation shall be indemnified to the fullest extent permitted by the General Corporation Law.
13
7.4 Nonexclusive Contract Right. To the extent permitted by law, the rights to indemnification and advance of expenses conferred in this Article VII shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, agreement, vote of stockholders or disinterested directors or otherwise. The right to indemnification conferred in this Article VII shall be a contract right upon which each Director or officer shall be presumed to have relied in determining to serve or to continue to serve as such. Any amendment to or repeal of this Article VII shall not adversely affect any right or protection of a Director or officer of the Corporation for or with respect to any acts or omissions of such Director or officer occurring prior to such amendment or repeal.
7.5 Severability. If any provision of this Article IX or any application thereof shall be invalid, unenforceable or contrary to applicable law, the remainder of this Article IX, and the application of such provisions to persons or circumstances other than those as to which it is held invalid, unenforceable or contrary to applicable law, shall not be affected thereby.
ARTICLE
VIII
CORPORATE SEAL
The Board of Directors may, but shall not be required to, adopt a corporate seal for the Corporation in such form and with such inscription as the Board may determine. If such a corporate seal shall at any time be so adopted, the application of or the failure to apply such seal to any document or instrument shall have no effect upon the validity or invalidity of such document or instrument under otherwise applicable principles of law.
ARTICLE
IX
MISCELLANY
9.1 Communications by Facsimile. To the extent permitted by applicable law, whenever these Bylaws require notice, consent or other communication to be delivered for any purpose, transmission by phone, wire, wireless equipment or electronic mail which transmits a facsimile of such communication shall constitute sufficient delivery for such purpose. Such communication shall be deemed to have been received by or in the possession of the addressee upon completion of the transmission.
9.2 Inspector of Elections. Before any meeting of stockholders, the Board of Directors may appoint an inspector of elections to act at the meeting and any adjournment thereof. If no inspector of elections is so appointed by the Board, then the Chairman of the meeting may appoint an inspector of elections to act at the meeting and any adjournment thereof. If any person appointed as inspector fails to appear or fails or refuses to act, then the Chairman of the meeting may, and upon the request of any stockholder or a stockholder’s proxy shall, appoint a person to fill that vacancy. The inspector of elections may appoint or retain other persons or entities to assist him or her in the performance of his or her duties.
Such inspector of elections shall:
(a) ascertain the number of shares outstanding and the voting power of each;
14
(b) determine the shares represented at the meeting and the validity of proxies and ballots;
(c) count all votes and ballots;
(d) determine and retain for a reasonable period a record of the disposition of any challenges made to any determination of the inspector of elections; and
(e) certify the determination of the number of shares represented at the meeting, and the count of all votes and ballots.
9.3 Rules of Conduct. The Board of Directors or the Chairman of the meeting may adopt such rules, regulations and procedures for the conduct of any meeting of the stockholders as they deem appropriate including, without limitation, rules, regulations and procedures regarding participation in the meeting by means of remote communication. Except to the extent inconsistent with any applicable rules, regulations or procedures adopted by the Board of Directors, the Chairman of any meeting may adopt such rules, regulations and procedures for the meeting, and take such actions with respect to the conduct of the meeting, as the Chairman of the meeting deems appropriate. The rules, regulations and procedures adopted may include, without limitation, rules that (a) establish an agenda or order of business, (b) are intended to maintain order and safety at the meeting, (c) restrict entry to the meeting after the time fixed for its commencement and (d) limit the time allotted to stockholder questions or comments. Unless otherwise determined by the Board of Directors or the Chairman of the meeting, meetings of the stockholders need not be held in accordance with the rules of parliamentary procedure.
9.4 Construction. Within these Bylaws, words of any gender shall be construed to include any other gender, and words in the singular or plural number shall be construed to include the plural or singular, respectively, unless the context otherwise requires.
9.5 Severability. If any provision of these Bylaws or any application thereof shall be invalid, unenforceable or contrary to applicable law, the remainder of these Bylaws, and the application of such provisions to individuals or circumstances other than those as to which it is held invalid, unenforceable or contrary to applicable law, shall not be affected thereby.
9.6 Notices To And From Directors And Stockholders. In addition to the means of notice previously provided for or required in these Bylaws, to the extent permitted by applicable law, notices to Directors and stockholders from the Corporation and from Directors and stockholders to the Corporation may be provided by a form of electronic transmission (as defined in the General Corporation Law). Similarly where these Bylaws provide for or require action by “written” consent or in a “writing”, to the extent permitted by applicable law, such consent or action may be either in a tangible medium or by means of electronic transmission. Subject to contrary provisions in the General Corporation Law, notice to stockholders or Directors in an electronic transmission shall be effective only with respect to stockholders and Directors that have consented to receive electronically transmitted notices and that have designated in the consent the address, location or system to which these notices may be electronically transmitted and with respect to a notice that otherwise complies with any other requirements of the General Corporation Law and any applicable federal law.
15
A stockholder or Director who has consented to receipt of electronically transmitted notices may revoke this consent by delivering a written revocation to the Corporation.
The consent of any stockholder or Director is revoked if (a) the Corporation is unable to deliver by electronic transmission two consecutive notices given by the Corporation in accordance with the consent, and (b) this inability becomes known to the Secretary or an Assistant Secretary of the Corporation or any other person responsible for giving the notice. The inadvertent failure by the Corporation to treat this inability as a revocation does not invalidate any meeting or other action.
ARTICLE
X
AMENDMENT OF BYLAWS
Except as may be provided in the Certificate of Incorporation, and subject to Section 216 of the General Corporation Law, the Bylaws of the Corporation may be amended or repealed, or new Bylaws may be adopted, by: (a) the stockholders, even though the Bylaws may also be amended or repealed, or new Bylaws may also be adopted, by the Board of Directors; or (b) subject to the power of the stockholders of the Corporation to amend or repeal the Bylaws, the Board of Directors, unless such power is reserved, by the Certificate of Incorporation or by law, exclusively to the stockholders in whole or in part or unless the stockholders, in adopting, amending or repealing a particular Bylaw, provide expressly that the Board of Directors may not amend or repeal that Bylaw. Any officer of the Corporation may authenticate a restatement of the Bylaws and all amendments thereto adopted in the manner provided above.
16
Exhibit 4.1
Exhibit 4.4
WARRANT AGREEMENT
THIS WARRANT AGREEMENT (this “Agreement”), dated as of August 13, is by and between Airspan Networks Holdings Inc., a Delaware corporation (the “Company”), and Continental Stock Transfer & Trust Company, a New York limited purpose trust company, as warrant agent (the “Warrant Agent” and, in its capacity as transfer agent, referred to herein as the “Transfer Agent”).
WHEREAS, pursuant to that certain Business Combination Agreement, dated as of March 8, 2021 (the “Business Combination Agreement”), by and among the Company, Artemis Merger Sub Corp. and Airspan Networks Inc. (“Airspan”), the Company agreed to issue (i) three million (3,000,000) warrants to purchase shares of common stock of the Company, par value $0.0001 per share (“Common Stock”), at an exercise price of $12.50 (the “$12.50 Warrants”), (ii) three million (3,000,000) warrants to purchase shares of Common Stock at an exercise price of $15.00 (the “$15.00 Warrants”), and (iii) three million (3,000,000) warrants to purchase shares of Common Stock, at an exercise price of $17.50 (the “$17.50 Warrants” and, together with the $12.50 Warrants and the $15.00 Warrants, the “Warrants”, and each of the $12.50 Warrants, the $15.00 Warrants and the $17.50 Warrants as a separate group, a “Warrant Tranche”);
WHEREAS, the Company has filed with the Securities and Exchange Commission (the “Commission”) a registration statement on Form S-4, File No. 333-256137 (as amended, the “Registration Statement”), for the registration under the Securities Act of 1933, as amended (the “Securities Act”), of, among other securities, the Warrants and the shares of Common Stock issuable upon exercise of the Warrants, which Registration Statement was declared effective by the Commission on July 23, 2021;
WHEREAS, the Company desires the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing to so act, in connection with the issuance, registration, transfer, exchange, redemption and exercise of the Warrants;
WHEREAS, the Company desires to provide for the form and provisions of the Warrants, the terms upon which they shall be issued and exercised, and the respective rights, limitation of rights, and immunities of the Company, the Warrant Agent, and the holders of the Warrants; and
WHEREAS, all acts and things have been done and performed which are necessary to make the Warrants, when executed on behalf of the Company and countersigned by or on behalf of the Warrant Agent (if a physical certificate is issued), as provided herein, the valid, binding and legal obligations of the Company, and to authorize the execution and delivery of this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto agree as follows:
1. Appointment of Warrant Agent.
The Company hereby appoints the Warrant Agent to act as agent for the Company for the Warrants, and the Warrant Agent hereby accepts such appointment and agrees to perform the same in accordance with the terms and conditions set forth in this Agreement.
2. Warrants.
2.1 Form of Warrant. Each Warrant shall initially be issued in registered form only, and, if a physical certificate is issued, the $12.50 Warrants shall be in substantially the form of Exhibit A hereto, the $15.00 Warrants shall be in substantially the form of Exhibit B hereto, and the $17.50 Warrants shall be in substantially the form of Exhibit C hereto, the provisions of which are incorporated herein and shall be signed by, or bear the facsimile signature of, the Chairman of the Board (as defined below), the President, the Chief Executive Officer, the Chief Financial Officer, the Secretary or other principal officer of the Company. In the event the person whose facsimile signature has been placed upon any Warrant shall have ceased to serve in the capacity in which such person signed the Warrant before such Warrant is issued, it may be issued with the same effect as if he or she had not ceased to be such at the date of issuance.
2.2 Effect of Countersignature. If a physical certificate is issued, unless and until countersigned by the Warrant Agent pursuant to this Agreement, a Warrant certificate shall be invalid and of no effect and may not be exercised by the holder thereof.
2.3 Registration.
2.3.1 Warrant Register. The Warrant Agent shall maintain books (the “Warrant Register”) for the registration of original issuance and the registration of transfer of the Warrants. Upon the initial issuance of the Warrants, the Warrant Agent shall issue and register the Warrants in the names of the respective holders thereof in such denominations and otherwise in accordance with instructions delivered to the Warrant Agent by the Company. All of the Warrants shall initially be represented by one or more book-entry certificates (each, a “Book-Entry Warrant Certificate”) deposited with The Depository Trust Company (the “Depositary”) and registered in the name of Cede & Co., a nominee of the Depositary. Ownership of beneficial interests in the Warrants shall be shown on, and the transfer of such ownership shall be effected through, records maintained by (i) the Depositary or its nominee for each Book-Entry Warrant Certificate, or (ii) institutions that have accounts with the Depositary (each such institution, with respect to a Warrant in its account, a “Participant”).
If the Depositary subsequently ceases to make its book-entry settlement system available for the Warrants, the Company may instruct the Warrant Agent regarding making other arrangements for book-entry settlement. In the event that the Warrants are not eligible for, or it is no longer necessary to have the Warrants available in, book-entry form, the Warrant Agent shall provide written instructions to the Depositary to deliver to the Warrant Agent for cancellation each Book-Entry Warrant Certificate, and the Company shall instruct the Warrant Agent to deliver to the Depositary definitive certificates in physical form evidencing such Warrants (“Definitive Warrant Certificate”). Such Definitive Warrant Certificate shall be in the form annexed hereto as Exhibit A, Exbibit B or Exhibit C, as applicable, with appropriate insertions, modifications and omissions, as provided above.
| 2 |
2.3.2 Registered Holder. Prior to due presentment for registration of transfer of any Warrant, the Company and the Warrant Agent may deem and treat the person in whose name such Warrant is registered in the Warrant Register (the “Registered Holder”) as the absolute owner of such Warrant and of each Warrant represented thereby (notwithstanding any notation of ownership or other writing on a Definitive Warrant Certificate made by anyone other than the Company or the Warrant Agent), for the purpose of any exercise thereof, and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary.
3. Terms and Exercise of Warrants.
3.1 Warrant Price. Each $12.50 Warrant shall entitle the Registered Holder thereof, subject to the provisions of such $12.50 Warrant and of this Agreement, to purchase from the Company the number of shares of Common Stock stated therein, at the price of $12.50 per share, subject to the adjustments provided in Section 4 hereof and in the last sentence of this Section 3.1. Each $15.00 Warrant shall entitle the Registered Holder thereof, subject to the provisions of such $15.00 Warrant and of this Agreement, to purchase from the Company the number of shares of Common Stock stated therein, at the price of $15.00 per share, subject to the adjustments provided in Section 4 hereof and in the last sentence of this Section 3.1. Each $17.50 Warrant shall entitle the Registered Holder thereof, subject to the provisions of such $17.50 Warrant and of this Agreement, to purchase from the Company the number of shares of Common Stock stated therein, at the price of $17.50 per share, subject to the adjustments provided in Section 4 hereof and in the last sentence of this Section 3.1. The term “Warrant Price” as used in this Agreement shall mean the price per share (including in cash or by payment of Warrants pursuant to a “cashless exercise,” to the extent permitted hereunder) at which shares of Common Stock may be purchased at the time a Warrant is exercised.
3.2 Duration of Warrants. A Warrant may be exercised only during the period (the “Exercise Period”) (A) commencing on the date hereof, and (B) terminating on the earlier to occur of (i) two (2) years following the date hereof, and (ii) the Redemption Date (as defined below) as provided in Section 6.2 hereof (the “Expiration Date”); provided, however, that the exercise of any Warrant shall be subject to the satisfaction of any applicable conditions, as set forth in subsection 3.3.2 below, with respect to an effective registration statement or a valid exemption therefrom being available. Except with respect to the right to receive the Redemption Price (as defined below), in the event of a redemption (as set forth in Section 6 hereof), each outstanding Warrant not exercised on or before the Expiration Date shall become void, and all rights thereunder and all rights in respect thereof under this Agreement shall cease at 5:00 p.m., New York City time, on the Expiration Date.
| 3 |
3.3 Exercise of Warrants.
3.3.1 Payment. Subject to the provisions of the Warrant and this Agreement, a Warrant may be exercised by the Registered Holder thereof by delivering to the Warrant Agent at its corporate trust department (i) the Definitive Warrant Certificate evidencing the Warrants to be exercised, or, in the case of a Book-Entry Warrant Certificate, the Warrants to be exercised (the “Book-Entry Warrants”) on the records of the Depositary to an account of the Warrant Agent at the Depositary designated for such purposes in writing by the Warrant Agent to the Depositary from time to time, (ii) an election to purchase (“Election to Purchase”) any share of Common Stock pursuant to the exercise of a Warrant, properly completed and executed by the Registered Holder on the reverse of the Definitive Warrant Certificate or, in the case of a Book-Entry Warrant Certificate, properly delivered by the Participant in accordance with the Depositary’s procedures, and (iii) the payment in full of the Warrant Price for each full share of Common Stock as to which the Warrant is exercised and any and all applicable taxes due in connection with the exercise of the Warrant, the exchange of the Warrant for the shares of Common Stock and the issuance of such shares of Common Stock, as follows:
(a) in lawful money of the United States, in good certified check or wire payable to the Warrant Agent;
(b) in the event of a redemption pursuant to Section 6 hereof in which the Company’s board of directors (the “Board”) has elected to require all holders of the Warrants to exercise such Warrants on a “cashless basis,” by surrendering the Warrants for that number of shares of Common Stock equal to the quotient obtained by dividing (x) the product of the number of shares of Common Stock underlying the Warrants, multiplied by the excess, if any, of the “Fair Market Value”, as defined in this subsection 3.3.1(b) over the applicable Warrant Price by (y) the Fair Market Value. Solely for purposes of this subsection 3.3.1(b) and Section 6.3, the “Fair Market Value” shall mean the average last sale price of the Common Stock for the ten (10) trading days ending on the third (3rd) trading day prior to the date on which the notice of redemption is sent to the holders of the Warrants, pursuant to Section 6 hereof; or
(c) on a cashless basis, as provided in Section 7.4 hereof.
| 4 |
3.3.2 Issuance of Shares of Common Stock upon Exercise. As soon as practicable after the exercise of any Warrant and the clearance of the funds in payment of the applicable Warrant Price (if payment is pursuant to subsection 3.3.1(a)), the Company shall issue to the Registered Holder of such Warrant a book-entry position or certificate, as applicable, for the number of full shares of Common Stock to which he, she or it is entitled, registered in such name or names as may be directed by him, her or it, and if such Warrant shall not have been exercised in full, a new book-entry position or countersigned Warrant, as applicable, for the number of shares of Common Stock as to which such Warrant shall not have been exercised. If fewer than all the Warrants evidenced by a Book-Entry Warrant Certificate are exercised, a notation shall be made to the records maintained by the Depositary, its nominee for each Book-Entry Warrant Certificate, or a Participant, as appropriate, evidencing the balance of the Warrants remaining after such exercise. Notwithstanding the foregoing, the Company shall not be obligated to deliver any shares of Common Stock pursuant to the exercise of a Warrant and shall have no obligation to settle such Warrant exercise unless a registration statement under the Securities Act with respect to the shares of Common Stock underlying the Warrants is then effective and a prospectus relating thereto is current, subject to the Company’s satisfying its obligations under Section 7.4 or a valid exemption from registration being available. No Warrant shall be exercisable and the Company shall not be obligated to issue shares of Common Stock upon exercise of a Warrant unless the Common Stock issuable upon such Warrant exercise has been registered, qualified or deemed to be exempt from registration or qualification under the securities laws of the state of residence of the Registered Holder of the Warrants, except pursuant to Section 7.4. In the event that the conditions in the two immediately preceding sentences are not satisfied with respect to a Warrant, the holder of such Warrant shall not be entitled to exercise such Warrant and such Warrant may have no value and expire worthless. In no event will the Company be required to net cash settle the Warrant exercise. The Company may require holders of Warrants to settle the Warrant on a “cashless basis” pursuant to subsection 3.3.1(b) and Section 7.4. If, by reason of any exercise of Warrants on a “cashless basis”, the holder of any Warrant would be entitled, upon the exercise of such Warrant, to receive a fractional interest in a share of Common Stock, the Company shall round down to the nearest whole number, the number of shares of Common Stock to be issued to such holder.
3.3.3 Valid Issuance. All shares of Common Stock issued upon the proper exercise of a Warrant in conformity with this Agreement shall be validly issued, fully paid and non-assessable.
3.3.4 Date of Issuance. Each person in whose name any book-entry position or certificate, as applicable, for shares of Common Stock is issued shall for all purposes be deemed to have become the holder of record of such shares of Common Stock on the date on which the Warrant, or book-entry position representing such Warrant, was surrendered and payment of the applicable Warrant Price was made, irrespective of the date of delivery of such certificate in the case of a certificated Warrant, except that, if the date of such surrender and payment is a date when the share transfer books of the Company or book-entry system of the Warrant Agent are closed, such person shall be deemed to have become the holder of such shares of Common Stock at the close of business on the next succeeding date on which the share transfer books or book-entry system are open.
| 5 |
3.3.5 Maximum Percentage. A holder of a Warrant may notify the Company in writing in the event he, she or it elects to be subject to the provisions contained in this subsection 3.3.5; provided, however, no holder of a Warrant shall be subject to this subsection 3.3.5 unless he, she or it makes such election. If the election is made by a holder, the Warrant Agent shall not effect the exercise of the holder’s Warrant, and such holder shall not have the right to exercise such Warrant, to the extent that after giving effect to such exercise, such person (together with such person’s affiliates), to the Warrant Agent’s actual knowledge, would beneficially own in excess of 4.9% or 9.8% (as specified by such holder) (the “Maximum Percentage”) of the shares of Common Stock outstanding immediately after giving effect to such exercise. For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by such person and his, her or its affiliates or any such other person or group shall include the number of shares of Common Stock issuable upon exercise of the Warrant with respect to which the determination of such sentence is being made, but shall exclude shares of Common Stock that would be issuable upon (x) exercise of the remaining, unexercised portion of the Warrant beneficially owned by such person and his, her or its affiliates and (y) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company beneficially owned by such person and his, her or its affiliates (including, without limitation, any convertible notes or convertible preferred stock or warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein. Except as set forth in the preceding sentence, for purposes of this paragraph, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). For purposes of the Warrant, in determining the number of outstanding shares of Common Stock, the holder may rely on the number of outstanding shares of Common Stock as reflected in (1) the Company’s most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other public filing with the Commission as the case may be, (2) a more recent public announcement by the Company or (3) any other notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. For any reason at any time, upon the written request of the holder of the Warrant, the Company shall, within two (2) business days, confirm orally and in writing to such holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of equity securities of the Company by the holder and his, her or its affiliates since the date as of which such number of outstanding shares of Common Stock was reported. By written notice to the Company, the holder of a Warrant may from time to time increase or decrease the Maximum Percentage applicable to such holder to any other percentage specified in such notice; provided, however, that any such increase shall not be effective until the sixty-first (61st) day after such notice is delivered to the Company.
| 6 |
4. Adjustments.
4.1 Stock Dividends. If after the date hereof, and subject to the provisions of Section 4.6 below, the number of outstanding shares of Common Stock is increased by a stock capitalization or stock dividend payable in shares of Common Stock, or by a split-up of shares of Common Stock or other similar event, then, on the effective date of such stock capitalization or stock dividend, split-up or similar event, the number of shares of Common Stock issuable on exercise of each Warrant shall be increased in proportion to such increase in the outstanding shares of Common Stock. A rights offering to holders of the Common Stock entitling holders to purchase shares of Common Stock at a price less than the “Historical Fair Market Value” (as defined below) shall be deemed a stock dividend of a number of shares of Common Stock equal to the product of (i) the number of shares of Common Stock actually sold in such rights offering (or issuable under any other equity securities sold in such rights offering that are convertible into or exercisable for the Common Stock) and (ii) one (1) minus the quotient of (x) the price per share of Common Stock paid in such rights offering divided by (y) the Historical Fair Market Value. For purposes of this Section 4.1, (i) if the rights offering is for securities convertible into or exercisable for Common Stock, in determining the price payable for Common Stock, there shall be taken into account any consideration received for such rights, as well as any additional amount payable upon exercise or conversion and (ii) “Historical Fair Market Value” means the volume weighted average price of the Common Stock as reported during the ten (10) trading day period ending on the trading day prior to the first date on which the shares of Common Stock trade on the applicable exchange or in the applicable market, regular way, without the right to receive such rights. No shares of Common Stock shall be issued at less than their par value.
4.2 Aggregation of Shares. If after the date hereof, and subject to the provisions of Section 4.6 hereof, the number of outstanding shares of Common Stock is decreased by a consolidation, combination, reverse stock split or reclassification of shares of Common Stock or other similar event, then, on the effective date of such consolidation, combination, reverse stock split, reclassification or similar event, the number of shares of Common Stock issuable on exercise of each Warrant shall be decreased in proportion to such decrease in outstanding shares of Common Stock.
4.3 Adjustments in Exercise Price. Whenever the number of shares of Common Stock purchasable upon the exercise of the Warrants is adjusted, as provided in Section 4.1 or Section 4.2 above, the applicable Warrant Price shall be adjusted (to the nearest whole cent) by multiplying such Warrant Price immediately prior to such adjustment by a fraction (x) the numerator of which shall be the number of shares of Common Stock purchasable upon the exercise of the Warrants immediately prior to such adjustment, and (y) the denominator of which shall be the number of shares of Common Stock so purchasable immediately thereafter.
| 7 |
4.4 Replacement of Securities upon Reorganization, etc. In case of any reclassification or reorganization of the outstanding shares of Common Stock (other than a change under Section 4.1 or Section 4.2 hereof or that solely affects the par value of such shares of Common Stock), or in the case of any merger or consolidation of the Company with or into another entity or conversion of the Company as another entity (other than a consolidation or merger in which the Company is the continuing corporation and that does not result in any reclassification or reorganization of the outstanding shares of Common Stock), or in the case of any sale or conveyance to another corporation or entity of the assets or other property of the Company as an entirety or substantially as an entirety in connection with which the Company is dissolved, the holders of the Warrants shall thereafter have the right to purchase and receive, upon the basis and upon the terms and conditions specified in the Warrants and in lieu of the shares of Common Stock of the Company immediately theretofore purchasable and receivable upon the exercise of the rights represented thereby, the kind and amount of shares of stock or other securities or property (including cash) receivable upon such reclassification, reorganization, merger or consolidation, or upon a dissolution following any such sale or transfer, that the holder of the Warrants would have received if such holder had exercised his, her or its Warrant(s) immediately prior to such event (the “Alternative Issuance” ); provided, however, that in connection with the closing of any such consolidation, merger, sale or conveyance, the successor or purchasing entity shall execute an amendment hereto with the Warrant Agent providing for delivery of such Alternative Issuance; provided, further, that (i) if the holders of the Common Stock were entitled to exercise a right of election as to the kind or amount of securities, cash or other assets receivable upon such consolidation or merger, then the kind and amount of securities, cash or other assets constituting the Alternative Issuance for which each Warrant shall become exercisable shall be deemed to be the weighted average of the kind and amount received per share by the holders of the Common Stock in such consolidation or merger that affirmatively make such election, and (ii) if a tender, exchange or redemption offer shall have been made to and accepted by the holders of the Common Stock under circumstances in which, upon completion of such tender or exchange offer, the maker thereof, together with members of any group (within the meaning of Rule 13d-5(b)(1) under the Exchange Act (or any successor rule)) of which such maker is a part, and together with any affiliate or associate of such maker (within the meaning of Rule 12b-2 under the Exchange Act (or any successor rule)) and any members of any such group of which any such affiliate or associate is a part, own beneficially (within the meaning of Rule 13d-3 under the Exchange Act (or any successor rule)) more than 50% of the outstanding shares of Common Stock, the holder of a Warrant shall be entitled to receive as the Alternative Issuance, the highest amount of cash, securities or other property to which such holder would actually have been entitled as a stockholder if such Warrant holder had exercised the Warrant prior to the expiration of such tender or exchange offer, accepted such offer and all of the Common Stock held by such holder had been purchased pursuant to such tender or exchange offer, subject to adjustments (from and after the consummation of such tender or exchange offer) as nearly equivalent as possible to the adjustments provided for in this Section 4; provided, further, that if less than 70% of the consideration receivable by the holders of the Common Stock in the applicable event is payable in the form of common stock in the successor entity that is listed for trading on a national securities exchange or is quoted in an established over-the-counter market, or is to be so listed for trading or quoted immediately following such event, and if the Registered Holder properly exercises the Warrant within thirty (30) days following the public disclosure of the consummation of such applicable event by the Company pursuant to a Current Report on Form 8-K filed with the Commission, the applicable Warrant Price shall be reduced by an amount (in dollars) (but in no event less than zero) equal to the difference of (i) the applicable Warrant Price in effect prior to such reduction minus (ii) (A) the Per Share Consideration (as defined below) minus (B) the Black-Scholes Warrant Value (as defined below). The “Black-Scholes Warrant Value” means the value of a Warrant immediately prior to the consummation of the applicable event based on the Black-Scholes Warrant Model for a Capped American Call on Bloomberg Financial Markets (“Bloomberg”). For purposes of calculating such amount, (1) Section 6 of this Agreement shall be taken into account, (2) the price of each share of Common Stock shall be the volume weighted average price of the Common Stock as reported during the ten (10) trading day period ending on the trading day prior to the effective date of the applicable event, (3) the assumed volatility shall be the ninety (90) day volatility obtained from the HVT function on Bloomberg determined as of the trading day immediately prior to the day of the announcement of the applicable event, and (4) the assumed risk-free interest rate shall correspond to the U.S. Treasury rate for a period equal to the remaining term of the Warrant. “Per Share Consideration” means (i) if the consideration paid to holders of the Common Stock consists exclusively of cash, the amount of such cash per share of Common Stock, and (ii) in all other cases, the amount of such cash per share of Common Stock, if any, plus the volume weighted average price of the Common Stock as reported during the ten (10) trading day period ending on the trading day prior to the effective date of the applicable event. If any reclassification or reorganization also results in a change in shares of Common Stock covered by Section 4.1, then such adjustment shall be made pursuant to Sections 4.1, 4.2, 4.3 and this Section 4.4. The provisions of this Section 4.4 shall similarly apply to successive reclassifications, reorganizations, mergers or consolidations, sales or other transfers. In no event will the Warrant Price with respect to any Warrant be reduced to less than the par value per share issuable upon exercise of such Warrant.
| 8 |
4.5 Notices of Changes in Warrant. Upon every adjustment of any Warrant Price or the number of shares of Common Stock issuable upon exercise of a Warrant pursuant to this Section 4, the Company shall give written notice thereof to the Warrant Agent, which notice shall state the Warrant Price resulting from such adjustment and the increase or decrease, if any, in the number of shares of Common Stock purchasable at such price upon the exercise of a Warrant, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. Upon the occurrence of any event specified in Section 4.1, 4.2, 4.3 or 4.4, the Company shall give written notice of the occurrence of such event to each holder of a Warrant, at the last address set forth for such holder in the Warrant Register, of the record date or the effective date of the event. Failure to give such notice, or any defect therein, shall not affect the legality or validity of such event.
4.6 No Fractional Shares. Notwithstanding any provision contained in this Agreement to the contrary, the Company shall not issue fractional shares of Common Stock upon the exercise of Warrants. If, by reason of any adjustment made pursuant to this Section 4, the holder of any Warrant would be entitled, upon the exercise of such Warrant, to receive a fractional interest in a share, the Company shall, upon such exercise, round down to the nearest whole number the number of shares of Common Stock to be issued to such holder.
4.7 Form of Warrant. The form of Warrant need not be changed because of any adjustment pursuant to this Section 4, and Warrants issued after such adjustment may state the same Warrant Price and the same number of shares of Common Stock as is stated in the Warrants initially issued pursuant to this Agreement; provided, however, that the Company may at any time in its sole discretion make any change in the form of Warrant that the Company may deem appropriate and that does not affect the substance thereof, and any Warrant thereafter issued or countersigned, whether in exchange or substitution for an outstanding Warrant or otherwise, may be in the form as so changed.
| 9 |
4.8 Other Events. In case any event shall occur affecting the Company as to which none of the provisions of the preceding subsections of this Section 4 are strictly applicable, but which would require an adjustment to the terms of the Warrants in order to (i) avoid an adverse impact on the Warrants and (ii) effectuate the intent and purpose of this Section 4, then, in each such case, the Company shall appoint a firm of independent public accountants, investment banking or other appraisal firm of recognized national standing, which shall give its opinion as to whether or not any adjustment to the rights represented by the Warrants is necessary to effectuate the intent and purpose of this Section 4 and, if they determine that an adjustment is necessary, the terms of such adjustment. The Company shall adjust the terms of the Warrants in a manner that is consistent with any adjustment recommended in such opinion.
5. Transfer and Exchange of Warrants.
5.1 Registration of Transfer. The Warrant Agent shall register the transfer, from time to time, of any outstanding Warrant upon the Warrant Register, upon surrender of such Warrant for transfer, in the case of a Definitive Warrant Certificate, properly endorsed with signatures properly guaranteed and accompanied by appropriate instructions for transfer. Upon any such transfer, a new Warrant representing an equal aggregate number of Warrants shall be issued and the old Warrant shall be cancelled by the Warrant Agent. In the case of a Definitive Warrant Certificate, the Warrants so cancelled shall be delivered by the Warrant Agent to the Company from time to time upon request.
5.2 Procedure for Surrender of Warrants. Warrants may be surrendered to the Warrant Agent, together with a written request for exchange or transfer, and thereupon the Warrant Agent shall issue in exchange therefor one or more new Warrants as requested by the Registered Holder of the Warrants so surrendered, representing an equal aggregate number of Warrants; provided, however, that except as otherwise provided herein or with respect to any Book-Entry Warrant, each Book-Entry Warrant may be transferred only in whole and only to the Depositary, to another nominee of the Depositary, to a successor depository, or to a nominee of a successor depository; provided further, however, that in the event that a Warrant surrendered for transfer bears a restrictive legend, the Warrant Agent shall not cancel such Warrant and issue new Warrants in exchange thereof until the Warrant Agent has received an opinion of counsel for the Company stating that such transfer may be made and indicating whether the new Warrants must also bear a restrictive legend.
5.3 Fractional Warrants. The Warrant Agent shall not be required to effect any registration of transfer or exchange which shall result in the issuance of a Warrant certificate or book-entry position for a fraction of a Warrant.
5.4 Service Charges. No service charge shall be made for any exchange or registration of transfer of Warrants.
5.5 Warrant Execution and Countersignature. The Warrant Agent is hereby authorized to countersign and to deliver, in accordance with the terms of this Agreement, the Warrants required to be issued pursuant to the provisions of this Section 5, and the Company, whenever required by the Warrant Agent, shall supply the Warrant Agent with Warrants duly executed on behalf of the Company for such purpose.
| 10 |
6. Redemption.
6.1 Redemption of Warrants When the Price per Share of Common Stock Equals or Exceeds Applicable Warrant Price.
6.1.1 Not less than all of the outstanding $12.50 Warrants may be redeemed, at the option of the Company, at any time while they are exercisable and prior to their expiration, at the office of the Warrant Agent, upon notice to the Registered Holders of the Warrants, as described in Section 6.2 below, at the price of $0.01 per Warrant (the “Redemption Price”), provided that the last sales price of the Common Stock reported has been at least $12.50 per share (subject to adjustment in compliance with Section 4 hereof), on each of twenty (20) trading days within the thirty (30) trading-day period commencing once the $12.50 Warrants become exercisable and ending on the third (3rd) trading day prior to the date on which notice of the redemption is given and provided that there is an effective registration statement covering the shares of Common Stock issuable upon exercise of the $12.50 Warrants, and a current prospectus relating thereto, available throughout the 30-day Redemption Period (as defined in Section 6.2 below) or the Company has elected to require the exercise of the Warrants on a “cashless basis” pursuant to subsection 3.3.1.
6.1.2 Not less than all of the outstanding $15.00 Warrants may be redeemed, at the option of the Company, at any time while they are exercisable, at the office of the Warrant Agent, upon notice to the Registered Holders of the Warrants, as described in Section 6.2 below, at the Redemption Price, provided that the last sales price of the Common Stock reported has been at least $15.00 per share (subject to adjustment in compliance with Section 4 hereof), on each of twenty (20) trading days within the thirty (30) trading-day period commencing once the $15.00 Warrants become exercisable and ending on the third (3rd) trading day prior to the date on which notice of the redemption is given and provided that there is an effective registration statement covering the shares of Common Stock issuable upon exercise of the $15.00 Warrants, and a current prospectus relating thereto, available throughout the 30-day Redemption Period (as defined in Section 6.2 below) or the Company has elected to require the exercise of the Warrants on a “cashless basis” pursuant to subsection 3.3.1.
6.1.3 Not less than all of the outstanding $17.50 Warrants may be redeemed, at the option of the Company, at any time while they are exercisable, at the office of the Warrant Agent, upon notice to the Registered Holders of the Warrants, as described in Section 6.2 below, at the Redemption Price, provided that the last sales price of the Common Stock reported has been at least $17.50 per share (subject to adjustment in compliance with Section 4 hereof), on each of twenty (20) trading days within the thirty (30) trading-day period commencing once the $17.50 Warrants become exercisable and ending on the third (3rd) trading day prior to the date on which notice of the redemption is given and provided that there is an effective registration statement covering the shares of Common Stock issuable upon exercise of the $17.50 Warrants, and a current prospectus relating thereto, available throughout the 30-day Redemption Period (as defined in Section 6.2 below) or the Company has elected to require the exercise of the Warrants on a “cashless basis” pursuant to subsection 3.3.1.
| 11 |
6.2 Date Fixed for, and Notice of, Redemption; Redemption Price; Reference Value. In the event that the Company elects to redeem any of the Warrant Tranches pursuant to Section 6.1, the Company shall fix a date for the redemption (the “Redemption Date”). Notice of redemption shall be mailed by first class mail, postage prepaid, by the Company not less than thirty (30) days prior to the Redemption Date (the “30-day Redemption Period”) to the Registered Holders of the Warrants to be redeemed at their last addresses as they shall appear on the registration books. Any notice mailed in the manner herein provided shall be conclusively presumed to have been duly given whether or not the Registered Holder received such notice.
6.3 Exercise After Notice of Redemption. The Warrants may be exercised for cash (or on a “cashless basis” in accordance with subsection 3.3.1(b) of this Agreement) at any time after notice of redemption shall have been given by the Company pursuant to Section 6.2 hereof and prior to the Redemption Date. In the event that the Company determines to require all holders of Warrants to exercise their Warrants on a “cashless basis” pursuant to subsection 3.3.1, the notice of redemption shall contain the information necessary to calculate the number of shares of Common Stock to be received upon exercise of the Warrants, including the “Fair Market Value” (as such term is defined in subsection 3.3.1(b) hereof) in such case. On and after the Redemption Date, the record holder of the Warrants shall have no further rights except to receive, upon surrender of the Warrants, the Redemption Price.
7. Other Provisions Relating to Rights of Holders of Warrants.
7.1 No Rights as Stockholder. A Warrant does not entitle the Registered Holder thereof to any of the rights of a stockholder of the Company, including, without limitation, the right to receive dividends, or other distributions, exercise any preemptive rights to vote or to consent or to receive notice as a stockholder in respect of the meetings of stockholders or the election of directors of the Company or any other matter.
7.2 Lost, Stolen, Mutilated, or Destroyed Warrants. If any Warrant is lost, stolen, mutilated, or destroyed, the Company and the Warrant Agent may on such terms as to indemnity or otherwise as they may in their discretion impose (which shall, in the case of a mutilated Warrant, include the surrender thereof), issue a new Warrant of like denomination, tenor, and date as the Warrant so lost, stolen, mutilated, or destroyed. Any such new Warrant shall constitute a substitute contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated, or destroyed Warrant shall be at any time enforceable by anyone.
7.3 Reservation of Common Stock. The Company shall at all times reserve and keep available a number of its authorized but unissued shares of Common Stock that shall be sufficient to permit the exercise in full of all outstanding Warrants issued pursuant to this Agreement.
| 12 |
7.4 Registration of Common Stock; Cashless Exercise at Company’s Option.
7.4.1 Registration of the Common Stock. The Company has filed with the Commission the Registration Statement, for the registration under the Securities Act, of, among other securities, the Warrants and the shares of Common Stock issuable upon exercise of the Warrants, which Registration Statement was declared effective by the Commission on July 23, 2021. The Company shall use its best efforts to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration or redemption of the Warrants in accordance with the provisions of this Agreement. Holders of the Warrants shall have the right, during any period in which the Company shall fail to maintain an effective registration statement covering the shares of Common Stock issuable upon exercise of the Warrants, to exercise such Warrants on a “cashless basis,” pursuant to subsection 3.3.1, by exchanging the Warrants (in accordance with Section 3(a)(9) of the Securities Act (or any successor rule) or another exemption) for that number of shares of Common Stock equal to the quotient obtained by dividing (x) the product of the number of shares of Common Stock underlying the Warrants, multiplied by the excess of the “Fair Market Value” (as defined below) over the applicable Warrant Price by (y) the Fair Market Value. Solely for purposes of this subsection 7.4.1, “Fair Market Value” shall mean the volume-weighted average price of the Common Stock as reported during the ten (10) trading day period ending on the trading day prior to the date that notice of exercise is received by the Warrant Agent from the holder of such Warrants or his, her or its securities broker or intermediary. The date that notice of cashless exercise is received by the Warrant Agent shall be conclusively determined by the Warrant Agent. In connection with the “cashless exercise” of a Warrant, the Company shall, upon request, provide the Warrant Agent with an opinion of counsel for the Company (which shall be an outside law firm with securities law experience) stating that (i) the exercise of the Warrants on a cashless basis in accordance with this subsection 7.4.1 is not required to be registered under the Securities Act and (ii) the shares of Common Stock issued upon such exercise shall be freely tradable under United States federal securities laws by anyone who is not an affiliate (as such term is defined in Rule 144 under the Securities Act (or any successor statute)) of the Company and, accordingly, shall not be required to bear a restrictive legend. Except as provided in subsection 7.4.2, for the avoidance of doubt, unless and until all of the Warrants have been exercised or have expired, the Company shall continue to be obligated to comply with its registration obligations under the second sentence of this subsection 7.4.1.
| 13 |
7.4.2 Cashless Exercise at Company’s Option. If the Common Stock is at the time of any exercise of a Warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act (or any successor statute), (i) the Company may, at its option, require holders of Warrants who exercise Warrants to exercise such Warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act (or any successor statute) as described in subsection 7.4.1 and (ii) in the event the Company so elects, the Company shall not be required to file or maintain in effect a registration statement for the registration, under the Securities Act, of the Common Stock issuable upon exercise of the Warrants, notwithstanding anything in this Agreement to the contrary. If the Company does not elect at the time of exercise to require a holder of Warrants who exercises Warrants to exercise such Warrants on a “cashless basis,” it agrees to use its best efforts to register or qualify for sale the Common Stock issuable upon exercise of the Warrant under applicable blue sky laws of the state of residence of the exercising Warrant holder to the extent an exemption is not available.
8. Concerning the Warrant Agent and Other Matters.
8.1 Payment of Taxes. The Company shall from time to time promptly pay all taxes and charges that may be imposed upon the Company or the Warrant Agent in respect of the issuance or delivery of shares of Common Stock upon the exercise of the Warrants, but the Company shall not be obligated to pay any transfer taxes in respect of the Warrants or such shares of Common Stock.
8.2 Resignation, Consolidation, or Merger of Warrant Agent.
8.2.1 Appointment of Successor Warrant Agent. The Warrant Agent, or any successor to it hereafter appointed, may resign its duties and be discharged from all further duties and liabilities hereunder after giving sixty (60) days’ notice in writing to the Company. If the office of the Warrant Agent becomes vacant by resignation or incapacity to act or otherwise, the Company shall appoint in writing a successor Warrant Agent in place of the Warrant Agent. If the Company shall fail to make such appointment within a period of thirty (30) days after it has been notified in writing of such resignation or incapacity by the Warrant Agent or by the holder of a Warrant (who shall, with such notice, submit his, her or its Warrant for inspection by the Company), then the holder of any Warrant may apply to the Supreme Court of the State of New York for the County of New York for the appointment of a successor Warrant Agent at the Company’s cost. Any successor Warrant Agent, whether appointed by the Company or by such court, shall be a corporation organized and existing under the laws of the State of New York, in good standing and having its principal office in the Borough of Manhattan, City and State of New York, and authorized under such laws to exercise corporate trust powers and subject to supervision or examination by federal or state authority. After appointment, any successor Warrant Agent shall be vested with all the authority, powers, rights, immunities, duties, and obligations of its predecessor Warrant Agent with like effect as if originally named as Warrant Agent hereunder, without any further act or deed; but if for any reason it becomes necessary or appropriate, the predecessor Warrant Agent shall execute and deliver, at the expense of the Company, an instrument transferring to such successor Warrant Agent all the authority, powers, and rights of such predecessor Warrant Agent hereunder; and upon request of any successor Warrant Agent the Company shall make, execute, acknowledge, and deliver any and all instruments in writing for more fully and effectually vesting in and confirming to such successor Warrant Agent all such authority, powers, rights, immunities, duties, and obligations.
| 14 |
8.2.2 Notice of Successor Warrant Agent. In the event a successor Warrant Agent shall be appointed, the Company shall give notice thereof to the predecessor Warrant Agent and the Transfer Agent for the Common Stock not later than the effective date of any such appointment.
8.2.3 Merger or Consolidation of Warrant Agent. Any corporation into which the Warrant Agent may be merged or with which it may be consolidated or any corporation resulting from any merger or consolidation to which the Warrant Agent shall be a party shall be the successor Warrant Agent under this Agreement without any further act.
8.3 Fees and Expenses of Warrant Agent.
8.3.1 Remuneration. The Company agrees to pay the Warrant Agent reasonable remuneration for its services as such Warrant Agent hereunder and shall, pursuant to its obligations under this Agreement, reimburse the Warrant Agent upon demand for all expenditures that the Warrant Agent may reasonably incur in the execution of its duties hereunder.
8.3.2 Further Assurances. The Company agrees to perform, execute, acknowledge, and deliver or cause to be performed, executed, acknowledged, and delivered all such further and other acts, instruments, and assurances as may reasonably be required by the Warrant Agent for the carrying out or performing of the provisions of this Agreement.
8.4 Liability of Warrant Agent.
8.4.1 Reliance on Company Statement. Whenever in the performance of its duties under this Agreement, the Warrant Agent shall deem it necessary or desirable that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a statement signed by the President, the Chief Executive Officer, the Chief Financial Officer, the Secretary or the Chairman of the Board of the Company and delivered to the Warrant Agent. The Warrant Agent may rely upon such statement for any action taken or suffered in good faith by it pursuant to the provisions of this Agreement.
8.4.2 Indemnity. The Warrant Agent shall be liable hereunder only for its own gross negligence, willful misconduct, fraud or bad faith. The Company agrees to indemnify the Warrant Agent and save it harmless against any and all liabilities, including judgments, reasonable and documented out-of-pocket costs and reasonable outside counsel fees, for anything done or omitted by the Warrant Agent in the execution of this Agreement, except as a result of the Warrant Agent’s gross negligence, willful misconduct, fraud or bad faith.
| 15 |
8.4.3 Exclusions. The Warrant Agent shall have no responsibility with respect to the validity of this Agreement or with respect to the validity or execution of any Warrant (except its countersignature thereof). The Warrant Agent shall not be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Warrant. The Warrant Agent shall not be responsible to make any adjustments required under the provisions of Section 4 hereof or responsible for the manner, method, or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment; nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of Common Stock to be issued pursuant to this Agreement or any Warrant or as to whether any shares of Common Stock shall, when issued, be valid and fully paid and non-assessable.
8.5 Acceptance of Agency. The Warrant Agent hereby accepts the agency established by this Agreement and agrees to perform the same upon the terms and conditions herein set forth and among other things, shall account promptly to the Company with respect to Warrants exercised and concurrently account for, and pay to the Company, all monies received by the Warrant Agent for the purchase of shares of Common Stock through the exercise of the Warrants.
9. Miscellaneous Provisions.
9.1 Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company or the Warrant Agent shall bind and inure to the benefit of their respective successors and assigns.
9.2 Notices. Any notice, statement or demand authorized by this Agreement to be given or made by the Warrant Agent or by the holder of any Warrant to or on the Company shall be sufficiently given when so delivered if by hand or overnight delivery or if sent by certified mail or private courier service within five (5) days after deposit of such notice, postage prepaid, addressed (until another address is filed in writing by the Company with the Warrant Agent), as follows:
Airspan
Networks Holdings Inc.
777 Yamato Road
Boca Raton, FL 33431
Attention: Chief Financial Officer
Email: Dbrant@airspan.com
| 16 |
Any notice, statement or demand authorized by this Agreement to be given or made by the holder of any Warrant or by the Company to or on the Warrant Agent shall be sufficiently given when so delivered if by hand or overnight delivery or if sent by certified mail or private courier service within five (5) days after deposit of such notice, postage prepaid, addressed (until another address is filed in writing by the Warrant Agent with the Company), as follows:
Continental
Stock Transfer & Trust Company
1 State Street, 30th Floor
New York, NY 10004
Attn: Compliance Department
With a copy in each case to:
Greenberg
Traurig, P.A.
333 SE 2nd Avenue
Suite 4400
Miami,
FL 33131
Attn: Alan I. Annex, Esq. and Daniella G. Silberstein, Esq.
Email: annexa@gtlaw.com and silbersteind@gtlaw.com
9.3 Applicable Law. The validity, interpretation, and performance of this Agreement and of the Warrants shall be governed in all respects by the laws of the State of New York, without giving effect to conflicts of law principles that would result in the application of the substantive laws of another jurisdiction. The Company hereby agrees that any action, proceeding or claim against it arising out of or relating in any way to this Agreement shall be brought and enforced in the courts of the State of New York or the United States District Court for the Southern District of New York, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. The Company hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum.
9.4 Persons Having Rights under this Agreement. Nothing in this Agreement shall be construed to confer upon, or give to, any person or corporation other than the parties hereto and the Registered Holders of the Warrants any right, remedy, or claim under or by reason of this Agreement or of any covenant, condition, stipulation, promise, or agreement hereof. All covenants, conditions, stipulations, promises, and agreements contained in this Agreement shall be for the sole and exclusive benefit of the parties hereto and their successors and assigns and of the Registered Holders of the Warrants.
9.5 Examination of the Warrant Agreement. A copy of this Agreement shall be available at all reasonable times at the office of the Warrant Agent in the Borough of Manhattan, City and State of New York, for inspection by the Registered Holder of any Warrant. The Warrant Agent may require any such holder to submit such holder’s Warrant for inspection by the Warrant Agent.
9.6 Counterparts. This Agreement may be executed in any number of original or facsimile counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.
9.7 Effect of Headings. The section headings herein are for convenience only and are not part of this Agreement and shall not affect the interpretation thereof.
| 17 |
9.8 Amendments. This Agreement may be amended by the parties hereto without the consent of any Registered Holder (i) for the purpose of curing any ambiguity, or curing, correcting or supplementing any defective provision contained herein or adding or changing any other provisions with respect to matters or questions arising under this Agreement as the parties may deem necessary or desirable and that the parties deem shall not adversely affect the interest of the Registered Holders, and (ii) to provide for the delivery of Alternative Issuance pursuant to Section 4.4. All other modifications or amendments shall require the vote or written consent of the Registered Holders of a majority of the then outstanding Warrants, it being understood that if any such modification or amendment would only impact a particular Warrant Tranche and not all of the Warrants, then such modification or amendment shall require the vote or written consent of the Registered Holders of a majority of the then outstanding Warrants in such Warrant Tranche.
9.9 Severability. This Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of this Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable term or provision, the parties hereto intend that there shall be added as a part of this Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible and be valid and enforceable.
[Signature Page Follows]
| 18 |
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.
|
AIRSPAN NETWORKS HOLDINGS INC. | |
| By: | /s/ Michael Liebowitz | |
| Name: | Michael Liebowitz | |
| Title: | Chief Executive Officer | |
CONTINENTAL STOCK TRANSFER & TRUST COMPANY, as Warrant Agent | ||
| By: | /s/ Margaret B. Lloyd | |
| Name: | Margaret B. Lloyd | |
| Title: | Vice President | |
[Signature Page to Warrant Agreement]
EXHIBIT A
Form of $12.50 Warrant Certificate
Number
Warrants
THIS
WARRANT SHALL BE VOID IF NOT EXERCISED PRIOR TO
THE EXPIRATION OF THE EXERCISE PERIOD PROVIDED FOR
IN THE WARRANT AGREEMENT DESCRIBED BELOW
AIRSPAN NETWORKS HOLDINGS INC.
Incorporated Under the Laws of the State of Delaware
CUSIP 00951K 120
Warrant Certificate
This Warrant Certificate certifies that __________, or its registered assigns, is the registered holder of __________ warrant(s) evidenced hereby (the “Warrants” and each, a “Warrant”) to purchase shares of common stock, $0.0001 par value per share (“Common Stock”), of Airspan Networks Holdings Inc., a Delaware corporation (the “Company”). Each Warrant entitles the holder, upon exercise during the period set forth in the Warrant Agreement referred to below, to receive from the Company that number of fully paid and non-assessable shares of Common Stock as set forth below, at the exercise price (the “Exercise Price”) as determined pursuant to the Warrant Agreement, payable in lawful money (or through “cashless exercise” as provided for in the Warrant Agreement) of the United States of America upon surrender of this Warrant Certificate and payment of the Exercise Price at the office or agency of the Warrant Agent referred to below, subject to the conditions set forth herein and in the Warrant Agreement. Defined terms used in this Warrant Certificate but not defined herein shall have the meanings given to them in the Warrant Agreement.
Each whole Warrant is initially exercisable for one fully paid and non-assessable share of Common Stock. No fractional shares will be issued upon exercise of any Warrant. If, upon the exercise of Warrants, a holder would be entitled to receive a fractional interest in a share of Common Stock, the Company will, upon exercise, round down to the nearest whole number the number of shares of Common Stock to be issued to the Warrant holder. The number of shares of Common Stock issuable upon exercise of the Warrants is subject to adjustment upon the occurrence of certain events set forth in the Warrant Agreement.
The initial Exercise Price per share of Common Stock for any Warrant is equal to $12.50 per share. The Exercise Price is subject to adjustment upon the occurrence of certain events set forth in the Warrant Agreement.
A-1
Subject to the conditions set forth in the Warrant Agreement, the Warrants may be exercised only during the Exercise Period and to the extent not exercised by the end of such Exercise Period, such Warrants shall become void. The Warrants may be redeemed, subject to certain conditions, as set forth in the Warrant Agreement.
Reference is hereby made to the further provisions of this Warrant Certificate set forth on the reverse hereof and such further provisions shall for all purposes have the same effect as though fully set forth at this place.
This Warrant Certificate shall not be valid unless countersigned by the Warrant Agent, as such term is used in the Warrant Agreement.
This Warrant Certificate shall be governed by and construed in accordance with the internal laws of the State of New York, without regard to conflicts of laws principles thereof.
A-2
AIRSPAN NETWORKS HOLDINGS INC. | ||
| By: | ||
| Name: | ||
| Title: | ||
CONTINENTAL
STOCK TRANSFER & TRUST COMPANY, | ||
| By: | ||
| Name: | ||
| Title: | ||
A-3
[Reverse]
The Warrants evidenced by this Warrant Certificate are part of a duly authorized issue of Warrants entitling the holder on exercise to receive shares of Common Stock and are issued or to be issued pursuant to a Warrant Agreement dated as of August 13, 2021 (the “Warrant Agreement”), duly executed and delivered by the Company to Continental Stock Transfer & Trust Company, a New York limited purpose trust company, as warrant agent (the “Warrant Agent”), which Warrant Agreement is hereby incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties and immunities thereunder of the Warrant Agent, the Company and the holders (the words “holders” or “holder” meaning the Registered Holders or Registered Holder, respectively) of the Warrants. A copy of the Warrant Agreement may be obtained by the holder hereof upon written request to the Company. Defined terms used in this Warrant Certificate but not defined herein shall have the meanings given to them in the Warrant Agreement.
Warrants may be exercised at any time during the Exercise Period set forth in the Warrant Agreement. The holder of Warrants evidenced by this Warrant Certificate may exercise them by surrendering this Warrant Certificate, with the form of election to purchase set forth hereon properly completed and executed, together with payment of the Exercise Price as specified in the Warrant Agreement (or through “cashless exercise” as provided for in the Warrant Agreement) at the principal corporate trust office of the Warrant Agent. In the event that upon any exercise of Warrants evidenced hereby the number of Warrants exercised shall be less than the total number of Warrants evidenced hereby, there shall be issued to the holder hereof or his, her or its assignee, a new Warrant Certificate evidencing the number of Warrants not exercised.
Notwithstanding anything else in this Warrant Certificate or the Warrant Agreement, no Warrant may be exercised unless at the time of exercise (i) a registration statement covering the shares of Common Stock to be issued upon exercise is effective under the Securities Act and (ii) a prospectus thereunder relating to the shares of Common Stock is current, except through “cashless exercise” as provided for in the Warrant Agreement.
The Warrant Agreement provides that upon the occurrence of certain events the number of shares of Common Stock issuable upon exercise of the Warrants set forth on the face hereof may, subject to certain conditions, be adjusted. If, upon exercise of a Warrant, the holder thereof would be entitled to receive a fractional interest in a share of Common Stock, the Company shall, upon exercise, round down to the nearest whole number of shares of Common Stock to be issued to the holder of the Warrant.
Warrant Certificates, when surrendered at the principal corporate trust office of the Warrant Agent by the Registered Holder thereof in person or by legal representative or attorney duly authorized in writing, may be exchanged, in the manner and subject to the limitations provided in the Warrant Agreement, but without payment of any service charge, for another Warrant Certificate or Warrant Certificates of like tenor evidencing in the aggregate a like number of Warrants.
A-4
Upon due presentation for registration of transfer of this Warrant Certificate at the office of the Warrant Agent a new Warrant Certificate or Warrant Certificates of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferee(s) in exchange for this Warrant Certificate, subject to the limitations provided in the Warrant Agreement, without charge except for any tax or other governmental charge imposed in connection therewith.
The Company and the Warrant Agent may deem and treat the Registered Holder(s) hereof as the absolute owner(s) of this Warrant Certificate (notwithstanding any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof, of any distribution to the holder(s) hereof, and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary. Neither the Warrants nor this Warrant Certificate entitles any holder hereof to any rights of a stockholder of the Company.
A-5
Election to Purchase
(To Be Executed Upon Exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right, represented by this Warrant Certificate, to receive __________ shares of Common Stock and herewith tenders payment for such shares of Common Stock to the order of Airspan Networks Holdings Inc. (the “Company”) in the amount of $ __________ in accordance with the terms hereof. The undersigned requests that a certificate for such shares of Common Stock be registered in the name of __________, whose address is __________ and that such shares of Common Stock be delivered to __________ whose address is __________. If said number of shares of Common Stock is less than all of the shares of Common Stock purchasable hereunder, the undersigned requests that a new Warrant Certificate representing the remaining balance of such shares of Common Stock be registered in the name of __________, whose address is __________ and that such Warrant Certificate be delivered to __________, whose address is __________.
In the event that the Warrant has been called for redemption by the Company pursuant to Section 6 of the Warrant Agreement and the Company has elected to require the exercise of the Warrants on a “cashless basis”, the number of shares of Common Stock that this Warrant is exercisable for shall be determined in accordance with subsection 3.3.1(b) of the Warrant Agreement.
In the event that the Warrant is to be exercised on a “cashless” basis pursuant to Section 7.4 of the Warrant Agreement, the number of shares of Common Stock that this Warrant is exercisable for shall be determined in accordance with Section 7.4 of the Warrant Agreement.
In the event that the Warrant may be exercised, to the extent allowed by the Warrant Agreement, through cashless exercise (i) the number of shares of Common Stock that this Warrant is exercisable for would be determined in accordance with the relevant section of the Warrant Agreement which allows for such cashless exercise and (ii) the holder hereof shall complete the following: The undersigned hereby irrevocably elects to exercise the right, represented by this Warrant Certificate, through the cashless exercise provisions of the Warrant Agreement, to receive shares of Common Stock. If said number of shares of Common Stock is less than all of the shares of Common Stock purchasable hereunder (after giving effect to the cashless exercise), the undersigned requests that a new Warrant Certificate representing the remaining balance of such shares of Common Stock be registered in the name of __________, whose address is __________ and that such Warrant Certificate be delivered to __________, whose address is __________.
[Signature Page Follows]
A-6
| Date: __________, 20 | ||
| (Signature) | ||
| (Address) | ||
| (Tax Identification Number) | ||
| Signature Guaranteed: | ||
THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO S.E.C. RULE 17Ad-15 (OR ANY SUCCESSOR RULE) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED).
A-7
EXHIBIT B
Form of $15.00 Warrant Certificate
Number
Warrants
THIS
WARRANT SHALL BE VOID IF NOT EXERCISED PRIOR TO
THE EXPIRATION OF THE EXERCISE PERIOD PROVIDED FOR
IN THE WARRANT AGREEMENT DESCRIBED BELOW
AIRSPAN NETWORKS HOLDINGS INC.
Incorporated Under the Laws of the State of Delaware
CUSIP 00951K 138
Warrant Certificate
This Warrant Certificate certifies that __________, or its registered assigns, is the registered holder of __________ warrant(s) evidenced hereby (the “Warrants” and each, a “Warrant”) to purchase shares of common stock, $0.0001 par value per share (“Common Stock”), of Airspan Networks Holdings Inc., a Delaware corporation (the “Company”). Each Warrant entitles the holder, upon exercise during the period set forth in the Warrant Agreement referred to below, to receive from the Company that number of fully paid and non-assessable shares of Common Stock as set forth below, at the exercise price (the “Exercise Price”) as determined pursuant to the Warrant Agreement, payable in lawful money (or through “cashless exercise” as provided for in the Warrant Agreement) of the United States of America upon surrender of this Warrant Certificate and payment of the Exercise Price at the office or agency of the Warrant Agent referred to below, subject to the conditions set forth herein and in the Warrant Agreement. Defined terms used in this Warrant Certificate but not defined herein shall have the meanings given to them in the Warrant Agreement.
Each whole Warrant is initially exercisable for one fully paid and non-assessable share of Common Stock. No fractional shares will be issued upon exercise of any Warrant. If, upon the exercise of Warrants, a holder would be entitled to receive a fractional interest in a share of Common Stock, the Company will, upon exercise, round down to the nearest whole number the number of shares of Common Stock to be issued to the Warrant holder. The number of shares of Common Stock issuable upon exercise of the Warrants is subject to adjustment upon the occurrence of certain events set forth in the Warrant Agreement.
The initial Exercise Price per share of Common Stock for any Warrant is equal to $15.00 per share. The Exercise Price is subject to adjustment upon the occurrence of certain events set forth in the Warrant Agreement.
B-1
Subject to the conditions set forth in the Warrant Agreement, the Warrants may be exercised only during the Exercise Period and to the extent not exercised by the end of such Exercise Period, such Warrants shall become void. The Warrants may be redeemed, subject to certain conditions, as set forth in the Warrant Agreement.
Reference is hereby made to the further provisions of this Warrant Certificate set forth on the reverse hereof and such further provisions shall for all purposes have the same effect as though fully set forth at this place.
This Warrant Certificate shall not be valid unless countersigned by the Warrant Agent, as such term is used in the Warrant Agreement.
This Warrant Certificate shall be governed by and construed in accordance with the internal laws of the State of New York, without regard to conflicts of laws principles thereof.
B-2
AIRSPAN NETWORKS HOLDINGS INC. | ||
| By: | ||
| Name: | ||
| Title: | ||
CONTINENTAL
STOCK TRANSFER & TRUST COMPANY, | ||
| By: | ||
| Name: | ||
| Title: | ||
B-3
[Reverse]
The Warrants evidenced by this Warrant Certificate are part of a duly authorized issue of Warrants entitling the holder on exercise to receive shares of Common Stock and are issued or to be issued pursuant to a Warrant Agreement dated as of August 13, 2021 (the “Warrant Agreement”), duly executed and delivered by the Company to Continental Stock Transfer & Trust Company, a New York limited purpose trust company, as warrant agent (the “Warrant Agent”), which Warrant Agreement is hereby incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties and immunities thereunder of the Warrant Agent, the Company and the holders (the words “holders” or “holder” meaning the Registered Holders or Registered Holder, respectively) of the Warrants. A copy of the Warrant Agreement may be obtained by the holder hereof upon written request to the Company. Defined terms used in this Warrant Certificate but not defined herein shall have the meanings given to them in the Warrant Agreement.
Warrants may be exercised at any time during the Exercise Period set forth in the Warrant Agreement. The holder of Warrants evidenced by this Warrant Certificate may exercise them by surrendering this Warrant Certificate, with the form of election to purchase set forth hereon properly completed and executed, together with payment of the Exercise Price as specified in the Warrant Agreement (or through “cashless exercise” as provided for in the Warrant Agreement) at the principal corporate trust office of the Warrant Agent. In the event that upon any exercise of Warrants evidenced hereby the number of Warrants exercised shall be less than the total number of Warrants evidenced hereby, there shall be issued to the holder hereof or his, her or its assignee, a new Warrant Certificate evidencing the number of Warrants not exercised.
Notwithstanding anything else in this Warrant Certificate or the Warrant Agreement, no Warrant may be exercised unless at the time of exercise (i) a registration statement covering the shares of Common Stock to be issued upon exercise is effective under the Securities Act and (ii) a prospectus thereunder relating to the shares of Common Stock is current, except through “cashless exercise” as provided for in the Warrant Agreement.
The Warrant Agreement provides that upon the occurrence of certain events the number of shares of Common Stock issuable upon exercise of the Warrants set forth on the face hereof may, subject to certain conditions, be adjusted. If, upon exercise of a Warrant, the holder thereof would be entitled to receive a fractional interest in a share of Common Stock, the Company shall, upon exercise, round down to the nearest whole number of shares of Common Stock to be issued to the holder of the Warrant.
Warrant Certificates, when surrendered at the principal corporate trust office of the Warrant Agent by the Registered Holder thereof in person or by legal representative or attorney duly authorized in writing, may be exchanged, in the manner and subject to the limitations provided in the Warrant Agreement, but without payment of any service charge, for another Warrant Certificate or Warrant Certificates of like tenor evidencing in the aggregate a like number of Warrants.
B-4
Upon due presentation for registration of transfer of this Warrant Certificate at the office of the Warrant Agent a new Warrant Certificate or Warrant Certificates of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferee(s) in exchange for this Warrant Certificate, subject to the limitations provided in the Warrant Agreement, without charge except for any tax or other governmental charge imposed in connection therewith.
The Company and the Warrant Agent may deem and treat the Registered Holder(s) hereof as the absolute owner(s) of this Warrant Certificate (notwithstanding any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof, of any distribution to the holder(s) hereof, and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary. Neither the Warrants nor this Warrant Certificate entitles any holder hereof to any rights of a stockholder of the Company.
B-5
Election to Purchase
(To Be Executed Upon Exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right, represented by this Warrant Certificate, to receive __________ shares of Common Stock and herewith tenders payment for such shares of Common Stock to the order of Airspan Networks Holdings Inc. (the “Company”) in the amount of $ __________ in accordance with the terms hereof. The undersigned requests that a certificate for such shares of Common Stock be registered in the name of __________, whose address is __________ and that such shares of Common Stock be delivered to __________ whose address is __________. If said number of shares of Common Stock is less than all of the shares of Common Stock purchasable hereunder, the undersigned requests that a new Warrant Certificate representing the remaining balance of such shares of Common Stock be registered in the name of __________, whose address is __________ and that such Warrant Certificate be delivered to __________, whose address is __________.
In the event that the Warrant has been called for redemption by the Company pursuant to Section 6 of the Warrant Agreement and the Company has elected to require the exercise of the Warrants on a “cashless basis”, the number of shares of Common Stock that this Warrant is exercisable for shall be determined in accordance with subsection 3.3.1(b) of the Warrant Agreement.
In the event that the Warrant is to be exercised on a “cashless” basis pursuant to Section 7.4 of the Warrant Agreement, the number of shares of Common Stock that this Warrant is exercisable for shall be determined in accordance with Section 7.4 of the Warrant Agreement.
In the event that the Warrant may be exercised, to the extent allowed by the Warrant Agreement, through cashless exercise (i) the number of shares of Common Stock that this Warrant is exercisable for would be determined in accordance with the relevant section of the Warrant Agreement which allows for such cashless exercise and (ii) the holder hereof shall complete the following: The undersigned hereby irrevocably elects to exercise the right, represented by this Warrant Certificate, through the cashless exercise provisions of the Warrant Agreement, to receive shares of Common Stock. If said number of shares of Common Stock is less than all of the shares of Common Stock purchasable hereunder (after giving effect to the cashless exercise), the undersigned requests that a new Warrant Certificate representing the remaining balance of such shares of Common Stock be registered in the name of __________, whose address is __________ and that such Warrant Certificate be delivered to __________, whose address is __________.
[Signature Page Follows]
B-6
| Date: __________, 20 | ||
| (Signature) | ||
| (Address) | ||
| (Tax Identification Number) | ||
| Signature Guaranteed: | ||
THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO S.E.C. RULE 17Ad-15 (OR ANY SUCCESSOR RULE) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED).
B-7
EXHIBIT C
Form of $17.50 Warrant Certificate
Number
Warrants
THIS
WARRANT SHALL BE VOID IF NOT EXERCISED PRIOR TO
THE EXPIRATION OF THE EXERCISE PERIOD PROVIDED FOR
IN THE WARRANT AGREEMENT DESCRIBED BELOW
AIRSPAN NETWORKS HOLDINGS INC.
Incorporated Under the Laws of the State of Delaware
CUSIP 00951K 146
Warrant Certificate
This Warrant Certificate certifies that __________, or its registered assigns, is the registered holder of __________ warrant(s) evidenced hereby (the “Warrants” and each, a “Warrant”) to purchase shares of common stock, $0.0001 par value per share (“Common Stock”), of Airspan Networks Holdings Inc., a Delaware corporation (the “Company”). Each Warrant entitles the holder, upon exercise during the period set forth in the Warrant Agreement referred to below, to receive from the Company that number of fully paid and non-assessable shares of Common Stock as set forth below, at the exercise price (the “Exercise Price”) as determined pursuant to the Warrant Agreement, payable in lawful money (or through “cashless exercise” as provided for in the Warrant Agreement) of the United States of America upon surrender of this Warrant Certificate and payment of the Exercise Price at the office or agency of the Warrant Agent referred to below, subject to the conditions set forth herein and in the Warrant Agreement. Defined terms used in this Warrant Certificate but not defined herein shall have the meanings given to them in the Warrant Agreement.
Each whole Warrant is initially exercisable for one fully paid and non-assessable share of Common Stock. No fractional shares will be issued upon exercise of any Warrant. If, upon the exercise of Warrants, a holder would be entitled to receive a fractional interest in a share of Common Stock, the Company will, upon exercise, round down to the nearest whole number the number of shares of Common Stock to be issued to the Warrant holder. The number of shares of Common Stock issuable upon exercise of the Warrants is subject to adjustment upon the occurrence of certain events set forth in the Warrant Agreement.
The initial Exercise Price per share of Common Stock for any Warrant is equal to $17.50 per share. The Exercise Price is subject to adjustment upon the occurrence of certain events set forth in the Warrant Agreement.
C-1
Subject to the conditions set forth in the Warrant Agreement, the Warrants may be exercised only during the Exercise Period and to the extent not exercised by the end of such Exercise Period, such Warrants shall become void. The Warrants may be redeemed, subject to certain conditions, as set forth in the Warrant Agreement.
Reference is hereby made to the further provisions of this Warrant Certificate set forth on the reverse hereof and such further provisions shall for all purposes have the same effect as though fully set forth at this place.
This Warrant Certificate shall not be valid unless countersigned by the Warrant Agent, as such term is used in the Warrant Agreement.
This
Warrant Certificate shall be governed by and construed in accordance with the internal laws of the State of New York, without regard
to conflicts of laws principles thereof.
C-2
AIRSPAN NETWORKS HOLDINGS INC. | ||
| By: | ||
| Name: | ||
| Title: | ||
CONTINENTAL
STOCK TRANSFER & TRUST COMPANY, | ||
| By: | ||
| Name: | ||
| Title: | ||
C-3
[Reverse]
The Warrants evidenced by this Warrant Certificate are part of a duly authorized issue of Warrants entitling the holder on exercise to receive shares of Common Stock and are issued or to be issued pursuant to a Warrant Agreement dated as of August 13, 2021 (the “Warrant Agreement”), duly executed and delivered by the Company to Continental Stock Transfer & Trust Company, a New York limited purpose trust company, as warrant agent (the “Warrant Agent”), which Warrant Agreement is hereby incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties and immunities thereunder of the Warrant Agent, the Company and the holders (the words “holders” or “holder” meaning the Registered Holders or Registered Holder, respectively) of the Warrants. A copy of the Warrant Agreement may be obtained by the holder hereof upon written request to the Company. Defined terms used in this Warrant Certificate but not defined herein shall have the meanings given to them in the Warrant Agreement.
Warrants may be exercised at any time during the Exercise Period set forth in the Warrant Agreement. The holder of Warrants evidenced by this Warrant Certificate may exercise them by surrendering this Warrant Certificate, with the form of election to purchase set forth hereon properly completed and executed, together with payment of the Exercise Price as specified in the Warrant Agreement (or through “cashless exercise” as provided for in the Warrant Agreement) at the principal corporate trust office of the Warrant Agent. In the event that upon any exercise of Warrants evidenced hereby the number of Warrants exercised shall be less than the total number of Warrants evidenced hereby, there shall be issued to the holder hereof or his, her or its assignee, a new Warrant Certificate evidencing the number of Warrants not exercised.
Notwithstanding anything else in this Warrant Certificate or the Warrant Agreement, no Warrant may be exercised unless at the time of exercise (i) a registration statement covering the shares of Common Stock to be issued upon exercise is effective under the Securities Act and (ii) a prospectus thereunder relating to the shares of Common Stock is current, except through “cashless exercise” as provided for in the Warrant Agreement.
The Warrant Agreement provides that upon the occurrence of certain events the number of shares of Common Stock issuable upon exercise of the Warrants set forth on the face hereof may, subject to certain conditions, be adjusted. If, upon exercise of a Warrant, the holder thereof would be entitled to receive a fractional interest in a share of Common Stock, the Company shall, upon exercise, round down to the nearest whole number of shares of Common Stock to be issued to the holder of the Warrant.
Warrant Certificates, when surrendered at the principal corporate trust office of the Warrant Agent by the Registered Holder thereof in person or by legal representative or attorney duly authorized in writing, may be exchanged, in the manner and subject to the limitations provided in the Warrant Agreement, but without payment of any service charge, for another Warrant Certificate or Warrant Certificates of like tenor evidencing in the aggregate a like number of Warrants.
C-4
Upon due presentation for registration of transfer of this Warrant Certificate at the office of the Warrant Agent a new Warrant Certificate or Warrant Certificates of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferee(s) in exchange for this Warrant Certificate, subject to the limitations provided in the Warrant Agreement, without charge except for any tax or other governmental charge imposed in connection therewith.
The Company and the Warrant Agent may deem and treat the Registered Holder(s) hereof as the absolute owner(s) of this Warrant Certificate (notwithstanding any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof, of any distribution to the holder(s) hereof, and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary. Neither the Warrants nor this Warrant Certificate entitles any holder hereof to any rights of a stockholder of the Company.
C-5
Election to Purchase
(To Be Executed Upon Exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right, represented by this Warrant Certificate, to receive __________ shares of Common Stock and herewith tenders payment for such shares of Common Stock to the order of Airspan Networks Holdings Inc. (the “Company”) in the amount of $ __________ in accordance with the terms hereof. The undersigned requests that a certificate for such shares of Common Stock be registered in the name of __________, whose address is __________ and that such shares of Common Stock be delivered to __________ whose address is __________. If said number of shares of Common Stock is less than all of the shares of Common Stock purchasable hereunder, the undersigned requests that a new Warrant Certificate representing the remaining balance of such shares of Common Stock be registered in the name of __________, whose address is __________ and that such Warrant Certificate be delivered to __________, whose address is __________.
In the event that the Warrant has been called for redemption by the Company pursuant to Section 6 of the Warrant Agreement and the Company has elected to require the exercise of the Warrants on a “cashless basis”, the number of shares of Common Stock that this Warrant is exercisable for shall be determined in accordance with subsection 3.3.1(b) of the Warrant Agreement.
In the event that the Warrant is to be exercised on a “cashless” basis pursuant to Section 7.4 of the Warrant Agreement, the number of shares of Common Stock that this Warrant is exercisable for shall be determined in accordance with Section 7.4 of the Warrant Agreement.
In the event that the Warrant may be exercised, to the extent allowed by the Warrant Agreement, through cashless exercise (i) the number of shares of Common Stock that this Warrant is exercisable for would be determined in accordance with the relevant section of the Warrant Agreement which allows for such cashless exercise and (ii) the holder hereof shall complete the following: The undersigned hereby irrevocably elects to exercise the right, represented by this Warrant Certificate, through the cashless exercise provisions of the Warrant Agreement, to receive shares of Common Stock. If said number of shares of Common Stock is less than all of the shares of Common Stock purchasable hereunder (after giving effect to the cashless exercise), the undersigned requests that a new Warrant Certificate representing the remaining balance of such shares of Common Stock be registered in the name of __________, whose address is __________ and that such Warrant Certificate be delivered to __________, whose address is __________.
[Signature Page Follows]
C-6
| Date: __________, 20 | ||
| (Signature) | ||
| (Address) | ||
| (Tax Identification Number) | ||
| Signature Guaranteed: | ||
THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO S.E.C. RULE 17Ad-15 (OR ANY SUCCESSOR RULE) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED).
C-7
Exhibit 10.1
FORM OF REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
THIS AMENDED AND RESTATED REGISTRATION RIGHTS AND LOCK-UP AGREEMENT (this “Agreement”) is made and entered into as of August 13, 2021 (the “Effective Date”) by and among:
| (i) | Airspan Networks Holdings Inc., a Delaware corporation f/k/a New Beginnings Acquisition Corp. (the “Company”); |
| (ii) | New Beginnings Sponsor, LLC, a Delaware limited liability company (the “Sponsor”); |
| (iii) | the undersigned parties listed under Sponsor Holders on the signature pages hereto (collectively with the Sponsor, the ”Sponsor Holders”); and |
| (iv) | the undersigned parties listed under Legacy Airspan Holders on the signature pages hereto (collectively, the “Legacy Airspan Holders” and, together with the Sponsor Holders and any person or entity who hereafter becomes a party to this Agreement pursuant to Section 5.2 of this Agreement, the “Holders” and each individually a “Holder”). |
RECITALS
WHEREAS, the Company and the Sponsor Holders are parties to that certain Registration Rights Agreement, dated as of October 29, 2020 (the “Prior Agreement”);
WHEREAS, the Company, Airspan Networks Inc., a Delaware corporation (“Legacy Airspan”), and Artemis Merger Sub Corp., a Delaware corporation (“Merger Sub”), are party to that certain Business Combination Agreement, dated as of March 8, 2021 (the “Business Combination Agreement”), pursuant to which, on the Effective Date, Merger Sub will merge (the “Merger”) with and into Legacy Airspan, with Legacy Airspan surviving the Merger as a wholly-owned subsidiary of the Company;
WHEREAS, the Legacy Airspan Holders are receiving shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), and warrants exercisable for Common Stock (the “New Seller Warrants”) on or about the date hereof, pursuant to the Business Combination Agreement;
WHEREAS, on October 29, 2020, the Company and the Sponsor entered into that certain Private Placement Unit Purchase Agreement, pursuant to which the Sponsor agreed to purchase an aggregate of 500,000 units, each unit consisting of one share of Common Stock and one warrant to purchase one share of Common Stock (the “Private Placement Units”), in a private placement transaction occurring simultaneously with the closing of the Company’s initial public offering. On November 9, 2020 and November 12, 2020, the Sponsor purchased 30,000 and 15,000 additional Private Placement Units, respectively, in private placement transactions occurring simultaneously with the closing of the underwriters’ over-allotment option;
WHEREAS, in addition to the Private Placement Units, the Sponsor owns, in the aggregate, 2,821,000 shares (the “Founder Shares”) of Common Stock;
WHEREAS, in order to finance the Company’s transaction costs in connection with an intended initial Business Combination (as defined below) the Sponsor or an affiliate of the Sponsor or certain of the Company’s officers and directors may loan to the Company funds as the Company may require, of which up to $1,500,000 of such loans may be convertible into units, each unit consisting of one share of Common Stock and one warrant to purchase one share of Common Stock (“Working Capital Units”) at a price of $10.00 per unit; and
WHEREAS, in connection with the consummation of the Merger, the parties to the Prior Agreement desire to amend and restate the Prior Agreement in its entirety as set forth herein, and the parties hereto desire to enter into this Agreement, pursuant to which the Company shall grant the Holders certain registration rights with respect to the Registrable Securities (as defined below) on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual representations, covenants and agreements contained herein, and certain other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:
Article I
DEFINITIONS
1.1 Definitions. The terms defined in this Article I shall, for all purposes of this Agreement, have the respective meanings set forth below:
“Adverse Disclosure” shall mean any public disclosure of material non-public information, which disclosure, in the good faith judgment of the Chief Executive Officer or any principal financial officer of the Company, after consultation with counsel to the Company, (i) would be required to be made in any Registration Statement or Prospectus in order for the applicable Registration Statement or Prospectus not to contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein (in the case of any prospectus and any preliminary prospectus, in the light of the circumstances under which they were made) not misleading, (ii) would not be required to be made at such time if the Registration Statement were not being filed, and (iii) the Company has a bona fide business purpose for not making such information public.
“Agreement” shall have the meaning given in the Preamble.
“Blackout Period” shall have the meaning given in subsection 2.4.
“Business Combination” shall mean any merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses, involving the Company.
“Business Combination Agreement” shall have the meaning given in the Recitals hereto.
“Business Combination Securities” shall mean the Common Stock and New Seller Warrants (and any shares of Common Stock issued or issuable upon the exercise of the New Seller Warrants) received by Legacy Airspan Holders as consideration in the Merger.
“Commission” shall mean the U.S. Securities and Exchange Commission.
“Common Stock” shall have the meaning given in the Recitals hereto.
“Company” shall have the meaning given in the Preamble.
“Company Shelf Takedown Notice” shall have the meaning given in subsection 2.1.3.
“Demand Registration” shall have the meaning given in subsection 2.2.1.
“Demanding Holders” shall have the meaning given in subsection 2.2.1.
“Excluded Registration” shall mean a Registration Statement (i) filed in connection with any employee stock option or other benefit plan, (ii) on Form S-4 (or similar form that relates to a transaction subject to Rule 145 under the Securities Act or any successor rule thereto), (iii) for an exchange offer or offering of securities solely to the Company’s existing stockholders, (iv) in which the offering solely consists of debt that is convertible into equity securities of the Company or (v) for a dividend reinvestment plan.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
“Filing Deadline” shall have the meaning given in subsection 2.1.1.
“Form S-1 Shelf” shall have the meaning given in subsection 2.1.1.
“Form S-3 Shelf” shall have the meaning given in subsection 2.1.1.
“Founder Shares” shall have the meaning given in the Recitals hereto.
2
“Founder Shares Lock-Up Period” shall mean, with respect to the Founder Shares, the period ending on the earlier of (a) one year after the date of the consummation of the Merger and (b) subsequent to the completion of the Merger, (x) if the last reported sale price of the Common Stock equals or exceeds $12.50 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing after the Merger or (y) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction after the Merger that results in all of the Company’s stockholders having the right to exchange their shares of Common Stock for cash, securities or other property.
“Holders” shall have the meaning given in the Preamble.
“Insider Letter” shall mean that certain letter agreement, dated as of October 29, 2020, by and among the Company, the Sponsor and each of the Company’s officers, directors and director nominees.
“Legacy Airspan” shall have the meaning given in the Recitals hereto.
“Legacy Airspan Holders” shall have the meaning given in the Preamble.
“Legacy Airspan Lock-Up Period” shall mean, with respect to any shares of Common Stock or New Seller Warrants (and any shares of Common Stock issued or issuable upon the exercise of the New Seller Warrants) received by Legacy Airspan Holders as consideration in the Merger that are held by the Legacy Airspan Holders or their Permitted Transferees, the period ending on the earliest of: (i) the date that is six months after the closing of the Merger; (ii) the first date on which the last reported sale price of the Common Stock equals or exceeds $12.50 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing after the Merger; or (iii) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction after the Merger that results in all of the Company’s stockholders having the right to exchange their shares of Common Stock for cash, securities or other property.
“Lock-Up Periods” shall mean the Founder Shares Lock-Up Period, the Legacy Airspan Lock-Up Period and the Private Placement Lock-Up Period.
“Maximum Number of Securities” shall have the meaning given in subsection 2.2.4.
“Merger” shall have the meaning given in the Recitals hereto.
“Merger Sub” shall have the meaning given in the Recitals hereto.
“Misstatement” shall mean an untrue statement of a material fact or an omission to state a material fact required to be stated in a Registration Statement or Prospectus, or necessary to make the statements in a Registration Statement or Prospectus (in the light of the circumstances under which they were made) not misleading.
“New Seller Warrants” shall have the meaning given in the Recitals hereto.
“Permitted Transferees” shall mean any person or entity to whom a Holder of Registrable Securities is permitted to transfer such Registrable Securities prior to the expiration of the Founder Shares Lock-Up Period, the Legacy Airspan Lock-Up Period or Private Placement Lock-Up Period, as the case may be, under this Agreement, the Insider Letter, the Sponsor Support Agreement and any other applicable agreement between such Holder and the Company, and to any transferee thereafter.
“Piggyback Registration” shall have the meaning given in subsection 2.3.1.
“Prior Agreement” shall have the meaning given in the Recitals hereto.
“Private Placement Lock-Up Period” shall mean, with respect to Private Placement Units that are held by the initial purchasers of such Private Placement Units or their Permitted Transferees, and any of the securities underlying the Private Placement Units, including the Private Placement Shares, the Private Placement Warrants and any of the shares of Common Stock issued or issuable upon the exercise of the Private Placement Warrants, that are held by the initial purchasers of the Private Placement Units or their Permitted Transferees, the period ending 30 days after the completion of the Merger.
3
“Private Placement Shares” shall mean the shares of Common Stock comprising the Private Placement Units.
“Private Placement Units” shall have the meaning given in the Recitals hereto.
“Private Placement Warrants” shall mean the warrants comprising the Private Placement Units.
“Pro Rata” shall have the meaning given in subsection 2.2.4.
“Prospectus” shall mean the prospectus included in any Registration Statement, as supplemented by any and all prospectus supplements and as amended by any and all post-effective amendments and including all material incorporated by reference in such prospectus.
“Registrable Security” shall mean (a) the Founder Shares, (b) the Private Placement Units (including the Private Placement Shares, the Private Placement Warrants and the Common Stock issued or issuable upon the exercise of any such Private Placement Warrants), (c) the New Seller Warrants and the Common Stock issued or issuable upon the exercise of any New Seller Warrants, (d) any outstanding shares of Common Stock or any other equity security (including the shares of Common Stock issued or issuable upon the exercise of any other equity security) of the Company held by a Holder as of the date of this Agreement, after giving effect to the Merger, (e) any equity securities (including the shares of Common Stock issued or issuable upon the exercise of any such equity security) of the Company issuable upon conversion of any Working Capital Units, and (f) any other equity security of the Company issued or issuable with respect to any such shares of Common Stock by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or reorganization; provided, however, that, as to any particular Registrable Security, such securities shall cease to be Registrable Securities when: (A) a Registration Statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been sold, transferred, disposed of or exchanged in accordance with such Registration Statement; (B) such securities shall have been otherwise transferred, new certificates or book entry positions for such securities not bearing a legend restricting further transfer shall have been delivered by the Company and subsequent public distribution of such securities shall not require registration under the Securities Act; (C) such securities shall have ceased to be outstanding; (D) such securities may be sold without registration pursuant to Rule 144 promulgated under the Securities Act (or any successor rule promulgated thereafter by the Commission) (but with no volume or other restrictions or limitations); or (E) such securities have been sold to, or through, a broker, dealer or underwriter in a public distribution or other public securities transaction.
“Registration” shall mean a registration effected by preparing and filing a registration statement or similar document in compliance with the requirements of the Securities Act, and the applicable rules and regulations promulgated thereunder, and such registration statement becoming effective.
“Registration Expenses” shall mean the documented out-of-pocket expenses of a Registration, including, without limitation, the following:
(A) all registration and filing fees (including fees with respect to filings required to be made with the Financial Industry Regulatory Authority, Inc.) and any securities exchange on which the Common Stock is then listed;
(B) fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of counsel for the Underwriters in connection with blue sky qualifications of Registrable Securities);
(C) printing, messenger, telephone and delivery expenses;
(D) reasonable fees and disbursements of counsel for the Company;
(E) reasonable fees and disbursements of all independent registered public accountants of the Company incurred specifically in connection with such Registration; and
(F) reasonable fees and expenses of one (1) legal counsel selected by the majority-in-interest of the Demanding Holders initiating a Demand Registration to be registered for offer and sale in the applicable Registration.
4
“Registration Statement” shall mean any registration statement that covers the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus included in such registration statement, amendments (including post-effective amendments) and supplements to such registration statement, and all exhibits to and all material incorporated by reference in such registration statement.
“Requesting Holder” shall have the meaning given in subsection 2.2.1.
“Rule 415” shall have the meaning given in subsection 2.1.1.
“Securities Act” shall mean the Securities Act of 1933, as amended.
“Shelf Takedown Notice” shall have the meaning given in subsection 2.1.3.
“Shelf Underwritten Offering” shall have the meaning given in subsection 2.1.3.
“Sponsor” shall have the meaning given in the Preamble.
“Sponsor Holders” shall have the meaning given in the Preamble.
“Sponsor Support Agreement” shall mean that certain letter agreement, dated as of March 8, 2021, by and between the Company and the Sponsor.
“Subscription Agreements” shall mean those certain subscription agreements the Company entered into with certain investors pursuant to which such investors purchased shares of Common Stock in connection with the consummation of the transactions contemplated in the Business Combination Agreement.
“Transfer” shall mean the (a) sale of, offer to sell, contract or agreement to sell, hypothecate, pledge, grant of any option to purchase or otherwise dispose of or agreement to dispose of, directly or indirectly, or establishment or increase of a put equivalent position or liquidation with respect to or decrease of a call equivalent position within the meaning of Section 16 of the Exchange Act, and the rules and regulations of the Commission promulgated thereunder with respect to, any security, (b) entry into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any security, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise, or (c) public announcement of any intention to effect any transaction specified in clause (a) or (b).
“Underwriter” shall mean a securities dealer who purchases any Registrable Securities as principal in an Underwritten Offering and not as part of such dealer’s market-making activities.
“Underwritten Registration” or “Underwritten Offering” shall mean a Registration in which securities of the Company are sold to an Underwriter in a firm commitment underwriting for distribution to the public.
“Working Capital Units” shall have the meaning given in the Recitals hereto.
5
Article II
REGISTRATIONS
2.1 Shelf Registration.
2.1.1 Initial Registration. The Company shall, as promptly as reasonably practicable, but in no event later than thirty (30) calendar days after the date of this Agreement (the “Filing Deadline”), file a Registration Statement under the Securities Act to permit the public resale of all the Registrable Securities held by the Holders (and certain other outstanding equity securities of the Company) from time to time as permitted by Rule 415 under the Securities Act (or any successor or similar provision adopted by the Commission then in effect) (“Rule 415”) on the terms and conditions specified in this subsection 2.1.1 and shall use its reasonable best efforts to cause such Registration Statement to be declared effective as promptly as reasonably practicable after the filing thereof, but in no event later than the earlier of (i) the 90th calendar day following the Filing Deadline if the Commission notifies the Company that it will “review” the Registration Statement, and (ii) the 5th business day after the date the Company is notified (orally or in writing, whichever is earlier) by the Commission that the Registration Statement will not be “reviewed,” or will not be subject to further review. The Registration Statement filed with the Commission pursuant to this subsection 2.1.1 shall be a shelf registration statement on Form S-3 (a “Form S-3 Shelf”) or, if Form S-3 is not then available to the Company, on Form S-1 (a “Form S-1 Shelf”) or such other form of registration statement as is then available to effect a registration for resale of such Registrable Securities, covering such Registrable Securities, and shall contain a Prospectus in such form as to permit any Holder to sell such Registrable Securities pursuant to Rule 415 at any time beginning on the effective date for such Registration Statement. A Registration Statement filed pursuant to this subsection 2.1.1 shall provide for the resale pursuant to any method or combination of methods legally available to, and requested prior to effectiveness by, the Holders. The Company shall use its reasonable best efforts to cause a Registration Statement filed pursuant to this subsection 2.1.1 to remain effective, and to be supplemented and amended to the extent necessary to ensure that such Registration Statement is available or, if not available, that another Registration Statement is available, for the resale of all the Registrable Securities held by the Holders until all such Registrable Securities have ceased to be Registrable Securities. In the event the Company files a Form S-1 Shelf, the Company shall use its reasonable best efforts to convert the Form S-1 Shelf to a Form S-3 Shelf as soon as practicable after the Company is eligible to use Form S-3. When effective, a Registration Statement filed pursuant to this subsection 2.1.1 (including the documents incorporated therein by reference) will comply as to form in all material respects with all applicable requirements of the Securities Act and the Exchange Act and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading (in the case of any Prospectus contained in such Registration Statement, in the light of the circumstances under which such statement is made).
2.1.2 Form S-3 Shelf. If the Company files a Form S-3 Shelf and thereafter the Company becomes ineligible to use Form S-3 for secondary sales, the Company shall use its reasonable best efforts to file a Form S-1 Shelf as promptly as reasonably practicable to replace the shelf registration statement that is a Form S-3 Shelf and have the Form S-1 Shelf declared effective as promptly as reasonably practicable and to cause such Form S-1 Shelf to remain effective, and to be supplemented and amended to the extent necessary to ensure that such Registration Statement is available or, if not available, that another Registration Statement is available, for the resale of all the Registrable Securities held by the Holders until all such Registrable Securities have ceased to be Registrable Securities.
2.1.3 Shelf Takedown. At any time and from time to time following the effectiveness of the shelf registration statement required by subsection 2.1.1 or 2.1.2, any Holder may request to sell all or a portion of their Registrable Securities in an underwritten offering that is registered pursuant to such shelf registration statement (a “Shelf Underwritten Offering”), provided that such Holder(s) (a) reasonably expect aggregate gross proceeds in excess of $50,000,000 from such Shelf Underwritten Offering or (b) reasonably expects to sell all of the Registrable Securities held by such Holder in such Shelf Underwritten Offering but in no event less than $10,000,000 in aggregate gross proceeds. All requests for a Shelf Underwritten Offering shall be made by giving written notice to the Company (the “Shelf Takedown Notice”). Each Shelf Takedown Notice shall specify the approximate number of Registrable Securities proposed to be sold in the Shelf Underwritten Offering and the expected price range (net of underwriting discounts and commissions) of such Shelf Underwritten Offering. Within five (5) business days after receipt of any Shelf Takedown Notice, the Company shall give written notice of such requested Shelf Underwritten Offering to all other Holders of Registrable Securities (the “Company Shelf Takedown Notice”) and, subject to reductions consistent with the Pro Rata calculations in Section 2.2.4, shall include in such Shelf Underwritten Offering all Registrable Securities with respect to which the Company has received written requests for inclusion therein, within five (5) days after sending the Company Shelf Takedown Notice. The Company shall enter into an underwriting agreement in a form as is customary in Underwritten Offerings of securities by the Company with the managing Underwriter or Underwriters selected by the initiating Holders with written consent of the Company (such consent not to be unreasonably withheld, delayed or conditioned) and shall take all such other reasonable actions as are requested by the managing Underwriter or Underwriters in order to expedite or facilitate the disposition of such Registrable Securities. In connection with any Shelf Underwritten Offering contemplated by this subsection 2.1.3, subject to Section 3.3 and Article IV, the underwriting agreement into which each Holder and the Company shall enter shall contain such representations, covenants, indemnities and other rights and obligations of the Company and the selling stockholders as are customary in underwritten offerings of securities. The Legacy Airspan Holders, on the one hand, and the Sponsor Holders, on the other hand, may each demand not more than two (2) Shelf Underwritten Offerings pursuant to this subsection 2.1.3 in any twelve (12)-month period.
6
2.1.4 Holder Information Required for Participation in Shelf Registration. At least ten (10) business days prior to the first anticipated filing date of a Registration Statement pursuant to this Article II, the Company shall use reasonable best efforts to notify each Holder in writing (which may be by email) of the information reasonably necessary about the Holder to include such Holder’s Registrable Securities in such Registration Statement. Notwithstanding anything else in this Agreement, the Company shall not be obligated to include such Holder’s Registrable Securities to the extent the Company has not received such information, and received any other reasonably requested agreements or certificates, on or prior to the fifth (5th) business day prior to the first anticipated filing date of a Registration Statement pursuant to this Article II.
2.2 Demand Registration.
2.2.1 Request for Registration. Subject to the provisions of subsection 2.2.4 and Section 2.4 hereof and provided that the Company does not have an effective Registration Statement pursuant to subsection 2.1.1 covering Registrable Securities, (a) the Sponsor Holders of at least a majority in interest of the then-outstanding number of Registrable Securities held by the Sponsor Holders or (b) the Legacy Airspan Holders of at least a majority of the Registrable Securities held by the Legacy Airspan Holders (the “Demanding Holders”), in each case, may make a written demand for Registration of all or part of their Registrable Securities, which written demand shall describe the amount and type of securities to be included in such Registration and the intended method(s) of distribution thereof (such written demand a “Demand Registration”). The Company shall, within ten (10) days of the Company’s receipt of the Demand Registration, notify, in writing, all other Holders of Registrable Securities of such demand, and each Holder of Registrable Securities who thereafter wishes to include all or a portion of such Holder’s Registrable Securities in a Registration pursuant to a Demand Registration (each such Holder that includes all or a portion of such Holder’s Registrable Securities in such Registration, a “Requesting Holder”) shall so notify the Company, in writing, within five (5) days after the receipt by the Holder of the notice from the Company. Upon receipt by the Company of any such written notification from a Requesting Holder(s) to the Company, such Requesting Holder(s) shall be entitled to have their Registrable Securities included in a Registration pursuant to a Demand Registration and the Company shall file, as soon thereafter as practicable, but not more than forty five (45) days immediately after the Company’s receipt of the Demand Registration, a Form S-3 Shelf or, if Form S-3 is not then available to the Company, a Form S-1 Shelf covering all Registrable Securities requested by the Demanding Holders and Requesting Holders pursuant to such Demand Registration and shall use reasonable best efforts to cause such Registration Statement to become effective as promptly as practicable after filing. Under no circumstances shall the Company be obligated to effect (x) more than an aggregate of three (3) Registrations pursuant to a Demand Registration by the Sponsor Holders under this subsection 2.2.1 with respect to any or all Registrable Securities held by such Sponsor Holders or (y) more than an aggregate of three (3) Registrations pursuant to a Demand Registration by the Legacy Airspan Holders under this subsection 2.2.1 with respect to any or all Registrable Securities held by such Legacy Airspan Holders; provided, however, that a Registration shall not be counted for such purposes unless a Registration Statement has become effective and all of the Registrable Securities requested by the Requesting Holders to be registered on behalf of the Requesting Holders in such Registration have been sold, in accordance with Section 3.1 of this Agreement.
2.2.2 Effective Registration. Notwithstanding the provisions of subsection 2.2.1 above or any other part of this Agreement, a Registration pursuant to a Demand Registration shall not count as a Registration unless and until (i) the Registration Statement filed with the Commission with respect to a Registration pursuant to a Demand Registration has been declared effective by the Commission and (ii) the Company has complied with all of its obligations under this Agreement with respect thereto; provided, further, that if, after such Registration Statement has been declared effective, an offering of Registrable Securities in a Registration pursuant to a Demand Registration is subsequently interfered with by any stop order or injunction of the Commission, federal or state court or any other governmental agency the Registration Statement with respect to such Registration shall be deemed not to have been declared effective, unless and until, (i) such stop order or injunction is removed, rescinded or otherwise terminated and (ii) a majority-in-interest of the Demanding Holders initiating such Demand Registration thereafter affirmatively elect to continue with such Registration and accordingly notify the Company in writing, but in no event later than five (5) days, of such election; provided, further, that the Company shall not be obligated or required to file another Registration Statement until the Registration Statement that has been previously filed with respect to a Registration pursuant to a Demand Registration becomes effective or is subsequently terminated.
7
2.2.3 Underwritten Offering. Subject to the provisions of subsection 2.2.4 and Section 2.4 hereof, if a majority-in-interest of the Demanding Holders so advise the Company as part of their Demand Registration that the offering of the Registrable Securities pursuant to such Demand Registration shall be in the form of an Underwritten Offering, then the right of such Demanding Holder or Requesting Holder (if any) to include its Registrable Securities in such Registration shall be conditioned upon such Holder’s participation in such Underwritten Offering and the inclusion of such Holder’s Registrable Securities in such Underwritten Offering to the extent provided herein. All such Holders proposing to distribute their Registrable Securities through an Underwritten Offering under this subsection 2.2.3 shall enter into an underwriting agreement in customary form with the Underwriter(s) selected for such Underwritten Offering by the majority-in-interest of the Demanding Holders initiating the Demand Registration.
2.2.4 Reduction of Underwritten Offering. If the managing Underwriter or Underwriters in an Underwritten Registration, in good faith, advises the Company, the Demanding Holders and the Requesting Holders (if any) in writing that the dollar amount or number of Registrable Securities that the Demanding Holders and the Requesting Holders (if any) desire to sell, taken together with all other Common Stock or other equity securities that the Company desires to sell and the Common Stock, if any, as to which a Registration has been requested pursuant to separate written contractual piggy-back registration rights held by any other stockholders who desire to sell, exceeds the maximum dollar amount or maximum number of equity securities that can be sold in the Underwritten Offering without adversely affecting the proposed offering price, the timing, the distribution method, or the probability of success of such offering (such maximum dollar amount or maximum number of such securities, as applicable, the “Maximum Number of Securities”), then the Company shall include in such Underwritten Offering, as follows: (i) first, the Registrable Securities of the Demanding Holders and the Requesting Holders (if any) (pro rata based on the respective number of Registrable Securities that each Demanding Holder and Requesting Holder (if any) has requested be included in such Underwritten Registration and the aggregate number of Registrable Securities that the Demanding Holders and Requesting Holders (if any) have requested be included in such Underwritten Registration (such proportion is referred to herein as “Pro Rata”)) that can be sold without exceeding the Maximum Number of Securities; (ii) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (i), the Registrable Securities of Holders (Pro Rata, based on the respective number of Registrable Securities that each Holder has so requested) exercising their rights to register their Registrable Securities pursuant to subsection 2.2.1 hereof, without exceeding the Maximum Number of Securities; and (iii) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (i) and (ii), the Common Stock or other equity securities that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities; and (iv) fourth, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (i), (ii) and (iii), the Common Stock or other equity securities of other persons or entities that the Company is obligated to register in a Registration pursuant to separate written contractual arrangements with such persons and that can be sold without exceeding the Maximum Number of Securities.
2.2.5 Demand Registration Withdrawal. A majority-in-interest of the Demanding Holders initiating a Demand Registration or a majority-in-interest of the Requesting Holders (if any), pursuant to a Registration under subsection 2.2.1 shall have the right to withdraw from a Registration pursuant to such Demand Registration or a Shelf Underwritten Offering pursuant to subsection 2.1.3 for any or no reason whatsoever upon written notification to the Company and the Underwriter or Underwriters (if any) of their intention to withdraw from such Registration prior to the effectiveness of the Registration Statement filed with the Commission with respect to the Registration of their Registrable Securities pursuant to such Demand Registration or Shelf Underwritten Offering. Notwithstanding anything to the contrary in this Agreement, the Company shall be responsible for the Registration Expenses incurred in connection with a Registration pursuant to a Demand Registration or a Shelf Underwritten Offering prior to its withdrawal under this subsection 2.2.5.
2.3 Piggyback Registration.
2.3.1 Piggyback Rights. If the Company proposes to file a Registration Statement under the Securities Act with respect to an offering of equity securities, or securities or other obligations exercisable or exchangeable for, or convertible into equity securities, for its own account or for the account of stockholders of the Company (or by the Company and by the stockholders of the Company including, without limitation, pursuant to Section 2.2 hereof), other than an Excluded Registration, then the Company shall give written notice of such proposed filing to all of the Holders of Registrable Securities as soon as practicable but not less than ten (10) days before the anticipated filing date of such Registration Statement, which notice shall (A) describe the amount and type of securities to be included in such offering, the intended method(s) of distribution, and the name of the proposed managing Underwriter or Underwriters, if any, in such offering, and (B) offer to all of the Holders of Registrable Securities the opportunity to register the sale of such number of Registrable Securities as such Holders may request in writing within five (5) days after receipt of such written notice (such Registration a “Piggyback Registration”). The Company shall, in good faith, cause such Registrable Securities to be included in such Piggyback Registration and shall use its reasonable best efforts to cause the managing Underwriter or Underwriters of a proposed Underwritten Offering to permit the Registrable Securities requested by the Holders pursuant to this subsection 2.3.1 to be included in a Piggyback Registration on the same terms and conditions as any similar securities of the Company included in such Registration and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof. All such Holders proposing to distribute their Registrable Securities through an Underwritten Offering under this subsection 2.3.1 shall enter into an underwriting agreement in customary form with the Underwriter(s) selected for such Underwritten Offering by the Company.
8
2.3.2 Reduction of Piggyback Registration. If the managing Underwriter or Underwriters in an Underwritten Registration that is to be a Piggyback Registration, in good faith, advises the Company and the Holders of Registrable Securities participating in the Piggyback Registration in writing that the dollar amount or number of the shares of Common Stock that the Company desires to sell, taken together with (i) the Common Stock, if any, as to which Registration has been demanded pursuant to separate written contractual arrangements with persons or entities other than the Holders of Registrable Securities hereunder, (ii) the Registrable Securities as to which registration has been requested pursuant to Section 2.3 hereof, and (iii) the Common Stock, if any, as to which Registration has been requested pursuant to separate written contractual piggy-back registration rights of other stockholders of the Company, exceeds the Maximum Number of Securities, then:
(a) If the Registration is undertaken for the Company’s account, the Company shall include in any such Registration (A) first, the Common Stock or other equity securities that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities; (B) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (A), the Registrable Securities of Holders exercising their rights to register their Registrable Securities pursuant to subsection 2.3.1 hereof, Pro Rata, which can be sold without exceeding the Maximum Number of Securities; and (C) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A) and (B), the Common Stock, if any, as to which Registration has been requested pursuant to written contractual piggy-back registration rights of other stockholders of the Company, which can be sold without exceeding the Maximum Number of Securities;
(b) If the Registration is pursuant to a request by persons or entities other than the Holders of Registrable Securities, then the Company shall include in any such Registration (A) first, the Common Stock or other equity securities, if any, of such requesting persons or entities, other than the Holders of Registrable Securities, which can be sold without exceeding the Maximum Number of Securities; (B) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (A), the Registrable Securities of Holders exercising their rights to register their Registrable Securities pursuant to subsection 2.3.1, Pro Rata, which can be sold without exceeding the Maximum Number of Securities; (C) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A) and (B), the Common Stock or other equity securities that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities; and (D) fourth, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A), (B) and (C), the Common Stock or other equity securities for the account of other persons or entities that the Company is obligated to register pursuant to separate written contractual arrangements with such persons or entities, which can be sold without exceeding the Maximum Number of Securities.
2.3.3 Piggyback Registration Withdrawal. Any Holder of Registrable Securities shall have the right to withdraw from a Piggyback Registration for any or no reason whatsoever upon written notification to the Company and the Underwriter or Underwriters (if any) of his, her or its intention to withdraw from such Piggyback Registration prior to the effectiveness of the Registration Statement filed with the Commission with respect to such Piggyback Registration. The Company (whether on its own good faith determination or as the result of a request for withdrawal by persons pursuant to separate written contractual obligations) may withdraw a Registration Statement filed with the Commission in connection with a Piggyback Registration at any time prior to the effectiveness of such Registration Statement. Notwithstanding anything to the contrary in this Agreement, the Company shall be responsible for the Registration Expenses incurred in connection with the Piggyback Registration prior to its withdrawal under this subsection 2.3.3.
9
2.3.4 Unlimited Piggyback Registration Rights. For purposes of clarity, any Registration effected pursuant to Section 2.3 hereof shall not be counted as a Registration pursuant to a Demand Registration effected under Section 2.2 hereof or a Shelf Underwritten Offering effected under subsection 2.1.3.
2.4 Restrictions on Registration Rights. Notwithstanding anything to the contrary contained herein, the Company shall not be obligated to (but may, at its sole option) (A) effect any Demand Registration or an Underwritten Offering (i) within sixty (60) days after the closing of an Underwritten Offering or (ii) during the period starting with the date sixty (60) days prior to the Company’s good faith estimate of the date of the filing of, and ending on a date one hundred and twenty (120) days after the effective date of, a Company initiated Registration and provided that the Company has delivered written notice to the Holders prior to receipt of a Demand Registration pursuant to subsection 2.2.1 and it continues to actively employ, in good faith, all reasonable best efforts to cause the applicable Registration Statement to become effective or (B) file a Registration Statement (or any amendment thereto) or effect an Underwritten Offering (or, if the Company has filed a Registration Statement and has included Registrable Securities therein, the Company shall be entitled to suspend the offer and sale of Registrable Securities pursuant to such Registration Statement) for a period of up to forty-five (45) days (i) if the Holders have requested an Underwritten Registration and the Company and the Holders are unable to obtain the commitment of underwriters to firmly underwrite the offer or (ii) if the Company has determined in good faith that the sale of Registrable Securities pursuant a Registration Statement would require disclosure of material non-public information not otherwise required to be disclosed under applicable securities laws (x) which disclosure would have a detrimental effect on the Company or (y) relating to a material transaction involving the Company (any such period, a “Blackout Period”); provided, however, that in no event shall any Blackout Period together with other Blackout Periods exceed an aggregate of 30 days in any consecutive 12-month period.
Article III
COMPANY PROCEDURES
3.1 General Procedures. If the Company is required to effect the Registration of Registrable Securities, the Company shall use its reasonable best efforts to effect such Registration to permit the sale of such Registrable Securities in accordance with the intended plan of distribution thereof, and pursuant thereto the Company shall, as expeditiously as possible:
3.1.1 prepare and file with the Commission as soon as practicable a Registration Statement with respect to such Registrable Securities and use its reasonable best efforts to cause such Registration Statement to become effective and remain effective until all Registrable Securities covered by such Registration Statement have been sold;
3.1.2 prepare and file with the Commission such amendments and post-effective amendments to the Registration Statement, and such supplements to the Prospectus, as may be reasonably requested by the majority-in-interest of the Holders with Registrable Securities registered on such Registration Statement or any Underwriter of Registrable Securities or as may be required by the rules, regulations or instructions applicable to the registration form used by the Company or by the Securities Act or rules and regulations thereunder to keep the Registration Statement effective until all Registrable Securities covered by such Registration Statement are sold in accordance with the intended plan of distribution set forth in such Registration Statement or supplement to the Prospectus;
3.1.3 prior to filing a Registration Statement or Prospectus, or any amendment or supplement thereto, furnish without charge to the Underwriters, if any, and the Holders of Registrable Securities included in such Registration, and such Holders’ legal counsel, copies of such Registration Statement as proposed to be filed, each amendment and supplement to such Registration Statement (in each case including all exhibits thereto and documents incorporated by reference therein), the Prospectus included in such Registration Statement (including each preliminary Prospectus), and such other documents as the Underwriters and the Holders of Registrable Securities included in such Registration or the legal counsel for any such Holders may request in order to facilitate the disposition of the Registrable Securities owned by such Holders;
10
3.1.4 prior to any public offering of Registrable Securities, use its reasonable best efforts to (i) register or qualify the Registrable Securities covered by the Registration Statement under such securities or “blue sky” laws of such jurisdictions in the United States as the Holders of Registrable Securities included in such Registration Statement (in light of their intended plan of distribution) may request and (ii) take such action necessary to cause such Registrable Securities covered by the Registration Statement to be registered with or approved by such other governmental authorities as may be necessary by virtue of the business and operations of the Company and do any and all other acts and things that may be necessary or advisable to enable the Holders of Registrable Securities included in such Registration Statement to consummate the disposition of such Registrable Securities in such jurisdictions; provided, however, that the Company shall not be required to qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify or take any action to which it would be subject to general service of process or taxation in any such jurisdiction where it is not then otherwise so subject;
3.1.5 cause all such Registrable Securities to be listed on each securities exchange or automated quotation system on which similar securities issued by the Company are then listed;
3.1.6 provide a transfer agent or warrant agent, as applicable, and registrar for all such Registrable Securities no later than the effective date of such Registration Statement;
3.1.7 advise each seller of such Registrable Securities, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the Commission suspending the effectiveness of such Registration Statement or the initiation or threatening of any proceeding for such purpose and promptly use its reasonable best efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop order should be issued;
3.1.8 at least five (5) days prior to the filing of any Registration Statement or Prospectus or any amendment or supplement to such Registration Statement or Prospectus or any document that is to be incorporated by reference into such Registration Statement or Prospectus, furnish a copy thereof to each seller of such Registrable Securities or its counsel;
3.1.9 notify the Holders at any time when a Prospectus relating to such Registration Statement is required to be delivered under the Securities Act, of the happening of any event as a result of which the Prospectus included in such Registration Statement, as then in effect, includes a Misstatement, and then to correct such Misstatement as set forth in Section 3.4 hereof;
3.1.10 permit a representative of the Holders (such representative to be selected by a majority of the participating Holders), the Underwriters, if any, and any attorney or accountant retained by such Holders or Underwriter to participate, at each such person’s own expense, in the preparation of the Registration Statement, and cause the Company’s officers, directors and employees to supply all information reasonably requested by any such representative, Underwriter, attorney or accountant in connection with the Registration; provided, however, that such representatives or Underwriters enter into a confidentiality agreement, in form and substance reasonably satisfactory to the Company, prior to the release or disclosure of any such information;
3.1.11 obtain a “cold comfort” letter from the Company’s independent registered public accountants in the event of an Underwritten Registration for the benefit of the Underwriters, in customary form and covering such matters of the type customarily covered by “cold comfort” letters as the managing Underwriter may reasonably request;
3.1.12 on the date the Registrable Securities are delivered for sale pursuant to such Registration, obtain an opinion, dated such date, of counsel representing the Company for the purposes of such Registration, addressed to the Underwriters, if any, covering such legal matters with respect to the Registration in respect of which such opinion is being given as the Underwriters may reasonably request and as are customarily included in such opinions and negative assurance letters;
3.1.13 in the event of any Underwritten Offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing Underwriter of such offering;
11
3.1.14 make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve (12) months beginning with the first day of the Company’s first full calendar quarter after the effective date of the Registration Statement which satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any successor rule promulgated thereafter by the Commission);
3.1.15 if the Registration involves the Registration of Registrable Securities involving gross proceeds in excess of $50,000,000, use its reasonable efforts to make available senior executives of the Company to participate in customary “road show” presentations that may be reasonably requested by the Underwriter in any Underwritten Offering; and
3.1.16 otherwise, in good faith, cooperate reasonably with, and take such customary actions as may reasonably be requested by the Holders, in connection with such Registration.
3.2 Registration Expenses. Except as otherwise set forth herein, the Registration Expenses of all Registrations shall be borne by the Company. It is acknowledged by the Holders that the Holders shall bear all incremental selling expenses relating to the sale of Registrable Securities, such as Underwriters’ commissions and discounts, brokerage fees, Underwriter marketing costs and, other than as set forth in the definition of “Registration Expenses,” all reasonable fees and expenses of any legal counsel representing the Holders.
3.3 Requirements for Participation in Underwritten Offerings. No person may participate in any Underwritten Offering for equity securities of the Company pursuant to a Registration initiated by the Company hereunder unless such person (i) agrees to sell such person’s securities on the basis provided in any underwriting arrangements approved by the Company and (ii) completes and executes all customary questionnaires, powers of attorney, indemnities, lock-up agreements, underwriting agreements and other customary documents as may be reasonably required under the terms of such underwriting arrangements.
3.4 Suspension of Sales; Adverse Disclosure. Upon receipt of written notice from the Company that a Registration Statement or Prospectus contains a Misstatement, each of the Holders shall forthwith discontinue disposition of Registrable Securities until he, she or it has received copies of a supplemented or amended Prospectus correcting the Misstatement (it being understood that the Company hereby covenants to prepare and file such supplement or amendment as soon as practicable after the time of such notice), or until he, she or it is advised in writing by the Company that the use of the Prospectus may be resumed. If the filing, initial effectiveness or continued use of a Registration Statement in respect of any Registration at any time would require the Company to make an Adverse Disclosure or would require the inclusion in such Registration Statement of financial statements that are unavailable to the Company for reasons beyond the Company’s control, the Company may, upon giving prompt written notice of such action to the Holders, delay the filing or initial effectiveness of, or suspend use of, such Registration Statement for the shortest period of time, but in no event more than thirty (30) days, determined in good faith by the Company to be necessary for such purpose. In the event the Company exercises its rights under the preceding sentence, the Holders agree to suspend, immediately upon their receipt of the notice referred to above, their use of the Prospectus relating to any Registration in connection with any sale or offer to sell Registrable Securities. The Company shall promptly notify the Holders of the expiration of any period during which it exercised its rights under this Section 3.4.
3.5 Reporting Obligations. As long as any Holder shall own Registrable Securities, the Company, at all times while it shall be a reporting company under the Exchange Act, covenants to file timely (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to Section 13(a) or 15(d) of the Exchange Act. The Company further covenants that it shall take such further action as any Holder may reasonably request, all to the extent required from time to time to enable such Holder to sell shares of the Common Stock held by such Holder without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 promulgated under the Securities Act (or any successor rule promulgated thereafter by the Commission), including providing any legal opinions, to the extent such exemption is available to Holders at such time. Upon the request of any Holder, the Company shall deliver to such Holder a written certification of a duly authorized officer as to whether it has complied with such requirements.
3.6 Limitations on Registration Rights. Notwithstanding anything herein to the contrary, (i) any affiliate of the underwriters in the Company’s initial public offering may not exercise its rights under Section 2.2 and 2.3 hereunder after five (5) and seven (7) years after the effective date of the registration statement relating to the Company’s initial public offering, respectively, and (ii) such holders may not exercise the rights under Section 2.2 more than one time.
12
3.7 Transfer Restrictions.
3.7.1 Each Legacy Airspan Holder agrees that it, he or she shall not Transfer its, his or her Business Combination Securities until the expiration of the Legacy Airspan Lock-Up Period.
3.7.2 Notwithstanding the provisions set forth in subsection 3.7.1, Transfers of the Business Combination Securities that are held by the Legacy Airspan Holders or any of their permitted transferees (that have complied with this subsection 3.7.2) are permitted during the Legacy Airspan Lock-Up Period: (a) in the case of an individual, by gift to a member of such individual’s immediate family or to a trust, the beneficiary of which is a member of such individual’s immediate family, an affiliate of such individual or to a charitable organization; (b) in the case of an individual, by virtue of laws of descent and distribution upon death; (c) in the case of an individual, pursuant to a qualified domestic relations order; (d) in the case of an entity, as a distribution to the limited partners, stockholders, unitholders, members of or owners of similar equity interests in such entity; (e) in connection with collateral, hypothecation or other pledge arrangements to support a credit facility entered into in the ordinary course; and (f) pursuant to a bona fide third-party tender offer for all or substantially all of the Common Stock or in the event of completion of a liquidation, merger, share exchange or other similar transaction which results in all of the Company’s stockholders having the right to exchange their shares of Common Stock for cash, securities or other property subsequent to the completion of Merger; provided, however, that in the case of clauses (a) through (d), these permitted transferees must enter into a written agreement with the Company agreeing to be bound by the transfer restrictions herein. For the avoidance of doubt, the transfers of Business Combination Securities shall be permitted regardless of whether a filing under Section 16(a) of the Exchange Act shall be required or shall be voluntarily made with respect to such transfers.
Article IV
INDEMNIFICATION AND CONTRIBUTION
4.1 Indemnification.
4.1.1 The Company agrees to indemnify, to the extent permitted by law, each Holder of Registrable Securities, its officers and directors and each person who controls such Holder (within the meaning of the Securities Act) against all losses, claims, damages, liabilities and expenses (including attorneys’ fees) caused by any untrue or alleged untrue statement of material fact contained in any Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as the same are caused by or contained in any information furnished in writing to the Company by such Holder expressly for use therein. The Company shall indemnify the Underwriters, their officers and directors and each person who controls such Underwriters (within the meaning of the Securities Act) to the same extent as provided in the foregoing with respect to the indemnification of the Holder.
4.1.2 In connection with any Registration Statement in which a Holder of Registrable Securities is participating, such Holder shall furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such Registration Statement or Prospectus and, to the extent permitted by law, shall indemnify the Company, its directors and officers and agents and each person who controls the Company (within the meaning of the Securities Act) against any losses, claims, damages, liabilities and expenses (including without limitation reasonable attorneys’ fees) resulting from any untrue statement of material fact contained in the Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto or any omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission is contained in any information or affidavit so furnished in writing by such Holder expressly for use therein; provided, however, that the obligation to indemnify shall be several, not joint and several, among such Holders of Registrable Securities, and the liability of each such Holder of Registrable Securities shall be in proportion to and limited to the net proceeds received by such Holder from the sale of Registrable Securities pursuant to such Registration Statement. The Holders of Registrable Securities shall indemnify the Underwriters, their officers, directors and each person who controls such Underwriters (within the meaning of the Securities Act) to the same extent as provided in the foregoing with respect to indemnification of the Company.
13
4.1.3 Any person entitled to indemnification herein shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair any person’s right to indemnification hereunder to the extent such failure has not materially prejudiced the indemnifying party) and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent shall not be unreasonably withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. No indemnifying party shall, without the consent of the indemnified party, consent to the entry of any judgment or enter into any settlement which cannot be settled in all respects by the payment of money (and such money is so paid by the indemnifying party pursuant to the terms of such settlement) or which settlement does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation.
4.1.4 The indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling person of such indemnified party and shall survive the transfer of securities. The Company and each Holder of Registrable Securities participating in an offering also agrees to make such provisions as are reasonably requested by any indemnified party for contribution to such party in the event the Company’s or such Holder’s indemnification is unavailable for any reason.
4.1.5 If the indemnification provided under Section 4.1 hereof from the indemnifying party is unavailable or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities and expenses referred to herein, then the indemnifying party, in lieu of indemnifying the indemnified party, shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities and expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, was made by, or relates to information supplied by, such indemnifying party or indemnified party, and the indemnifying party’s and indemnified party’s relative intent, knowledge, access to information and opportunity to correct or prevent such action and the benefits received by such indemnifying party and indemnified party; provided, however, that the liability of any Holder under this subsection 4.1.5 shall be limited to the amount of the net proceeds received by such Holder in such offering giving rise to such liability. The amount paid or payable by a party as a result of the losses or other liabilities referred to above shall be deemed to include, subject to the limitations set forth in subsections 4.1.1, 4.1.2 and 4.1.3 above, any legal or other fees, charges or expenses reasonably incurred by such party in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this subsection 4.1.5 were determined by pro rata allocation or by any other method of allocation, which does not take account of the equitable considerations referred to in this subsection 4.1.5. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution pursuant to this subsection 4.1.5 from any person who was not guilty of such fraudulent misrepresentation.
14
Article V
MISCELLANEOUS
5.1 Notices. Any notice or communication under this Agreement must be in writing and given by (i) deposit in the United States mail, addressed to the party to be notified, postage prepaid and registered or certified with return receipt requested, (ii) delivery in person or by courier service providing evidence of delivery, or (iii) transmission by hand delivery, electronic mail, telecopy, telegram or facsimile. Each notice or communication that is mailed, delivered, or transmitted in the manner described above shall be deemed sufficiently given, served, sent, and received, in the case of mailed notices, on the third business day following the date on which it is mailed and, in the case of notices delivered by courier service, hand delivery, electronic mail, telecopy, telegram or facsimile, at such time as it is delivered to the addressee (with the delivery receipt or the affidavit of messenger) or at such time as delivery is refused by the addressee upon presentation. Any notice or communication under this Agreement must be addressed, if to the Company, to: 777 Yamato Road, Boca Raton, FL 33431, Attention: Chief Financial Officer, and, if to any Holder, at such Holder’s address or contact information as set forth in the Company’s books and records. Any party may change its address for notice at any time and from time to time by written notice to the other parties hereto, and such change of address shall become effective thirty (30) days after delivery of such notice as provided in this Section 5.1.
5.2 Assignment; No Third Party Beneficiaries.
5.2.1 This Agreement and the rights, duties and obligations of the Company hereunder may not be assigned or delegated by the Company in whole or in part.
5.2.2 Prior to the expiration of any Lock-Up Period, no Holder subject to such Lock-Up Period may assign or delegate such Holder’s rights, duties or obligations under this Agreement, in whole or in part, except in connection with a transfer of Registrable Securities by such Holder to a Permitted Transferee, but only if such Permitted Transferee agrees to become bound by the transfer restrictions set forth in this Agreement and other applicable agreements.
5.2.3 This Agreement and the provisions hereof shall be binding upon and shall inure to the benefit of each of the parties and its successors and the permitted assigns of the Holders, which shall include Permitted Transferees.
5.2.4 This Agreement shall not confer any rights or benefits on any persons that are not parties hereto, other than as expressly set forth in this Agreement and Section 5.2 hereof.
5.2.5 No assignment by any party hereto of such party’s rights, duties and obligations hereunder shall be binding upon or obligate the Company unless and until the Company shall have received (i) written notice of such assignment as provided in Section 5.1 hereof and (ii) the written agreement of the assignee, in a form reasonably satisfactory to the Company, to be bound by the terms and provisions of this Agreement (which may be accomplished by an addendum or certificate of joinder to this Agreement). Any transfer or assignment made other than as provided in this Section 5.2 shall be null and void.
5.3 Severability. This Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of this Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable term or provision, the parties hereto intend that there shall be added as a part of this Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible that is valid and enforceable.
5.4 Counterparts. This Agreement may be executed in multiple counterparts (including facsimile or PDF counterparts), each of which shall be deemed an original, and all of which together shall constitute the same instrument, but only one of which need be produced.
5.5 Entire Agreement. This Agreement (including all agreements entered into pursuant hereto and all certificates and instruments delivered pursuant hereto and thereto) constitute the entire agreement of the parties with respect to the subject matter hereof and supersede all prior and contemporaneous agreements, representations, understandings, negotiations and discussions between the parties, whether oral or written.
15
5.6 Governing Law; Venue. NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY ANY OF THE PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT (I) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF NEW YORK AS APPLIED TO AGREEMENTS AMONG NEW YORK RESIDENTS ENTERED INTO AND TO BE PERFORMED ENTIRELY WITHIN NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAW PROVISIONS OF SUCH JURISDICTION AND (II) THE VENUE FOR ANY ACTION TAKEN WITH RESPECT TO THIS AGREEMENT SHALL BE ANY STATE OR FEDERAL COURT IN NEW YORK COUNTY IN THE STATE OF NEW YORK.
5.7 Waiver of Trial by Jury. Each party hereby irrevocably and unconditionally waives the right to a trial by jury in any action, suit, counterclaim or other proceeding (whether based on contract, tort or otherwise) arising out of, connected with or relating to this Agreement, the transactions contemplated hereby, or the negotiation, administration, performance or enforcement hereof.
5.8 Amendments and Modifications. Upon the written consent of the Company and the Holders of at least a majority in interest of the Registrable Securities at the time in question, compliance with any of the provisions, covenants and conditions set forth in this Agreement may be waived, or any of such provisions, covenants or conditions may be amended or modified; provided, however, that notwithstanding the foregoing, any amendment hereto or waiver hereof that adversely affects one Holder, solely in his, her or its capacity as a holder of the shares of capital stock of the Company, in a manner that is materially different from the other Holders (in such capacity) shall require the consent of the Holder so affected. No course of dealing between any Holder or the Company and any other party hereto or any failure or delay on the part of a Holder or the Company in exercising any rights or remedies under this Agreement shall operate as a waiver of any rights or remedies of any Holder or the Company. No single or partial exercise of any rights or remedies under this Agreement by a party shall operate as a waiver or preclude the exercise of any other rights or remedies hereunder or thereunder by such party.
5.9 Titles and Headings. Titles and headings of sections of this Agreement are for convenience only and shall not affect the construction of any provision of this Agreement.
5.10 Remedies Cumulative. In the event that the Company fails to observe or perform any covenant or agreement to be observed or performed under this Agreement, the Holders may proceed to protect and enforce its rights by suit in equity or action at law, whether for specific performance of any term contained in this Agreement or for an injunction against the breach of any such term or in aid of the exercise of any power granted in this Agreement or to enforce any other legal or equitable right, or to take any one or more of such actions, without being required to post a bond. None of the rights, powers or remedies conferred under this Agreement shall be mutually exclusive, and each such right, power or remedy shall be cumulative and in addition to any other right, power or remedy, whether conferred by this Agreement or now or hereafter available at law, in equity, by statute or otherwise.
5.11 Termination of Existing Registration Rights. The registration rights granted under this Agreement shall supersede any registration, qualification or similar rights of the Holders with respect to any shares or securities of the Company or Legacy Airspan granted under any other agreement, including, but not limited to, the Prior Agreement and the Second Amended and Restated Investors Rights Agreement, dated as of December 14, 2020, by and among Legacy Airspan and the other parties thereto, and any of such preexisting registration, qualification or similar rights and such agreements shall be terminated and of no further force and effect.
5.12 Other Registration Rights. Except as provided in the Subscription Agreements, the Company represents and warrants that no person, other than a Holder of Registrable Securities, has any right to require the Company to register any securities of the Company for sale or to include such securities of the Company in any Registration filed by the Company for the sale of securities for its own account or for the account of any other person.
5.13 Term. This Agreement shall terminate upon the earlier of (i) the tenth anniversary of the date of this Agreement or (ii) the date as of which (A) all of the Registrable Securities have been sold pursuant to a Registration Statement (but in no event prior to the applicable period referred to in Section 4(a)(3) of the Securities Act and Rule 174 thereunder (or any successor rule promulgated thereafter by the Commission)) or (B) the Holders of all of the Registrable Securities are permitted to sell the Registrable Securities under Rule 144 (or any similar provision) under the Securities Act without limitation on the amount of securities sold or the manner of sale. The provisions of Section 3.5 and Article IV shall survive any termination.
[SIGNATURE PAGES FOLLOW]
16
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed as of the date first written above.
| COMPANY: | ||
| AIRSPAN NETWORKS HOLDINGS INC. | ||
| By: | /s/ Michael Liebowitz | |
| Name: | Michael S. Liebowitz | |
| Title: | Chief Executive Officer | |
| SPONSOR HOLDERS: | ||
| NEW BEGINNINGS SPONSOR, LLC | ||
| By: | /s/ Michael Liebowitz | |
| Name: | Michael S. Liebowitz | |
| Title: | Managing Member | |
| /s/ Benjamin Garrett | ||
| Benjamin Garrett | ||
| /s/ Frank A. Del Rio | ||
| Frank A. Del Rio | ||
| /s/ Kate Walsh | ||
| Kate Walsh | ||
| LEGACY AIRSPAN HOLDERS: | ||
| oak investment partners xi, limited partnership | ||
| By: Oak Associates XI, LLC, its General Partner | ||
| By: | /s/ Bandel L. Carano | |
| Name: | Bandel Carano | |
| Title: | Managing Member | |
17
| oak investment partners xIIi, limited partnership | ||
| By: Oak Associates XIII, LLC, its General Partner | ||
| By: | /s/ Bandel L. Carano | |
| Name: | Bandel Carano | |
| Title: | Managing Member | |
| softbank group capital limited | ||
| By: | /s/ Alex Clavel | |
| Name: | Alex Clavel | |
| Title: | Authorized Signatory | |
| qualcomm incorporated | ||
| By: | /s/ Adam Schwenker | |
| Name: | Adam Schwenker | |
| Title: | VP & Legal Counsel | |
| reliance jio infocomm usa inc. | ||
| By: | /s/ Joe Harness | |
| Name: | Joe Harness | |
| Title: | Vice President | |
18
Exhibit 10.2
THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT CERTAIN INFORMATION HAS BEEN OMITTED PURSUANT TO ITEM 601(a)(6) OF REGULATION S-K: [***]
STOCKHOLDERS AGREEMENT
BY AND AMONG
Airspan Networks Holdings Inc.
AND
THE STOCKHOLDERS PARTY HERETO
Dated as of August 13, 2021
CONTENTS
| Page | ||
| Article I. DEFINITIONS AND CONSTRUCTION | 1 | |
| Section 1.01 | Definitions | 1 |
| Section 1.02 | Rules of Construction | 3 |
| Article II. CORPORATE GOVERNANCE MATTERS | 3 | |
| Section 2.01 | Composition of the Board of Directors | 3 |
| Section 2.02 | Nomination Rights of NBA Sponsor | 4 |
| Section 2.03 | Director Independence | 4 |
| Section 2.04 | Voting Obligations | 4 |
| Section 2.05 | Vacancy | 4 |
| Section 2.06 | Chairperson of the Board | 5 |
| Section 2.07 | Classified Board | 5 |
| Section 2.08 | Indemnification and D&O Insurance | 5 |
| Section 2.09 | Reimbursement of Expenses | 5 |
| Section 2.10 | Restrictions on Other Agreements | 6 |
| Article III. REPRESENTATIONS AND WARRANTIES OF EACH STOCKHOLDER | 6 | |
| Section 3.01 | Organization; Authority | 6 |
| Section 3.02 | No Consent | 6 |
| Section 3.03 | No Conflicts; Litigation | 6 |
| Article IV. GENERAL PROVISIONS | 7 | |
| Section 4.01 | Termination | 7 |
| Section 4.02 | No Agreement as Director or Officer | 7 |
| Section 4.03 | Notices | 7 |
| Section 4.04 | Amendment; Waiver | 8 |
| Section 4.05 | Further Assurances | 8 |
| Section 4.06 | Parties in Interest | 9 |
| Section 4.07 | Governing Law | 9 |
| Section 4.08 | Waiver of Jury Trial | 9 |
| Section 4.09 | Specific Performance | 10 |
| Section 4.10 | Entire Agreement; Assignment | 10 |
| Section 4.11 | Severability | 10 |
| Section 4.12 | Counterparts | 10 |
| Section 4.13 | No Recourse | 11 |
STOCKHOLDERS AGREEMENT
This Stockholders Agreement (as the same may be amended, supplemented, amended and restated or otherwise modified from time to time in accordance with the terms hereof, this “Agreement”) is made and entered into effective as of August 13, 2021 by and among Airspan Networks Holdings Inc., a Delaware corporation (the “Company”), and each of the parties listed under “Stockholders” on the signature page hereto (collectively, the “Stockholders” and each, a “Stockholder”). The Company and the Stockholders are sometimes referred to herein collectively as the “Parties” and individually as a “Party.” Each capitalized term used but not defined herein will have the meaning ascribed to such term in Section 1.01.
RECITALS
WHEREAS, the Company and Airspan Networks Inc., a Delaware corporation (“Legacy Airspan”), are party to that certain Business Combination Agreement, dated as of March 8, 2021 (as it may be amended, supplemented, amended and restated or otherwise modified from time to time, the “Business Combination Agreement”), by and among the Company, Artemis Merger Sub Corp. (“Merger Sub”) and Legacy Airspan, pursuant to which, subject to the terms and conditions set forth therein, Merger Sub will merge with and into Legacy Airspan (the “Merger”), with Legacy Airspan surviving the Merger as a wholly-owned subsidiary of the Company;
WHEREAS, capitalized terms used but not otherwise defined in this Agreement shall have the meanings ascribed to them in the Business Combination Agreement; and
WHEREAS, pursuant to the Business Combination Agreement, the Parties are entering into this Agreement to set forth certain understandings between the Parties with respect to certain governance and other matters of the Company.
NOW, THEREFORE, in consideration of the representations, covenants and agreements contained herein, and certain other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:
Article
I.
DEFINITIONS AND CONSTRUCTION
Section 1.01 Definitions. In addition to the terms defined elsewhere herein, the following terms have the following meanings when used herein with initial capital letters:
“Affiliate” has the meaning set forth in Rule 12b-2 promulgated under the Exchange Act, as in effect on the date hereof.
“Agreement” has the meaning set forth in the Preamble hereto.
“Beneficially Own” has the meaning set forth in Rule 13d-3 promulgated under the Exchange Act.
“Board” means the board of directors of the Company.
1
“Business Combination Agreement” has the meaning set forth in the Recitals hereto.
“Bylaws” means the Amended and Restated Bylaws of the Company, as amended or amended and restated from time to time.
“Certificate of Incorporation” means the Second Amended and Restated Certificate of Incorporation of the Company, as amended, restated or amended and restated from time to time.
“Common Stock” means the Company’s common stock, with a par value of $0.0001 per share.
“Company” has the meaning set forth in the Preamble hereto.
“Director” means any member of the Board.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, as the same may be amended from time to time.
“Independent Director” has the meaning set forth in Section 2.03.
“Initial Board” has the meaning set forth in Section 2.01(a).
“Legacy Airspan” has the meaning set forth in the Recitals hereto.
“Merger” has the meaning set forth in the Recitals hereto.
“Merger Sub” has the meaning set forth in the Recitals hereto.
“NBA Director” has the meaning set forth in Section 2.02.
“NBA Sponsor” means New Beginnings Sponsor, LLC.
“Non-Recourse Party” has the meaning set forth in Section 4.13.
“NYSE” means the New York Stock Exchange.
“Parties” or “Party” has the meaning set forth in the Preamble hereto.
“person” has the meaning set forth in the Business Combination Agreement.
“Stockholder” or “Stockholders” has the meaning set forth in the Preamble hereto.
2
Section 1.02 Rules of Construction. The language used in this Agreement shall be deemed to be the language chosen by the Parties to express their mutual intent and no rule of strict construction shall be applied against any Party. No summary of this Agreement prepared by a Party shall affect the meaning or interpretation of this Agreement. For all purposes of this Agreement, except as otherwise provided in this Agreement or unless the context otherwise requires:
(a) the meanings of defined terms are applicable to the singular as well as the plural forms of such terms;
(b) the words “hereof”, “herein”, “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;
(c) references in this Agreement to any Law shall be deemed also to refer to such Law, and all rules and regulations promulgated thereunder;
(d) whenever the words “include”, “includes” or “including” are used in this Agreement, they shall mean “without limitation”;
(e) the captions and headings of this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement;
(f) pronouns of any gender or neuter shall include, as appropriate, the other pronoun forms;
(g) all references to “or” shall be construed in the inclusive sense of “and/or”;
(h) the terms “Article” and “Section” refer to the specified Article or Section of this Agreement;
(i) the word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other things extends, and such phrase shall not mean simply “if”; and
(j) the word “will” shall be construed to have the same meaning and effect as the word “shall.”
Article
II.
CORPORATE GOVERNANCE MATTERS
Section 2.01 Composition of the Board of Directors. The Company represents and warrants that immediately prior to the execution and delivery hereof:
(a) The Board consists of eight (8) Directors (the “Initial Board”);
(b) The Initial Board consists of the following individuals, each of whom shall serve as a Director until his successor is duly elected and qualified in accordance with this Agreement, the Certificate of Incorporation and the Bylaws, subject to such individual’s earlier death, resignation or removal:
(i) Bandel L. Carano;
(ii) Michael T. Flynn;
(iii) Thomas S. Huseby;
3
(iv) Scot B. Jarvis;
(v) Michael Liebowitz;
(vi) Mathew Oommen;
(vii) Eric D. Stonestrom; and
(viii) Dominique Trempont.
Section 2.02 Nomination Rights of NBA Sponsor. Notwithstanding anything to the contrary contained herein, the Parties agree that, from and after the Closing and until such time as NBA Sponsor Beneficially Owns less than 1,535,000 shares of Common Stock, NBA Sponsor shall have the right to nominate one (1) Director to the Board (the “NBA Director”), including after all of the members of the Initial Board cease to serve as Directors. For the avoidance of doubt and subject to the rules of the NYSE, NBA Sponsor’s right to nominate one (1) Director to the Board under this Section 2.02 shall not be transferable. NBA Sponsor shall use its commercially reasonable efforts to cause the Sponsor Designee to comply with any qualification requirements for Directors set forth in the Certificate of Incorporation or Bylaws, and all policies, procedures, processes, codes, rules, standards and guidelines of the Company applicable to Directors; provided, however, that the Company understands and agrees that the Sponsor Designee may disclose information he or she obtains while serving as a member of the Board to NBA Sponsor and NBA Sponsor agrees to maintain the confidentiality of such information. The NBA Director shall initially be Michael Liebowitz.
Section 2.03 Director Independence. The Company shall ensure that the composition of the Board will continue to meet all requirements for a company listed on the NYSE (or such other stock exchange on which the Common Stock may be listed), including with respect to director independence pursuant to which a majority of the Directors shall meet the independence requirements under the listing rules of the NYSE (or such other stock exchange on which the Common Stock may be listed) (each such Director, an “Independent Director”). If the NBA Director is an Independent Director, then it is intended that the NBA Director shall be appointed to, and serve on, the nominating and corporate governance committee of the Board (or, if there is no nominating and corporate governance committee of the Board, such other committee of the Board that is primarily responsible for nominating and corporate governance matters).
Section 2.04 Voting Obligations. Each Stockholder entitled to vote for the election of Directors hereby agrees to vote all shares of Common Stock held by such Stockholder in favor of electing the NBA Director to the Board in accordance with Section 2.02, and to take all other necessary action in order to ensure that the composition of the Board is as set forth in Sections 2.01 and 2.02. For the avoidance of doubt, this Agreement, including this Section 2.04, shall not restrict any Stockholder from transferring any of its Common Stock as otherwise permitted by applicable law.
Section 2.05 Vacancy. In the event that a vacancy on the Board is created at any time by the death, resignation, disqualification or removal of a member of the Initial Board prior to the due election and qualification of such member’s successor, such vacancy shall be filled pursuant to this Agreement, the Certificate of Incorporation and the Bylaws.
4
Section 2.06 Chairperson of the Board. Thomas S. Huseby shall serve as Chairperson of the Board for so long as he is a Director; provided that, in the event Thomas S. Huseby is no longer a Director, Eric D. Stonestrom shall serve as Chairperson of the Board for so long as he is a Director; provided further that, in the event each of Thomas S. Huseby and Eric D. Stonestrom is no longer a Director, the successor Chairperson of the Board shall be elected as provided in the Bylaws.
Section 2.07 Classified Board. The Company represents and warrants that immediately prior to the execution and delivery hereof the Board is divided into three classes, with the Directors serving staggered three-year terms as follows:
(a) Class I Directors, whose initial terms expire at the first annual meeting of the stockholders of the Company following the Effective Time and include Mathew Oommen and Eric D. Stonestrom;
(b) Class II Directors, whose initial terms expire at the second annual meeting of the stockholders of the Company following the Effective Time and include Bandel L. Carano, Michael T. Flynn and Scot B. Jarvis; and
(c) Class III Directors, whose initial terms expire at the third annual meeting of the stockholders of the Company following the Effective Time and include Thomas S. Huseby, Michael Liebowitz and Dominique Trempont.
Section 2.08 Indemnification and D&O Insurance. As promptly as reasonably practicable following the Closing, the Company shall enter into an indemnification agreement with each Director, each on substantially the same terms entered into with, and based on the same customary and reasonable form provided to, the other Directors. To the fullest extent permitted by applicable Law, the Company shall not amend, alter or repeal any right to indemnification, advancement of expenses or exculpation benefiting any Director nominated pursuant to this Agreement, as and to the extent consistent with applicable Law, contained in the Certificate of Incorporation or Bylaws (except to the extent such amendment or alteration permits the Company to provide broader rights to indemnification, advancement of expenses or exculpation). The Company shall (a) purchase directors’ and officers’ liability insurance in an amount determined by the Board to be reasonable and customary and (b) for so long as a Director nominated pursuant to this Article II serves as a Director of the Company, maintain such coverage with respect to such Director and shall take all actions necessary to extend such coverage for a period of not less than six years from any removal or resignation of such Director, in respect of any act or omission occurring at or prior to such event.
Section 2.09 Reimbursement of Expenses. The Company shall reimburse the Directors for all reasonable and documented out-of-pocket expenses incurred in connection with their attendance at meetings of the Board and any committees thereof, including travel, lodging and meal expenses.
5
Section 2.10 Restrictions on Other Agreements. No Stockholder shall grant any proxy and no Party shall enter into or agree to be bound by any voting trust, agreement or arrangement of any kind with any person if and to the extent the terms thereof conflict with the provisions of this Agreement.
Article
III.
REPRESENTATIONS AND WARRANTIES OF EACH STOCKHOLDER
Each Stockholder on its own behalf hereby represents and warrants to the Company and the other Stockholders, severally and not jointly, with respect to such Stockholder as of the date of this Agreement, as follows:
Section 3.01 Organization; Authority.
(a) If a Stockholder is a legal entity, (i) such Stockholder (1) is duly incorporated or formed, duly organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization and (2) has all requisite corporate or other entity power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby and (ii) the execution and delivery by such Stockholder of this Agreement, the performance and compliance by such Stockholder with each of its obligations herein and the consummation by such Stockholder of the transactions contemplated hereby have been duly authorized by all necessary corporate or other entity action on the part of such Stockholder.
(b) If a Stockholder is an individual, such Stockholder has the legal capacity to enter into this Agreement and perform his obligations hereunder.
(c) This Agreement constitutes a valid and binding obligation of such Stockholder enforceable in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting creditors’ rights generally and by general principles of equity (regardless of whether considered in a proceeding in equity or at Law).
Section 3.02 No Consent. Except as provided in this Agreement, no consent, approval or authorization of, or designation, declaration or filing with, any Governmental Authority or other person on the part of such Stockholder is required in connection with the execution, delivery and performance of this Agreement, except where the failure to obtain such consents, approvals, authorizations or to make such designations, declarations or filings would not materially interfere with a such Stockholder’s ability to perform his or its obligations under to this Agreement. If such Stockholder is an individual, no consent of such Stockholder’s spouse is necessary under any “community property” or other Laws for the execution and delivery of this Agreement or the performance of such Stockholder’s obligations hereunder.
Section 3.03 No Conflicts; Litigation. Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, nor compliance with the terms hereof, will, (a) if such Stockholder is a legal entity, conflict with or violate any provision of the organizational documents of such Stockholder or (b) violate, conflict with or result in a breach of, or constitute a default (with or without notice or lapse of time or both) under any provision of, any trust agreement, loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, instrument, permit, concession, franchise, license, judgment, order, notice, decree, statute, law, ordinance, rule or regulation applicable to such Stockholder or to such Stockholder’s property or assets, except, in the case of this clause (b), that would not reasonably be expected to impair, individually or in the aggregate, such Stockholder’s ability to fulfill its obligations under this Agreement. As of the date of this Agreement, there is no Action pending or, to the knowledge of such Stockholder, threatened, against such Stockholder or any of such Stockholder’s Affiliates or any of their respective assets or properties that would materially interfere with such Stockholder’s ability to perform his or its obligations under this Agreement or that would reasonably be expected to prevent, enjoin, alter or delay any of the transactions contemplated by this Agreement.
6
Article
IV.
GENERAL PROVISIONS
Section 4.01 Termination. Notwithstanding anything to the contrary contained herein, but subject to the early termination of any provision as a result of an amendment to this Agreement agreed to by the Parties as provided under Section 4.04, this Agreement (other than Article I, the last sentence of Section 2.08 (which, for the avoidance of doubt, shall terminate as provided therein) and this Article IV) shall terminate at such time as NBA Sponsor Beneficially Owns less than 1,535,000 shares of Common Stock and, with respect to any other Stockholder, this Agreement shall terminate (solely with respect to such Stockholder and not with respect to any other Parties) at such time as such Stockholder no longer holds any shares of Common Stock.
Section 4.02 No Agreement as Director or Officer. Each Stockholder is signing this Agreement solely in his or its capacity as a stockholder of the Company. No Stockholder makes any agreement or understanding in this Agreement in such Stockholder’s capacity (or in the capacity of any Affiliate, partner or employee of such Stockholder) as a Director or officer of the Company. Nothing in this Agreement will limit or affect any actions or omissions taken by a Stockholder (or any Affiliate, partner or employee of such Stockholder) in his capacity as a Director or officer of the Company, and no actions or omissions taken in such Stockholder’s capacity (or in the capacity of any Affiliate, partner or employee of such Stockholder) as such shall be deemed a breach of this Agreement. Nothing in this Agreement will be construed to prohibit, limit or restrict a Stockholder (or any Affiliate, partner or employee of such Stockholder) from exercising his fiduciary duties as a Director or officer of the Company to the Company or its stockholders.
Section 4.03 Notices. All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by email or by registered or certified mail (postage prepaid, return receipt requested) to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 4.03):
If to the Company, to:
Airspan Networks Inc.
777 Yamato Road
Boca Raton, FL 33431
Attn: David Brant, Chief Financial Officer
Email: dbrant@airspan.com
with copies (which shall not constitute notice) to:
Dorsey & Whitney LLP
51 West 52nd Street
New York, NY 10019
Attention: Ted Farris; Brian R. Rosenau
Email: farris.ted@dorsey.com; rosenau.brian@dorsey.com
If to a Stockholder, to such address set forth on the Stockholder’s signature page or to such other address or addresses as such Stockholder may from time to time designate by written notice to the other Parties, which change of address shall become effective thirty (30) days after delivery of such notice as provided in this Section 4.03.
7
Section 4.04 Amendment; Waiver.
(a) The terms and provisions of this Agreement may be modified or amended only with the written approval of the Company and the Stockholders holding a majority of the shares of Common Stock held by the Stockholders in the aggregate; provided, however, that any modification or amendment to (i) Section 2.02 or (ii) any other provision that adversely affects NBA Sponsor or the NBA Director, shall also require the approval of NBA Sponsor.
(b) Except as expressly set forth in this Agreement, neither the failure nor delay on the part of any Party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence.
(c) No Party shall be deemed to have waived any claim arising out of this Agreement, or any right, remedy, power or privilege under this Agreement, unless the waiver of such claim, right, remedy, power or privilege is expressly set forth in a written instrument duly executed and delivered on behalf of such Party, and any such waiver shall not be applicable or have any effect except in the specific instance in which it is given.
(d) Any Party may unilaterally waive any of its rights hereunder in a signed writing delivered to the Company.
Section 4.05 Further Assurances. To the fullest extent permitted by Law, the Stockholders agree to sign such further documents, cause such meetings to be held, resolutions passed and do and perform and cause to be done such further acts and things reasonably necessary in order to give full effect to this Agreement and every provision hereof. To the fullest extent permitted by Law, the Company shall not directly or indirectly take any action that is intended to, or would reasonably be expected to result in, the Stockholders being deprived of the rights contemplated by this Agreement.
8
Section 4.06 Parties in Interest. This Agreement shall be binding upon and inure solely to the benefit of each Party, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement, other than Section 4.13.
Section 4.07 Governing Law. This Agreement shall be governed by, and construed in accordance with, the Laws of the State of Delaware applicable to contracts executed in and to be performed in that State, without regard to conflict of laws principles. All Actions arising out of or relating to this Agreement or the transactions contemplated hereby shall be heard and determined exclusively in the Court of Chancery of the State of Delaware; provided, that if jurisdiction is not then available in the Court of Chancery of the State of Delaware, then any such legal Action may be brought in any federal court located in the State of Delaware or any other Delaware state court. The Parties hereby (a) irrevocably submit to the exclusive jurisdiction of the aforesaid courts for themselves and with respect to their respective properties for the purpose of any Action arising out of or relating to this Agreement or the transactions contemplated hereby brought by any Party, and (b) agree not to commence any Action relating thereto except in the courts described above in Delaware, other than Actions in any court of competent jurisdiction to enforce any judgment, decree or award rendered by any such court in Delaware as described herein. Each of the Parties further agrees, to the fullest extent permitted by applicable Law, that notice as provided in this Agreement shall constitute sufficient service of process and the Parties further waive any argument that such service is insufficient. Each of the Parties hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any Action arising out of or relating to this Agreement or the transactions contemplated hereby, (a) any claim that it is not personally subject to the jurisdiction of the courts in Delaware as described herein for any reason, (b) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) that (i) the Action in any such court is brought in an inconvenient forum, (ii) the venue of such Action is improper or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.
Section 4.08 Waiver of Jury Trial. Each of the Parties hereby waives, to the fullest extent permitted by applicable Law, any right it may have to a trial by jury with respect to any Action arising out of or relating to this Agreement or the transactions contemplated hereby. Each of the Parties (a) certifies that no Representative, agent or attorney of any other Party has represented, expressly or otherwise, that such other Party would not, in the event of any Action, seek to enforce that foregoing waiver and (b) acknowledges that it and the other Party have been induced to enter into this Agreement and the transactions contemplated hereby, as applicable, by, among other things, the mutual waivers and certifications in this Agreement.
9
Section 4.09 Specific Performance. The Parties acknowledge and agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof. Each Stockholder agrees with the Company (and only with the Company) that, in the event of any breach or threatened breach by any other Party of any covenant or obligation contained in this Agreement, the Company shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof in the Court of Chancery of the State of Delaware or, if that court does not have jurisdiction, any federal court located in the State of Delaware or any other Delaware state court without proof of actual damages or otherwise, in addition to any other remedy to which they are entitled at law or in equity as expressly permitted in this Agreement. The Parties agree that, in the event of any breach or threatened breach by any Party of Section 2.02 or Section 2.03 of this Agreement, NBA Sponsor or the Company, as the case may be, shall be entitled to seek an injunction or injunctions to prevent such breach or to enforce specifically the performance of the terms and provisions of Section 2.02 or Section 2.03 of this Agreement in the Court of Chancery of the State of Delaware or, if that court does not have jurisdiction, any federal court located in the State of Delaware or any other Delaware state court without proof of actual damages or otherwise, in addition to any other remedy to which such Party is entitled at law or in equity as expressly permitted in this Agreement. Each Stockholder hereby further agrees with the Company (and only with the Company) to waive (a) any defense in any action for specific performance that a remedy at law would be adequate and (b) any requirement under any Law to post security or a bond as a prerequisite to obtaining equitable relief.
Section 4.10 Entire Agreement; Assignment. This Agreement sets forth the entire understanding of the Parties with respect to the subject matter hereof and supersede all prior agreements and undertakings, both written and oral, among the Parties, or any of them, with respect to the subject matter hereof. This Agreement shall not be assigned (whether pursuant to a merger, by operation of Law or otherwise) by any Party without the prior express written consent of the other Parties.
Section 4.11 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.
Section 4.12 Counterparts. This Agreement may be executed and delivered (including by facsimile or portable document format (pdf) transmission) in one or more counterparts, and by the different Parties in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.
10
Section 4.13 No Recourse. This Agreement may only be enforced against, and any claim or cause of action that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement, the transactions contemplated hereby or the subject matter hereof may only be made against the Parties and no past, present or future Affiliate, director, officer, employee, incorporator, member, manager, partner, shareholder, agent, attorney or representative of any Party or any past, present or future Affiliate, director, officer, employee, incorporator, member, manager, partner, stockholder, agent, attorney or representative of any of the foregoing (each, a “Non-Recourse Party”) shall have any liability for any obligations or liabilities of the Parties or for any claim based on, in respect of, or by reason of, the transactions contemplated hereby. Without limiting the rights of any Party against the other Parties, in no event shall any Party or any of its Affiliates seek to enforce this Agreement against, make any claims for breach of this Agreement against, or seek to recover monetary damages from, any Non–Recourse Party.
[Signature Pages Follow.]
11
IN WITNESS WHEREOF, the Parties have executed this Agreement on the day and year first above written.
| COMPANY: | ||
| NEW BEGINNINGS ACQUISITION CORP. | ||
| By: | /s/ Michael Liebowitz | |
| Name: | Michael S. Liebowitz | |
| Title: | Chief Executive Officer | |
| STOCKHOLDERS: | ||
| NEW BEGINNINGS SPONSOR, LLC | ||
| By: | /s/ Michael Liebowitz | |
| Name: | Michael S. Liebowitz | |
| Title: | Managing Member | |
| ADDRESS: | ||
| [***] | ||
| Oak Investment Partners XI, LIMITED PARTNERSHIP | ||
| By: | Oak Associates XI, LLC, its General Partner | |
| By: | /s/ Bandel L. Carano | |
| Name: | Bandel Carano | |
| Title: | Managing Member | |
| ADDRESS: | ||
| [***] | ||
| Attention: Grace Ames and Bandel Carano | ||
[Signature Page to Stockholders Agreement]
| Oak Investment Partners XIII, LIMITED PARTNERSHIP | ||
| By: | Oak Associates XIII, LLC, its General Partner | |
| By: | /s/ Bandel L. Carano | |
| Name: | Bandel Carano | |
| Title: | Managing Member | |
| ADDRESS: | ||
| [***] | ||
| Attention: Grace Ames and Bandel Carano | ||
| Softbank Group Capital Limited | ||
| By: | /s/ Alex Clavel | |
| Name: | Alex Clavel | |
| Title: | Authorized Signatory | |
| ADDRESS: | ||
| [***] | ||
| Attention: Stephen Lam | ||
| Email: [***] | ||
| Qualcomm Incorporated | ||
| By: | /s/ Adam Schwenker | |
| Name: | Adam Schwenker | |
| Title: | VP & Legal Counsel | |
| ADDRESS: | ||
| [***] | ||
| Attention: Ventures Legal Counsel | ||
[Signature Page to Stockholders Agreement]
Exhibit 10.3
Execution Version
THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT CERTAIN INFORMATION HAS BEEN OMITTED PURSUANT TO ITEM 601(a)(6) OF REGULATION S-K: [***]
WAIVER AND CONSENT, SECOND AMENDMENT, RESTATEMENT, JOINDER AND OMNIBUS AMENDMENT TO CREDIT AGREEMENT AND OTHER LOAN DOCUMENTS
This CONSENT AND SECOND AMENDMENT, RESTATEMENT, AND JOINDER AND OMNIBUS AMENDMENT TO CREDIT AGREEMENT AND OTHER LOAN DOCUMENTS (this “Agreement”) is dated as of August 13, 2021 and entered into by AIRSPAN NETWORKS, INC., a Delaware corporation, as borrower (“ANI” or the “Borrower”), NEW BEGINNINGS ACQUISITION CORP., a Delaware corporation (to be renamed Airspan Networks Holdings Inc. after the consummation of the Merger), as joining Guarantor and as holdings (“Holdings” and “Joining Guarantor”) and together with each undersigned Subsidiary of the Borrower party to the Credit Agreement (as defined below) as a Guarantor (collectively, as the “Guarantors” and each a “Guarantor” and together with the Borrower, collectively referred to herein as the “Loan Parties” and each as a “Loan Party”), the Lenders party hereto and DBFIP ANI LLC (“Fortress”), as Administrative Agent and Collateral Agent (Fortress, together with its successors and assigns in such capacities, the “Agent”), and acknowledged, agreed, and consented to by the Note Agent and the Purchasers on the signature pages hereto.
WHEREAS, the Borrower and certain of its Subsidiaries are parties to (x) that certain Credit Agreement dated as of December 30, 2020 (as amended by that Limited Consent dated as of March 8, 2021 (the “Limited Consent” and the First Amendment to Credit Agreement dated as of June 14, 2021) and as the same has been or may be further amended, amended and restated, restated, supplemented or otherwise modified from time to time including by this Agreement, the “Credit Agreement”), with the Lenders and the Agent and (y) certain other Loan Documents pursuant to which the existing Loan Parties have provided guarantees and collateral security in respect of the Obligations;
WHEREAS, the Agent and the Lenders consented to the execution of that certain Business Combination Agreement, dated as of March 8, 2021 (including all schedules and exhibits thereto, the “Acquisition Agreement”), by and among inter alios, the Borrower, as company, Holdings, as parent and Artemis Merger Sub Corp., a Delaware corporation, as merger sub (the “Merger Sub”) and the consummation of the De-SPAC Transactions (as defined in the Limited Consent) on the terms and conditions set forth in the Limited Consent, including that Holdings would become a party to the Credit Agreement as a Loan Party and asset security provider substantially concurrently with the consummation of the Merger (as defined in the Limited Consent, the “Merger”));
WHEREAS, on July 30, 2021, New Beginnings Acquisition Corp. entered into that certain Senior Secured Convertible Note Purchase and Guarantee Agreement (the “NPA”) by, among others, Holdings, as issuer, Merger Sub, as guarantor, the purchasers party thereto (the “Purchasers”), and Fortress, as collateral agent on behalf of the secured parties thereunder (in such capacity, the “Note Agent”), and, immediately prior to the consummation of the De-SPAC Transactions, Holdings will issue up to $66,000,000 of 7% Senior Secured Convertible Notes to such purchasers under the terms of the NPA;
WHEREAS, immediately upon the consummation of the De-SPAC Transactions, (i) Merger Sub will merge with and into the Borrower, with the Borrower as the surviving entity, whereby the Borrower will become party to the NPA as a guarantor thereunder, and (ii) the undersigned Subsidiaries of the Borrower party to the Credit Agreement will join the NPA as guarantors thereunder;
WHEREAS, the undersigned parties are entering into this Agreement to, among other things, effectuate the joinder of Holdings to the Credit Agreement and certain other Loan Documents as a Guarantor, and to amend and restate the Existing Credit Agreement to make certain changes to the Credit Agreement and other Loan Documents to effectuate post-merger structure, including having Holdings as the parent of the Borrower and reflecting the existence of the NPA and the other Note Documents and designating the NPA and the other Note Documents as Transaction Documents and the obligations under the Note Documents as Obligations under the Credit Agreement and related Loan Documents and consenting to the Indebtedness and Liens evidenced by the Note Documents and other matters relating to the Note Documents;
WHEREAS, it is the intent of the parties hereto that this Agreement does not constitute a novation of rights, obligations and liabilities of the respective parties (including the Obligations) existing under the existing Credit Agreement or evidence payment of all or any of such obligations and liabilities under any of the Loan Documents and such rights, obligations and liabilities shall continue and remain outstanding;
NOW, THEREFORE, in consideration of the premises set forth above and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned parties agree as follows:
1. Defined Terms. Except as otherwise defined in this Agreement, capitalized terms used in this Agreement have the meanings ascribed to such terms in the Credit Agreement. This Agreement shall constitute a Loan Document for all purposes of the Credit Agreement and the other Loan Documents.
2. Consent regarding Merger. Upon the satisfaction of the terms and conditions set forth in Section 6.1(i) and Section 6.1(viii), effective on the date hereof, the Limited Consent shall be amended to restate the penultimate sentence of the first paragraph thereof to read in its entirety as follows:
The Merger Transactions will be financed with (a) cash in trust of NB and (b) cash proceeds of the issuance of Senior Secured Convertible Notes pursuant to the terms of the NPA and a private investment in public equity transaction (the “Private Placement”) which issuances will occur substantially contemporaneously with the consummation of the Merger (and, for the avoidance of doubt, not later than the close of business on the Merger Closing Date) (the “Equity Contribution” and together with the closing of the Proposed Amendment, the Private Placement and the Merger Transactions, the “De-SPAC Transactions”).
3. Waiver and Consent. Upon the satisfaction of the conditions set forth herein under Section 6.1(i) and Section 6.1(viii), effective on the date hereof, each of the Agent and the Lenders hereby consent to and waive the Specified Defaults. “Specified Defaults” shall mean the potential and/or prospective Defaults and Events of Default (as defined in each of the Credit Agreement and the NPA) identified in the letter described in Section 6.1(viii) of this Amendment (“Borrower Letter”). The waiver and consent set forth in the sentence immediately preceding shall be limited precisely as written and shall relate solely to the Specified Defaults in the manner they exist on the date hereof as described in the Borrower Letter and not to any other change in facts or circumstances occurring after the date hereof, or to any other Defaults or Events of Default now existing or occurring after the date hereof, and shall not in any way or manner restrict the Agent or any Lender from exercising any rights or remedies they may have with respect to any other Default or Event of Default (including, for the avoidance of doubt, any Default or Event of Default existing as of the date hereof which is not a Specified Default) at any time in respect of the Agreement or any other Loan Document. Except as expressly stated, nothing herein shall be deemed to constitute a consent to any other departure from or a waiver of any other term, provision or condition of the Agreement or any other Loan Document or prejudice any right or remedy that the Agent or any Lender may have or may in the future have.
| 2 |
4. Amended and Restated Credit Agreement. Upon the satisfaction of the terms and conditions set forth in Section 6, effective substantially contemporaneous with the Merger, the existing Credit Agreement (including the annexes, schedules and exhibits thereto) shall be amended and restated in its entirety and replaced with the Amended and Restated Credit Agreement attached as Annex A attached hereto. References to the exhibits and schedules of the Credit Agreement in any of the Loan Documents shall be deemed to be and include references to such exhibits and schedules of the Credit Agreement as set forth or amended, restated or otherwise supplemented by Annex A.
5. Amended and Restated Security Agreement. Upon the satisfaction of the terms and conditions set forth in Section 6, effective substantially simultaneous with the Merger, the Security Agreement (including the schedules thereto) shall be amended and restated and replaced with the Amended and Restated Security Agreement attached as Annex B. References to the schedules in any of the Loan Documents shall be deemed to be and include references to such schedules as set forth in or amended, restated or otherwise supplemented by Annex B.
6. Effectiveness. The waivers and consents under Section 2 and Section 3 shall be effective, as of the date hereof, upon the satisfaction of the conditions set forth in Section 6.1(i) and Section 6.1(viii). The joinder of Holdings as a Guarantor and (i) the amendment and restatement of the Credit Agreement set forth in Section 3 hereof and (ii) the amendment and restatement of the Security Agreement set forth in Section 3, shall become effective, as of the date hereof, upon the Lenders’ and the Agent’s satisfaction with each of the following conditions precedent (the “Restatement Effective Date”):
6.1 Agent (or its counsel) shall have each received the following, each in form and substance satisfactory to the Agent and the Lenders:
(i) the counterparts to this Agreement duly executed by the Borrower, each Guarantor, each Lender and the Agent,
(ii) the conditions precedent set forth in Exhibit B to the Limited Consent;
(iii) if requested by the Agent in its sole discretion, counterparts to a Trademark Security Agreement duly executed by the Borrower and the Agent;
(iv) if requested by the Agent in its sole discretion, counterparts to a Patent Security Agreement duly executed by the Borrower and the Agent;
(v) a Board Observation Rights Letter to be delivered by Holdings and the Borrower to the Administrative Agent substantially in the form attached as Exhibit M to Annex A hereto;
(vi) a duly executed Perfection Certificate;
(vii) (A) an amendment and restatement of the Intercompany Subordination Agreement and (B) a supplement to the Softbank Subordination Agreement, each duly executed by Holdings;
(viii) A letter from the Borrower dated as of the date hereof addressed to the Agent and the Lenders as to the matters agreed between the Borrower, the Agent and the Lenders.
(ix) The duly executed NPA;
(x) The duly executed Pari Passu Intercreditor Agreement;
| 3 |
(xi) Evidence that the De-SPAC Transaction shall be consummated immediately following or substantially concurrently with the Closing on the Closing Date (each as defined in the Acquisition Agreement) and in accordance with the terms of the Acquisition Agreement without any amendment, modification or waiver of the Acquisition Agreement that materially and adversely affects Holdings or the Borrower or the Secured Parties unless the Secured Parties shall have consented thereto in writing. For the avoidance of doubt Holdings shall not amend the definition of “Material Adverse Effect” (as defined in the Acquisition Agreement) or waive non-compliance with any condition to the consummation of the De-SPAC Transaction without the prior written consent of the Secured Parties;
(xii) Agent shall have received (a) from each Loan Party an Officer’s Certificate dated as of the Restatement Effective Date and certifying that attached thereto are (i) true, correct and complete copies of the charter and by-laws or operating (or limited liability company) agreement of such Loan Party as in effect on the Restatement Effective Date, or a certification that there has been no change to the same since delivered to the Agent on the Closing Date, (ii) true, correct and complete copies of the certificate or articles of incorporation or organization, including all amendments thereto, of each Loan Party, certified, if applicable, as of a recent date by the Secretary of State of the state of its organization (or equivalent), or a certification that there has been no change to the same since delivered to the Agent on the Closing Date, (iii) where applicable, a certificate as to the good standing of each Loan Party as of a recent date, from such Secretary of State or similar Governmental Authority from such Loan Party’s jurisdiction of organization, (iv) the names of the authorized officers authorized to sign the Loan Documents and their true signatures and (v) that attached thereto is a true, correct and complete copy of resolutions duly adopted by the board of directors (or equivalent governing body) of such Loan Party authorizing the execution, delivery and performance of this Agreement, the amended and restated Credit Agreement, the Loan Documents and the transactions contemplated hereby and thereby and that such resolutions have not been modified, rescinded or amended and are in full force and effect, or a certification that there has been no change since the authorizing resolutions delivered to the Agent on the Closing Date and that such resolutions authorize the execution, delivery and performance of this Agreement, the amended and restated Credit Agreement, the Loan Documents and the transactions contemplated hereby and thereby, (b) a solvency certificate of Holdings, the Borrower and each Domestic Guarantor and (c) a closing certificate of the Borrower in form and substance reasonably satisfactory to the Agent certifying (i) as to the matters set forth in Section 7 of this Agreement and (ii) that all conditions precedent to the Restatement Effective Date have been satisfied;
(xiii) The Agent and Lenders shall have received a written opinion in form and substance reasonably satisfactory to the Agent and customary for transactions similar to this transaction (addressed to the Agent and the Lenders dated the Restatement Effective Date) from counsel for the Loan Parties (and each Loan Party on its own behalf and an behalf of each Loan Party hereby instructs such counsel to deliver such opinions to Agent and the Lenders);
(xiv) Results of proper and customary Lien, bankruptcy, judgment, copyright, patent and trademark searches with respect to Holdings in the applicable jurisdictions in reasonably acceptable scope and with acceptable results to the Agent.
6.2 Representations and Warranties. The representations and warranties in Section 7 of this Agreement and in the Loan Documents shall be true and correct in all material respects (or if qualified by “materiality,” “material adverse effect” or similar language, in all respects (after giving effect to such qualification and the waiver contained in Section 2 and Section 3 to this Agreement and the amendments to the Credit Agreement and other Loan Documents contained herein and in the amended and restated Credit Agreement attached as Annex A hereto)) on the Restatement Effective Date (or to the extent that such representations and warranties specifically refer to an earlier date, such representations and warranties shall have been true and correct in all material respects as of such earlier date).
| 4 |
6.3 No Default. After giving effect to this Agreement and the waivers and consents contained in Section 2 and Section 3 to this Agreement, no Default or Event of Default has occurred and is continuing or would result from the execution, delivery or performance of this Agreement.
6.4 Fees. The Agent and each Lender shall have received evidence in form in substance reasonably satisfactory to the Agent that substantially contemporaneously with the effectiveness of this Agreement that all fees and expenses of the Administrative Agent and the other Secured Parties required to be paid or reimbursed by the Borrower on the Restatement Effective Date including, without limitation, all fees and expenses of Reed Smith LLP and any local counsel to the Agent and the Lenders required to be paid or reimbursed under Section 13.02 of the Credit Agreement for which invoices have been presented prior to the Restatement Effective Date, shall in each case have been paid or reimbursed to the appropriate parties.
Each Lender, by delivering its signature page to this Agreement on the Restatement Effective Date, shall be deemed to have consented to, approved or accepted or to be satisfied with, the Credit Agreement and the Loan Documents as amended hereby and each other document required hereunder or thereunder to be consented to, approved by or acceptable or satisfactory to a Lender, unless the Agent shall have received notice from such Lender prior to the Restatement Effective Date specifying its objection thereto.
7. Representations and Warranties; Ratification of Obligations; Reaffirmation of Guaranty and Loan Documents. The Loan Parties represent and warrant that, after giving effect to the waivers, consents, amendments, supplements and modifications contained herein and in the amended and restated Credit Agreement (collectively, the “Supplements”) (a) (i) each of the representations and warranties set forth in Article V of the Credit Agreement are true and correct in all material respects on and as of the Restatement Effective Date, except to the extent that such representations and warranties expressly relate to an earlier date, in which case such representations and warranties remain true and correct in all material respects as of such earlier date and, in the case of any of the foregoing, other than representations that are qualified by materiality, which are true and correct in all respects; (ii) no Default or Event of Default has occurred and is continuing; and (iii) no event, change or condition has occurred since the Closing Date that has had or could reasonably be expected to have, a Material Adverse Effect and (b) each Loan Party (i) confirms its Obligations (including any guarantee obligation) under each Loan Document, in each case as amended, restated, supplemented or modified after giving effect to this Agreement and the Supplements, (ii) confirms that its Obligations as amended, restated, supplemented or modified hereby under the Credit Agreement and the Loan Documents are entitled to the benefits of the pledges and guarantees, as applicable, set forth in the Loan Documents, in each case, as amended, restated, supplemented or modified after giving effect to this Agreement (including as such grants have been amended, restated, supplemented or modified by this Agreement and the Supplements), (iii) confirms that its Obligations under the Credit Agreement and Loan Documents after giving effect to the Supplements constitute Obligations and (iv) agrees that the Credit Agreement and Loan Documents as amended, restated, modified or supplemented hereby is the Credit Agreement (or as the context may require, the applicable Loan Documents) under and for all purposes of the Credit Agreement and the other Loan Documents. Each party, by its execution of this Agreement, hereby confirms that the Obligations shall remain in full force and effect (except as such Obligations have been expressly supplemented, amended, restated or modified hereby or by the Supplements including), and such Obligations shall continue to be entitled to the benefits of the grant set forth in the Collateral Documents, as amended, restated, supplemented or modified hereby.
8. Further Assurances. Each of the undersigned Loan Parties, shall, at the request of the Agent and at such Loan Party’s own expense, do all such acts and things necessary or desirable to give effect to the amendments effected or to be effected pursuant to this Agreement.
| 5 |
9. Release. In consideration of the foregoing amendments, the Loan Parties signatory hereto, and, to the extent the same is claimed by right of, through or under the Borrower or any Guarantor, for its past, present and future successors in title, representatives, assignees, agents, officers, directors and shareholders, does hereby and shall be deemed to have forever remised, released and discharged each of the Secured Parties, and their respective Affiliates, and any of the respective successors-in-title, legal representatives and assignees, past, present and future officers, directors, shareholders, trustees, agents, employees, consultants, experts, advisors, attorneys and other professionals and all other persons and entities to whom any Secured Party or any of its Affiliates would be liable if such persons or entities were found to be liable to any Borrower or any other Loan Party, or any of them (collectively hereinafter the “Indemnified Parties”), from any and all manner of action and actions, cause and causes of action, claims, charges, demands, counterclaims, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, contracts, controversies, damages, judgments, expenses, executions, liens, claims of liens, claims of costs, penalties, attorneys’ fees, or any other compensation, recovery or relief on account of any liability, obligation, demand or cause of action of whatever nature, whether in law, equity or otherwise (including without limitation those arising under 11 U.S.C. §§ 541-550 and interest or other carrying costs, penalties, legal, accounting and other professional fees and expenses, and incidental, consequential and punitive damages payable to third parties), whether known or unknown, fixed or contingent, joint and/or several, secured or unsecured, due or not due, primary or secondary, liquidated or unliquidated, contractual or tortious, direct, indirect, or derivative, asserted or unasserted, foreseen or unforeseen, suspected or unsuspected, now existing, heretofore existing or which may heretofore accrue against any of the Indemnified Parties, whether held in a personal or representative capacity, and which are based on any act, fact, event or omission or other matter, cause or thing occurring at or from any time prior to and including the date hereof in any way, directly or indirectly arising out of, connected with or relating to this Agreement or the Loan Documents, and the transactions contemplated hereby and thereby, and all other agreements, certificates, instruments and other documents and statements (whether written or oral) related to any of the foregoing.
10. No Actions, Claims, Etc. Each Loan Party acknowledges and confirms that it has no knowledge of any actions, causes of action, claims, demands, damages or liabilities of whatever kind or nature, in law or in equity, against any Secured Party, in any case, arising from any action or failure of any Secured Party to act under this Agreement or any other Loan Document on or prior to the date hereof, or of any offset right, counterclaim or defense of any kind against any of its respective obligations, indebtedness or liabilities to any Secured Party or any of their Affiliates under this Agreement or any other Loan Document. Each Loan Party unconditionally releases, waives and forever discharges on its own behalf and on behalf of each of its subsidiaries and Affiliates (i) any and all liabilities, obligations, duties, promises or indebtedness of any kind of any Secured Party to such Loan Party, except the obligations required to be performed by a Secured Party or their Affiliates or agents under the Loan Documents on or after the date hereof, and (ii) all claims, offsets, causes of action, suits or defenses of any kind whatsoever (if any), whether arising at law or in equity, whether known or unknown, which such Loan Party might otherwise have against Lender in connection with this Agreement or the other Loan Documents or the transactions contemplated thereby, in the case of each of clauses (i) and (ii), on account of any past or presently existing condition, act, omission, event, contract, liability, obligation, indebtedness, claim, cause of action, defense, circumstance or matter of any kind.
11. Reference to and Effect on the Credit Agreement and the Loan Documents. On and after the Restatement Effective Date, each reference in the Credit Agreement or Loan Documents to “this Agreement”, “the Credit Agreement”, “Security Agreement”, “the Loan Documents”, “hereunder”, “hereof”, “thereunder”, “thereof” or words of like import referring to the Credit Agreement, Security Agreement and each of the other Loan Documents, shall mean and be a reference to the Credit Agreement, Security Agreement and/or, as the context may require, the Loan Documents, as amended or amended and restated by this Agreement. The execution, delivery and effectiveness of this Agreement shall not, except as expressly provided herein, operate as a waiver or novation of any Loan Document or of any right, power or remedy of any Secured Party under any Loan Document, nor, except as expressly provided herein, constitute a waiver or novation of any provision of any of the Loan Documents.
| 6 |
12. Incorporation of Terms. The provisions of Section 13.07 (Survival), Section 13.01 (Successors and Assigns), Section 13.02 (Costs and Expenses; Indemnification) and Section 13.05 (Amendments in Writing; Waiver; Integration) of the Credit Agreement shall be incorporated into this Agreement as if set out in full in this Agreement and as if references in those sections to “this Agreement” are references to this Agreement.
13. Notices. Any notice or request under this Agreement shall be given to each undersigned Loan Party at such party’s address set forth below, or at such other address as such party may hereafter specify in a notice given in the manner required under Section 12.01 of the Credit Agreement.
14. Headings. The headings of this Agreement are for purposes of reference only and shall not limit or otherwise affect the meaning hereof.
15. Counterparts. This Agreement may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Agreement. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or in electronic (i.e., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Agreement, as applicable.
16. Applicable Law; Consent to Jurisdiction; Waiver of Jury Trial. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD FOR ITS CONFLICTS OF LAWS PRINCIPLES except Section 5-1401 of the New York General Obligations Law. THE TERMS AND PROVISIONS OF SECTION 12.02 (GOVERNING LAW; SUBMISSION TO JURISDICTION) AND SECTION 12.03 (JURY TRIAL WAIVER) OF THE CREDIT AGREEMENT ARE HEREBY INCORPORATED BY REFERENCE AND SHALL APPLY TO THIS AGREEMENT MUTATIS MUTANDIS AS IF FULLY SET FORTH HEREIN.
| 7 |
17. APPOINTMENT OF PROCESS AGENT; SERVICE OF PROCESS. EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 12.01 OF THE CREDIT AGREEMENT. EACH NON-U.S. LOAN PARTY IRREVOCABLY DESIGNATES AND APPOINTS THE BORROWER, WITH AN OFFICE ON THE EFFECTIVE DATE AT THE ADDRESS LISTED FOR BORROWER IN SECTION 12.01 OF THE CREDIT AGREEMENT, AS ITS AUTHORIZED AGENT, TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF, SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUIT, ACTION OR PROCEEDING OF THE NATURE REFERRED TO IN SECTION 15 HEREOF OR IN ANY OTHER TRANSACTION DOCUMENT IN ANY FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK CITY. EACH OF THE NON-U.S. LOAN PARTIES AND THE BORROWER HEREBY REPRESENTS, WARRANTS AND CONFIRMS THAT THE BORROWER HAS AGREED TO ACCEPT SUCH APPOINTMENT (AND ANY SIMILAR APPOINTMENT BY ANY OTHER NON-U.S. LOAN PARTY). SAID DESIGNATION AND APPOINTMENT SHALL BE IRREVOCABLE BY EACH SUCH NON-U.S. LOAN PARTY UNTIL ALL AMOUNTS PAYABLE BY SUCH NON-U.S. LOAN PARTY HEREUNDER AND UNDER THE OTHER TRANSACTION DOCUMENTS SHALL HAVE BEEN PAID IN FULL IN ACCORDANCE WITH THE PROVISIONS HEREOF AND THEREOF AND, AS APPLICABLE, SUCH NON-U.S. LOAN PARTY SHALL HAVE BEEN TERMINATED OR RELEASED AS A GUARANTOR PURSUANT TO THE TERMS OF THE APPLICABLE TRANSACTION DOCUMENTS. EACH NON-U.S. LOAN PARTY HEREBY CONSENTS TO PROCESS BEING SERVED IN ANY SUIT, ACTION OR PROCEEDING OF THE NATURE REFERRED TO IN SECTION 15 HEREOF OR IN ANY OTHER TRANSACTION DOCUMENT IN ANY FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK CITY BY SERVICE OF PROCESS UPON THE BORROWER AS PROVIDED IN THIS SECTION 16. EACH NON-U.S. LOAN PARTY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL CLAIM OF ERROR BY REASON OF ANY SUCH SERVICE IN SUCH MANNER AND AGREES THAT SUCH SERVICE SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON SUCH NON-U.S. LOAN PARTY IN ANY SUCH SUIT, ACTION OR PROCEEDING AND SHALL, TO THE FULLEST EXTENT PERMITTED BY LAW, BE TAKEN AND HELD TO BE VALID AND PERSONAL SERVICE UPON AND PERSONAL DELIVERY TO SUCH NON-U.S. LOAN PARTY. TO THE EXTENT ANY NON-U.S. LOAN PARTY HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER FROM SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OF A JUDGMENT, EXECUTION OR OTHERWISE), EACH NON-U.S. LOAN PARTY HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THE TRANSACTION DOCUMENTS. NOTHING IN THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
[Signature pages to follow.]
| 8 |
IN WITNESS WHEREOF, the undersigned has caused this Agreement to be executed and made effective as of the date first written above:
| DBFIP ANI LLC, | ||
| as Agent, Note Agent, and as a Lender | ||
| By: | /s/ Daniel N. Bass | |
| Name: | Daniel N. Bass | |
| Title: | Authorized Signatory | |
[Signature Page to Waiver and Consent, Second Amendment, Restatement, Joinder and Omnibus Amendment to Credit Agreement and other Loan Documents]
IN WITNESS WHEREOF, the undersigned has caused this Agreement to be executed and made effective as of the date first written above:
| PENDRELL CORPORATION, | ||
| as a Lender | ||
| By: | /s/ Steve Ednie | |
| Name: | Steve Ednie | |
| Title: | CFO | |
[Signature Page to Waiver and Consent, Second Amendment, Restatement, Joinder and Omnibus Amendment to Credit Agreement and other Loan Documents]
IN WITNESS WHEREOF, the undersigned has caused this Agreement to be executed and made effective as of the date first written above:
| LOAN PARTIES: | ||
| NEW BEGINNINGS ACQUISITION CORP. (to be renamed Airspan Networks Holdings Inc. upon consummation of the Merger), a Delaware corporation, as a Guarantor and Grantor | ||
| By: | /s/ Michael S. Liebowitz | |
| Name: | Michael S. Liebowitz | |
| Title: | Chief Executive Officer | |
[Signature Page to Waiver and Consent, Second Amendment, Restatement, Joinder and Omnibus Amendment to Credit Agreement and other Loan Documents]
| AIRSPAN NETWORKS INC., | ||
| a Delaware corporation, as Borrower and Grantor | ||
| By: | /s/ David Brant | |
| Name: | David Brant | |
| Title: | Senior Vice President and Chief Financial Officer | |
| AIRSPAN IP HOLDCO LLC, | ||
| a Delaware limited liability company, as a Guarantor and Grantor | ||
| By: | /s/ David Brant | |
| Name: | David Brant | |
| Title: | Senior Vice President and Chief Financial Officer | |
| AIRSPAN NETWORKS (SG) INC., | ||
| a Delaware corporation, as a Guarantor and Grantor | ||
| By: | /s/ David Brant | |
| Name: | David Brant | |
| Title: | Senior Vice President and Chief Financial Officer | |
| MIMOSA NETWORKS, INC., | ||
| a Delaware corporation, as a Guarantor and Grantor | ||
| By: | /s/ David Brant | |
| Name: | David Brant | |
| Title: | Senior Vice President and Secretary | |
| MIMOSA NETWORKS INTERNATIONAL, LLC, | ||
| a Delaware limited liability company, as a Guarantor and Grantor | ||
| By: | /s/ David Brant | |
| Name: | David Brant | |
| Title: | Senior Vice President and Chief Financial Officer | |
[Signature Page to Waiver and Consent, Second Amendment, Restatement, Joinder and Omnibus Amendment to Credit Agreement and other Loan Documents]
| AIRSPAN COMMUNICATIONS LIMITED, | ||
| a United Kingdom corporation, as a Guarantor | ||
| By: | /s/ David Brant | |
| Name: | David Brant | |
| Title: | Director | |
| AIRSPAN NETWORKS LTD. | ||
| an Israel corporation, as a Guarantor | ||
| By: | /s/ David Brant | |
| Name: | David Brant | |
| Title: | Director | |
| Airspan Japan KK, | ||
| a Japanese corporation, as a Guarantor | ||
| By: | /s/ Steven P. Shipley | |
| Name: | Steven P. Shipley | |
| Title: | Representative Director | |
[Signature Page to Waiver and Consent, Second Amendment, Restatement, Joinder and Omnibus Amendment to Credit Agreement and other Loan Documents]
ACCEPTED AND AGREED, by each of the undersigned Purchasers and the Note Agent, who hereby acknowledge, waive, and consent to the terms of this Agreement, the Credit Agreement and the Security Agreement, including but not limited to the waivers and consents set forth in Sections 2 and 3. Each undersigned Purchaser and the Note Agent hereby consents to and waives the Specified Defaults precisely as written above.
| DBFIP ANI LLC, | ||
| as Note Agent | ||
| By: | /s/ Daniel N. Bass | |
| Name: | Daniel N. Bass | |
| Title: | Authorized Signatory | |
| FIP UST LP, as a Purchaser | ||
| By: FIP FUND I GP LLC, its general partner | ||
| By: | /s/ Daniel N. Bass | |
| Name: | Daniel N. Bass | |
| Title: | Authorized Signatory | |
| FORTRESS LENDING I HOLDINGS L.P. as a Purchaser | ||
| By: Fortress Lending Advisors LLC, its investment manager | ||
| By: | /s/ Daniel N. Bass | |
| Name: | Daniel N. Bass | |
| Title: | Authorized Signatory | |
| FLF II Holdings Finance L.P., as a Purchaser | ||
| By: FLF II Holdings Finance CM LLC, as Servicer | ||
| By: Fortress Lending II Holdings L.P., its Sole Member | ||
| By: Fortress Lending Advisors II LLC, its investment manager | ||
| By: | /s/ Daniel N. Bass | |
| Name: | Daniel N. Bass | |
| Title: | Authorized Signatory | |
[Signature Page to Waiver and Consent, Second Amendment, Restatement, Joinder and Omnibus Amendment to Credit Agreement and other Loan Documents]
| FORTRESS LENDING II HOLDINGS L.P., as a Purchaser | ||
| By: Fortress Lending Advisors II LLC, its investment manager | ||
| By: | /s/ Daniel N. Bass | |
| Name: | Daniel N. Bass | |
| Title: | Authorized Signatory | |
| FLF I Holdings Finance L.P., as a Purchaser | ||
| By: FLF I Holdings Finance CM LLC, as Servicer | ||
| By: Fortress Lending I Holdings L.P., its Sole Member | ||
| By: Fortress Lending Advisors LLC, its investment manager | ||
| By: | /s/ Daniel N. Bass | |
| Name: | Daniel N. Bass | |
| Title: | Authorized Signatory | |
| Drawbridge Special Opportunities Fund LP, as a Purchaser | ||
| By: Drawbridge Special Opportunities GP LLC, its general partner | ||
| By: | /s/ Daniel N. Bass | |
| Name: | Daniel N. Bass | |
| Title: | Authorized Signatory | |
| DBDB FUNDING LLC, as a Purchaser | ||
| By: | /s/ Daniel N. Bass | |
| Name: | Daniel N. Bass | |
| Title: | Authorized Signatory | |
| Fortress Lending Fund II MA-CRPTF LP, as a Purchaser | ||
| By: FLF II MA-CRPTF Advisors LLC, its investment manager | ||
| By: | /s/ Daniel N. Bass | |
| Name: | Daniel N. Bass | |
| Title: | Authorized Signatory | |
[Signature Page to Waiver and Consent, Second Amendment, Restatement, Joinder and Omnibus Amendment to Credit Agreement and other Loan Documents]
ANNEX A
AMENDED AND RESTATED CREDIT AGREEMENT
(See Attached)
Annex A
to the Second Amendment
Execution Version
THE
USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT CERTAIN
INFORMATION HAS BEEN OMITTED PURSUANT TO ITEM 601(a)(6) OF
REGULATION S-K: [***]
AMENDED AND RESTATED
CREDIT
AGREEMENT
dated as of August 13, 2021
among
AIRSPAN NETWORKS Inc.,
as Borrower,
AIRSPAN NETWORKS
HOLDINGS INC.
(formerly
known as New Beginnings Acquisition Corp)
as Holdings and as a Guarantor,
and
CERTAIN SUBSIDIARIES OF HOLDINGS,
as Guarantors,
THE LENDERS FROM TIME TO TIME PARTY HERETO
and
DBFIP
ANI LLC,
as Administrative Agent and Collateral Agent
(which amends and restates that certain Credit Agreement dated December 30, 2021)
TABLE OF CONTENTS
| Page | ||||
| Article I DEFINITIONS AND ACCOUNTING TERMS | 1 | |||
| Section 1.01 | Defined Terms | 1 | ||
| Section 1.02 | Other Interpretative Provisions | 58 | ||
| Section 1.03 | Rounding | 60 | ||
| Section 1.04 | Divisions | 60 | ||
| Section 1.05 | Cashless Rolls | 60 | ||
| Section 1.06 | Rates | 60 | ||
| Section 1.07 | Currencies | 60 | ||
| Article II LOANS AND TERMS OF PAYMENT | 61 | |||
| Section 2.01 | Term Loans | 61 | ||
| Section 2.02 | Interest; Fees; Evidence of Debt; Payments | 67 | ||
| Section 2.03 | Taxes | 71 | ||
| Section 2.04 | Ratable Sharing; Pro Rata Shares; Availability of Funds | 75 | ||
| Section 2.05 | Benchmark Replacement Settings | 76 | ||
| Section 2.06 | Increased Costs; Capital Requirements | 77 | ||
| Section 2.07 | Application of Prepayments/Reductions | 78 | ||
| Section 2.08 | Defaulting Lenders | 79 | ||
| Section 2.09 | Mitigation of Obligations; Replacement of Lenders | 80 | ||
| Article III CONDITIONS Precedent to the LOANs | 81 | |||
| Section 3.01 | Conditions to the Closing Date and Closing Date Term Loan | 81 | ||
| Section 3.02 | Conditions to all Loans after the Closing Date | 86 | ||
| Article IV Reserved | 87 | |||
| Article V REPRESENTATIONS AND WARRANTIES | 87 | |||
| Section 5.01 | Existence, Qualification and Power | 87 | ||
| Section 5.02 | Authorization; No Contravention | 87 | ||
| Section 5.03 | Governmental Authorization; Other Consents | 88 | ||
| Section 5.04 | Binding Effect | 88 | ||
| Section 5.05 | Financial Statements; No Material Adverse Effect | 88 | ||
| Section 5.06 | Litigation | 88 | ||
| Section 5.07 | No Default | 89 | ||
| Section 5.08 | Ownership of Property; Liens; Permits | 89 | ||
| Section 5.09 | Environmental Compliance | 89 | ||
| Section 5.10 | Insurance | 89 | ||
| Section 5.11 | Taxes | 90 | ||
| Annex A-i |
| Section 5.12 | ERISA and Foreign Plans Compliance; Pensions | 90 | ||
| Section 5.13 | Subsidiaries; Equity Interests | 91 | ||
| Section 5.14 | Margin Regulations; Investment Company Act | 91 | ||
| Section 5.15 | Disclosure | 91 | ||
| Section 5.16 | Compliance with Laws | 91 | ||
| Section 5.17 | Intellectual Property; Licensing | 92 | ||
| Section 5.18 | Rights in Collateral; Priority of Liens | 95 | ||
| Section 5.19 | Solvency | 95 | ||
| Section 5.20 | Business Locations; Taxpayer Identification Number | 95 | ||
| Section 5.21 | [Reserved] | 96 | ||
| Section 5.22 | PATRIOT Act; Sanctions; Export Controls; FCPA | 96 | ||
| Section 5.23 | Material Contracts | 97 | ||
| Section 5.24 | Employee Matters | 97 | ||
| Section 5.25 | No Regulatory Restrictions on Borrowing, Guarantees or Upstreaming Cashflows | 98 | ||
| Section 5.26 | Rank of Debt | 98 | ||
| Section 5.27 | No Set-off | 98 | ||
| Section 5.28 | No Immunity; Proper Legal Form; No Need To Qualify Under each Relevant Jurisdiction or other Applicable Law | 98 | ||
| Section 5.29 | Centre of Main Interests and Establishments | 99 | ||
| Section 5.30 | Exchange Controls | 99 | ||
| Section 5.31 | Customers and Suppliers | 99 | ||
| Section 5.32 | Critical Technologies | 99 | ||
| Section 5.33 | Products | 99 | ||
| Article VI AFFIRMATIVE COVENANTS | 100 | |||
| Section 6.01 | Compliance with Laws | 100 | ||
| Section 6.02 | Financial Statements | 100 | ||
| Section 6.03 | Certificates; Other Information | 102 | ||
| Section 6.04 | Notices | 105 | ||
| Section 6.05 | Payment of Obligations | 107 | ||
| Section 6.06 | Books and Records | 107 | ||
| Section 6.07 | Inspection Rights | 107 | ||
| Section 6.08 | Litigation Cooperation | 107 | ||
| Section 6.09 | Use of Proceeds | 107 | ||
| Section 6.10 | Preservation of Existence, Etc. | 107 | ||
| Section 6.11 | Maintenance of Properties | 108 | ||
| Annex A-ii |
| Section 6.12 | Collateral and Guarantee Requirements; Formation or Acquisition of Subsidiaries | 108 | ||
| Section 6.13 | Insurance | 112 | ||
| Section 6.14 | Conduct of Business and SPV Compliance | 112 | ||
| Section 6.15 | Controlled Accounts; Cash Management Systems | 114 | ||
| Section 6.16 | Lender Meetings | 114 | ||
| Section 6.17 | [Reserved] | 114 | ||
| Section 6.18 | Assigned Patents and Assigned Patent Rights | 114 | ||
| Section 6.19 | Consent of Licensors | 116 | ||
| Section 6.20 | Maintenance of Regulatory Permits, Contracts, Intellectual Property, Etc. | 116 | ||
| Section 6.21 | Pari Passu Ranking | 116 | ||
| Section 6.22 | Subsidiary Distributions; Upstreaming Cashflows; Investment Documents | 117 | ||
| Section 6.23 | Critical Technologies | 117 | ||
| Section 6.24 | Further Assurances | 118 | ||
| Section 6.25 | Covenants Regarding Products and Compliance with Material Regulatory Permits | 118 | ||
| Section 6.26 | Post-Closing Obligations | 118 | ||
| Article VII NEGATIVE COVENANTS | 118 | |||
| Section 7.01 | Dispositions | 118 | ||
| Section 7.02 | Changes in Business, Management, Ownership, or Business Locations | 120 | ||
| Section 7.03 | Mergers or Acquisitions | 120 | ||
| Section 7.04 | Liens | 120 | ||
| Section 7.05 | Distributions; Investments | 120 | ||
| Section 7.06 | Transactions with Affiliates | 121 | ||
| Section 7.07 | Limitation on Negative Pledges | 121 | ||
| Section 7.08 | Compliance | 121 | ||
| Section 7.09 | Indebtedness | 122 | ||
| Section 7.10 | Amendments to Organization Documents, Patent Assignment Agreement or Patent License Agreement, Accounting Methods and Fiscal Year | 122 | ||
| Section 7.11 | Sanctions | 122 | ||
| Section 7.12 | Patent Development and Enhancement | 122 | ||
| Section 7.13 | Sales and Lease Backs | 122 | ||
| Section 7.14 | Deposit Accounts | 123 | ||
| Section 7.15 | Prepayments of Certain Indebtedness | 123 | ||
| Section 7.16 | Financial Covenants | 123 | ||
| Section 7.17 | Pensions | 124 | ||
| Section 7.18 | Centre of Main Interests and Establishment | 124 | ||
| Annex A-iii |
| Article VIII EVENTS OF DEFAULT | 125 | |||
| Section 8.01 | Events of Default | 125 | ||
| Section 8.02 | Rights and Remedies | 128 | ||
| Article IX Guaranty | 130 | |||
| Section 9.01 | Guaranty of the Obligations | 130 | ||
| Section 9.02 | Contribution by Guarantors | 130 | ||
| Section 9.03 | Payment by Guarantors | 130 | ||
| Section 9.04 | Liability of Guarantors Absolute | 131 | ||
| Section 9.05 | Waivers by Guarantors | 133 | ||
| Section 9.06 | Guarantors’ Rights of Subrogation, Contribution, etc. | 134 | ||
| Section 9.07 | Subordination of Other Obligations | 134 | ||
| Section 9.08 | Continuing Guaranty | 134 | ||
| Section 9.09 | Authority of Guarantors or Borrower | 134 | ||
| Section 9.10 | Collateral Matters | 134 | ||
| Section 9.11 | Financial Condition of Borrower | 135 | ||
| Section 9.12 | Bankruptcy, etc. | 135 | ||
| Section 9.13 | Discharge of Guaranty Upon Sale of Guarantor | 136 | ||
| Article X AGENTS | 136 | |||
| Section 10.01 | Appointment of Agents | 136 | ||
| Section 10.02 | Powers and Duties | 136 | ||
| Section 10.03 | General Immunity | 137 | ||
| Section 10.04 | Agents Entitled to Act as Lender | 138 | ||
| Section 10.05 | Delegation of Duties | 138 | ||
| Section 10.06 | Lenders’ Representations, Warranties and Acknowledgment | 138 | ||
| Section 10.07 | Right to Indemnity | 139 | ||
| Section 10.08 | Successor Administrative Agent and Collateral Agent | 140 | ||
| Section 10.09 | Collateral Documents and Guaranty | 140 | ||
| Section 10.10 | Administrative Agent May File Proofs of Claim | 141 | ||
| Article XI [RESERVED] | 142 | |||
| Article XII NOTICES, GOVERNING LAW, SUBMISSION TO JURISDICTION, JURY TRIAL WAIVER, AND JUDICIAL REFERENCE | 142 | |||
| Section 12.01 | Notices | 142 | ||
| Section 12.02 | Governing Law; Submission to Jurisdiction | 143 | ||
| Section 12.03 | Jury Trial Waiver | 143 | ||
| Section 12.04 | Additional Waivers in the Event of Enforcement | 143 | ||
| Section 12.05 | APPOINTMENT OF PROCESS AGENT; SERVICE OF PROCESS | 144 | ||
| Section 12.06 | Borrower as Agent for Notice for Loan Parties | 144 | ||
| Section 12.07 | Loan Party Agent | 144 | ||
| Annex A-iv |
| Article XIII GENERAL PROVISIONS | 145 | |||
| Section 13.01 | Successors and Assigns; Participations | 145 | ||
| Section 13.02 | Costs and Expenses; Indemnification | 148 | ||
| Section 13.03 | Time of Essence | 149 | ||
| Section 13.04 | Severability of Provisions | 149 | ||
| Section 13.05 | Amendments in Writing; Waiver; Integration; | 149 | ||
| Section 13.06 | Counterparts | 151 | ||
| Section 13.07 | Survival | 151 | ||
| Section 13.08 | Affiliate Activities | 152 | ||
| Section 13.09 | Electronic Execution of Documents | 152 | ||
| Section 13.10 | Captions | 152 | ||
| Section 13.11 | Construction of Agreement | 152 | ||
| Section 13.12 | Relationship | 152 | ||
| Section 13.13 | Third Parties | 152 | ||
| Section 13.14 | Payments Set Aside | 153 | ||
| Section 13.15 | Right of Setoff | 153 | ||
| Section 13.16 | Interest Rate Limitation | 153 | ||
| Section 13.17 | Securitization of Loans; Appointment of Agent | 153 | ||
| Section 13.18 | Confidentiality | 154 | ||
| Section 13.19 | No Fiduciary Duty | 155 | ||
| Section 13.20 | Judgement Currency | 155 | ||
| Section 13.21 | Corporate Seal | 156 | ||
| Section 13.22 | Location of Closing | 156 | ||
| Section 13.23 | Waiver of Immunity | 156 | ||
| Section 13.24 | Intercreditor and Subordination Agreements | 156 | ||
| Section 13.25 | Acknowledgement Regarding Any Supported QFCs | 156 | ||
| Section 13.26 | English Language | 157 | ||
| Section 13.27 | No Strict Construction | 157 | ||
| Section 13.28 | Attachments | 157 | ||
| Section 13.29 | Original Loans and Initial Term Loans | 157 | ||
| Section 13.30 | Existing Credit Agreement | 158 | ||
| Annex A-v |
| APPENDICES | |
| Appendix A: | Commitment |
| Appendix B: | Principal Office |
| SCHEDULES | |
| Schedule 1.01(b): | Guarantors |
| Schedule 5.03: | Governmental Authorization; Other Consents |
| Schedule 5.05: | Financial Statements; No Material Adverse Effect |
| Schedule 5.09 | Environmental Compliance |
| Schedule 5.13: | Subsidiaries; Equity Interests |
| Schedule 5.17: | Intellectual Property |
| Schedule 5.20: | Business Locations; Taxpayer Identification Number |
| Schedule 5.23: | Material Contracts |
| Schedule 5.24: | Employee Matters |
| Schedule 5.25: | Regulatory Restrictions |
| Schedule 5.33: | Products |
| Schedule 6.03: | Website Address |
| Schedule 7.04: | Liens |
| Schedule 7.05: | Investments |
| Schedule 7.09: | Indebtedness |
| EXHIBITS | |
| Exhibit A-1: | Form of Notice of Borrowing |
| Exhibit A-2: | Form of Conversion/Continuation Notice |
| Exhibit B: | Form of Note |
| Exhibit C: | Form of Compliance Certificate |
| Exhibit D: | Closing Agenda |
| Exhibit H: | Form of Assignment and Assumption Agreement |
| Exhibit J: | Forms of Tax Certificates |
| Exhibit K: | Form of Counterpart Agreement |
| Exhibit L: | Form of Solvency Certificate |
| Exhibit M: | Form of Board Observation Rights Letter |
| Annex A-vi |
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT dated as of August 13, 2021 (as the same may be further amended, restated, amended and restated, supplemented or otherwise modified from time to time, this “Agreement”), is entered into by, among others, airspAn networks Inc., a Delaware corporation (successor by merger to Artemis Merger Sub Corp.) (the “Initial Borrower” and together with each other Person that becomes a Borrower hereunder from time to time, each a “Borrower” and collectively, the “Borrowers”), AIRSPAN NETWORKS HOLDINGS INC. (formerly known as New Beginnings Acquisition Corp.), a Delaware corporation and the parent of the Initial Borrower (“Holdings”) and each Subsidiary of the Borrower that is identified as a guarantor on Schedule 1.01(b) hereto or that becomes a Guarantor hereunder from time to time, the Lenders from time to time party hereto and DBFIP ANI LLC, a Delaware limited liability company (“Fortress”), in its capacity as the administrative agent for the Lenders and other Secured Parties (Fortress, together with its successors and assigns in such capacity, the “Administrative Agent”) and as the collateral agent and trustee for the Lenders and other Secured Parties (Fortress, together with its successors and assigns in such capacity, the “Collateral Agent” and together with the Administrative Agent, each, an “Agent” and collectively, the “Agents”).
WITNESSETH
WHEREAS, the Borrower, the Guarantors, Agent, and the Lenders are party to that certain Reaffirmation and Omnibus Amendment Agreement dated as of December 30, 2020, which, among other things, amended and restated the Original Credit Agreement and replaced it, in its entirety, with that certain Credit Agreement dated December 30, 2020, by, among others, the Borrower and certain Guarantors, the Lenders, and the Agents (as the same has been amended, restated, amended and restated, supplemented or otherwise modified prior to the date hereof, the “Existing Credit Agreement”).
WHEREAS, the Borrower entered into that certain Business Combination Agreement dated March 8, 2021 pursuant to which it agreed to merge with Artemis Merger Sub Corp., a Delaware corporation and a subsidiary of Holdings (“Merger Sub”), and as part of the Lenders’ consent (the “Merger Consent”) to that transaction the Loan Parties agreed to have Holdings accede as a Guarantor under this Agreement and the other Loan Documents and amend and restate the Existing Credit Agreement on the terms and subject to the conditions set forth herein.
WHEREAS, it is the intent of the parties hereto that this Agreement does not constitute a novation of rights, obligations and liabilities of the respective parties (including the Obligations) existing under the Existing Credit Agreement or evidence payment of all or any of such obligations and liabilities and such rights, obligation and liabilities shall continue and remain outstanding, and that this Agreement amends and restates in its entirety the Existing Credit Agreement;
NOW THEREFORE, in consideration of the premises and mutual agreements and subject to the terms and conditions set forth herein, and intending to be legally bound hereby, the parties agree as follows:
Article
I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.01 Defined Terms. As used in this Agreement, the following terms shall have the meanings set forth below:
| Annex A-1 |
“Account” is any “account” as defined under the UCC with such additions to such term as may hereafter be made, and includes, without limitation, all accounts receivable and other sums owing to any Loan Party.
“Accounting Change” is defined in Section 1.02(d)(ii).
“Administration Fee” is defined in Section 2.02(b)(i)(A).
“Administrative Agent” is defined in the preamble.
“Adverse Proceeding” means any action, suit, proceeding (whether administrative, judicial or otherwise), governmental investigation or arbitration (whether or not purportedly on behalf of Holdings or any of its Subsidiaries) at law or in equity, or before or by any Governmental Authority, domestic or foreign (including any Environmental Claims), whether pending or, to the knowledge of Holdings or any of its Subsidiaries, threatened against or affecting Holdings or any of its Subsidiaries or any property of Holdings or any of its Subsidiaries.
“Affected Principal Amount” means the principal amount of Loans and/or Delayed Draw Term Loan Commitments subject to Prepayment Event.
“Affiliate” means, as applied to any Person (the “Specified Person”), any other Person directly or indirectly controlling, controlled by, or under common control with, the Specified Person. For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlling”, “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of the Specified Person, whether through the ownership of voting securities or by contract or otherwise; provided, however, neither Softbank, any DAL Loan Party, nor any member of the Softbank Group or the DAL Loan Party Group shall be deemed to be an Affiliate of FIG, of any Fortress Member, or of their respective Affiliates.
“Agents” is defined in the preamble.
“Aggregate Payments” is defined in Section 9.02.
“Agreement” is defined in the preamble.
“Agreement Currency” is defined in Section 13.20.
“Airspan Networks Israel” means Airspan Networks Ltd, a company organized and existing under the laws of the State of Israel.
“Amendment and Restatement Agreement” means that certain Second Amendment and Restatement and Joinder Agreement to Credit Agreement and other Loan Documents dated August 13, 2021, by and among Borrower, Holdings, each Guarantor party thereto, the Lenders party thereto and the Agent.
“Applicable Prepayment Premium” means, as the context may require, the Prepayment Premium and/or the Yield Maintenance Premium.
“Applicable Rate” means, as of any date of determination, with respect to the interest rate of any Loan (or any portion thereof):
| Annex A-2 |
(a) with respect to the Initial Term Loan and the Delayed Draw Term Loan:
(i) From the Closing Date until the first Financial Statement Delivery Date to occur after the Closing Date (the “Initial Applicable Rate Period”), the relevant Applicable Rate shall be set at Level V in the table below. After the Initial Applicable Rate Period, the relevant Applicable Rate shall be set at the respective level indicated below based upon the Net EBITDA Leverage Ratio of (x) the Borrower and its Subsidiaries prior to the Restatement Effective Date and (y) after giving effect to the Restatement Effective Date, Holdings and its Subsidiaries for the Test Period for which such financial statements were delivered as of the Financial Statement Delivery Date:
| Level | Net EBITDA Leverage Ratio | Base Rate Loan |
LIBO Rate Loan |
| I | Less than or equal to 2.00:1.00 | The Applicable Rate shall be the Base Rate plus 6.00% per annum, of which the Margin Cash Component shall be the Base Rate plus 5.50% and the Margin PIK Component shall be 0.50% | The Applicable Rate shall be the LIBO Rate plus 7.00% per annum, of which the Margin Cash Component shall be the LIBO Rate plus 5.50% and the Margin PIK Component shall be 1.50% |
| II | Less than or equal to 3.00:1.00 but greater than 2.00:1.00 | The Applicable Rate shall be the Base Rate plus 7.00% per annum, of which the Margin Cash Component shall be the Base Rate plus 5.50% and the Margin PIK Component shall be 1.50% | The Applicable Rate shall be the LIBO Rate plus 8.00% per annum, of which the Margin Cash Component shall be the LIBO Rate plus 5.50% and the Margin PIK Component shall be 2.50% |
| III | Less than or equal to 4.00:1.00 but greater than 3.00:1.00 | The Applicable Rate shall be the Base Rate plus 8.00% per annum, of which the Margin Cash Component shall be the Base Rate plus 5.50% and the Margin PIK Component shall be 2.50% | The Applicable Rate shall be the LIBO Rate plus 9.00% per annum, of which the Margin Cash Component shall be the LIBO Rate plus 5.50% and the Margin PIK Component shall be 3.50% |
| IV | Less than or equal to 5.00:1.00 but greater than 4.00:1.00 | The Applicable Rate shall be the Base Rate plus 9.00% per annum, of which the Margin Cash Component shall be the Base Rate plus 5.50% and the Margin PIK Component shall be 3.50% | The Applicable Rate shall be the LIBO Rate plus 10.00% per annum, of which the Margin Cash Component shall be the LIBO Rate plus 5.50% and the Margin PIK Component shall be 4.50% |
| V | Greater than 5.00:1.00 | The Applicable Rate shall be the Base Rate plus 10.00% per annum, of which the Margin Cash Component shall be the Base Rate plus 5.50% and the Margin PIK Component shall be 4.50% | The Applicable Rate shall be the LIBO Rate plus 11.00% per annum, of which the Margin Cash Component shall be the LIBO Rate plus 5.50% and the Margin PIK Component shall be 5.50% |
| Annex A-3 |
(ii) If the Net EBITDA Leverage Ratio changes upon delivery of any financial statements required under Section 6.02(a), Section 6.02(b) or Section 6.02(c), such change in the Applicable Rate will be effective as of the date on which any such financial statement is delivered, irrespective of whether it is in the middle of an interest period or when notice of such change in the Net EBITDA Leverage Ratio has been furnished by the Loan Parties to the Administrative Agent and the Lenders. Each change in the Applicable Rate will apply during the period commencing on the effective date of such change and ending on the date immediately preceding the effective date of the next such change.
(b) With respect to the Tranche 2 Term Loan, the relevant Applicable Rate shall be five percent (5.00%).
(c) Notwithstanding the foregoing:
(i) the Applicable Rate shall be increased by three and three-quarters of one percent (3.75%) above the then applicable rates set forth in clause (a) and clause (b) above (such rate, the “Applicable Default Interest Rate”): (x) (i) immediately upon the occurrence of an Event of Default described in Section 8.01(h) or 8.01(i), or (ii) at the option of the Requisite Lenders, upon the occurrence and during the continuation of any other Default or Event of Default other than those specified in clause (i) above, or (y) if for any period, the Administrative Agent does not receive the financial statements and certificates described in Section 6.02(a), Section 6.02(b), Section 6.02(c) or Section 6.03(b) of this Agreement, for the period commencing on the date such financial statements and certificate were required to be delivered through the date on which such financial statements and certificate are delivered to the Administrative Agent; and
(ii) in the event that any financial statement or certificate described in clause (c)(i)(y) above is shown to be inaccurate (regardless of whether this Agreement or any Term Loan Commitments are in effect when such inaccuracy is discovered), and such inaccuracy, if corrected, would have led to the application of a higher Applicable Rate for any fiscal period, then the Applicable Rate for such fiscal period that such financial statement or certificate covered shall be adjusted retroactively to reflect the correct Applicable Rate for such period, and the Loan Parties shall promptly make payments to the Administrative Agent for the account of the Lenders, the accrued additional interest owing as a result of such adjustment for such period with respect to the Loans owed thereby.
“Approved Fund” means any fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender or an Affiliate of a Lender.
“Asset Disposition” means any Transfer pursuant to Section 7.01(a) or to the extent not permitted hereunder.
“Asset Security Providers” means Holdings, the Borrower and any Subsidiary of Holdings that is or becomes a Loan Party and provides asset security as of the Restatement Effective Date or from time to time thereafter pursuant to Section 3.01, Section 6.12, Section 6.24, Section 6.26 and/or the Collateral and Guarantee Requirements hereof.
“Assigned Patent Rights” means all of the following, whether now owned or hereafter acquired or arising:
| Annex A-4 |
(a) all Assigned Patents;
(b) all patents and patent applications (i) to which any of the Assigned Patents directly or indirectly claims priority or (ii) for which any of the Assigned Patents directly or indirectly forms a basis for priority;
(c) all reissues, reexaminations, extensions, renewals, continuations, continuations in part, continuing prosecution applications, requests for continuing examinations, and divisionals of any item in any of the foregoing categories (a) and (b);
(d) all foreign patents, patent applications, and counterparts relating to any item in any of the foregoing categories (a) through (c), including certificates of invention, utility models, industrial design protection, design patent protection and other governmental grants or issuances;
(e) all items in any of the foregoing in categories (b) through (d), whether or not expressly listed on the Disclosure Schedule and whether or not claims in any of the foregoing have been rejected, withdrawn, cancelled, or the like;
(f) inventions, invention disclosures, and discoveries described in any of the Assigned Patents or any item in the foregoing categories (b) through (e) that: (i) are included in any claim in the Assigned Patents or any item in the foregoing categories (b) through (e); (ii) are subject matter capable of being reduced to a patent claim in a reissue or reexamination proceeding brought on any of the Assigned Patents or any item in the foregoing categories (b) through (e); or (iii) could have been included as a claim in any of the Assigned Patents or any item in the foregoing categories (b) through (e);
(g) all rights to apply in any or all countries of the world for Patents or other governmental grants or issuances of any type related to any item in any of the foregoing categories (a) through (f), including under the Paris Convention for the Protection of Industrial Property, the International Patent Cooperation Treaty, or any other convention, treaty, agreement, or understanding;
(i) all causes of action (whether known or unknown or whether currently pending, filed, or otherwise) and other enforcement rights under, or on account of, any of the Assigned Patents or any item in any of the foregoing categories (b) through (g), including all causes of action and other enforcement rights for (i) damages, (ii) injunctive relief and (iii) any other remedies of any kind for past, current, and future infringement, misappropriation or other violation; and
(j) all rights to collect income, royalties, damages and other payments due or payable under or with respect to any of the Assigned Patents or any item in any of the foregoing categories (b) through (h).
“Assigned Patents” means all Patents issued to, or for which applications are pending in the name of, Holdings or any of its Subsidiaries and (a) assigned to IP Hold-Co in accordance with the Patent Assignment Agreement, including without limitation any Patents described on Schedule 5.17(a) or that are hereafter acquired by, or filed in the name of, Holdings or any of its Subsidiaries, including Patents that are the subject of Section 6.18.
“Assigned Trade Secrets” means all Trade Secrets (a) owned by Holdings or any of its Subsidiaries and or (b) that are hereafter acquired by Holdings or any of its Subsidiaries that are the subject of Section 6.18.
| Annex A-5 |
“Assignment Agreement” means an Assignment and Assumption Agreement substantially in the form of Exhibit H, with such amendments or modifications as may be approved by Administrative Agent.
“Audited Financial Statements” means (x) the audited consolidated balance sheet of Borrower and its Subsidiaries on a consolidated basis for the fiscal year ended 2019 and 2020, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year of Borrower and its Subsidiaries, including the notes thereto, (y) the audited consolidated balance sheet of Holdings and its Subsidiaries on a consolidated basis for the fiscal year ended December 31, 2020 and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year of Holdings and its Subsidiaries, including the notes thereto, and (z) for each other fiscal year ended thereafter, the audited consolidated balance sheet of Holdings and its Subsidiaries on a consolidated basis for the fiscal year ended, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year of Holdings and its Subsidiaries, including the notes thereto, in each case, which audited financial statements shall be accompanied by a report and opinion prepared in accordance with generally accepted auditing standards and shall not be subject to any “going concern” or like qualification or exception (other than a “going concern” or like qualification or exception in either case resulting solely from an upcoming maturity date of any Permitted Indebtedness occurring within one year from the time such opinion is delivered or otherwise permitted in writing by the Administrative Agent) or any qualification or exception as to the scope of such audit.
“Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, (x) if the then-current Benchmark is a term rate, any tenor for such Benchmark that is or may be used for determining the length of an Interest Period or (y) otherwise, any payment period for interest calculated with reference to such Benchmark, as applicable, pursuant to this Agreement as of such date.
“Base Rate” means, for any day, a rate per annum equal to the greater of (i) the Prime Rate in effect on such day, but in no event less than the Base Rate Floor and (ii) the Federal Funds Effective Rate in effect on such day plus one-half of one percent (½ of 1%), but in no event less than the Base Rate Floor and (iii) the LIBO Rate in effect on such day for an Interest Period of one (1) month plus one percent (1%), but in no event less than the Base Rate Floor. Any change in the Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective on the effective day of such change in the Prime Rate or the Federal Funds Effective Rate, respectively. Base Rate, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such borrowing, are bearing interest at a rate determined by the reference to the Base Rate.
“Base Rate Floor” means one and one half of one percent (1.50%) per annum.
“Base Rate Loan” means any Loan at any time which it bears interest at or by reference to the Base Rate in accordance with the term hereof.
“Benchmark” means initially, USD LIBOR; provided that if a replacement of the Benchmark has occurred pursuant to Section 2.05, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate. Any reference to “Benchmark” shall include, as applicable, the published component used in the calculation thereof.
“Benchmark Replacement” means, for any Available Tenor:
| Annex A-6 |
(1) For purposes of Section 2.05(a), the first alternative set forth below that can be determined by the Agent:
(a) the sum of: (i) Term SOFR and (ii) 0.11448% (11.448 basis points) for an Available Tenor of one-month’s duration, 0.26161% (26.161 basis points) for an Available Tenor of three-months’ duration, and 0.42826% (42.826 basis points) for an Available Tenor of six-months’ duration, or
(b) the sum of: (i) Daily Simple SOFR and (ii) the spread adjustment selected or recommended by the Relevant Governmental Body for the replacement of the tenor of USD LIBOR with a SOFR-based rate having approximately the same length as the interest payment period specified in clause (a) of this Section; and
(2) For purposes of Section 2.05(b), the sum of (a) the alternate benchmark rate and (b) an adjustment (which may be a positive or negative value or zero), in each case, that has been selected by the Administrative Agent and the Borrower as the replacement for such Available Tenor of such Benchmark giving due consideration to any evolving or then-prevailing market convention, including any applicable recommendations made by the Relevant Governmental Body, for U.S. dollar-denominated syndicated credit facilities at such time;
provided that, if the Benchmark Replacement as determined pursuant to clause (1) or (2) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents.
“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Base Rate,” the definition of “Business Day,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, the applicability and length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Administrative Agent decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of such Benchmark Replacement exists, in such other manner of administration as the Administrative Agent decides is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents).
“Benchmark Transition Event” means, with respect to any then-current Benchmark other than USD LIBOR, the occurrence of a public statement or publication of information by or on behalf of the administrator of the then-current Benchmark, the regulatory supervisor for the administrator of such Benchmark, the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark, a resolution authority with jurisdiction over the administrator for such Benchmark or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark, announcing or stating that (a) such administrator has ceased or will cease on a specified date to provide all Available Tenors of such Benchmark, permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark or (b) all Available Tenors of such Benchmark are or will no longer be representative of the underlying market and economic reality that such Benchmark is intended to measure and that representativeness will not be restored.
| Annex A-7 |
“Beneficiary” means Administrative Agent, Collateral Agent and each Lender.
“BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.
“Board Observation Rights Letter” means that certain board observation rights letter in the form attached hereto as Exhibit M to be delivered by Holdings to the Administrative Agent on the Restatement Effective Date.
“Board of Directors” means, with respect to any Person, (i) in the case of any corporation, the board of directors of such Person, (ii) in the case of any limited liability company, the board of managers or managing member of such Person (or, in relation to any limited liability company incorporated under the laws of England and Wales, the board of directors of such Person), (iii) in the case of any partnership, the board of directors of the general partner of such Person and (iv) in any other case, the functional equivalent of the foregoing.
“Borrower” and “Borrowers” are defined in the preamble.
“Borrowing” means Loans of the same Type, made, converted or continued on the same date and, in the case of LIBO Rate Loans, as to which a single Interest Period is in effect.
“Borrowing Date” means the date of any Borrowing made hereunder.
“Borrowing Period” means the period beginning on the Closing Date and ending on the earliest of:
(a) the twenty-fourth (24th) month after the Closing Date, with respect to the Delayed Draw Term Loans;
(b) the date the Delayed Draw Term Loan Commitments are permanently reduced to zero by the making of Loans; and
(c) the date of the termination of the Delayed Draw Term Loan Commitments pursuant to Section 8.01(a).
“Business Combination” means the merger, combination or consolidation of Holdings or any of its Subsidiaries with or into any Person or the sale of all or substantially all of the assets, stock or other evidence of beneficial ownership of Holdings or any of its Subsidiaries.
“Business Day” is any day that is not a Saturday, Sunday or a day on which commercial banks are authorized to close under the Laws of the State of New York and, if such day relates to any LIBO Rate Loan, means any such day on which dealings in Dollar deposits are conducted by and between banks in the London interbank market.
“Capital Expenditures” means expenditures for any fixed assets or improvements, replacements, substitutions or additions thereto or therefor which have a useful life of more than one year.
“Capitalized Lease” means, with respect to any Person, any lease of (or other arrangement conveying the right to use) real or personal property by such Person as lessee that is required under GAAP to be capitalized on the balance sheet of such Person.
| Annex A-8 |
“Capitalized Lease Obligations” means, with respect to any Person, obligations of such Person and its Subsidiaries under Capitalized Leases, and, for purposes hereof, the amount of any such obligation shall be the capitalized amount thereof determined in accordance with GAAP. Notwithstanding the foregoing, for purposes of this Agreement, any lease (whether entered into before or after December 31, 2018) that, in the good faith determination of such Person, would have been classified as an operating lease pursuant to IFRS as in effect on December 31, 2018 shall be deemed to be an operating lease and shall not be included in the definition of “Capitalized Lease Obligations.”
“CARES Act - Title I” means Title I of the Coronavirus Aid, Relief and Economic Security Act, as amended (including any successor thereto), and all requests, rules, guidelines, requirements and directives thereunder or issued in connection therewith or in implementation thereof, regardless of the date enacted, adopted, issued or implemented.
“Cash” means money, currency or a credit balance in any demand or Deposit Account; provided, however, that notwithstanding anything to the contrary contained herein, for purposes of calculating compliance with the requirements of Article III and Article VII hereof “Cash” shall exclude any amounts that would not be considered “cash” under GAAP or “cash” as recorded on the books of the Borrower and the Guarantors.
“Cash Equivalents” means (a) marketable direct obligations issued or unconditionally guaranteed by the United States or any agency or any State thereof having maturities of not more than one (1) year from the date of acquisition; (b) commercial paper maturing no more than one (1) year after its creation and having a rating of at least A 1 or P 1 from either Standard & Poor’s Ratings Group or Moody’s Investors Service, Inc.; (c) certificates of deposit maturing no more than one (1) year after issue; and (d) money market funds in which at least ninety-five percent (95.0%) of the assets of such fund constitute Cash Equivalents of the kinds described in clauses (a) through (c) of this definition.
“Change in Law” means the occurrence of any of the following: (a) the adoption or introduction of, or any change in any applicable law, treaty, rule or regulation (whether domestic or foreign) now or hereafter in effect and whether or not applicable to the Secured Parties on such date, (b) any change in interpretation, administration or implementation of any such law, treaty, rule or regulation by any Governmental Authority or (c) the issuance, making or implementation by any Governmental Authority of any interpretation, administration, request, regulation, guideline, or directive (whether or not having the force of law), including any risk-based capital guidelines; provided however that for purposes of this definition, (x) a change in law, treaty, rule, regulation, interpretation, administration or implementation shall include, without limitation, any change made or which becomes effective on the basis of a law, treaty, rule, regulation, interpretation administration or implementation then in force, the effective date of which change is delayed by the terms of such law, treaty, rule, regulation, interpretation, administration or implementation, (y) the Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub. L. 111-203, H.R. 4173) and all requests, rules, regulations, guidelines, interpretations or directives promulgated thereunder or issued in connection therewith shall be deemed to be a “Change in Law”, regardless of the date enacted, adopted, issued, implemented, or promulgated, whether before or after the Closing Date and (z) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States regulatory authorities, in each case pursuant to Basel III, shall each be deemed to be a “Change in Law”, regardless of the date enacted, adopted, issued, implemented, or promulgated, whether before or after the Closing Date.
| Annex A-9 |
“Change of Control” means the occurrence of any of: (i) the Key Investors shall fail to beneficially and of record own and control (directly or indirectly), at least fifty percent (50%) on a fully diluted basis of the aggregate outstanding voting and economic power of the Equity Interests of Holdings (inclusive of warrants and other convertible instruments) owned by the Key Investors on the Restatement Effective Date; (ii) an acquisition by an individual, legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of Equity Interests of Holdings, by contract or otherwise) of in excess of fifty percent (50%) of the Equity Interests of Holdings, (iii) Holdings or any Subsidiary thereof sells or transfers all or any substantial portion of its assets to another Person (other than the Liens under the Loan Documents and Transfers, Investments and Business Combinations expressly permitted by Article VII), (iv) (x) at any time, Holdings shall cease to own and control, of record and beneficially, directly or indirectly, one hundred percent (100%) of the aggregate voting and economic power of the Equity Interests of each Subsidiary of Holdings (other than the IP Hold-Co) free and clear of all Liens (except Permitted Liens) or (y) at any time, Borrower shall cease to own and control, of record and beneficially, directly or indirectly, at least ninety nine and eight tenths percent (99.8%) of the aggregate voting and economic power of the Equity Interests of IP Hold-Co free and clear of all Liens (except for Permitted Liens), or (v) a “change of control” occurs under the Note Purchase Documents or any other Material Indebtedness (other than the Loan Obligations) of Holdings or any of its Subsidiaries.
“Class” means (a) with respect to Lenders, each of the following classes of Lenders: (i) Lenders having Initial Term Loan Exposure, (ii) Lenders having Tranche 2 Term Loan Exposure and (iii) Lenders having Delayed Draw Term Loan Exposure, and (b) with respect to Loans, each of the following classes of Loans: (i) Initial Term Loans, (ii) Tranche 2 Term Loans and (ii) Delayed Draw Term Loans.
“Closing Agenda” means that certain Closing Agenda attached hereto as Exhibit D.
“Closing Date” means December 30, 2020.
“Closing Date Term Loans” is defined in Section 2.01(a)(i)(A).
“Code” means the means the Internal Revenue Code of 1986, as amended from time to time.
“Collateral” means collectively, (a) all of the real, personal and mixed property (including Equity Interests) in which Liens are granted or purported to be granted pursuant to any of the Collateral Documents as security for the Obligations; (b) all products, proceeds, rents and profits of the foregoing; (c) all of each Loan Party’s books and records related to any of the foregoing; and (d) all of the foregoing, whether now owned or existing or hereafter acquired or arising or in which any Loan Party now has or hereafter acquires any rights; in each case, other than Excluded Assets.
“Collateral Agent” is defined in the preamble.
“Collateral and Guarantee Requirement” means, at any time, the requirement that:
(a) the Agent shall have received each Collateral Document required to be delivered at such time as may be designated therein, pursuant to the terms of the Collateral Documents or Section 6.12, Section 6.15, Section 6.24 or Section 6.26, subject, in each case, to the limitations and exceptions of this Agreement, duly executed by each Loan Party thereto;
(b) all Guaranteed Obligations shall have been unconditionally guaranteed by each Subsidiary of Holdings organized or formed in an Asset Security Jurisdiction (other than the Specified Immaterial Foreign Subsidiary) including those that are listed on Schedule 1.01(b) hereto;
| Annex A-10 |
(c) except as otherwise provided hereunder or under any Collateral Document, the Obligations and the Guaranteed Obligations shall have been secured by a first-priority security interest in all of the Equity Interests of each Subsidiary which is organized or formed in an Asset Security Jurisdiction (other than Japan unless and until required to be pledged pursuant to Section 6.12) owned by Holdings and the other Loan Parties;
(d) except to the extent otherwise provided hereunder or under any Collateral Document, the Obligations and the Guaranteed Obligations shall have been secured by a perfected first-priority security interest in, and mortgages on, substantially all tangible and intangible assets of each Loan Party (including, without limitation, accounts receivable, insurance, inventory, equipment, investment property, Intellectual Property, other general intangibles, owned (but not leased) Material Real Property and proceeds of the foregoing, but excluding Excluded Assets), in each case, with the priority required by the Collateral Documents;
(e) [Reserved];
(f) the Collateral Agent shall have received (i) counterparts of a Mortgage with respect to each Material Real Property required to be delivered pursuant to Section 3.01, the Resignation Agreement or Exhibit E of the Reaffirmation and Omnibus Amendment Agreement (if applicable), Section 6.12, Section 6.24 and/or Section 6.26 (the “Mortgaged Properties”), within the time periods set forth therein, duly executed and delivered by the record owner of such property together with evidence that counterparts of the Mortgages are in form suitable for filing or recording in all filing or recording offices that the Collateral Agent may deem reasonably necessary or desirable in order to create a valid and subsisting perfected Lien on the property and/or rights described therein in favor of the Collateral Agent for the benefit of the Secured Parties and that all filing and recording taxes and fees have been paid or otherwise provided for, (ii) a title insurance policy for such property or the equivalent or other form (if applicable) available in each applicable jurisdiction (the “Mortgage Policies”) insuring the Lien of each such Mortgage as a valid Lien on the property described therein, free of any other Liens except Permitted Liens, in amounts (not to exceed the value of the real properties covered thereby) and together with such endorsements, coinsurance and direct access reinsurance as the Collateral Agent may reasonably request and providing for such other affirmative insurance as the Collateral Agent shall reasonably request (including endorsements for future advances under the Loan Documents), (iii) if requested by the Agent, a Survey of such property, provided that new or updated Surveys will not be required if an existing survey, ExpressMap or other similar documentation is available and survey coverage (including deletion of the general survey and issuance of survey-related endorsements) is available for the Mortgage Policies without the need for such new or updated Surveys, (iv) an opinion of local counsel, with respect to the execution, delivery, enforceability and perfection of the security interests created by the Mortgages and any related fixture filings in form and substance reasonably satisfactory to the Collateral Agent, (v) and other documents (including subordination or pari passu confirmations, and lien searches) as the Collateral Agent may reasonably request with respect to any such Mortgaged Property and (vi) to the extent reasonably requested by the Administrative Agent, if such Loan Party is in receipt of a completed “Life-of-Loan” Federal Emergency Management Agency Standard Flood Hazard Determination, and if any improvements on such Mortgaged Property are located in a special flood hazard area, (1) a notice about special flood hazard area status and flood disaster assistance duly executed by the applicable Loan Parties and (2) evidence of insurance required by Section 6.13 and/or the applicable Collateral Documents in form and substance reasonably satisfactory to the Agent;
(g) (i) except with respect to intercompany Indebtedness, if any Indebtedness for borrowed money in a principal amount in excess of One Million Dollars ($1,000,000) (individually) is owing to any Loan Party and such Indebtedness is evidenced by a promissory note, the Collateral Agent shall have received such promissory note, together with undated instruments of transfer with respect thereto endorsed in blank and (ii) with respect to intercompany Indebtedness, all Indebtedness of Holdings and each of its Subsidiaries shall be subject to the Intercompany Subordination Agreement and upon request of the Agent, any Indebtedness that is owing to any Loan Party (or Person required to become a Loan Party) shall be evidenced by a subordinated intercompany note (in form and substance satisfactory to the Agent and otherwise conforming with the requirements of the Intercompany Subordination Agreement), and such intercompany note shall be delivered to the Collateral Agent, along with undated instruments of transfer with respect thereto endorsed in blank;
| Annex A-11 |
(h) the Collateral Agent shall have received all certificates, agreements, documents and instruments, including, Uniform Commercial Code financing statements (or equivalent) and Control Agreements or as applicable notices and acknowledgement or equivalent with respect to deposit accounts, securities accounts or commodities accounts or other account Collateral, to the extent required by this Agreement, the Collateral Documents or as reasonably requested by the Collateral Agent to be filed, delivered, registered or recorded to create the Liens intended to be created by the Collateral Documents and perfect such Liens to the extent required by, and with the priority required by, the Collateral Documents and the other provisions of the term “Collateral and Guarantee Requirement,” shall have been filed, registered or recorded or delivered to the Administrative Agent for filing, registration or recording; and
(i) at any time any Collateral with a book value in excess of Seven Hundred and Fifty Thousand Dollars ($750,000) (when aggregated with all other Collateral at the same location) is located on any real property in a state of the United States or the District of Columbia (whether such real property is now existing or acquired after the Closing Date) which is not owned by a Loan Party, or is stored on the premises of a bailee, warehouseman, or similar party, use commercially reasonable efforts to obtain written subordinations or waivers or collateral access agreements, as the case may be, in form and substance reasonably satisfactory to the Collateral Agent.
Notwithstanding the foregoing provisions of this definition or anything in this Agreement or any other Loan Document to the contrary, (a) with respect to leases of real property entered into by any Loan Party, such Loan Party shall not be required to take any action with respect to creation or perfection of security interests with respect to such leases; provided that each Loan Party, as applicable, shall use commercially reasonable efforts to deliver landlord lien waivers, estoppels and collateral access letters and equivalent in respect of each such leased real property required by clause (h) above, (b) Liens required to be granted from time to time pursuant to the Collateral and Guarantee Requirement shall be subject to exceptions and limitations set forth in the Collateral Documents and, to the extent appropriate in the applicable jurisdiction, as agreed between the Collateral Agent and the Borrower, (c) prior to a Default, no perfection actions other than a UCC-filing shall be required in the United States, or in any state of the United States or the District of Columbia with respect to (i) motor vehicles and other assets and personal property subject to certificates of title with an individual book value of less than Two Hundred and Fifty Thousand Dollars ($250,000) except to the extent perfection is accomplished by the filing of a UCC financing statement or equivalent under applicable Law and letter of credit rights with a value of less than Two Hundred and Fifty Thousand Dollars ($250,000), except to the extent constituting a supporting obligation for other Collateral as to which perfection is accomplished by the filing of a UCC financing statement or equivalent under applicable Law (it being understood that no actions shall be required to perfect a security interest in assets subject to certificates of title or letter of credit rights, other than the filing of a UCC financing statement or equivalent under applicable Law), or (ii) commercial tort claims with an individual value of less than Two Hundred and Fifty Thousand Dollars ($250,000), (d) no perfection actions shall be required in the United States or any state of the United States or the District of Columbia with respect to any deposit account, securities account or commodities account which is an Excluded Account or accounts of the Loan Parties which have average monthly balances on deposit of less than One Hundred and Fifty Thousand Dollars ($150,000) individually and Two Hundred Thousand Dollars ($200,000) in the aggregate (such accounts, “De Minimis Accounts”), (e) unless required pursuant to Section 6.24 with respect to an additional Asset Security Jurisdiction after the Closing Date, no actions in any non-U.S. jurisdiction that is not an Existing Asset Security Jurisdiction or required by the Laws of any non-U.S. jurisdiction that is not an Existing Asset Security Jurisdiction shall be required to be taken to create any security interests in assets located or titled outside of the then applicable Asset Security Jurisdictions or to perfect or make enforceable any security interests in any assets (it being understood that there shall be no Collateral Document (or other security agreements or pledge agreements) governed under the laws of any non-U.S. jurisdiction that is not an Asset Security Jurisdiction), (f) no actions shall be required to be taken to perfect any security interest in Equity Interests other than Equity Interests of each Subsidiary which is organized or formed in an Asset Security Jurisdiction (excluding Japan) owned by Holdings, the Borrower or any Subsidiary Guarantor, (g) for so long as the Indebtedness evidenced by the Softbank Loan Documents remains outstanding, there shall be no requirement to take any actions to grant or perfect any security interest in the Dense Air Group (including in the Equity Interests issued by any member thereof), and (h) the Specified Immaterial Foreign Subsidiary shall be excluded from the Collateral and Guarantee Requirements at all times such Person qualifies as a Specified Immaterial Foreign Subsidiary.
| Annex A-12 |
The Collateral Agent may grant extensions of time for the provision or perfection of security interests in, or the obtaining of Mortgages, Mortgage Policies and Surveys with respect to, particular assets (including extensions beyond the Closing Date for the perfection of security interests in the assets of the Loan Parties on such date) where it reasonably determines, in consultation with the Borrower, that provision or perfection cannot be accomplished without undue effort or expense by the time or times at which it would otherwise be required by this Agreement or the Collateral Documents.
“Collateral Documents” means each of the Note Purchase Agreement, the Note Purchase Documents, each of the Loan Documents, the UK Security Documents, the Israeli Security Documents, the Japanese Security Documents, each Security Document, each Control Agreement, the Perfection Certificate and each other collateral document, debenture, mortgage, share charge, pledge, security agreement, intellectual property security agreement and any other similar document, notices, instruments or agreements entered into as of the Closing Date or from time to time thereafter pursuant to the requirements of Section 6.12 or 6.26 or any of the Loan Documents and all other collateral access agreements, mortgages, notices of pledge of accounts; perfection certificates, financing statements, security trustee deeds, collateral assignment agreements, deeds of trust, collateral access arrangements, collateral assignments, collateral reports, share transfer forms, powers of attorney and other similar instruments, documents, notices, acknowledgments, filings, registrations, endorsements delivered from time to time by any Loan Parties pursuant to this Agreement or any of the other Loan Documents in order to evidence, perfect, protect, assign, or grant a Lien on any real, personal or mixed property of that Person as security for the Obligations or the Guaranteed Obligations to the Collateral Agent for the benefit of the Secured Parties.
“Commitments” means each of the Initial Term Loan Commitment, the Tranche 2 Term Loan Commitment and, as applicable, the Delayed Draw Term Loan Commitments.
“Company Data and Data Sets” is defined in Section 5.17(m).
“Compliance Certificate” means a certificate in the form attached hereto as Exhibit C.
“Conduct of Business Provisions” is defined in Section 6.14.
| Annex A-13 |
“Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.
“Consolidated Current Assets” means, as at any date of determination, the total assets of Holdings and its Subsidiaries on a consolidated basis that may properly be classified as current assets in conformity with GAAP, excluding cash and Cash Equivalents.
“Consolidated Current Liabilities” means, as at any date of determination, the total liabilities of Holdings and its Subsidiaries on a consolidated basis that may properly be classified as current liabilities in conformity with GAAP, excluding the current portion of long term debt.
“Consolidated Excess Cash Flow” means, for any period, an amount (if positive) determined for Holdings and its Subsidiaries on a consolidated basis equal to: (a) the sum, without duplication, of the amounts for such period of (i) EBITDA, plus (ii) interest income, plus (iii) other non-ordinary course income (excluding any gains or losses attributable to the Asset Dispositions and Transfers), plus (iv) the Consolidated Working Capital Adjustment, minus (b) the sum, without duplication, of the amounts for such period of (i) voluntary and scheduled repayments of Consolidated Total Debt (excluding repayments of revolving loans except to the extent the related revolving commitments are permanently reduced in connection with such repayments), plus (ii) Capital Expenditures of Holdings and its Subsidiaries (net of any proceeds of (x) Net Cash Proceeds from Asset Dispositions to the extent reinvested in accordance with Section 2.01(e), and (y) any proceeds of related financings with respect to such expenditures), plus (iii) Consolidated Interest Expense, plus (iv) provisions for current taxes based on income of Holdings and its Subsidiaries and payable in cash with respect to such period, plus (v) to the extent permitted and added back pursuant to clause (e) of the definition of EBITDA, the amount of fees or expenses paid in respect to the transactions described in clause (e) of the definition of EBITDA during such period.
“Consolidated Interest Expense” means, for any period, total interest expense (including that portion attributable to Capitalized Leases in accordance with GAAP and capitalized interest) of Holdings and its Subsidiaries on a consolidated basis with respect to all outstanding Consolidated Total Debt, including all commissions, discounts and other fees and charges owed with respect to letters of credit and net costs under Hedging Contracts, including any amounts referred to in Section 2.02(b).
“Consolidated Total Debt” means, as at any date of determination, the aggregate stated balance sheet amount of all Indebtedness of Holdings and its Subsidiaries determined on a consolidated basis in accordance with GAAP.
“Consolidated Working Capital” means, as at any date of determination, the excess or deficiency of Consolidated Current Assets over Consolidated Current Liabilities.
“Consolidated Working Capital Adjustment” means, for any period of determination on a consolidated basis, the amount (which may be a negative number) by which Consolidated Working Capital as of the beginning of such period exceeds (or is less than) Consolidated Working Capital as of the end of such period.
| Annex A-14 |
“Contingent Obligation” means, with respect to any Person, any obligation of such Person guaranteeing or intending to guarantee any Indebtedness, leases, dividends or other obligations (“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, (a) the direct or indirect guaranty, endorsement (other than for collection or deposit in the ordinary course of business), co-making, discounting with recourse or sale with recourse by such Person of the obligation of a primary obligor, (b) the obligation to make take-or-pay or similar payments, if required, regardless of nonperformance by any other party or parties to an agreement, (c) any obligation of such Person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (A) for the purchase or payment of any such primary obligation or (B) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, assets, 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 such primary obligation against loss in respect thereof; provided, however, that the term “Contingent Obligation” shall not include any product warranties extended in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation with respect to which such Contingent Obligation is made (or, if less, the maximum amount of such primary obligation for which such Person may be liable pursuant to the terms of the instrument evidencing such Contingent Obligation) or, if not stated or determinable, the maximum reasonably anticipated liability with respect thereto (assuming such Person is required to perform thereunder), as determined by such Person in good faith.
“Contractual Obligation” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.
“Contributing Guarantors” is defined in Section 9.02.
“Control Agreement” means, with respect to any Deposit Account, any securities account, commodity account, securities entitlement or commodity contract, an agreement, in form and substance reasonably satisfactory to Collateral Agent, among Collateral Agent, the financial institution or other person at which such account is maintained or with which such entitlement or contract is carried and the Loan Party maintaining such account, effective to grant “control” (as defined under the applicable UCC) over such account to the Collateral Agent (including, where consistent with market practice in the relevant jurisdiction, obtaining an acknowledgement of such notice in respect of accounts subject to the Collateral Agent’s Liens where consistent with market practice in the relevant jurisdiction); it being understood that unless specifically specified in this Agreement or any Loan Document, any reference to a Control Agreement shall mean a Control Agreement subject to springing dominion pursuant to which the applicable Loan Party shall maintain control unless and until a notice of sole control has been given by Collateral Agent to the financial institution or other person at which such account is maintained or with which such entitlement or contract is carried.
“Controlled Account” means each Deposit Account, Securities Account, commodities account, securities entitlement or commodity contract that is (x) subject to a Control Agreement for the benefit of the Secured Parties, in accordance with the terms of this Agreement and of the applicable Security Documents or (y) which is otherwise subject to the sole dominion and control of the Collateral Agent pursuant to Section 6.15 hereof, for the benefit of the Secured Parties, in accordance with the terms of the applicable Collateral Documents, or subject to an equivalent arrangement required for perfection under English law or where applicable other applicable local law in the Relevant Jurisdictions and reasonably acceptable to the Collateral Agent.
“Conversion/Continuation Date” means the effective date of a continuation or conversion, as the case may be, as set forth in the applicable Conversion/Continuation Notice.
“Conversion/Continuation Notice” means a Conversion/Continuation Notice substantially in the form of Exhibit A-2.
| Annex A-15 |
“Convertible Note” means each Senior Secured Convertible Note issued by Holdings pursuant to the Note Purchase Agreement, in each case, as the same may be amended, restated, amended and restated, modified or supplemented from time to time in accordance with the terms of this Agreement, the Note Purchase Agreement, and the Pari Passu Intercreditor Agreement.
“Copyrights” means all of the following: (a) all copyright rights in any work subject to the copyright laws of the United States or any other country, whether as author, assignee, transferee or otherwise (including all copyrights in software), (b) all registrations and applications for registration of copyright in the United States or any other country, including registrations, renewals and pending applications for registration, (c) all income, royalties, damages and other payments now or hereafter due or payable under and with respect thereto, including payments under all licenses entered into in connection therewith and damages and payments for past or future infringements or other violations, and (d) the right to sue for past, present and future infringement or other violation thereof.
“Counterpart Agreement” means a Counterpart Agreement substantially in the form of Exhibit K delivered by a Loan Party pursuant to Section 6.12(b).
“Covered Entity” means any of the following: (i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b); (ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or (iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, C.F.R. § 382.2(b).
“Covered Party” has the meaning assigned to it in Section 13.25(b).
“Credit Date” means the date of a Credit Extension.
“Credit Extension” means the making of a Loan.
“Critical Technology” is defined in Section 5.32.
“Daily Simple SOFR” means, for any day, SOFR, with the conventions for this rate (which will include a lookback) being established by the Agent in accordance with the conventions for this rate recommended by the Relevant Governmental Body for determining “Daily Simple SOFR” for syndicated business loans; provided, that if the Administrative Agent decides that any such convention is not administratively feasible for the Administrative Agent, then the Administrative Agent may establish another convention in its reasonable discretion.
“DAL Convertible Loan Facility” means that certain credit facility agreement originally dated 5 February 2017 by and among Dense Air Limited (as borrower) and Softbank (as lender), each capitalized term as defined therein, as the same may have been amended, amended and restated, modified, supplemented or otherwise changed from time to time, including by way of sale by Softbank of its rights and interests as lender thereunder, substantially in the manner described to and consented to by the Collateral Agent prior to the Closing Date.
“DAL Loan Party” means that person or those persons that are, have become or may become “Lenders” under and as defined in the DAL Convertible Loan Facility.
“DAL Loan Party Group” means any Person controlling, controlled by or under common control with any DAL Loan Party that is not also controlled by FIG (for purposes of this definition, “control” means the power, through ownership of securities, contract or otherwise, to direct the policies of the applicable person or entity).
| Annex A-16 |
“De Minimis Accounts” has the meaning assigned in the definition of “Collateral and Guarantee Requirement.”
“De-SPAC Transaction” has the meaning assigned such term in the Merger Consent.
“Debtor Relief Law” means (i) the Bankruptcy Code of the United States, and (ii) all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, administration, compulsory winding up, management winding up, moratorium, rearrangement, receivership, insolvency, reorganization, rehabilitation or similar debtor relief Laws of the United States, any Relevant Jurisdiction and/or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.
“Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, the making of a determination or any combination of the foregoing, would become an Event of Default.
“Defaulting Lender” means, subject to Section 2.08(b), any Lender that (a) has failed to (i) fund all or any portion of its Loans within two (2) Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lender’s determination that one (1) or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Administrative Agent, or any other Lender any other amount required to be paid by it hereunder within two (2) Business Days of the date when due, (b) has notified the Borrower, the Administrative Agent in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within five (5) Business Days after written request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and the Borrower that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Laws, or (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one (1) or more of clauses (a) through (e) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.08(b)) upon delivery of written notice of such determination to the Borrower and each Lender.
“Default Period” means, with respect to any Defaulting Lender, the period commencing on the date it became a Defaulting Lender and ending on the earliest of the following dates: (a) the date on which all Term Loan Commitments are cancelled or terminated and/or the Obligations are declared or become immediately due and payable, and (b) the date on which the Borrower and Administrative Agent determine such Lender is no longer a Defaulting Lender under Section 2.08(b).
| Annex A-17 |
“Default Rate” means the LIBO Rate or Base Rate, as applicable, plus the Applicable Default Interest Rate.
“Default Rights” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
“Delayed Draw Funding Conditions” means a determination as of the date of Administrative Agent’s receipt of a Notice of Borrowing that the Gross EBITDA Leverage Incurrence Ratio does not exceed 4.00:1:00.
“Delayed Draw Term Loan” means a loan made by a Lender pursuant to Section 2.01(a)(ii)(A).
“Delayed Draw Term Loan Commitment” means the commitment of a Lender to make or otherwise fund a Delayed Draw Term Loan Commitment, and “Delayed Draw Term Loan Commitments” means such commitments of all Lenders in the aggregate. The amount of each Lender’s Delayed Draw Term Loan Commitment, if any, is set forth on Appendix A or in the applicable Assignment Agreement, subject to any adjustment or reduction pursuant to the terms and conditions hereof. The aggregate amount of the Delayed Draw Term Loan Commitments as of the Closing Date is Twenty Million Dollars ($20,000,000.00).
“Delayed Draw Term Loan Commitment Termination Date” means, for any Delayed Draw Term Loan Commitment, the last day of the applicable Borrowing Period for such Delayed Draw Term Loan Commitment.
“Delayed Draw Term Loan Exposure” means, with respect to any Lender as of any date of determination, the sum of that Lender’s unused Delayed Draw Term Loan Commitment and the aggregate outstanding principal amount of the Delayed Draw Term Loans of that Lender.
“Dense Air Conversion Date” means the date on which the exercise of the debt to equity conversion provisions set out in the DAL Convertible Loan Facility is completed.
“Dense Air Group” means Dense Air Holdco, Dense Air Limited and their respective subsidiaries from time to time.
“Dense Air Holdco” means, following the Dense Air Conversion Date, any entity that holds, either directly or indirectly, whether now or in the future not less than ninety-five percent (95%) of the outstanding issued share capital in Dense Air Limited from time to time.
“Dense Air Limited” means Dense Air Limited, a company organized under the laws of England and Wales.
“Deposit Account” means a demand, time, savings, passbook or like account with a bank, savings and loan association, credit union or like organization, other than an account evidenced by a negotiable certificate of deposit.
“Designated Jurisdiction” has the meaning given to that term in Section 5.22(b)(v).
| Annex A-18 |
“Disclosure Schedule” means each of the Disclosure Schedules attached hereto.
“Disqualified Equity Interests” means Equity Interests that by their terms (or by the terms of any security into which they are convertible or for which they are exchangeable) (a) require the payment of any cash dividends, (b) mature or are mandatorily redeemable or subject to mandatory repurchase or redemption or repurchase at the option of the holders thereof, in whole or in part and whether upon the occurrence of any event, pursuant to a sinking fund obligation, on a fixed date or otherwise, prior to the date that is three hundred and sixty-five (365) days after the Maturity Date at such time of any then outstanding Loan or (c) are convertible or exchangeable, automatically or at the option of any holder thereof, into any Indebtedness other than Permitted Indebtedness; provided that if such Equity Interests are issued pursuant to a plan for the benefit of employees of Holdings or any Subsidiary or by any such plan to such employees, such Equity Interests shall not constitute Disqualified Equity Interests solely because they may be required to be repurchased by such entity in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s termination, death or disability.
“Distributable Income” means, at any time, the maximum amount of income distributable by a Person at such time under the laws of such Persons jurisdiction, as certified by independent certified public accountants of recognized international standing pursuant to Section 6.02(a).
“Distribution” is defined in Section 6.22(a).
“Dollars,” “dollars” or use of the “$” sign means only lawful money of the United States and not any other currency, regardless of whether that currency uses the “$” sign to denote its currency or may be readily converted into lawful money of the United States.
“Domestic Subsidiary” means a Subsidiary of Holdings organized under the laws of the United States, any state, territory or province thereof; provided that no Person that is a direct or indirect Subsidiary of a Foreign Subsidiary shall be a Domestic Subsidiary.
“Early Opt-in Effective Date” means, with respect to any Early Opt-in Election, the sixth (6th) Business Day after the date notice of such Early Opt-in Election is provided to the Lenders, so long as the Administrative Agent has not received, by 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Early Opt-in Election is provided to the Lenders, written notice of objection to such Early Opt-in Election from Lenders comprising the Requisite Lenders.
“Early Opt-in Election” means the occurrence of: (1) notification by the Agent to (or the request by the Borrower to the Administrative Agent to notify) each of the other parties hereto that at least five (5) currently outstanding U.S. dollar-denominated syndicated credit facilities at such time contain (as a result of amendment or as originally executed) a SOFR-based rate (including SOFR, a term SOFR or any other rate based upon SOFR) as a benchmark rate (and such syndicated credit facilities are identified in such notice and are publicly available for review), and (2) the joint election by the Administrative Agent and the Borrower to trigger a fallback from USD LIBOR and the provision by the Administrative Agent of written notice of such election to the Lenders.
| Annex A-19 |
“EBITDA” means with respect to such Person and its consolidated Subsidiaries for any applicable period, on a consolidated basis, the net income of such Person and its consolidated Subsidiaries for such period, increased, without duplication, by the following, in each case (only to the extent (and in the same proportion) deducted (and not added back or excluded) in determining consolidated net income for such period): (a) interest (including amounts referred to in Section 2.02(b)), (b) taxes, (c) depreciation, (d) non-cash stock compensation expenses, (e) non-recurring costs and expenses in connection with (i) (x) the preparation of and consummation of the Loan Documents, (y) the preparation and consummation of the Note Purchase Documents and the transactions in connection therewith on or within sixty days after the Restatement Effective Date (including the issuance of the Convertible Notes), and (ii) the preparation of the Merger Agreement and related documents and the consummation of the transactions contemplated thereby, provided that the maximum amount permitted to be added back under this clause (e) when calculating the EBITDA of Holdings and its Subsidiaries for any twelve month measurement period ending on or prior to September 30, 2022 shall not exceed $8,500,000 in the aggregate for such period, (f) warrant liabilities, and (g) other noncash amortization expenses, in each case, determined in accordance with GAAP. To the extent the PPP Loan was or is treated as a gain on the financial statements of the Loan Parties, it is understood and agreed, that for purposes of this Agreement, no corresponding reversal of this gain needs to be applied or recognized when calculating EBITDA in the period so forgiven. Unless otherwise noted herein, references to EBITDA, shall be references to the EBITDA of Holdings and its consolidated Subsidiaries. For purposes of any calculations of EBITDA (or any related calculation) under the Loan Documents, the EBITDA of Holdings and its Subsidiaries on a consolidated basis after giving effect to the Merger, but relating to periods before giving effect to the Merger Agreement and related documentation addbacks outlined in clause (e) above, shall be deemed to be: (i) for the fiscal quarter ended June 30, 2021, the EBITDA of the Borrower and its Subsidiaries on a consolidated basis for the fiscal quarter ended June 30, 2021, (ii) for the fiscal quarter ended March 31, 2021, $(5,350,000) and for the fiscal quarter ended December 31, 2020, $12,683,000. For avoidance of doubt and without duplication, to the extent not previously included in the deemed numbers set forth in the immediately preceding sentence, addbacks permitted under clause (e) above shall be permitted for the purposes of calculating historical deemed EBITDA of Holdings and its Subsidiaries on a consolidated basis.
“Eligible Assignee” means any Person (other than a natural person or a trust of which any natural person is the beneficiary) that is (i) a Lender, an Affiliate of a Lender or a Related Fund (any two (2) or more Related Funds being treated as a single Eligible Assignee for all purposes hereof) and (ii) a commercial bank, insurance company, investment or mutual fund or other entity that is an “accredited investor” (as defined in Regulation D under the Securities Act) and which extends credit or buys loans in the ordinary course of business; provided, no Direct Competitor (unless approved by Borrower and the Administrative Agent, acting in consultation with the Requisite Lenders) and no Loan Party or any Affiliate thereof shall be an Eligible Assignee; provided further, no consent of the Borrower shall be required if an Event of Default has occurred. “Direct Competitor” as used herein shall mean an operating business of a 5G wireless telecommunications provider.
“End of Term Fee” means an end of term fee equal to two and one half percent (2.5%) of the principal balance of the Loans and any other Obligations advanced or otherwise owed hereunder (excluding Obligations arising under the Note Purchase Documents), including, without limitation, any fees, the capitalized interest and any Applicable Prepayment Premiums.
“Environmental Claim” means any investigation, notice, notice of violation, claim, action, suit, proceeding, demand, abatement order or other order or directive (conditional or otherwise), by any Governmental Authority or any other Person, arising (a) pursuant to or in connection with any actual or alleged violation of any applicable Environmental Law; (b) in connection with any Hazardous Material or any actual or alleged Hazardous Materials Activity; or (c) in connection with any actual or alleged damage, injury, threat or harm to health, safety, natural resources or the environment.
“Environmental Laws” means any and all current or future Laws, or any other requirements of Governmental Authorities relating to (a) environmental matters, or (b) occupational safety and health, industrial hygiene, land use or the protection of human, plant or animal health or welfare, in any manner applicable to Holdings or any of its Subsidiaries or any Facility owned, leased or operated by Holdings or any of its Subsidiaries.
| Annex A-20 |
“Environmental Liability” means all liabilities (contingent or otherwise, known or unknown), monetary obligations, losses (including monies paid in settlement), damages, natural resource damages, costs and expenses (including all reasonable fees, costs, client charges and expenses of counsel, experts and consultants), fines, penalties, sanctions and interest arising directly or indirectly as a result of or based upon (a) any Environmental Claim; (b) any actual, alleged or threatened non-compliance with any applicable Environmental Law or Environmental Permit; (c) any actual, alleged or threatened Release of or exposure to Hazardous Materials; (d) any Remedial Action; or (e) any contract, agreement, or other arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
“Environmental Permit” means any permit, license, authorization, approval, registration or entitlement required by or issued pursuant to any Environmental Law or by any Governmental Authority pursuant to Environmental Law.
“Equipment” means all present and future “equipment” as defined in the Code (or equivalent in the equivalent applicable Law of a relevant non-U.S. jurisdiction) in effect on the Closing Date with such additions to such term as may hereafter be made, and includes without limitation all machinery, fixtures, goods, vehicles (including motor vehicles and trailers), and any interest in any of the foregoing.
“Equity Interests” means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such securities convertible into or exchangeable for shares of capital stock (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.
“ERISA” means the Employee Retirement Income Security Act of 1974, and its regulations.
“ERISA Affiliate” means any trade or business (whether or not incorporated) under common control with Holdings or any of its Subsidiaries 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 a Loan Party, either Borrower or any other Loan Party or ERISA Affiliate thereof 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 that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by any Loan Party 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; (e) an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; (f) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon any Loan Party or any ERISA Affiliate; (g) or any Foreign Plan Event.
| Annex A-21 |
“Event of Default” is defined in Article VIII.
“Exchange Act” is the Securities Exchange Act of 1934, as amended.
“Excluded Account” means any segregated deposit account or securities account specifically and exclusively used to hold payroll and payroll taxes and other employee benefit payments, Taxes required to be collected, remitted or withheld (including sales taxes) and other funds which any Loan Party holds in trust or as an escrow or fiduciary for another third party which is not a Loan Party or its Subsidiary (including for the purposes of paying taxes in the ordinary course of business).
“Excluded Assets” means the following assets and property of any Loan Party (i) any of such Loan Party’s right, title or interest in any license, contract or agreement to which such Loan Party is a party or any of its right, title or interest thereunder to the extent, but only to the extent, that such a grant would, under the express terms of such license, contract or agreement result in the termination, a material breach of the terms of, or constitute a material default under, such license, contract or agreement (other than to the extent that any such term (A) has been waived or (B) would be rendered ineffective pursuant to Sections 9-406, 9-408, 9-409 of the UCC or other applicable provisions of the UCC (or equivalent) of any relevant jurisdiction or any other applicable law (including the applicable Debtor Relief Laws) or principles of equity); provided, that (x) immediately upon the ineffectiveness, lapse, termination or waiver of any such provision, the Collateral shall include, and such Loan Party shall be deemed to have granted a security interest in, all such right, title and interest as if such provision had never been in effect and (y) the foregoing exclusion shall in no way be construed so as to limit, impair or otherwise affect the Collateral Agent’s unconditional continuing security interest in and liens upon any rights or interests of a Loan Party in or to the proceeds of, or any monies due or to become due under, any such license, contract or agreement, provided that such security interest or lien would not itself result in the termination, material breach of the terms of a material default under such license, contract or agreement (other than to the extent that any such term (A) has been waived or (B) would be rendered ineffective pursuant to Sections 9-406, 9-408, 9-409 of the UCC or other applicable provisions of the UCC (or equivalent) of any relevant jurisdiction or any other applicable law (including the applicable Debtor Relief Laws) or principles of equity), (ii) any intent-to-use United States trademark applications for which an amendment to allege use or statement of use has not been filed under 15 U.S.C. § 1051(c) or 15 U.S.C. § 1051(d), respectively, or if filed, has not been deemed in conformance with 15 U.S.C. § 1051(a) or examined and accepted, respectively, by the United States Patent and Trademark Office, provided that upon such filing and acceptance, such intent-to-use applications shall be included in the definition of Collateral, (iii) any Excluded Accounts if and for so long as the accounts described therein as used solely for the purposes described in the definition of “Excluded Accounts”, (iv) Equity Interests issued by Dense Air Limited, Dense Air Holdco, or any of their subsidiaries and held by any Loan Party or any of their Subsidiaries, and (v) such other assets and property as to which the Collateral Agent (in its sole discretion) determines that the cost of obtaining or perfecting a security interest therein is excessive in relation to the benefits afforded to the Secured Parties by the security to be afforded thereby; provided, however, that (x) the exclusions described in clauses (i) through (v) above shall in no way be construed as to limit, impair or otherwise affect the Collateral Agent’s unconditional continuing security interest in and liens upon any rights or interest of the Loan Parties in or to the proceeds of, or any monies due or to become due under, any such leases, contracts, agreements, licenses, permits, equipment, Equity Interests, accounts or other assets and (y) immediately upon the effectiveness, lapse termination or waiver of any such restriction, provision or agreement, references to the Collateral shall include and the Loan Parties shall be deemed to have granted a security interest with respect to such leases, contracts, agreements, licenses, permits, equipment, Equity Interests, accounts and other assets as if such provision or restriction or agreement had never been in effect.
| Annex A-22 |
“Excluded Taxes” means any of the following Taxes imposed on or with respect to a Lender or required to be withheld or deducted from a payment to such Lender, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of a Lender being organized under the laws of, or having its principal office located in, the jurisdiction imposing such Tax (or any political subdivision thereof), or (ii) that are Other Connection Taxes; (b) U.S. federal withholding Taxes imposed on amounts payable to or for the account of a Lender with respect to an applicable interest in a Loan or Term Loan Commitment pursuant to a law in effect on the date on which such Lender designates a new lending office or acquires its interests or rights under this Agreement, except, in each case, to the extent that, (x) pursuant to Section 2.03, amounts with respect to such Taxes were payable either to such Lender immediately before it changed its lending office or to such Lender’s assignor immediately before such Lender became a party hereto or (y) such assignment of a Lender’s interest under this Agreement was triggered by any Loan Party’s request; (c) Taxes attributable to a Lender’s failure to comply with Section 2.03(e); and (d) any U.S. federal withholding Taxes imposed under FATCA as a result of a Lender not being in compliance with FATCA or such Lender failing to provide the Borrower with all forms reasonably requested by the Borrower establishing an exemption from U.S. federal withholding Taxes imposed under FATCA. Any Israeli VAT required to be paid with respect to a payment made pursuant to this Agreement or any Loan Document shall not be included in the definition of “Excluded Taxes”.
“Executive Order” is defined in Section 5.22(b)(i).
“Existing Credit Agreement” shall have the meaning assigned to it in the Recitals hereto.
“Existing Indebtedness” means Indebtedness and other obligations outstanding under the Original Credit Agreement.
“Existing Security Agreement” means the Security Agreement dated December 30, 2020 among the Borrower, the Guarantors listed on the signature pages to the Reaffirmation and Omnibus Amendment Agreement as Grantors, and the Collateral Agent, as amended and restated by that certain Amended and Restated Security Agreement dated as of the Restatement Effective Date and as the same may be further amended, restated, amended and restated, supplemented, or otherwise modified in accordance with the terms hereof and of the Pari Passu Intercreditor Agreement.
“Export Control Regulations” shall mean the Export Administration Act, the Arms Export Control Act, the Export Administration Regulations and the International Traffic in Arms Regulations, the Export Control Act 2002 (United Kingdom) each as amended from time to time, and any similar law applicable to the operations or activities of Holdings or any of its Subsidiaries in any jurisdiction.
“Facility” means any real property (including all buildings, fixtures or other improvements located thereon) now, hereafter or heretofore owned, leased, operated or used by Holdings or any of its Subsidiaries or any of their respective predecessors.
“Fair Share” is defined in Section 9.02
“Fair Share Contribution Amount” is defined in Section 9.02.
“FATCA” shall mean Sections 1471 through 1474 of the Code, as of the Closing Date (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, and any agreements entered into pursuant to Section 1471(b)(1) of the Code.
| Annex A-23 |
“FCC” means the Federal Communications Commission or any Governmental Authority substituted therefor.
“FCPA” shall mean the Foreign Corrupt Practices Act of 1977 (as amended from time to time).
“Federal Funds Effective Rate” means for any day, the rate per annum (expressed, as a decimal, rounded upwards, if necessary, to the next higher one one-hundredth of one percent (1/100 of 1%)) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided, if such day is not a Business Day, the Federal Funds Effective Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day.
“Federal Reserve Bank of New York’s Website” means the website of the Federal Reserve Bank of New York at http://www.newyorkfed.org (or any successor source for the secured overnight financing rate identified as such by the administrator of the secured overnight financing rate from time to time).
“Federal Reserve Board” means the Board of Governors of the Federal Reserve System of the United States.
“Fee Letter” means (x) the letter agreement dated as of the Closing Date between the Borrower and Administrative Agent and (y) each other letter agreement designated by the Borrower and the Administrative Agent as a “Fee Letter” from time to time.
“FIG” is defined in Section 13.08.
“Financial Plan” is defined in Section 6.02(e).
“Financial Statement Delivery Date” means the earlier of the date on which the Loan Parties deliver or are required to deliver their financial statements to the Administrative Agent and the Lenders under Section 6.02(a), Section 6.02(b) or Section 6.02(c), as the case may be.
“First Priority” means, with respect to any Lien purported to be created in any Collateral pursuant to any Collateral Document, such Lien is prior to all other Liens on such Collateral, subject to any Permitted Lien which is prior as a matter of law or agreement.
“Floor” means the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to USD LIBOR, which floor shall in no event be less than zero.
“Foreign Lender” shall mean a Lender that is not a U.S. Person.
“Foreign Plan” means (a) any employee pension benefit plan (within the meaning of Section 3(2) of ERISA, whether or not subject to ERISA) that is not subject to United States law, that is maintained or contributed to by any Loan Party or any of their Subsidiaries or any ERISA Affiliate and (b) any other material foreign pension in accordance to any other applicable Law and special arrangements, collective bargaining agreements and extension orders in any applicable jurisdiction that is maintained or contributed to by any Loan Party or any of their Subsidiaries or any ERISA Affiliate.
| Annex A-24 |
“Foreign Plan Event” means (a) with respect to any Foreign Plan, (i) the failure to make or, if applicable, accrue in accordance with normal accounting practices, any employer or employee contributions or payments required by applicable Law or by the terms of such Foreign Plan, (ii) the failure to register or loss of good standing with applicable regulatory authorities of any such Foreign Plan required to be registered, or (iii) the failure of any Foreign Plan to comply with any material provisions of applicable law and regulations or with the material terms of such Foreign Plan, or (b) a final determination that any Loan Party is responsible for a deficit or funding shortfall in a multi-employer pension plan as that term is defined under applicable foreign pension and benefits standards statute or regulation or other Foreign Plan administered by an entity other than a Loan Party under a collective bargaining agreement, in each case to the extent material to Holdings and Subsidiaries, taken as a whole.
“Foreign Subsidiary” means a Subsidiary that is not a Domestic Subsidiary.
“Foreign Subsidiary Accession Requirements” is defined in Section 6.12(c).
“Fortress” is defined in the Preamble to the Agreement.
“Fortress Member” means the Agent and its respective Permitted Transferees (as defined in the IP Hold-Co Operating Agreement).
“Free Cash Flow” means, for any Person for any period, EBITDA plus cash interest income of such Person for such period, less income taxes, Capital Expenditures and Investments (to the extent made in compliance with this Agreement), Scheduled Debt Service (if any) and variations in working capital made in the ordinary course of business, with respect to such period.
“Funded Debt” means, with respect to any specified Person, any indebtedness of such Person (excluding accrued expenses and trade payables), whether or not contingent;
(1) in respect of borrowed money or advances; or
(2) evidenced by loan agreements, bonds, notes or debentures or similar instruments or letters of credit (solely to the extent such letters of credit or other similar instruments have been drawn and remain unreimbursed) or, without duplication, reimbursement agreements in respect thereof.
“Funding Guarantor” is defined in Section 9.02.
“GAAP” means (a) in the case of Holdings, the Borrower, IP Hold-Co and the Domestic Subsidiaries, United States generally accepted accounting principles; and (b) in the case of any Loan Party which is a Foreign Subsidiary, the generally accepted accounting principles applying to it in the country of its incorporation or in a jurisdiction agreed to by the Administrative Agent or, if adopted by the relevant Loan Party, the international accounting standards within the meaning of IAS Regulation 1606/2002 (“IFRS”), in each case, to the extent applicable to the relevant financial statements and applied on a consistent basis.
“Golden Wayford Note” means that certain Convertible Promissory Note, dated as of August 6, 2015 (as the same has been and may be amended, restated, amended and restated, supplemented or otherwise modified from time to time), by and between Borrower and Golden Wayford Limited.
| Annex A-25 |
“Golden Wayford Subordination Agreement” means that certain Subordination Agreement dated August 6, 2015 and executed by Golden Wayford Limited with respect to the Borrower’s obligations under the Golden Wayford Note, as the same has been amended, amended and restated, restated, supplemented or otherwise modified from time to time pursuant to which Golden Wayford agreed to subordinate the Indebtedness evidenced by the Golden Wayford Note to the Obligations, the Agent (on its own behalf and on behalf of the Lenders holding such Loans and Obligations) being the beneficiary of such agreement as the successor in interest to PWB (the prior agent on behalf of the lenders and other secured parties and the successor by merger to Square 1 Bank).
“Governmental Authority” means any nation or government, any federal, supranational, state or other political subdivision of any of the foregoing, any ministry, agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government, any securities exchange and any self-regulatory organization.
“Gross EBITDA Leverage Incurrence Ratio” means, with respect to Holdings and its consolidated Subsidiaries, as of any date of determination, the ratio of (a) the total outstanding principal amount of the Loans after giving pro forma effect to the borrowing of the Delayed Draw Term Loan requested under the applicable Notice of Borrowing to (b) the total EBITDA of Holdings and its consolidated Subsidiaries for the most recently ended Test Period.
“Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly and including any obligation, direct or indirect, of the guarantor (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued in support of such Indebtedness or obligation; provided that the term “Guarantee” shall not include endorsements for collection or deposit in the ordinary course of business. The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee is made or, if not so stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as determined by such Person in good faith. The term “Guarantee” used as a verb has a corresponding meaning.
“Guaranteed Obligations” is defined in Section 9.01.
“Guarantor” means Holdings and each Subsidiary of Holdings (other than the Borrower) listed on Schedule 1.01(b) hereto and each other Subsidiary of Holdings (other than the Borrower) organized or formed in an Initial Asset Security Jurisdiction and each other Subsidiary of Holdings that guarantees the Obligations (other than the members of the Dense Air Group, Subsidiaries of Holdings organized in India or, for so long as such Subsidiaries remain Immaterial Foreign Subsidiaries, Immaterial Foreign Subsidiaries organized in non-Initial Asset Security Jurisdictions unless required to become Loan Parties pursuant to Section 6.12) and each other Person, if any, that from time to time becomes a Guarantor by executing and delivering a Guaranty, or becomes a party to this Agreement as Guarantor by joinder or otherwise.
“Guaranty” means the guaranty of each Guarantor set forth in Article IX.
“Harmful Code” is defined in Section 5.17(f).
| Annex A-26 |
“Hazardous Materials” means any chemical, material or substance, exposure to which is prohibited, limited or regulated by any applicable Governmental Authority or which may or could pose a hazard to the health and safety of the owners, occupants or any Persons in the vicinity of any Facility or to the indoor or outdoor environment.
“Hazardous Materials Activity” means any past, current, proposed or threatened activity, event or occurrence involving any Hazardous Materials, including the use, manufacture, possession, storage, holding, presence, existence, location, Release, threatened Release, discharge, placement, generation, transportation, processing, construction, treatment, abatement, removal, remediation, disposal, disposition or handling of any Hazardous Materials, and any corrective action or response action with respect to any of the foregoing.
“Hedging Contract” means any rate or currency swap, cap or collar agreement or any other agreement designed to hedge risk with respect to interest rate or currency fluctuations, whether or not pursuant to a master agreement.
“Holdings” is defined in the preamble.
“IFRS” means International Financial Reporting Standards.
“Immaterial Foreign Subsidiary” means any Foreign Subsidiary of the Loan Parties that (a) does not own any Patents and has neither (i) revenues (excluding intercompany transactions and balances) for the most recently completed twelve (12) month period of more than the lesser of (x) Five Million Dollars ($5,000,000) (or its equivalent) and (y) three percent (3%) of total revenues of Holdings and its consolidated Subsidiaries for the last twelve months (as measured as of the last day of the most recently completed fiscal period for which financial statements have been delivered pursuant Section 6.02(a), Section 6.02(b), or Section 6.02(c), as applicable), nor (ii) assets or Investments having fair market value (as of the last day of the most recently completed twelve-month period) of more than Two Million Five Hundred Thousand Dollars ($2,500,000) (or its equivalent) on average as of the last day of each fiscal period ending, during such period, in each case, as determined based on the most recently completed fiscal period for which financial statements have been delivered pursuant to Section 6.02(a), Section 6.02(b), or Section 6.02(c), as applicable, for the preceding twelve (12) month period then ended (but giving pro forma effect to any material Indebtedness, Investment, Transfer or Asset Dispositions during such period).
“Immaterial Foreign Subsidiary Threshold” means for all Subsidiaries of Holdings that are not Loan Parties and Asset Security Providers (on a combined basis with all of the non-Loan Party Subsidiaries taken as a whole) (i) revenues (excluding intercompany transactions and balances) for the most recently completed twelve (12) month period of no more than the lesser of (x) Ten Million Dollars ($10,000,000) (or its equivalent) and (y) six percent (6%) of the total revenues of Holdings and its consolidated Subsidiaries for the last twelve months (as measured as of the last day of the most recently completed fiscal period for which financial statements have been delivered pursuant Section 6.02(a), Section 6.02(b), or Section 6.02(c), as applicable,), and (ii) assets or Investments (as of the last day of the most recently completed twelve-month period) of no more than Five Million Dollars ($5,000,000) (or its equivalent) on average as of the last day of each fiscal period ending during such period, in each case, as determined based on the most recently completed fiscal period for which financial statements have been delivered pursuant to Section 6.02(a), Section 6.02(b), or Section 6.02(c), as applicable, for the preceding twelve (12) month period then ended (but giving pro forma effect to any material Investment, Transfer or Asset Dispositions during such period).
“Increased-Cost Lender” is defined in Section 2.09(b).
| Annex A-27 |
“Indebtedness” means, with respect to any Person, without duplication, (a) all indebtedness of such Person for borrowed money; (b) all obligations of such Person for the deferred purchase price of property or services (other than trade payables or other account payables incurred in the ordinary course of such Person’s business and not overdue for more than ninety (90) days); (c) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments or upon which interest payments are customarily made (excluding surety bonds, performance bonds, bid bonds and similar obligations); (d) all reimbursement, payment or other obligations and liabilities of such Person created or arising under any conditional sales or other title retention agreement with respect to property used and/or acquired by such Person, even though the rights and remedies of the lessor, seller and/or lender thereunder may be limited to repossession or sale of such property; (e) all Capitalized Lease Obligations of such Person; (f) all obligations and liabilities, contingent or otherwise, of such Person, in respect of letters of credit, acceptances and similar facilities (other than to the extent undrawn or cash collateralized); (g) all obligations and liabilities, calculated on a basis satisfactory to the Administrative Agent and in accordance with accepted practice, of such Person under Hedging Contracts; (h) all monetary obligations under any receivables factoring, receivable sales or similar transactions and all monetary obligations under any synthetic lease, tax ownership/operating lease, off-balance sheet financing or similar financing; (i) all surety bonds, performance bonds, bid bonds, appeal bonds, completion guarantees and similar obligations; (j) all Contingent Obligations; (k) all Disqualified Equity Interests; and (l) all obligations referred to in clauses (a) through (k) of this definition of another Person secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) a Lien upon property owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness. The Indebtedness of any Person shall include, without duplication, the Indebtedness of any partnership of or joint venture in which such Person is a general partner or a joint venturer to the extent such Person is liable therefor as a result of such Person’s ownership interest in such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor. The amount of Indebtedness of any Person for purposes of clause (l) above shall be deemed to be equal to the lesser of (i) the aggregate unpaid amount of such Indebtedness and (ii) the fair market value of the property encumbered thereby as reasonably determined by such Person in good faith.
“Indemnified Liabilities” means, collectively, any and all liabilities, obligations, losses, damages (including natural resource damages), penalties, claims (including Environmental Claims), costs (including the costs of any investigation, study, sampling, testing, abatement, cleanup, removal, remediation or other response action necessary to remove, remediate, clean up or abate any Hazardous Materials Activity), expenses and disbursements of any kind or nature whatsoever (including the reasonable fees and disbursements of counsel for Indemnitees in connection with any investigative, administrative or judicial proceeding commenced or threatened by any Person, whether or not any such Indemnitee shall be designated as a party or a potential party thereto, and any fees or expenses incurred by Indemnitees in enforcing this indemnity), whether direct, indirect or consequential and whether based on any federal, state or foreign laws, statutes, rules or regulations (including securities and commercial laws, statutes, rules or regulations and applicable Environmental Laws), on common law or equitable cause or on contract or otherwise, that may be imposed on, incurred by, or asserted against any such Indemnitee, in any manner relating to or arising out of (a) this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby (including each Lender’s agreement to make Credit Extensions or the use or intended use of the proceeds thereof, or any enforcement of any of the Loan Documents (including any sale of, collection from, or other realization upon any of the Collateral or the enforcement of the Guaranty)); (b) the statements contained in the commitment letter delivered by any Lender to Borrower with respect to the transactions contemplated by this Agreement or the other Loan Documents; (c) any Environmental Claim or any Hazardous Materials Activity relating to or arising from, directly or indirectly, any past or present activity, operation, land ownership, or practice of the Loan Parties or any of their Subsidiaries; or (d) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrower or any other Loan Party, and regardless of whether any Indemnitee is a party thereto.
| Annex A-28 |
“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in clause (a) of this definition of “Indemnified Taxes”, Other Taxes.
“Indemnitee” is defined in Section 13.02(b).
“Indemnitee Related Party” is defined in Section 10.07.
“Information Declination Notice” is defined in Section 6.03.
“Initial Asset Security Jurisdiction” means the United States, the United Kingdom, the State of Israel and Japan.
“Initial Borrower” is defined in the preamble.
“Initial Term Loan” is defined in Section 2.01(a)(I)(A).
“Initial Term Loan Commitment” means the commitment of a Lender to make or otherwise fund an Initial Term Loan. The amount of each Lender’s Initial Term Loan Commitment as of the Closing Date is set forth on Appendix A or in the applicable Assignment Agreement, subject to any adjustment or reduction pursuant to the terms and conditions hereof. The aggregate amount of the Initial Term Loan Commitments as of the Closing Date is as set forth on Appendix A. The Initial Term Loans were fully-advanced on the Closing Date.
“Initial Term Loan Exposure” means, with respect to any Lender, as of any date of determination, the outstanding principal amount of the Initial Term Loans of such Lender.
“Insolvency Proceeding” means any proceeding under any Debtor Relief Law.
“Intellectual Property” means collectively, all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including, without limitation, all Copyrights, Patents, Trademarks, Trade Secrets, Product Authorizations, Product Agreements, computer software, databases, data and documentation, know-how, inventions, manufacturing processes and techniques, research and development information data and other information included in or supporting Product Authorizations, other intellectual property or similar proprietary rights, copies and tangible embodiments of any of the foregoing (in whatever form or medium) and any and all improvements to any of the foregoing or rights or licenses to or from a third party in connection therewith.
“Intercreditor and Subordination Agreements” means (a) the Pari Passu Intercreditor Agreement, (b) the Subordination Agreements and (c) each other intercreditor agreement and/or subordination agreement in respect of Indebtedness of Holdings and its Subsidiaries entered into from time to time; provided that each such agreement is in form and substance satisfactory to the Administrative Agent, in each case, as such agreements may be amended, restated, amended and restated, supplemented or otherwise modified from time to time to the extent permitted in accordance with the terms hereof and/or, as applicable, the applicable intercreditor and/or subordination agreement as applicable.
| Annex A-29 |
“Intercompany Subordination Agreement” means the Amended and Restated Intercompany Subordination Agreement dated as of the Restatement Effective Date, by and among Holdings, the Borrower and certain Subsidiaries thereof, as the same may be amended, amended and restated, restated, supplemented or otherwise modified from time to time.
“Interest Payment Date” means with respect to any Loan, (i) the last day of each calendar month ending after the Closing Date, and (ii) the Maturity Date of such Loan; provided if such date is not a Business Day, the applicable Interest Payment Date shall be the next succeeding Business Day.
“Interest Period” means, in connection with a LIBO Rate Loan, an interest period of one (1) month or such shorter other period as consented to by Administrative Agent and the Requisite Lenders, as selected by Borrower in the applicable Conversion/Continuation Notice or Notice of Borrowing, (i) initially, commencing on the Closing Date or Conversion/Continuation Date thereof, as the case may be; and (ii) thereafter, commencing on the day on which the immediately preceding Interest Period expires; provided, (a) if an Interest Period would otherwise expire on a day that is not a Business Day, such Interest Period shall expire on the next succeeding Business Day unless no further Business Day occurs in such month, in which case such Interest Period shall expire on the immediately preceding Business Day; (b) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to clause (c), of this definition, end on the last Business Day of a calendar month; and (c) no Interest Period shall extend beyond the Maturity Date.
“Interest Rate Agreement” means any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedging agreement or other similar agreement or arrangement, each of which is (i) for the purpose of hedging the interest rate exposure associated with Holdings and its Subsidiaries’ operations, (ii) approved by Administrative Agent, and (iii) not for speculative purposes.
“Inventory” is all “inventory” as defined in the UCC in effect on the Closing Date with such additions to such term as may hereafter be made, and includes without limitation all merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products, including without limitation such inventory as is temporarily out of a Loan Party’s custody or possession or in transit and including any returned goods and any documents of title representing any of the above.
“Investment” means (a) any beneficial ownership interest in any Person (including Equity Interests and other securities), (b) any investment by such Person in any other Person (including Affiliates) in the form of loans, guarantees, advances or other extensions of credit (excluding accounts receivable arising in the ordinary course of business), capital contributions or acquisitions of Indebtedness (including, any bonds, notes, debentures or other debt securities), Equity Interests, or all or substantially all of the assets of such other Person (or of any division or business line of such other Person), (c) the purchase or ownership of any futures contract or liability for the purchase or sale of currency or other commodities at a future date in the nature of a futures contract, or (d) any investment in any other items that are or would be classified as investments on a balance sheet of such Person prepared in accordance with GAAP. The amount of any Investment shall be the original cost of such Investment plus the cost of all additions thereto, without any adjustments for increases or decreases in value, or write-ups, write-downs or write-offs with respect to such Investment.
“IP Hold-Co” means Airspan IP Holdco LLC, a Delaware limited liability company and a Subsidiary of Borrower which, as of the Restatement Effective Date, has ninety nine and eight tenths percent (99.8%) of its Equity Interests owned by the Borrower and two-tenths percent (0.2%) owned by the Fortress Member and which is managed by (x) Borrower until the occurrence of a Triggering Event (as defined in the IP Hold-Co Operating Agreement), and (y) after the occurrence of a Triggering Event (as defined in the IP Hold-Co Operating Agreement), the Fortress Member (or its designee) shall become the sole manager of the IP Hold-Co.
| Annex A-30 |
“IP Hold-Co Documents” means the IP Hold-Co Operating Agreement, the Patent License Agreement and the Patent Assignment Agreement.
“IP Hold-Co Operating Agreement” means that certain Operating Agreement dated as of December 30, 2020 entered into by IP Hold-Co, the Borrower and the Agent in its capacity as the Fortress Member, as amended and restated by that certain Amended and Restated Operating Agreement dated as of the Restatement Effective Date, and as the same may be further amended, restated, amended and restated, modified or supplemented from time to time.
“IP Security Agreement” means each Intellectual Property Security Agreement or other short-form copyright, patent or trademark (as the case may be), security agreement, entered into from time to time by a Loan Party in favor of the Collateral Agent (on behalf of the Secured Parties) with such changes as approved by the Agent, in each case, as the same may be amended, amended and restated, restated, supplemented or otherwise modified from time to time.
“IRS” means the United States Internal Revenue Service.
“Israeli Borrower Trademarks Fixed Charge Pledge” means the Israeli law fixed charge debenture, dated December 30, 2020, among Borrower and the Collateral Agent, creating an Israeli law fixed charge over Borrower’s trademarks in favor of the Collateral Agent (on behalf of the Secured Parties).
“Israeli Companies Law” means the Israeli Companies Law, 1999.
“Israeli Floating Charge Debenture” means the Israeli law floating charge debenture, dated December 30, 2020, among Israeli Guarantor and the Collateral Agent, creating an Israeli law floating charge over all of Israeli Guarantor’s assets, in favor of the Collateral Agent (on behalf of the Secured Parties).
“Israeli Guarantee Law” is defined in Section 9.04(g).
“Israeli Guarantor” means Airspan Networks Ltd, and any other party organized under the laws of the State of Israel which joins this Agreement pursuant to the terms of Section 6.12(c).
“Israeli Insolvency Law” means the Israeli Insolvency and Economic Rehabilitation Law, 2018.
“Israeli IP Hold-Co Fixed Charge Pledge” means the Israeli law fixed charge debenture, dated December 30, 2020, among IP Hold-Co and the Collateral Agent, creating an Israeli law fixed charge over IP Hold-Co’s patents in favor of the Collateral Agent (on behalf of the Secured Parties).
“Israeli Security Documents” means the Israeli Floating Charge Debenture, Israeli Borrower Trademarks Fixed Charge Pledge, Israeli IP Hold-Co Fixed Charge Pledge, Israeli Share Pledge, Israeli Second Amendment Floating Charge Debenture, Israeli Second Amendment Borrower Trademarks Fixed Charge Pledge, Israeli Second Amendment IP Hold-Co Fixed Charge Pledge and the Israeli Second Amendment Share Pledge and any other Israeli law governed Collateral Documents entered into from time to time.
| Annex A-31 |
“Israeli Second Amendment Borrower Trademarks Fixed Charge Pledge” means the Israeli law fixed charge debenture entered into in connection with the amendment and restatement of this Agreement, among Borrower and the Collateral Agent, creating an Israeli law fixed charge over Borrower’s trademarks in favor of the Collateral Agent (on behalf of the Secured Parties).
“Israeli Second Amendment Floating Charge Debenture” means the Israeli law floating charge debenture entered into in connection with the amendment and restatement of this Agreement, among Israeli Guarantor and the Collateral Agent, creating an Israeli law floating charge over all of Israeli Guarantor’s assets, in favor of the Collateral Agent (on behalf of the Secured Parties).
“Israeli Second Amendment IP Hold-Co Fixed Charge Pledge” means the Israeli law fixed charge debenture entered into in connection with the amendment and restatement of this Agreement, among IP Hold-Co and the Collateral Agent, creating an Israeli law fixed charge over IP Hold-Co’s patents in favor of the Collateral Agent (on behalf of the Secured Parties).
“Israeli Second Amendment Share Pledge” means the Israeli law share pledge agreement entered into in connection with the amendment and restatement of this Agreement, among Airspan Communications Limited and the Collateral Agent, creating an Israeli law share pledge over all of the issued and outstanding equity interests in Israeli Guarantor in favor of the Collateral Agent (on behalf of the Secured Parties).
“Israeli Share Pledge” means the Israeli law share pledge agreement, dated December 30, 2020, among Airspan Communications Limited and the Collateral Agent, creating an Israeli law share pledge over all of the issued and outstanding equity interests in Israeli Guarantor in favor of the Collateral Agent (on behalf of the Secured Parties).
“IT Systems” means all software, computer hardware, servers, networks, platforms, peripherals, and similar or related items of automated, computerized, or other information technology (IT) networks and systems (including telecommunications networks and systems for voice, data, and video) owned, leased, licensed, or used (including through cloud-based or other third-party service providers) in the current conduct of the business of the Loan Parties.
“Japanese Guarantor” means Airspan Japan KK, a stock company (kabushiki kaisha) organized under the laws of Japan.
“Japanese Security Documents” means each of (a) the Assignment of Receivables from Japanese Guarantor to the Lenders and the Purchasers under the Note Purchase Agreement; (b) the Rakuten Receivables Assignment Agreement; (c) the Consent to Assignment of Receivables delivered by Rakuten Mobile, Inc. on February 19, 2021 and (d) each other Japanese law governed Collateral Document entered into from time to time.
“Judgment Currency” is defined in Section 13.21.
“Key Customers” means Rakuten Mobile, Inc., Sprint Corporation, Reliance Jio Infocomm Limited and Gogo Business Aviation, LLC.
“Key Investors” means Oak Investments, Reliance Jio Infocomm Limited, and Softbank Group Capital Limited.
“Knowledge” means, with respect to any Person, the actual knowledge of executive officers (as defined in Rule 405 under the Securities Act) of such Person, after due inquiry.
| Annex A-32 |
“Laws” means, collectively, all international, foreign, supranational, Federal, state and local laws, statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations, clearances, approvals, exemptions and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.
“Lender” means each Person listed on the signature pages hereto as a Lender, and any other Person that becomes a party hereto pursuant to an Assignment Agreement.
“Liabilities” is defined in Section 13.17.
“LIBO Rate” means for an Interest Period, the greater of one half of one percent (0.5%) or (a) the LIBOR Index Rate for such Interest Period, if such rate is available, and (b) if the LIBOR Index Rate cannot be determined, the arithmetic average of the rates of interest per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) at which deposits in Dollars in immediately available funds are offered to the Lenders at 11:00 a.m. (London, England time) two (2) Business Days before the beginning of such Interest Period by three (3) or more major banks in the interbank eurodollar market selected by the Lenders for delivery on the first day of and for a period equal to such Interest Period and in an amount equal or comparable to the principal amount of any Loan.
“LIBO Rate Loan” means any Loan at any time which it bears interest at or by reference to the LIBO Rate in accordance with the term hereof.
“LIBOR Index Rate” means, for any Interest Period, the offered rate per annum (rounded upwards, if necessary, to the next higher one hundred-thousandth of a percentage point (0.00001%)) for deposits in Dollars for a period of one (1) month, which appears in the ICE Benchmark Administration (or any other Person that takes over the administration of such rate) and obtained through a nationally recognized service such as the Dow Jones Market Service (Telerate) or Reuters (or on any successor or substitute page on such screen that displays such rate, or on the appropriate page of such other information service that publishes such rate from time to time as selected by the Administrative Agent in its sole discretion), or a comparable or successor rate that has been approved by the Requisite Lenders, at approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period.
“Licenses” shall mean all licenses and any other agreement granting any right (or under which any Person agrees to refrain from exercising any right, including any covenant not to sue) with respect to any Intellectual Property (whether a Person is the grantor or grantee thereunder).
“Lien” means any lien, mortgage, deed of trust, pledge, security interest, charge, assignment or encumbrance or security or preferential arrangement of any kind (including, without limitation, any conditional sale or other title retention agreement, any lease in the nature thereof, any agreement to give any security interest, and any assignment, deposit arrangement or financing lease intended as, or having the effect of, security).
“Liquidation Event” is defined in the IP Hold-Co Operating Agreement.
“Loan Amendment Transactions” has the meaning given to such term in the Reaffirmation and Amendment Agreement, and shall mean and include for purposes of this Agreement all incidental steps and transactions further detailed in this Agreement and in the other Transaction Documents.
| Annex A-33 |
“Loan Documents” means this Agreement, the Amendment and Restatement Agreement, the Intercreditor and Subordination Agreements, the Merger Consent, the Disclosure Schedules, the Board Observation Rights Letter, the Notes, the Warrant, the Reaffirmation and Omnibus Amendment Agreement, the Perfection Certificate, the Compliance Certificate, each Collateral Document (excluding the Convertible Notes and the Note Purchase Documents), the Patent Assignment Agreement, the Patent License Agreement, each intercreditor agreement, fee letter, subordination agreement, joinder agreement, process agent appointment letters, notice, acknowledgment and consents, powers of attorney and any and all other present or future documents, instruments, agreements, reports, deeds and certificates required to be executed and delivered by a Loan Party in connection herewith or in connection with this Agreement or otherwise designated by the Borrower and the Administrative Agent as a “Loan Document” from time to time.
“Loan Obligations” means the Obligations, excluding the Obligations arising under the Note Purchase Documents.
“Loan Parties” means each Borrower and Guarantor.
“Loan Party Agent” is defined in Section 12.07.
“Loans” means Initial Term Loans, Tranche 2 Term Loans and/or Delayed Draw Term Loans, as the context may require, and any increases in the principal amount of any Loans as a payment of PIK Interest pursuant to Section 2.02.
“Margin Cash Component” shall mean the portion of the Applicable Rate which may only be paid in cash.
“Margin PIK Component” shall mean the portion of the Applicable Rate which may be paid in kind.
“Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect upon, the operations, business, prospects, properties or financial condition of Holdings and its Subsidiaries taken as a whole; (b) a material impairment of the ability of any Loan Party to perform its obligations under the Loan Document to which it is a party; (c) a material impairment in the perfection or priority of the Collateral Agent’s Lien in and on the Collateral as a whole; or (d) a material adverse effect upon the legality, validity, binding effect or enforceability against any Secured Party of any Loan Document to which it is a party (as represented in, and subject to the qualifications contained in, Section 5.04).
“Material Contract” means (i) each of the contracts listed on Schedule 5.23 and (ii) each contract, agreement, instrument, permit, lease or license, written or oral, of any Loan Party, (a) which is material to any Loan Party’s business or which the failure to comply with could reasonably be expected to result in a Material Adverse Effect; or (b) the aggregate value of which any Loan Party has a right to make or receive payments in respect thereof exceeds One Million Dollars ($1,000,000).
“Material Indebtedness” means Indebtedness of Holdings or any of its subsidiaries in an aggregate amount in excess of One Million Dollars ($1,000,000).
“Material Intellectual Property” means all (a) Assigned Patents, and (b) other Intellectual Property owned or exclusively licensed by Holdings or any Subsidiary of Holdings that is material to the business of Holdings and its Subsidiaries, taken as a whole.
“Material License” shall have the meaning assigned to such term in Section 5.17(a).
| Annex A-34 |
“Material Real Property” means any real property with a book value (at the time of acquisition) or fair market value in excess of One Million Five Hundred Thousand Dollars ($1,500,000) owned by any Loan Party.
“Material Regulatory Permits” means any Regulatory Permits where the failure to possess or maintain such Regulatory Permits, or restrictions placed thereon, in either case, could reasonably be expected, either individually or in the aggregate, to result in either (a) a material adverse effect on any Assigned Patent or (b) a Material Adverse Effect.
“Maturity Date” means the earlier of (i) December 30, 2024 and (ii) the date that all Loans and other Obligations shall become due and payable in full hereunder, whether by acceleration or otherwise.
“Maximum Note Obligations” shall mean, on any date of determination thereof, an amount equal to (i) $50,000,000 minus (x) payments actually made to and applied by the Secured Parties on or prior to such date of determination on account of the unpaid principal amount of the Obligations arising under the Note Purchase Documents and (y) such principal amounts as have been converted into Common Stock (as defined in the Convertible Notes) on or prior to such date of determination, plus (ii) all accrued but unpaid interest at any time or times due or payable in connection with such Obligations plus (iii) fifteen percent (15%) of the sum of clause (i) and clause (ii).
“Merger Agreement” means that certain Business Combination Agreement dated as of March 8, 2021, by and between Holdings, Merger Sub and Airspan, as the same may be amended, restated, amended and restated, modified or supplemented from time to time in accordance with the terms of this Agreement and the Merger Consent.
“Merger Consent” shall have the meaning assigned to such term in the Recitals hereto.
“Merger Sub” is defined in the Recitals hereto.
“Monthly Amortization Commencement Date” means the first Interest Payment Date after the twelve (12) month anniversary of the Closing Date.
“Mortgage” means, collectively, the deeds of trust, trust deeds, debentures, deeds and/or other local law equivalent to secure debt and mortgages creating and evidencing a Lien on a Mortgaged Property made by any Loan Party in favor or for the benefit of the Collateral Agent on behalf of the Secured Parties executed and delivered pursuant to Section 6.12, Section 6.24 and/or Section 6.26 as applicable.
“Mortgaged Property” means a parcel of real property owned by a Loan Party and subject to a Mortgage granted by such Loan Party in favor of the Collateral Agent.
“Multiemployer Plan” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which any Loan Party or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five (5) plan years, has made or been obligated to make contributions.
| Annex A-35 |
“Net Cash Proceeds” means:
(a) with respect to any Transfer (other than the issuance of Equity Interests of Holdings, which is addressed under clause (b) of this definition), Asset Disposition or any insurance or condemnation award, the aggregate cash proceeds (including cash proceeds received pursuant to policies of insurance or condemnation awards or by way of deferred payment of principal pursuant to a note, installment receivable or otherwise, but only as and when cash is actually received) received by Holdings or any Subsidiary pursuant to any such Transfer, Asset Disposition or insurance proceeds or condemnation award net of (i) the direct costs relating to such Asset Disposition (including sales commissions and legal, accounting and investment banking fees), (ii) net income taxes paid as a result thereof (after taking into account any tax credits or deductions and any tax sharing arrangements) and (iii) amounts required to be applied to the repayment of any Indebtedness secured by a Lien on the asset subject to any such Transfer or other Asset Disposition (other than the Loans) or required to be paid to parties (other than Affiliates of any Loan Party) having superior rights to the proceeds of any such Transfer or other Asset Disposition to the extent such superior rights are permitted hereunder; and
(b) with respect to any issuance of Equity Interests of Holdings or Indebtedness (excluding Permitted Indebtedness), the aggregate cash proceeds received by Holdings or any of its Subsidiaries pursuant to such issuance, net of the direct costs of such issuance (including reasonable and documented up-front, underwriters’ and placement fees and any related tax, legal and accounting fees) to the extent that such costs, fees and expenses are paid to non-Affiliates (including the payment of the Pacific Western Success Fee to PWB).
“Net EBITDA Leverage Ratio” means, with respect to Holdings and its consolidated Subsidiaries, as of any date of determination, the ratio of (a) (i) the total outstanding principal amount of the Loans less (ii) the Unrestricted Cash of the Loan Parties, to (b) the EBITDA of Holdings and its consolidated Subsidiaries for the most recently ended Test Period.
“No Call Period” means with respect to any Loans made on or after the Closing Date, the period on or prior to the first (1st) anniversary of the applicable Borrowing Date.
“Non-Consenting Lender” is defined in Section 2.09(b).
“Non-Loan Party Subsidiary” means any Subsidiary of Holdings that is not a Loan Party.
“Note” means a promissory note made by Borrower in favor of a Lender evidencing a Loan, in the form of Exhibit B.
“Note Purchase Agreement” means that certain Senior Secured Convertible Note Purchase and Guarantee Agreement dated as of July 30, 2021, by among others, Holdings, Borrower (as successor by merger to Merger Sub) and the other guarantors party thereto from time to time, Fortress in its capacity as collateral agent thereunder, and the Purchasers (as defined therein), as the same may be amended, restated, amended and restated, supplemented or modified from time to time in accordance with the terms of this Agreement and the Pari Passu Intercreditor Agreement.
“Note Purchase Documents” means the “Note Documents” as defined in the Note Purchase Agreement and the other “Note Documents” (as defined in the Note Purchase Agreement), the Convertible Notes issued in connection therewith and the other agreements and other instruments issued in connection therewith, together with any guarantees thereof and any security documents, other collateral documents and other instruments relating thereto, to the extent such are effective at the relevant time, as each may be amended and restated, modified, restated, supplemented, replaced or refinanced from time to time in accordance with the terms of this Agreement and the Pari Passu Intercreditor Agreement.
| Annex A-36 |
“Notice of Borrowing” means a written notice of a requested Borrowing substantially in the form of Exhibit A-1 signed by an authorized signatory of the Borrower, in which the Borrower requests a Loan and specifies and certifies, amongst other things, (a) the name of the Borrower, (b) the requested date of Borrowing (which shall be a Business Day during the applicable Borrowing Period for such tranche of Loans), (c) the principal amount of the Loans to be borrowed and the tranche and Type of Loan to be requested; (d) the use of proceeds of the Loan (which must be a purpose permitted by Section 6.09 for the type of Loan requested), (e) the account to which the proceeds of the Borrowing should be directed, (f) that all conditions precedent for such Loan set forth in Section 3.02, as applicable, have been satisfied, and (g) if the Borrowing is for a date other than the Closing Date, containing a calculation of the financial covenants both before and after giving pro forma effect to such Borrowing based on the most recent reporting delivered to the Lenders but giving pro forma effect to any material acquisitions, Transfer, or incurrence of additional Indebtedness, or Liens occurring during such period (detailing in such calculation any such adjustments made). Except as otherwise provided herein, each such Notice of Borrowing for each Loan shall be irrevocable and the Borrower shall be bound to make such borrowings in accordance therewith.
“Oak Investments” means Oak Investment Partners XI, LP and Oak Investment Partners XIII, LP.
“Obligations” means all Indebtedness and other obligations (including expense reimbursement and indemnification) of each Loan Party under the Loan Documents (other than the Warrant) and the Note Purchase Documents, whether for principal, interest, fees, expenses, prepayment premiums, any Applicable Prepayment Premium, the End of Term Fee, the Administration Fee, the Origination Fees (including, in each case as defined in the Convertible Notes, any Backstop Fee, Administration Fee, Change of Control Repurchase Price, or other Applicable Redemption Amount or Make-Whole Amount), whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, including all interest that accrues (a) during an Event of Default or (b) after the commencement of any Insolvency Proceeding, whether or not allowed or allowable in such Insolvency Proceeding.
“Obligee Guarantor” is defined in Section 9.07.
“OFAC” is defined in Section 5.22(b)(iv).
“Operating Expenses” means the sum of, commission fees and expenses, distributor fees and expenses, group purchasing organization fees and expenses, other network operations expenses, clinical, research and development expenses, sales and marketing expenses and general and administrative expenses of Holdings and its Subsidiaries; provided, however, that in no event shall any of the expenses, fees and costs arising from or related to the transactions contemplated by this Agreement, the Loan Documents and the other Transaction Documents, in each case to be paid on the Closing Date and identified to the Agents and Secured Parties in writing, be considered or deemed to constitute “Operating Expenses” for purposes of this Agreement.
“Organization Documents” means, (a) with respect to any corporation, the certificate or articles of incorporation, the bylaws, articles of association, memorandum (where applicable), shareholders registry and directors registry, limited liability agreement, operating agreement and all shareholder agreements, voting trusts and similar arrangements applicable to such company’s Equity Interests, or any equivalent document of any of the foregoing; (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership (or, with respect to any limited liability company incorporated under the laws of England and Wales, its certificate of incorporation, articles of association and memorandum of association), joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.
| Annex A-37 |
“Original Credit Agreement” means that certain Second Amended and Restated Loan and Security Agreement dated as of November 20, 2018 (as amended prior to December 30, 2020), by and among Borrower, the Guarantors, and the other lenders and financial institutions party thereto and Pacific Western Bank, in its capacity as administrative agent and collateral agent.
“Original Loans” has the meaning assigned to it in the Reaffirmation and Omnibus Amendment Agreement.
“Origination Fee” has the meaning given to such term in Section 2.02(b)(i)(B).
“Other Connection Taxes” means Taxes imposed as a result of a present or former connection between a Lender and the jurisdiction imposing such Tax (other than connections arising from such Lender having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any rights under any Loan Document, or sold or assigned an interest in any Loan or Loan Document).
“Other Material Jurisdictions” means, as of the Closing Date, India.
“Other Taxes” means all present or future stamp duty, stamp duty land tax, court or documentary, intangible, excise, sales, value added, property or franchise taxes, taxes on deemed income or other taxes, registration, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 2.09).
“Pacific Western Fee Letter” means that certain Agreement Regarding Success Fees, Cash Pledge Agreements and Lockbox Services dated on or about the Closing Date among certain of the Loan Parties and PWB and evidencing (i) $420,000 in Success Fees (as defined therein) payable upon the occurrence of the Borrower’s initial public offering and certain other fundamental transactions described therein (the “Pacific Western Success Fee”) and (ii) the pledge by the Borrower of certain accounts of the Borrower in order to secure existing letters of credit and other obligations owed to PWB pursuant to certain Cash Pledge Agreements (as defined therein); it being understood the Pacific Western Fee Letter shall not be amended in a manner adverse to the Secured Parties or the Loan Parties without the prior written consent of the Administrative Agent (it being understood that any increase in the quantum of the Success Fees shall be deemed to be deemed to be adverse to the Secured Parties).
“Pari Passu Intercreditor Agreement” means that certain Intercreditor Agreement dated as of the Restatement Effective Date, by, among others, Holdings, the Borrower, the Guarantors, and Fortress in its capacity as the Collateral Agent hereunder and as the Collateral Agent under the Note Purchase Agreement, as the same may be amended, restated, amended and restated, supplemented, or otherwise modified from time to time in accordance with the terms hereof and thereof.
“Participant Register” is defined in Section 13.01(d).
“Patent Act” means (i) the United States law applicable to patents commonly referred to as the US Patent Act that is codified in 35 USC §§ 1 et seq, (ii) the UK law applicable to patents commonly known as the Patents Act 1977 that is codified in UK Public General Acts, 1977, c. 37, and (iii) the Israeli law applicable to patents commonly referred to as Patents Law that is codified in Patents Law 5727-1967 (up through the most recent amendment, the 10th amendment published on July 12, 2012).
| Annex A-38 |
“Patent Assignment Agreement” means the agreement providing for the assignment of the Assigned Patent Rights by certain of the Loan Parties (other than IP Hold-Co) in favor of IP Hold-Co dated as of the Closing Date (as the same may be amended, amended and restated, supplemented or otherwise modified from time to time).
“Patent License Agreement” means a non-exclusive license agreement by and between certain of the Loan Parties (other than IP Hold-Co) and their Subsidiaries, as licensees of the Assigned Patent Rights, and IP Hold-Co, as licensor dated as of the Closing Date (as the same may be amended, amended and restated, supplemented or otherwise modified from time to time).
“Patent Prosecution Allotment” means an amount not to exceed Five Hundred Thousand Dollars ($500,000) during the period from the Closing Date through the Maturity Date (which shall be in addition to the Five Hundred Thousand Dollars ($500,000) per annum currently budgeted for any maintenance, annuity, prosecution, or similar fees with regard to the Intellectual Property) designated for the Patent Prosecution Workplan, which Patent Prosecution Allotment shall be funded solely with the proceeds of the Initial Term Loans.
“Patent Prosecution Workplan” means the work plan regarding the improvement, development, enhancement and prosecution of any Intellectual Property (including the Assigned Patent Rights) developed and directed by the Loan Parties and the Administrative Agent and approved by the Administrative Agent in its reasonable business discretion.
“Patents” means all of the following: (a) all letters patent of the United States or the equivalent thereof in any other country, and all applications for letters patent of the United States or the equivalent thereof in any other country, including certificates of invention, utility models, industrial design protection, design patent protection, and other governmental grants or issuances, and the right to make application for any of the foregoing, (b) all reissues, reexaminations, extensions, renewals continuations, continuations in part and divisionals thereof, (c) the inventions disclosed or claimed therein, including the right to make, use or sell the inventions disclosed or claimed therein, (d) all income, royalties, damages and payments now or hereafter due or payable under and with respect thereto, including payments under all licenses entered into in connection therewith and damages and other payments for past or future infringements or other violations, and (e) the right to sue for past, present and future infringement or other violation thereof.
“PATRIOT Act” shall mean the USA PATRIOT Act, Pub. L. 107-56 (signed into law October 26, 2001), as amended by the USA PATRIOT Improvement and Reauthorization Act, Pub. L. 109-177 (signed into law March 9, 2006) (as amended from time to time).
“PBGC” means the Pension Benefit Guaranty Corporation.
“Pension
Plan” means any “employee pension benefit plan” (as such term is defined in Section 3(2)
of ERISA) and/or any other foreign pension plans in accordance to any other applicable Laws and special arrangements,
collective bargaining agreements and extension orders in any applicable jurisdiction, in each case, other than a Multiemployer
Plan, that is subject to Title IV of ERISA and is sponsored or maintained by a Loan Party or any ERISA Affiliate or to which any
Loan Party or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other
plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five (5) plan
years.
“Perfection Certificate” means the perfection certificate dated as of the Closing Date (as the same may be amended, amended and restated, supplemented or otherwise modified from time to time).
| Annex A-39 |
“Permitted Indebtedness” means:
(i) the Loan Obligations;
(ii) (i) unsecured Indebtedness of any Loan Party to any other Loan Party; (ii) unsecured Indebtedness of any Loan Party owing to a Subsidiary which is not a Loan Party; (iii) unsecured Indebtedness of any Subsidiary which is not a Loan Party to any Loan Party in an aggregate amount collectively not to exceed One Million Dollars ($1,000,000) outstanding at any time and (iv) unsecured Indebtedness of any Subsidiary which is not a Loan Party to any other Subsidiary which is not a Loan Party; provided that all such Indebtedness shall be in form and substance satisfactory to the Collateral Agent and such shall be subject to the Intercompany Subordination Agreement and, where required by the Agent, shall be delivered to the Collateral Agent (together with such documents and instruments as may be requested by Administrative Agent pursuant to the terms of this Agreement, the Intercompany Subordination Agreement or any of the other Loan Documents);
(iii) obligations under the Warrants and any warrants issued in connection with the De-SPAC Transaction, in each case, to the extent constituting Indebtedness;
(iv) (A) unsecured Indebtedness incurred by Holdings or any of its Subsidiaries in the ordinary course of business arising from agreements not for borrowed money providing for indemnification or from guaranties or letters of credit, surety bonds or performance bonds or similar reimbursed type obligations incurred in the ordinary course of business and securing the performance of Holdings or any such Subsidiary pursuant to such agreements, in connection with dispositions permitted by Section 7.01 or permitted dispositions of any business, assets of Holdings, the Borrower or any of its Guarantor Subsidiaries in accordance with this Agreement, so long as any such obligations are those of the Person making the respective acquisition or sale, and are not guaranteed by any other Person except as permitted by clause (B) of this clause and (B) (i) Indebtedness consisting of unsecured guaranties by any Loan Party of the Indebtedness and lease and other contractual obligations (including, without limitation, guaranties of any License entered into in the ordinary course of business by a Loan Party), in each case, of any other Loan Party, to the extent permitted under this Agreement, solely to the extent that, if any such Indebtedness of a Loan Party is Subordinated Indebtedness, any such guarantee of such Subordinated Indebtedness is contractually subordinated to the Obligations, on terms and conditions acceptable to the Agent;
(v) Indebtedness evidenced by the Softbank Loan Documents in a principal amount not to exceed the amount of Indebtedness on the Closing Date plus any accrued and capitalized interest earned thereon at the interest rate set forth therein on the Closing Date solely to the extent such Indebtedness is contractually subordinated to the Obligations pursuant to a Subordination Agreement on terms acceptable to the Agent and (x) does not mature and is not subject to scheduled amortization, mandatory redemption, repurchase, prepayment or sinking fund obligation prior to the date that is 365 days after the Maturity Date (other than any provision requiring an offer (i) to purchase or redeem such Indebtedness or the payment of any cash amount as a result of a change of control, asset sale or similar provision so long as any right of the holders thereof upon the occurrence of a change of control, fundamental change, asset sale or similar provision shall be subject to the prior repayment in full of the Obligations under the Loan Documents or (ii) to purchase, redeem, convert or otherwise exchange such Indebtedness solely for Equity Interests in Holdings), (y) does not provide for cash payment of interest in excess of the rate per annum set forth in the Softbank Loan Documents on the Closing Date, and (z) shall not have the benefit of any security other than as described in the Softbank Loan Documents in effect on the Closing Date (other than the Dense Air Group) or direct or indirect obligors who are not also obligors and security providers on the Loans and (ii) any Permitted Refinancing thereof so long as such Permitted Refinancing complies with clauses (x) through (z) above;
| Annex A-40 |
(vi) unsecured Indebtedness in respect of netting services, overdraft protections and otherwise in connection with Deposit Accounts incurred in the ordinary course of business; provided however that such Indebtedness is extinguished within ten (10) Business Days of incurrence and/or in respect of cash management obligations provided by such bank or other financial institution, such Indebtedness is unsecured or has been subordinated to the Obligations in a manner reasonably acceptable to the Collateral Agent;
(vii) to the extent constituting Indebtedness, the Pacific Western Success Fee; provided that the amount of such Indebtedness does not at any time exceed the amount set forth in the Pacific Western Fee Letter as in effect on the Closing Date;
(viii) Indebtedness described in Schedule 7.09 on the Restatement Effective Date, but not any extensions, renewals or replacements of such Indebtedness (each a “Refinancing”) except (x) renewals and extensions expressly provided for in the agreements evidencing any such Indebtedness as the same are in effect on the Restatement Effective Date, and (y) Refinancing of any such Indebtedness if (A) the terms and conditions thereof are not less favorable to the obligor thereon or to the Lenders than the Indebtedness being Refinanced, (B) the average life to maturity thereof is greater than or equal to that of the Indebtedness being Refinanced, (C) such Refinanced Indebtedness shall not require any scheduled principal payments due prior to the Maturity Date in excess of or prior to the scheduled principal payments for the Indebtedness being refinanced due prior to such Maturity Date, (D) if the Indebtedness being Refinanced is unsecured or subordinated to the Obligations under this Agreement, such Refinancing shall be unsecured or subordinated to such Obligations on terms at least as favorable to the Secured Parties as those contained in the documentation governing the Indebtedness being Refinanced, respectively, (E) with respect to any such Refinancing of any subordinated Indebtedness, such Refinancing does not mature and is not subject to mandatory redemption, repurchase, prepayment or sinking fund obligation prior to the date that is one hundred and eighty-one (181) days after the Maturity Date at the time such Refinancing is incurred (other than any provision requiring an offer (i) to purchase such Indebtedness or the payment of any cash amount as a result of a change of control, fundamental change, asset sale, put right or similar provision so long as any right of the holders thereof shall be subject to the prior repayment in full of the Obligations under the Loan Documents or (ii) to purchase, redeem, convert or otherwise exchange such Indebtedness solely for Equity Interests in Holdings), (F) no Refinancing shall have direct or indirect obligors who were not also obligors of the Indebtedness being Refinanced, or greater guarantees or security, than the Indebtedness being Refinanced and the priority of any security shall be the same or junior to the Indebtedness being refinanced, and (G) at the time thereof, no Default or Event of Default shall have occurred and be continuing or would result therefrom (a Refinancing meeting all of the requirements of this clause (y), a “Permitted Refinancing”); and
(ix) Indebtedness in an aggregate amount not to exceed One Million Five Hundred Thousand Dollars ($1,500,000) at any time with respect to (A) Capitalized Leases and (B) purchase money Indebtedness to finance the acquisition of fixed or capital assets (including any Indebtedness acquired in connection with a disposition permitted by Section 7.01); provided, that no Default or Event of Default shall exist at the time of incurrence and in the case of clause (A), that any such Indebtedness shall be secured only by the asset subject to such Capitalized Lease, and, in the case of clause (B), that any such Indebtedness shall be secured only by the asset acquired in connection with the incurrence of such Indebtedness and provided further that, if requested by the Agent, the Loan Parties shall use commercially reasonable efforts to cause the holders of any such Indebtedness incurred to finance the acquisition of assets containing information relating to Intellectual Property, licensing arrangements or financial information to enter into an intercreditor agreement with the Agent on terms satisfactory to the Agent.
| Annex A-41 |
(x) the PPP Loan in an aggregate principal amount not to exceed the amount of such Indebtedness on the Closing Date (or such additional Indebtedness incurred by a Loan Party pursuant to the United States Small Business Administration Paycheck Protection Program following the Restatement Effective Date in such amounts and upon such terms and conditions acceptable to the Administrative Agent); provided that such Indebtedness is unsecured and the Loan Parties make all such submissions as are necessary or desirable to cause such Indebtedness to be forgiven in accordance with the requirements of CARES Act – Title I;
(xi) overdue trade payables incurred in the ordinary course of business in an aggregate amount not to exceed at any time Ten Million Dollars ($10,000,000) (it being understood that for purpose of calculating such amount, trade payable amounts which are overdue because they are being contested in good faith and by appropriate proceedings diligently conducted shall not be included in such Ten Million Dollars ($10,000,000) limit (and shall be permitted) for so long as such amounts remain disputed provided that during the pendency of such dispute adequate reserves to make such payments if and when due shall have been established in accordance with GAAP on the books of Holdings, the Borrower or, as applicable, such Subsidiary);
(xii) Indebtedness incurred as a result of endorsing negotiable instruments for deposit or collection received in the ordinary course of business;
(xiii) Indebtedness incurred in the ordinary course of business consisting of interest rate, currency, or commodity swap agreements, interest rate cap or collar arrangements or arrangements designed to protect a Person against fluctuations in interest rates, currency exchange rates, or commodity prices and not for speculative purposes, provided the potential total liability thereon does not at any time exceed the amount permitted for such Investments pursuant to clause (xii) of the definition of Permitted Investments;
(xiv) Indebtedness evidenced by the Golden Wayford Note and other Indebtedness subordinated to the Obligations pursuant to a subordination agreement described in clause (iv) of the definition of Subordination Agreement; provided that (i) such Indebtedness is subordinated on terms satisfactory to the Administrative Agent and (ii) the aggregate amount of such Indebtedness does not at any time exceed (A) the amount of such Indebtedness existing on the Closing Date plus (B) accrued and capitalized interest in respect thereof (provided that any such interest shall be paid in kind and at no time shall the all-in rate of interest on such Indebtedness (including any capitalized amount) exceed twelve percent (12%) per annum);
(xv) Indebtedness arising from the financing of insurance premiums over a period not extending beyond the term of the related insurance policy, in a total amount not to exceed Two Hundred and Fifty Thousand Dollars ($250,000);
(xvi) the Priority Lien Obligations as in effect on the Restatement Effective Date (other than the Loan Obligations) and as the same may be amended from time to time in accordance with the terms of the Note Purchase Documents and the Pari Passu Intercreditor Agreement, provided that (A) such Priority Lien Obligations are subject to the Pari Passu Intercreditor Agreement and (B) such Priority Lien Obligations (other than the Loan Obligations) do not exceed the Maximum Note Obligations; and
| Annex A-42 |
(xvii) other unsecured Indebtedness of Holdings or any Subsidiary of Holdings other than the types listed in (i) through (xvi) above, which is unsecured and subordinated to the Obligations in a manner satisfactory to Administrative Agent in an aggregate amount not to exceed One Million Dollars ($1,000,000) in the aggregate at any time.
“Permitted Intercompany Investments” is defined in the definition of “Permitted Investments.”
“Permitted Investments” means:
(i) Investments consisting of Cash and Cash Equivalents in the ordinary course of business;
(ii) the Loan Parties and their Subsidiaries may own the Equity Interests of their respective Subsidiaries or Subsidiaries created or acquired in accordance with this Agreement (so long as all amounts invested in such Subsidiaries are independently justified under another clause of this definition);
(iii) (i) advances in the form of a prepayment of expenses to vendors, suppliers and trade creditors consistent with their past practices, so long as such expenses were incurred in the ordinary course of business and (ii) Investments in the ordinary course of business of consisting of (A) deposits made to secure the performance of leases or (B) endorsements of negotiable instruments for collection or deposit and customary trade arrangements with customers, suppliers, franchisee and licensees consistent with past practices;
(iv) (i) Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business, and to the extent consistent with past practice Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors to the extent necessary in order to prevent or limit loss; (ii) Investments received in connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with, customers and suppliers, in each case in the ordinary course of business; and (iii) Investments consisting of deposits, prepayments and other credits to suppliers made in the ordinary course of business consistent with the past practices of Holdings and its Subsidiaries;
(v) (i) Investments by any Loan Party and its Subsidiaries in their respective Subsidiaries; provided, that such Investments are outstanding on the Closing Date, (ii) additional Investments by any Loan Party and its Subsidiaries in other Loan Parties, (iii) Investments made by any Non-Guarantor Subsidiaries in the Loan Parties so long as they are subject to the Intercompany Subordination Agreement and any Investments in the form of Indebtedness are permitted under clause (ii) of the definition of “Permitted Indebtedness”, (iv) Investments by any Non-Guarantor Subsidiaries in any other Non-Guarantor Subsidiaries and (v) Investments by any Loan Party and its Subsidiaries in Non-Guarantor Subsidiaries constituting (A) non-monetary Investments consisting of the acquisition or formation and ownership of the Equity Interests thereof to the extent permitted pursuant to another clause of this definition and (B) so long as no Default or Event of Default has occurred and is continuing or would result therefrom at the time of such Investment, additional Investments made in the ordinary course of business by any Loan Party in an aggregate amount not to exceed One Million Dollars ($1,000,000) at any time outstanding (“Permitted Intercompany Investments”); provided that any Investments made after the Closing Date in or by Airspan Networks (Beijing) Co. Ltd (“Airspan China”) shall not be Permitted Intercompany Investments and if incurred pursuant to another clause of this definition, Airspan China must become a party to the Intercompany Subordination Agreement prior to giving effect to such Investment;
| Annex A-43 |
(vi) Investments existing on the Restatement Effective Date set forth on Schedule 7.05, but not any additional Investment in respect thereof unless otherwise independently permitted under another clause of this definition;
(vii) (a) loans and advances to employees of Holdings and its Subsidiaries consisting of travel advances and employee relocation loans and other employee loans and advances in the ordinary course of business, and (b) loans to employees, officers or directors the proceeds of which are used for the purchase of equity securities of the Loan Parties pursuant to employee stock purchase plan agreements approved by the Board of Directors of the Loan Parties in an aggregate amount not to exceed One Hundred Thousand Dollars ($100,000);
(viii) Investments made in connection with dispositions permitted by Section 7.01;
(ix) Investments consisting of deposit accounts in which the Secured Parties have a perfected security interest to the extent required hereunder;
(x) To the extent constituting Investments, the Transactions including the assignment of the Assigned Patent Rights by the Loan Parties (other than IP Hold-Co) in favor of IP Hold-Co pursuant to the terms of the Patent Assignment Agreement and the execution of the Patent Licenses Agreement;
(xi) Investments acquired in the ordinary course of business consisting of interest rate, currency or commodity swap agreement, interest rate cap or collar agreements or arrangements designed to protect a Person against fluctuations in interest rates, currency exchange rates or commodity prices, in a total amount not to exceed One Million Dollars ($1,000,000) in any fiscal year; and
(xii) other Investments in an aggregate amount not to exceed Five Million Dollars ($5,000,000) per annum; so long as (i) no Default or Event of Default has occurred and is continuing either immediately before or after giving effect to such Investment and (ii) on or prior to such Investment, the Borrower delivers a certificate to the Administrative Agent (in form and substance satisfactory to the Administrative Agent) certifying that the following conditions have been satisfied and attaching supporting evidence demonstrating pro forma compliance with each of the financial covenants set forth in Section 7.16 both (x) as of the date of such Investment and (y) pro forma for the six (6) month period thereafter (in each case, calculated based on the most recent financial statements delivered to Administrative Agent pursuant to Section 6.02, but giving pro forma effect to the Investment).
“Permitted Liens” means:
(i) Liens in favor of Collateral Agent for the benefit of the Secured Parties granted to secure the Obligations (including for the avoidance of doubt any Liens assigned to the Agent pursuant to the terms of the Resignation Agreement and the Foreign Security Documents referred to therein); provided that all such Liens shall be subject to the terms of the Pari Passu Intercreditor Agreement;
(ii) non-exclusive licenses of software to customers for use with purchased products, and non-exclusive licenses to patents and trademarks to manufacturers and other vendors to allow them to manufacture and supply to Holdings and its Subsidiaries portions or all of one or more of their products and other intellectual property rights, in each case granted by Holdings or any of its Subsidiaries in the ordinary course of business and not adversely affecting the value of the Collateral or interfering in any respect with the ordinary conduct of the business of Holdings or such Subsidiary or the rights and remedies of the Secured Parties under the Loan Documents;
| Annex A-44 |
(iii) Liens for taxes, fees, assessments or other government charges or levies, either (a) not due and payable or (b) that are being contested in good faith by appropriate proceedings diligently conducted and for which Holdings and/or its Subsidiaries maintains adequate reserves on its books in conformity with GAAP or IFRS, as applicable; provided that no notice of any such Lien has been filed or recorded under the Code (or equivalent);
(iv) Liens incurred in the ordinary course of business in order to secure payment of workers’ compensation, unemployment insurance, old-age pensions and other types of social security;
(v) any interest or title of a lessor or sublessor under any lease or sublease granted in the ordinary course of Holdings’ and its Subsidiaries’ business, including in connection with the lease or sublease of premises or of tangible real property granted in the ordinary course of business;
(vi) the Patent License Agreement;
(vii) Liens arising from attachments or judgments, orders, or decrees in circumstances not constituting an Event of Default under Section 8.01(j);
(viii) deposits to secure the performance of bids, tenders, trade contracts (other than for borrowed money), leases, government contracts, bank obligations, statutory obligations, surety, stay, customs and appeal bonds, performance and return of money bonds and other obligations of a like nature incurred in the ordinary course of business;
(ix) easements, rights-of-way, restrictions (including zoning restrictions), covenants, licenses, encroachments, protrusions and other similar charges or encumbrances or minor title deficiencies incurred in the ordinary course of business that, in the aggregate, are not substantial in amount and that do not in any case detract from the value of the property subject thereto or materially interfere with the ordinary course of business;
(x) deposits (other than in respect of borrowed money) made in the ordinary course of business to in connection with workers compensation, unemployment insurance, social security and other like laws or to secure the performance of statutory obligations;
(xi) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of custom duties in connection with the importation of goods in the ordinary course of business;
(xii) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into in the ordinary course of business;
(xiii) statutory Liens of landlords, banks (and rights of set-off), of carriers, warehousemen, mechanics, repairmen, workmen and materialmen, and other Liens imposed by law (other than any such Lien imposed pursuant to Section 430(k) of the Internal Revenue Code or by ERISA), in each case incurred in the ordinary course of business (i) for amounts not yet overdue, or (ii) for amounts that are overdue and that (in the case of any such amounts overdue for a period in excess of five (5) days) are being contested in good faith by appropriate proceedings, so long as such reserves or other appropriate provisions, if any, as shall be required by GAAP shall have been made for any such contested amounts;
| Annex A-45 |
(xiv) the filing of UCC financing statements (or equivalents) solely as a precautionary measure in connection with operating leases or consignment of goods in the ordinary course of business;
(xv) Liens existing as of the Restatement Effective Date listed on Schedule 7.04 and Liens to secure any Permitted Refinancing of the Indebtedness with respect thereto; provided, that each Loan Party hereby agrees and acknowledges on its own behalf and on behalf of its Subsidiaries that any Liens in favor of such Loan Party or Subsidiary on the assets of any other Loan Party or Subsidiary shall be deemed to be subordinated to the Liens granted to the Agents, for the benefit of the Secured Parties, to secure the Obligations hereunder and under the Loan Documents;
(xvi) purchase money security interests in specific items of Equipment and Liens to secure any Indebtedness permitted under clause (ix) of the definition of Permitted Indebtedness and Permitted Refinancing with respect thereto; provided that such Lien on the Indebtedness secured thereby does not exceed the cost of acquisition of the applicable assets, and such Liens shall attach only to the assets acquired, improved or refinanced with such Indebtedness and shall not extend to any other property or assets of the Loan Parties or their Subsidiaries;
(xvii) Liens securing the Priority Lien Obligations permitted by clause (xvi) of the definition of Permitted Indebtedness and any Permitted Refinancing Indebtedness in respect thereof; provided that (A) such Liens are subject to the Pari Passu Intercreditor Agreement and (B) such Indebtedness has the benefit of the same guarantees and the same Collateral as the Loan Obligations hereunder and such Liens do not secure Indebtedness on a Priority Lien basis in excess of the Maximum Note Obligations (it being understood that any Liens permitted pursuant to this clause must be pari passu or junior to the Liens granted in connection with the Loan Documents);
(xviii) [Reserved];
(xix) pledges of cash in existence as of the Closing Date (including the Liens described in the Pacific Western Fee Letter in respect of the Cash Pledge Agreements described therein), to secure obligations in connection with existing letters of credit for the account of the Borrower and its Subsidiaries, which shall not at any time exceed an aggregate amount of One Million Dollars ($1,000,000) for Holdings and its Subsidiaries collectively;
(xx) Liens securing Indebtedness permitted under clause (xv) of the definition of Permitted Indebtedness, so long as such Liens encumber only Holdings’ or a Subsidiary’s interest in proceeds of the insurance policies financed with such Permitted Indebtedness and do not impair any rights of any Agent or Secured Party as a loss payee or additional insured thereunder;
(xxi) prior to the Dense Air Conversion Date, the Lien granted by Airspan Communications Limited to Softbank Group International Limited on five percent (5%) of the Equity Interest of Dense Air Limited and related security as described in the Softbank Loan Documents (as in effect on the Closing Date);
(xxii) on and after giving effect to the Dense Air Conversion Date, Liens granted by Airspan Communications Limited or any other Affiliate of Airspan Communications Limited on five percent (5%) of the Equity Interest in Dense Air Holdco (or any Subsidiary of Dense Air Holdco) as may be required pursuant to the terms of the Softbank Loan Documents (as the same may have been amended, amended and restated, supplemented or otherwise modified from time to time);
| Annex A-46 |
(xxiii) to the extent constituting Liens, Liens on the Equity Interests of Holdings reserved for the issuance of Qualified Equity Interests for the prepayment, purchase, redemption, defeasance, or other acquisition or retirement of the Convertible Notes in exchange for Qualified Equity Interests in accordance with the terms thereof;
(xxiv) other Liens on assets other than the Collateral and other than the types listed in clause (i) through (xxiii) of this definition of “Permitted Liens” securing Indebtedness in an aggregate amount not to exceed Five Hundred Thousand Dollars ($500,000) at any time outstanding.
“Person” means any individual, sole proprietorship, partnership, limited liability company, joint venture, company, trust, unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or government agency.
“Personal Information” refers to data that, separately or when combined with other data, can be used to identify an individual person, such as name, address, email address, photograph, internet protocol address, and unique device identifier.
“PIK Interest” means interest on the Loan Obligations due on any Interest Payment Date, which, at the election of Borrower is paid in kind by increasing the principal amount of the outstanding Loans.
“Plan” means any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) established by any Loan Party or, with respect to any such plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate.
“Post Restatement Obligations” is defined in Section 6.26.
“PPP Loan” means the Indebtedness represented by the Promissory Note issued by Airspan Networks Inc. to First Home Bank on April 27, 2020 or such additional Indebtedness incurred by the a Loan Party pursuant to the United States Small Business Administration Paycheck Protection Program following the Restatement Effective Date in such amounts and upon such terms and conditions acceptable to the Administrative Agent.
“Prepayment Event” means the occurrence of any of the following events prior to the applicable Loan’s Maturity Date: (a) any of the principal balance of the applicable Loans are refinanced, repaid, prepaid or replaced or modified by operation of law or reduced for any reason, and/or the Delayed Draw Term Loan Commitments are permanently reduced or terminated, (b) any Loans are satisfied as a result of a foreclosure sale, deed in lieu or by any other means, (c) the relevant Loan Obligations are accelerated in accordance with Article VIII or by operation of law, (d) an Event of Default has occurred and is continuing under Section 8.01(h) or (i), (e) there is a foreclosure or enforcement of any Lien on the Collateral pursuant to the Loan Documents, (f) there is a sale of the Collateral in any proceeding under Debtor Relief Laws or (g) there is a restructure, reorganization, or compromise of the Obligations by the confirmation of a plan of reorganization or any other plan of compromise, restructure or arrangement in any proceeding under Debtor Relief Laws.
“Prepayment Premium” is defined in Section 2.01(d)(iv).
| Annex A-47 |
“Prime Rate” means the rate last quoted by The Wall Street Journal as the “Prime Rate” in the United States or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as reasonably determined by the Administrative Agent) or any similar release by the Federal Reserve Board (as reasonably determined by the Administrative Agent).
“Principal Office” means Administrative Agent’s “Principal Office” as set forth on Appendix B, or such other office or office of a third party or sub-agent, as appropriate, as such Person may from time to time designate in writing to Borrower, the Agents and each Lender.
“Priority Lien” means a Lien granted, or purported to be granted, by a Collateral Document to the Collateral Agent, at any time, upon any property of the Loan Parties and/or their Subsidiaries to secure Priority Lien Obligations.
“Priority Lien Collateral Documents” means each Collateral Document creating (or purporting to create) a Lien upon Collateral of the Loan Parties and their Subsidiaries in favor of the Collateral Agent, for the benefit of any of the Secured Parties, in each case, as amended, modified, renewed, restated or replaced, in whole or in part, from time to time, in accordance with its terms and the provisions of the Loan Documents and the related Pari Passu Intercreditor Agreement.
“Priority Lien Debt” means:
(1) the Loan Obligations;
(2) the Funded Debt evidenced by the Note Purchase Documents up to the Maximum Note Obligations and provided that such Funded Debt and Priority Liens are to be incurred pursuant to the terms of the Pari Passu Intercreditor Agreement; and
(3) any Funded Debt that is permitted to be incurred and permitted to be secured by a Priority Lien under each applicable Priority Lien Document; provided, that, in the case of this clause (3), all relevant requirements set forth in the Loan Documents and the related Pari Passu Intercreditor Agreement are complied with.
“Priority Lien Documents” means, collectively, the Note Purchase Documents, the Loan Documents and any other indenture, credit agreement or other agreement pursuant to which any Priority Lien Debt is incurred, and the Priority Lien Collateral Documents.
“Priority Lien Holder” means each of the Lenders and each of the other holders of Priority Lien Obligations.
“Priority Lien Obligations” means the Priority Lien Debt and all other Obligations in respect of Priority Lien Debt including without limitation any post-petition interest whether or not allowable, together with any guarantees of any of the foregoing.
“Priority Lien Representative” means:
(1) in the case of the Convertible Notes, the Collateral Agent; and
(2) in the case of this Agreement, the Agent.
| Annex A-48 |
“Process Agent” is defined in Section 12.05.
“Product” means and any current or future product developed, manufactured, licensed, marketed, sold or otherwise commercialized by Holdings or any of its Subsidiaries, including any such product in development or which may be developed.
“Product Agreement” means each agreement, license, document, instrument, interest (equity or otherwise) or the like under which one (1) or more parties grants or receives any right, title or interest with respect to any Product Development and Commercialization Activities in respect of one (1) or more Products specified therein or to exclude third parties from engaging in, or otherwise restricting any right, title or interest as to any Product Development and Commercialization Activities with respect thereto, including each contract or agreement with suppliers, manufacturers, distributors, or any other Person related to any such entity.
“Product Authorizations” means any and all approvals, including applicable supplements, amendments, pre- and post-approvals, clearances, licenses, notifications, registrations, certifications or authorizations of any Governmental Authority, any Standard Body necessary for the manufacture, development, distribution, use storage, import, export, transport, promotion, marketing, sale or other commercialization of a Product in any country or jurisdiction.
“Product Development and Commercialization Activities” means, with respect to the Product, any combination of research, development, manufacture, import, use, sale, go-to market plans, the development of customer and revenue projections, financing plans pricing strategy, product positioning, board-approved operating budgets, Product Authorizations, supply, distribution, testing, packaging, purchasing or other commercialization activities, receipt of payment or financing in respect of any of the foregoing, or like activities and plan (each in form and substance satisfactory the Administrative Agents and the Lenders), the purpose of which is to commercially exploit such Product.
“Pro Rata Share” means (a) with respect to all payments, computations and other matters relating to the Initial Term Loan of any Lender, the percentage obtained by dividing (i) the Initial Term Loan Exposure of that Lender, by (ii) the aggregate Initial Term Loan Exposure of all Lenders; (b) with respect to all payments, computations and other matters relating to the Tranche 2 Term Loan of any Lender, the percentage obtained by dividing (i) the Tranche 2 Term Loan Exposure of that Lender, by (ii) the aggregate Tranche 2 Term Loan Exposure of all Lenders and (c) with respect to all payments, computations and other matters relating to the Delayed Draw Term Loans of any Lender, the percentage obtained by dividing (i) the Delayed Draw Term Loan Exposure of that Lender, by (ii) the aggregate Delayed Draw Term Loan Exposure of all Lenders. For all other purposes with respect to each Lender, “Pro Rata Share” means the percentage obtained by dividing (A) an amount equal to the sum of the Initial Term Loan Exposure, the Tranche 2 Term Loan Exposure, and the Delayed Draw Term Loan Exposure, by (B) an amount equal to the sum of the aggregate Delayed Draw Term Loan Exposure of all Lenders.
“PWB” means Pacific Western Bank.
“QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).
“QFC Credit Support” has the meaning assigned to it in Section 13.25.
| Annex A-49 |
“Qualified Equity Interests” means any Equity Interests that are not Disqualified Equity Interests.
“Rakuten Receivables Assignment Agreement” means that certain Assignment of Receivables for Security Purposes between Japanese Guarantor, the Lenders and the Administrative Agent, dated March 30, 2021.
“Reaffirmation and Omnibus Amendment Agreement” means that certain Reaffirmation and Omnibus Amendment Agreement dated as of December 30, 2020, by and among the Borrower, the Guarantors listed on the signature pages thereto, the Lenders party thereto, and the Agents which, among other things, amended and restated the Original Credit Agreement and replaced it with the Existing Credit Agreement and the Security Agreement.
“Real Estate Asset” means, at any time of determination, any interest (fee, leasehold or otherwise) then owned by any Loan Party in any real property.
“Recipient” means each Agent and any Lender and any other recipient of any payment by or on account of any Obligation of any Loan Party under any Loan Document.
“Reciprocal License” means any license associated with what is commonly known as “open source” software license terms including licenses that require as a condition of use, modification, distribution of, or linking to, such software subject to such license, that such software or other Intellectual Property relating to or combined with, distributed with, and/or linked to, such software be: (a) disclosed or distributed in source code form; (b) licensed for the purpose of making derivative works; or (c) redistributable at no charge.
“Register” is defined in Section 13.01(c).
“Regulation” is defined in Section 5.29.
“Regulatory Agencies” means any Governmental Authority that is concerned with the use, control, safety, efficacy, reliability, manufacturing, marketing, distribution, sale or other Product Development and Commercialization Activities relating to any Product or the business of the Loan Parties, including without limitation the FCC, and all similar agencies or Governmental Authorities in any applicable jurisdictions.
“Regulatory Permit” means all approvals, clearances, notifications, authorizations, orders, exemptions, registrations, certifications, licenses and permits granted by, submitted to, required by, or filed with any Regulatory Agencies related to the Assigned Patents, the Products or Product Development and Commercialization Activities, including all Product Authorizations.
“Related Fund” means, with respect to any Lender that is an investment fund, any other investment fund that invests in commercial loans and that is managed or advised by the same investment advisor as such Lender or by an Affiliate of such investment advisor.
“Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors, representatives investors and potential investors of such Person and of such Person’s Affiliates.
“Release” means any release, spill, emission, leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching or migration of any Hazardous Material into the indoor or outdoor environment (including the abandonment or disposal of any barrels, containers or other closed receptacles containing any Hazardous Material), including the movement of any Hazardous Material through the air, soil, surface water or groundwater.
| Annex A-50 |
“Relevant Governmental Body” means the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or any successor thereto.
“Relevant Jurisdiction” means in relation to a Loan Party or any of its Subsidiaries (as applicable):
(a) its jurisdiction of incorporation;
(b) the jurisdiction whose laws govern the perfection of any Collateral or Security Document (as applicable) entered into by it; and
(c) any jurisdiction where it conducts its business.
“Relevant Party” is defined in Section 2.03(g)(ii).
“Remedial Action” means any action (a) to correct or address any actual, alleged or threatened non-compliance with any applicable Environmental Law or Environmental Permit, or (b) to clean up, remove, remediate, contain, treat, monitor, assess, evaluate, investigate, prevent, minimize or in any other way address any environmental condition or the presence, Release or threatened Release of any Hazardous Material (including the performance of pre-remedial studies and investigations and post-remedial operation and maintenance activities).
“Replacement Lender” is defined in Section 2.09(b).
“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30 day notice period has been waived.
“Required Prepayment Date” has the meaning assigned to it in Section 2.07(b).
“Requisite Lenders” means one (1) or more Lenders having or holding Initial Term Loan Exposure, Tranche 2 Term Loan Exposure and Delayed Draw Term Loan Exposure and representing more than fifty percent (50%) of the sum of (a) the aggregate Initial Term Loan Exposure of all Lenders (b) the aggregate Tranche 2 Term Loan Exposure; and (c) the aggregate Delayed Draw Term Loan Exposure of all Lenders; provided if there is more than one Lender (Lenders that are Affiliates of one another shall be deemed to be one Lender for purposes hereof), then any vote or other action requiring the Requisite Lenders must include Fortress for so long as Fortress holds any Initial Term Loan Exposure, Tranche 2 Term Loan Exposure or Delayed Draw Term Loan Exposure hereunder.
“Resignation Agreement” has the meaning assigned to it in the Reaffirmation and Omnibus Amendment Agreement.
“Responsible Officer” means any of the Chief Executive Officer, or Chief Financial Officer of Borrower or, as applicable, the equivalent officer of another Loan Party.
“Restatement Effective Date” means the date hereof.
| Annex A-51 |
“Sanctions” is defined in Section 5.22(b)(iv).
“Scheduled Debt Service” means, for any period, with respect to any Person, the amount of all payments of principal of and interest on all Indebtedness of such Person (other than with respect to the Loan Parties, the Loan Obligations under the Loan Documents) paid or payable by such Person on a regularly scheduled payment date during such period.
“SEC” means the Securities and Exchange Commission, any successor thereto, and any analogous Governmental Authority in the country of organization of a Foreign Subsidiary.
“Secured Parties” means (a) the Lenders, (b) the holders of the Convertible Notes, (c) the Agents, (d) any Receiver or Delegate (each as defined in the Security Trust Deed), (e) the beneficiaries of each indemnification obligation undertaken by any Loan Party under any Loan Document or Note Purchase Document (including, without limitation, the Collateral Agent (as defined in the Note Purchase Agreement)) and (f) the successors and assigns of each of the foregoing.
“Securities Account” means any “securities account” within the meaning of Article 8 of the UCC (or equivalent).
“Securitization” is defined in Section 13.17.
“Securitization Parties” is defined in Section 13.17.
“Security Agreement” means the Existing Security Agreement as amended and restated by that certain Amended and Restated Security Agreement dated as of the Restatement Effective Date by, among others, the Loan Parties and the Collateral Agent, acting on its own behalf and on behalf of the other Secured Parties.
“Security Documents” means the Security Agreement, the UK Security Documents, any IP Security Agreement, the Israeli Security Documents, the Japanese Security Documents and all other security documents delivered after the Closing Date by the Loan Parties to the Collateral Agent for the benefit of the Secured Parties granting a Lien on their respective assets to secure any of the Obligations or to secure any guarantee of any such Obligations.
“Security Trust Deed” means the security trust deed dated as of the Closing Date appointing the Collateral Agent as trustee for the Secured Parties.
“Series H Investment” means the purchase of up to $20,000,046 of Series H Preferred Stock on the terms and subject to the conditions set forth in the Series H Investment Documents.
“Series H Investment Documents” means the Preferred Stock Purchase Agreement, dated on or about December 14, 2020, by and among Borrower and the other parties named therein, and the Second Amended and Restated Investors’ Rights Agreement, dated as of the December 14, 2020, by and among the Borrower and the other parties named therein.
“SOFR” means a rate per annum equal to the secured overnight financing rate for such Business Day published by the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate) on the Federal Reserve Bank of New York’s Website.
“SoftBank” means Softbank Group Corp.
| Annex A-52 |
“Softbank Group” means any Person controlling, controlled by or under common control with SoftBank that is not also controlled by FIG (for purposes of this definition, “control” means the power, through ownership of securities, contract or otherwise, to direct the policies of the applicable person or entity).
“Softbank Loan Agreement” means that certain Term Loan Agreement dated as of February 9, 2016 between Borrower and Softbank Group International Limited (as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time in accordance with the terms hereof and the Softbank Subordination Agreement).
“Softbank Loan Documents” means the “Loan Documents” as defined in the Softbank Loan Agreement as in effect on the Closing Date and as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time in accordance with the terms hereof and the Softbank Subordination Agreement.
“Softbank Subordination Agreement” means that certain Intercreditor and Subordination Agreement dated as of the Closing Date (as amended on the Closing Date and as the same may be further amended, amended and restated, supplemented or otherwise modified from time to time, including by the supplement dated as of the Restatement Effective Date) by, among others, Softbank Group Capital Limited, as subordinated agent, and the Agent, as senior agent, on behalf and for the benefit of the Secured Parties which subordinates the Indebtedness evidenced by the Softbank Loan Documents or on terms satisfactory to the Agent.
“Solvency Certificate” means the solvency certificate in the form attached hereto as Exhibit L.
“Solvent” means, with respect to any Person on any date of determination, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person, (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay such debts and liabilities as they mature, (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute an unreasonably small capital, and (e) such Person is able to pay its debts and liabilities, contingent obligations and other commitments as they mature in the ordinary course of business. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.
“SPAC” means a newly formed special purpose acquisition entity, which (i) has been formed with the purpose of raising capital, (ii) has completed an initial public offering resulting in the Equity Interests of such entity being listed on a United States national securities exchange, and (iii) does not conduct any material business or maintain any material assets other than cash.
“SPAC Transaction” means an acquisition, merger or other business combination between Borrower and a SPAC, provided that (i) the surviving entity shall be Borrower, (ii) the transaction shall result in Borrower or a class or series of Borrower’s Equity Interests being listed on a United States national securities exchange, and (iii) Borrower shall have provided twenty (20) Business Days prior written notice of the transaction to Administrative Agent, and the Administrative Agent shall have received copies of the material documents entered into to effect the SPAC Transaction, as Administrative Agent or any Lender may reasonably request, together with any documents that Administrative Agent or any Lender may reasonably request to maintain Agent’s security interest and other rights with respect to Loan Parties and the Collateral pursuant to this Agreement, including the right of the Administrative Agent and the Lenders to consent to any such Business Combination.
| Annex A-53 |
“Specified Immaterial Foreign Subsidiary” means Airspan Solutions Limited, a company organized under the laws of Israel, for so long as Airspan Solutions Limited remains an inactive Subsidiary of Holdings that does not hold any assets, conduct any business operations, generate any revenue or carry Indebtedness, or make Investments.
“Standard Bodies” means any of the organizations that create, sponsor or maintain safety, quality or other standards or licenses for the Products, including without limitation the FCC and OnCom.
“Subordinated Indebtedness” means, with respect to the Obligations, any unsecured Indebtedness of Loan Parties which is issued prior to the consummation of the subject financing and is contractually subordinated to the Obligations (including, in the case of a Guarantor, Obligations of such Guarantor under its Guaranty), on terms and conditions and subject to a subordination agreement acceptable to the Administrative Agent (acting at the direction of the Requisite Lenders acting reasonably).
“Subordination Agreement” shall mean each of (i) the Intercompany Subordination Agreement, (ii) the Softbank Subordination Agreement, (iii) the Golden Wayford Subordination Agreement and (iv) each other subordination agreement or other evidence of subordination of Indebtedness of Holdings and its Subsidiaries entered into from time to time; provided that each such agreement is in form and substance satisfactory to the Administrative Agent, in each case, such agreements may be amended, restated, amended and restated, supplemented or otherwise modified from time to time to the extent permitted in accordance with the terms hereof and the applicable Subordination Agreement.
“subsidiary” shall mean, with respect to any Person (herein referred to as the “parent”), any corporation, partnership, limited liability company, unlimited liability company, association or other business entity (a) of which securities or other ownership interests representing more than fifty percent (50%) of the equity or more than fifty percent (50%) of the ordinary voting power or more than fifty percent (50%) of the general partnership interests are, at the time any determination is being made, owned, controlled or held or (b) that is, at the time any determination is made, otherwise controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent. For the purposes of this definition, “controlled”, as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of the specified Person, whether through the ownership of voting securities or by contract or otherwise.
“Subsidiary” shall mean any subsidiary of Holdings and shall in any event include any other Person whose revenues and expenses are included in the consolidated financial statements of the Loan Parties, but unless specified otherwise shall not be a reference to and shall not include Dense Air Limited, Dense Air Holdco or any of their subsidiaries.
“Subsidiary Accession Requirements” means the execution and delivery of a joinder to this Agreement as a Guarantor and all other actions required to provide a First Priority Lien on and security interest in the Equity Interests of each such Subsidiary and its assets substantially similar in scope and granting and perfecting in the same types and classes of assets as the Liens granted by the existing Loan Parties in the existing Asset Security Jurisdictions under the existing Collateral Documents by executing and delivering to Collateral Agent for the benefit of the Secured Parties such guarantees and share charges or pledges (as applicable) over Equity Interests and other asset security of the same types entered into by the existing Asset Security Provider either by delivering a supplement or joinder to the existing Collateral Documents where possible or entering into new Collateral Documents to create and perfect the Collateral Agent’s Liens over all of such Persons assets of each such type or category of assets and if at the time of accession, a particular Person does not own assets of a particular category at the time it enters into the Collateral Document(s) in respect of assets of one or more types but a pledge over future assets can be effected by a composite Collateral Document that also secures assets it owns at the time it enters into the Collateral Documents, it will also grant under such composite Collateral Document a Lien on such future classes of assets and entering into such other Collateral Documents as necessary or desirable to perfect, protect or evidence its security interest in the Collateral or as otherwise reasonably requested by the Collateral Agent.
| Annex A-54 |
“Supported QFC” has the meaning assigned to it in Section 13.25.
“Survey” shall mean an American Land Title Association/American Congress of Surveying and Mapping (ALTA/CSM) form of survey (or non-US equivalent) of any Mortgaged Property by a duly licensed land surveyor for which all necessary fees have been paid which is (i) dated (or redated) not earlier than six (6) months prior to the date of delivery unless there shall have occurred within six (6) months prior to such date of delivery any exterior construction on the site of such Mortgaged Property or any easement, right of way or other interest in the Mortgaged Property has been granted or become effective through operation of law or otherwise with respect to such Mortgaged Property which, in either case, can be depicted on a survey, in which events, as applicable, such survey shall be dated (or redated) after the completion of such construction or if such construction shall not have been completed as of such date of delivery, not earlier than twenty (20) days prior to such date of delivery, or after the grant or effectiveness of any such easement, right of way or other interest in the Mortgaged Property, (ii) certified by the surveyor (in a manner reasonably acceptable to the Collateral Agent) to the Collateral Agent and the title company issuing the Mortgage Policies, (iii) complying in all material respects with the minimum detail requirements of the American Land Title Association/American Congress of Surveying and Mapping (ALTA/ACSM) (or non-US equivalent), and (iv) sufficient for the title company to remove all standard survey exceptions from the Mortgage Policies relating to such Mortgaged Property or otherwise reasonably acceptable to the Collateral Agent.
“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees, VAT or other charges of any nature whatsoever imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto, in each case, whether disputed or not.
“Terminated Lender” is defined in Section 2.09(b).
“Term Loan Commitments” means the Initial Term Loan Commitments, Tranche 2 Term Loan Commitments and the Delayed Draw Term Loan Commitments.
“Term SOFR” means, for the applicable corresponding tenor, the forward-looking term rate based on SOFR that has been selected or recommended by the Relevant Governmental Body.
“Test Period” shall mean, as of any date of determination, the period of twelve consecutive months (taken as one accounting period) of (x) prior to the Restatement Effective Date, the Borrower and (y) after the Restatement Effective Date, Holdings (i) most recently ended on or prior to such date for which financial statements have been or are required to be delivered pursuant to Section 6.02(a) or Section 6.02(b) or (ii) in the case of any calculation pursuant to Section 7.16, ended on the last date of the fiscal quarter in question.
“Trademarks” means all of the following: (a) all trademarks, service marks, corporate names, company names, business names, trade names, trade dress, logos, Internet domain names, other source or business identifiers, designs and general intangibles of like nature, all registrations thereof, and all registrations and applications filed in connection therewith in the United States Patent and Trademark Office or any similar offices in any State of the United States or any other country or any political subdivision thereof, and all renewals thereof, (b) all goodwill associated therewith or symbolized thereby, (c) all income, royalties, damages and payments now or hereafter due or payable under and with respect thereto, including payments under all licenses entered into in connection therewith and damages and other payments for past or future infringements or other violations, and (d) the right to sue for past, present and future infringement, dilution or other violation thereof.
| Annex A-55 |
“Trade Secrets” means all of the following: (a) trade secrets and other proprietary or confidential business information, including inventions, invention disclosures, discoveries, know how, systems, processes, methods, data, business and marketing plans, and customer and vendor lists, (b) all income, royalties, damages and payments now or hereafter due or payable under and with respect thereto, including payments under all licenses entered into in connection therewith and damages and other payments for past or future misappropriation or other violation, and (c) the right to sue for past, present and future misappropriation or other violation thereof.
“Tranche 2 Term Loan” is defined in Section 2.01(a)(i)(A).
“Tranche 2 Term Loan Commitment” means the commitment of a Lender to make or otherwise fund a Tranche 2 Term Loan. The amount of each Lender’s Tranche 2 Term Loan Commitment as of the Closing Date is set forth on Appendix A or in the applicable Assignment Agreement, subject to any adjustment or reduction pursuant to the terms and conditions hereof. The Tranche 2 Term Loans were fully-advanced on the Closing Date.
“Tranche 2 Term Loan Exposure” means, with respect to any Lender, as of any date of determination, the outstanding principal amount of the Tranche 2 Term Loan of such Lender.
“Transactions” shall mean, collectively, the transactions that occurred pursuant to the Loan Documents and the Transaction Documents (A) on or about (i) the Closing Date, including (a) the execution and delivery of the Reaffirmation and Omnibus Amendment Agreement and the Transaction Documents and the initial Borrowings hereunder, (b) the consummation of the Series H Investment, (c) the consummation of the Series H Investment and the issuance of Warrants to the initial Lenders, (d) the assignments and other transactions with respect to the Existing Indebtedness and the Loan Amendment Transactions described in the Reaffirmation and Omnibus Amendment Agreement, this Agreement, (e) the formation of the IP Hold-Co and execution of the IP Hold-Co Documents, including the assignment of the Assigned Patent Rights by the Loan Parties (other than IP Hold-Co) in favor of IP Hold-Co pursuant to the terms of the Patent Assignment Agreement and the execution of the Patent License Agreement, (ii) the Restatement Effective Date, including: (i) the entrance into the Note Purchase Documents and the issuance of Convertible Notes by Holdings and granting of Liens and security interests by the Loan Parties in connection therewith, (ii) the consummation of the Amendment and Restatement Agreement, and the execution of the Pari Passu Intercreditor Agreement, (B) all other reasonable incidental steps and actions required to facilitate the transactions described in clause (A) above and, and (C) the payment of fees and expenses in connection with the foregoing.
“Transaction Documents” means the IP Hold-Co Documents, the Series H Investment Documents, the Warrants and the Note Purchase Documents.
“Transfer” means to sell, exchange, transfer (including any effective transfer of assets by way of division), assign, license, lease, sub-lease, convey hypothecate, pledge or make a gift or dispose of all or any part of any Loan Party’s business, assets or properties of any kind, whether real, personal or mixed and whether tangible or intangible, whether now owned or hereinafter acquired, including the Equity Interests of any Loan Party.
| Annex A-56 |
“Treasury Rate” means, as of any date of voluntary or mandatory prepayment of the Loans, the weekly average yield on actually traded Unites States Treasury securities adjusted to a constant maturity of one year (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two (2) business days prior to such date (or, if such statistical release is no longer published, any publicly available source of similar market data)).
“Type” means a Base Rate Loan or a LIBO Rate Loan.
“UCC” means the Uniform Commercial Code in effect from time to time in the State of New York, except as such term may be used in connection with the perfection of a security interest in the Collateral, in which case, the Uniform Commercial Code (or similar or equivalent legislation) of the applicable jurisdiction with respect to the affected Collateral shall apply.
“UK Guarantor” means Airspan Communications Limited, and any other party organized under the laws of England and Wales which joins this Agreement pursuant to the terms of Section 6.12(c).
“UK Security Documents” means (a) the English law governed security agreement in relation to substantially all of the assets of the Airspan Communications Limited (other than Equity Interests and assets relating to the Dense Air Group) dated as of the Closing Date, (b) the English law governed share charge over shares in Airspan Communications Limited by the Initial Borrower, dated as of the Closing Date, (c) the Security Trust Deed, (d) the “UK Security Documents” as defined in the Note Purchase Agreement, and (e) any other English law governed Collateral Documents entered into from time to time.
“Unfunded Pension Liability” means the excess of a Pension Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Pension 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.
“Unrestricted Cash” means, on any date of determination, all Cash and Cash Equivalents owned by Holdings and its Loan Party Subsidiaries (or a non-Loan Party Subsidiary that has granted a first priority perfected Lien in such Account and the cash therein subject to the “control” (as defined in the UCC) of the Collateral Agent) and held in any Controlled Account in the United States, the United Kingdom, or otherwise subject to the “control” and a first priority perfected Lien in favor of Collateral Agent, in each case, on the date of determination (excluding, for purposes of clarity, any amounts available to be drawn or funded under lines of credit or other debt facilities, including any revolving loans); provided that amounts included under this definition shall (x) be included only to the extent such amounts are not subject to any consensual Lien or other restriction or encumbrance of any kind (other than Liens in favor of Collateral Agent) and (y) exclude any amounts held by Holdings or any of its Subsidiaries in escrow, trust or other fiduciary capacity for or on behalf of a client, borrower or customer of Holdings, its Subsidiaries or any of their respective Affiliates.
“USD LIBOR” means the London interbank offered rate for U.S. dollars.
“U.S. Person” shall mean any Person that is a “United States person” as defined in Section 7701(a)(30) of the Code.
“U.S. Special Resolution Regimes” has the meaning assigned to it in Section 13.25(a).
| Annex A-57 |
“U.S. Tax Compliance Certificate” shall have the meaning set forth in Section 2.03(e)(ii)(B).
“VAT” means, as applicable (a) any tax imposed in compliance with the Council Directive of 28 November 2006 on the common system of value added tax (EC Directive 2006/112); (b) any value added tax imposed by the Value Added Tax Act 1994 (United Kingdom); (c) any other tax of a similar nature, whether imposed in a member state of the European Union or the United Kingdom in substitution for, or levied in addition to, such tax referred to in paragraph (a) or (b) above, or imposed elsewhere; and (d) value added tax as defined in the Israeli Value Added Tax Law, 1975.
“Warrant” and “Warrants” means each of the Warrants executed by Borrower on the Closing Date in favor of the each of Lenders or an Affiliate of the Lenders holding Initial Term Loans on the Closing Date. As of the Restatement Effective Date, the Warrants have been deemed exercised and are of no further force or effect.
“Withdrawal Liability” means aggregate liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
“Withholding Agent” means any Loan Party, the Administrative Agent and any other Person required by applicable Law to withhold or deduct amounts from a payment made by or on account of any Obligation.
“Yield Maintenance Premium” is defined in Section 2.01(d)(iii).
Section 1.02 Other Interpretative Provisions. With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:
(a) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise, (a) any definition of or reference to any agreement, instrument or other document (including any Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document); (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns; (c) the words “hereto”, “herein”, “hereof” and “hereunder”, and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (d) all references in a Loan Document to Sections, Exhibits and Schedules shall be construed to refer to Sections of, and Exhibits and Schedules to, the Loan Document in which such references appear; (e) any reference to any Law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such Law and any reference to any Law or regulation shall, unless otherwise specified, refer to such Law or regulation as amended, modified or supplemented from time to time; and (f) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible, real and personal, assets and properties, including cash, securities, accounts and contract rights.
| Annex A-58 |
(b) Any reference to Debtor Relief Laws, insolvency, bankruptcy, liquidation, receivership, administration, reorganization, dissolution, winding-up, relief of debtors, or similar proceedings hereunder shall also include proceedings under the laws of the jurisdiction in which a company or corporation is incorporated or any jurisdiction in which a company or corporation carries on business, including the seeking of or decision or order relating to: (i) liquidation, winding-up, dissolution, administration or an arrangement, as such terms are understood under the Israeli Companies Law; (ii) the appointment of a receiver or trustee or other authorized functionary (“baal tafkid”), as such term is understood under the Israeli Insolvency Law; (iii) adjustment, reorganization, freeze order (or other similar remedy), protection from creditors, relief of debtors, an order for commencing proceedings (“Tzav Ptichat Halichim”), an order for financial rehabilitation (“Hafala Leshem Shikum Calcali”) or an order for liquidation (“Tzav Piruk”); or (iv) the recognition of a foreign proceeding with respect to an insolvency of a company (“Hakara be Halich Zar”), as such term is understood under the Israeli Insolvency Law.
(c) 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”. Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.
(d) Accounting Terms.
Generally. All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement or any other Loan Document shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Audited Financial Statements, except as otherwise specifically prescribed herein. Notwithstanding the foregoing, for purposes of determining compliance with any covenant (including the computation of any financial covenant) contained herein, Indebtedness of the Loan Parties and their Subsidiaries shall be deemed to be carried at one hundred percent (100%) of the outstanding principal amount thereof, and the effects of FASB ASC 825 on financial liabilities shall be disregarded. For the avoidance of doubt, for purposes of Sections 6.02. and 6.03(b), references to the prior periods for financial statements and other items contained in the audited financial statements described in clause (x) of the definition of Audited Financial Statements for such initial periods after the Restatement Effective Date shall mean references to the comparative data and the prior comparative periods for Borrower and its Subsidiaries until such time as comparable financial statements and information for Holdings and its Subsidiaries are available for the purposes of providing comparative data and information for use in such comparisons.
(i) Changes in GAAP. If at any time any change in GAAP or IFRS, as applicable (an “Accounting Change”), would affect the computation of any financial ratio or requirement set forth in any Loan Document, the Administrative Agent, on behalf of the Lenders, and the Loan Parties shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such Accounting Change; provided that, until so amended (i) such ratio or requirement shall continue to be computed in accordance with GAAP or IFRS, as applicable, prior to such change therein and (ii) the Borrower, or as the context may require, Holdings shall provide to the Administrative Agent and each Lender financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such Accounting Change. The Loan Parties and Secured Parties agree that notwithstanding any Accounting Change after the Closing Date, any lease that is or would be treated as an operating lease on the Closing Date shall continue to be treated as an operating lease and shall not constitute Indebtedness for purposes of this Agreement regardless of whether or not such operating lease would be required to be reflected as a liability on the balance sheet of the lessee as a result of such Accounting Change.
| Annex A-59 |
Section 1.03 Rounding. Any financial ratios required to be maintained by the Loan Parties pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one (1) place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).
Section 1.04 Divisions. For all purposes under the Loan Documents, in connection with any division or plan division under Delaware law (or any comparable event under a different jurisdiction’s laws): (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized on the first date of its existence by the holders of its Equity Interests at such time.
Section 1.05 Cashless Rolls. Notwithstanding anything to the contrary contained in this Agreement or any other Loan Documents, to the extent that any Lender extends the maturity date of, or exchanges, replaces, renews or refinances all or any portion of its then-existing Loans with loans incurred under a new or amended and restated facility or any similar transaction permitted by the terms of this Agreement, in each case, to the extent such extension, replacement, renewal or refinancing is effected by means of a “cashless roll” by such Lender or similar settlement mechanism, such extension, replacement, renewal or refinancing shall be deemed to comply with any requirement hereunder or in any other Loan Document that such payment be made “in Dollars”, “in immediately available funds”, “in cash” or any similar requirement.
Section 1.06 Rates. The Administrative Agent does not warrant or accept responsibility for, and shall not have any liability with respect to, the administration, submission or any other matter related to the rates in the definition of “LIBO Rate” or with respect to any comparable or successor rate thereto.
Section 1.07 Currencies. Any amount in a currency other than Dollars is to be taken into account at its Dollar equivalent calculated on the basis of: (i) if the amount is to be calculated on the last day of a financial period of Holdings and its Subsidiaries, the relevant rates of exchange used by such Person in, or in connection with, its financial statements for that period; or (ii) otherwise, the spot rate of exchange of an internationally recognized bank selected by the Administrative Agent for this purpose for the purchase of Dollars in the London foreign exchange market with the relevant currency at or about 11.00 a.m. on the day the relevant amount falls to be calculated.
| Annex A-60 |
Article
II
LOANS AND TERMS OF PAYMENT
Section 2.01 Term Loans
(a) Loans.
(i) Closing Date Term Loans.
(A) Closing Date Term Loan Commitments. Subject to the terms and conditions of this Agreement and the other Loan Documents, and in reliance upon the representations and warranties set forth in this Agreement and the other Loan Documents, each Lender made (x) an Initial Term Loan to Borrower on the Closing Date in an amount equal to such Lender’s Initial Term Loan Commitment (the “Initial Term Loan”) and (y) a Tranche 2 Term Loan in an amount equal to such Lender’s Tranche 2 Term Loan Commitment (the “Tranche 2 Term Loan,” and together with the Initial Term Loan, the “Closing Date Term Loans”). Amounts borrowed under this Section 2.01(a)(i) and repaid or prepaid may not be re-borrowed. Subject to Section 2.01(b), Section 2.01(c), and Section 2.01(d) all amounts owed hereunder with respect to the Closing Date Term Loans shall be paid in full no later than the Maturity Date. Upon funding the Closing Date Term Loans on the Closing Date, each Lender’s Initial Term Loan Commitment and Tranche 2 Term Loan Commitment was automatically reduced to zero.
(B) Procedure for the Advance of the Closing Date Term Loans. The Closing Date Term Loans were fully-advanced to the Borrower on the Closing Date.
(ii) Delayed Draw Term Loans.
(A) Delayed Draw Term Loan Commitments. Subject to the terms and conditions of this Agreement and the other Loan Documents, and in reliance upon the representations and warranties set forth in this Agreement and the other Loan Documents, each Lender severally agrees to make Delayed Draw Term Loans to Borrower during the Borrowing Period for such Loans in an aggregate amount not exceeding its respective Delayed Draw Term Loan Commitment for such Delayed Draw Term Loans; provided however, no Lender shall be required to make any Delayed Draw Term Loans unless the Borrower has delivered a Notice of Borrowing in accordance with the procedure for set forth in Section 2.01(a)(ii)(B) and such Lender is satisfied that all of the conditions precedent for such Loan set forth in Section 3.02 have been satisfied or waived in writing. Amounts borrowed under this Section 2.01(a)(ii)(A) and repaid or prepaid may not be reborrowed. Subject to Section 2.01(b), Section 2.01(c) and Section 2.01(d), all amounts and other Obligations owed under the Loan Documents with respect to the Delayed Draw Term Loans shall be paid in full not later than the Maturity Date.
(B) Procedure for Advance of Delayed Draw Term Loans.
(1) Delayed Draw Term Loans shall be in a minimum aggregate amount of Two Million Five Hundred Thousand Dollars ($2,500,000) and shall be in integral multiples of One Hundred Thousand Dollars ($100,000) in excess thereof or, if less, the remaining amount of the Delayed Draw Term Loan Commitments.
| Annex A-61 |
(2) The Borrower shall give the Administrative Agent an irrevocable Notice of Borrowing prior to 1:00 p.m. (New York time) no later than five (5) Business Days prior to the applicable Credit Date (or such later date as may be agreed by the Administrative Agent), requesting that the Lenders make the Loan as a LIBO Rate Loan if Borrower has delivered to the Administrative Agent a letter in form and substance reasonably satisfactory to the Administrative Agent indemnifying the Lenders in the manner set forth in Section 2.02(f) of this Agreement. Upon receipt of a duly executed and completed Notice of Borrowing from the Borrower in form and substance satisfactory to the Administrative Agent, the Administrative Agent shall promptly notify each Lender thereof. Not later than 12:00 p.m. (New York time) on the Credit Date; provided that such Lender is satisfied that each of the conditions precedent for such Loan set forth in Section 3.02 have been satisfied or waived in writing, then each such Lender will make available to the Administrative Agent for the account of Borrower, at the Principal Office in immediately available funds, the amount of the Loan to be made by such Lender on such Credit Date. The Borrower hereby irrevocably authorizes the Administrative Agent to disburse the proceeds of the Loans in immediately available funds by wire transfer to such Person or Persons as may be designated by the Borrower in writing.
(3) Upon funding on any Credit Date, each funding Lender’s Delayed Draw Term Loan Commitment for such tranche of Loans so advanced shall automatically be reduced concurrently with, and in the principal amount of, each Delayed Draw Term Loan made by such Lender, and any remaining unfunded Delayed Draw Term Loan Commitments shall automatically terminate on the applicable Delayed Draw Term Loan Commitment Termination Date. Any funded Delayed Draw Term Loan shall be deemed a “Loan” for all purposes of this Agreement. Each Delayed Draw Term Loan shall rank pari passu in right of payment, and shall have the same guarantees as, and be secured by the same Collateral securing, all of the other Obligations hereunder.
(b) Scheduled Payments/Principal Repayment.
(i) Commencing on the Monthly Amortization Commencement Date and continuing thereafter monthly on each Interest Payment Date through and including the Maturity Date, in addition to the payment of cash pay interest as described in Section 2.02, the Borrower shall also make monthly principal payments in respect of the Loans, each such monthly payment in an amount equal to one percent (1%) of the principal amount of the Loans funded (which amount may be readjusted by the Lenders from time to time to give effect to any prepayments of the Loans pursuant to Section 2.01(c), Section 2.01(d) and Section 2.01(e) as applicable and/or the incurrence of the Delayed Draw Term Loans).
(ii) Notwithstanding the foregoing, the unpaid principal of the Loans, together with all other accrued and unpaid interest, fees (including the End of Term Fee), premiums and other amounts owed under the Loan Documents, shall, in any event, be paid in full no later than the Maturity Date.
(iii) The Loans may only be prepaid in accordance with Section 2.01(c), Section 2.01(d), and Section 2.01(e).
(c) Mandatory Prepayment Upon Acceleration. If the Loan Obligations are accelerated (whether following the occurrence and during the continuation of an Event of Default, by operation of law or otherwise), the Loan Parties shall immediately pay to the Lenders an amount equal to the sum of (i) all outstanding principal plus accrued and unpaid interest, plus (ii) the End of Term Fee, as further described in Section 2.01(f), below; plus (iii) all other sums, if any, that shall have become due and payable, including interest at the Default Rate and, to the extent applicable, any Applicable Prepayment Premium.
| Annex A-62 |
(d) Permitted Prepayment of Loans/Commitment Reductions.
(i) Voluntary Prepayments. At any time and from time to time after the last day of the No Call Period but subject to Section 2.01(d)(iii), 2.01(d)(iv) and Section 2.01(f) below, the Borrower shall have the option to prepay all or part of the Loans; provided, that Borrower (x) provides written notice to the Administrative Agent and the Lenders of its election to prepay such Loans at least five (5) Business Days prior to such prepayment (or upon such lesser notice period as the Administrative Agent may permit in its sole discretion), and (y) pays, on the date of such prepayment (A) such outstanding principal plus accrued and unpaid interest for the portion of the Loan specified for prepayment in the written notice provided pursuant to clause (x); (B) the End of Term Fee on the principal portion of the Loan repaid; and (C) all other sums, if any, that shall have become due and payable, including interest at the Default Rate with respect to any past due amounts and any Applicable Prepayment Premium (if any), as further described in Section 2.01(d)(iii), 2.01(d)(iv) and/or Section 2.01(f), below. Each partial prepayment shall be applied pro rata to the remaining principal payments.
(ii) Voluntary Commitment Reductions.
(A) At any time after the first anniversary of the Closing Date, the Borrower may, upon not less than five (5) Business Days’ prior written notice to Administrative Agent (which written notice Administrative Agent will promptly transmit to each applicable Lender), at any time and from time to time terminate in whole or permanently reduce in part any unused portion of the Delayed Draw Term Loan Commitments; provided, any such partial reduction of the Delayed Draw Term Loan Commitments shall be in an aggregate minimum amount of One Million Dollars ($1,000,000) and integral multiples of One Hundred Thousand Dollars ($100,000) in excess of that amount or, if less, the remaining amount of the Delayed Draw Term Loan Commitments.
(B) Borrower’s notice to Administrative Agent shall designate the date (which shall be a Business Day) of such termination or reduction and the amount of any partial reduction, and such termination or reduction of the Delayed Draw Term Loan Commitments shall be effective on the date specified in Borrower’s notice and shall reduce the Delayed Draw Term Loan Commitment of each Lender proportionately to its pro rata share of the Type of Delayed Draw Term Loans so reduced.
(iii) No Call/Yield Maintenance Premium. The Loans shall not be refinanced, repaid, prepaid, replaced, modified by operation of law, or reduced, and no Delayed Draw Term Loan Commitment may be permanently reduced or terminated, until the end of the applicable No Call Period. Notwithstanding any of the foregoing, if a Prepayment Event (other than pursuant to Section 2.01(e)(i)(B) or Section 2.01(e)(i)(D)) occurs during the applicable No Call Period, such payment on the Loan Obligations shall include, in addition to all other amounts due under this Agreement and any other Loan Document an amount (the “Yield Maintenance Premium”) equal to the net present value of the sum of (i) the aggregate amount of interest at the then Applicable Rate (including interest payable in cash, in kind or deferred) which would have otherwise been payable on the Affected Principal Amount from the date of the occurrence of such Prepayment Event until the last day of the applicable No Call Period plus (ii) the Prepayment Premium on the principal amount of such Loans prepaid, repaid, refinanced or repriced (“Repayment”) that would have been payable on such Loans had Repayment occurred on the last day of the No Call Period applicable thereto (in each case computed on the basis of actual days elapsed over a year of three hundred and sixty (360) days and using a discount rate equal to the sum of the Treasury Rate as of the Business Day immediately before such Repayment plus fifty basis points). No amount will be payable pursuant to the foregoing provisions with respect to any Prepayment Event after the end of the No Call Period for such Loans.
| Annex A-63 |
(iv) Prepayment Premium. If a Prepayment Event (other than pursuant to Section 2.01(e)(i)(B) or Section 2.01(e)(i)(D)) occurs after the twelve (12) month anniversary of the Closing Date but on or before the thirty six (36) month anniversary of the Closing Date, the Borrower shall pay to Administrative Agent, for the benefit of all Lenders entitled to a portion of the Affected Principal Amount, a prepayment premium (the “Prepayment Premium”) on the Affected Principal Amount as follows:
| Relevant period (number of calendar months elapsed since the Closing Date) | Prepayment Premium as a percentage of the Affected Principal Amount |
| on or after twelve (12) month anniversary and until the twenty-four (24) month anniversary | 5.00% |
| on or after the twenty-four (24) month anniversary and until the thirty-six (36) month anniversary | 3.00% |
| on or after the thirty-six (36) month anniversary | 0.00% |
(e) Mandatory Prepayment Upon Certain Events.
(i) The Borrower shall make a prepayment of the Loans (in each case, without premium or penalty except as otherwise expressly provided in Section 2.01(d)(iii), Section 2.01(d)(iv), Section 2.01(f) or Section 2.02(f)) upon the occurrence of any of the following at the following times and in the following amounts:
(A) Asset Dispositions. Within five (5) Business Days after the receipt by Holdings or any of its Subsidiaries of any Net Cash Proceeds from any Asset Disposition, in an amount equal to one hundred percent (100%) of such Net Cash Proceeds; provided that no such prepayment shall be required unless and until the total aggregate amount of such Net Cash Proceeds received by Holdings and its Subsidiaries in any fiscal year (and not paid to the Administrative Agent as a prepayment of the Loans) exceeds One Hundred Thousand Dollars ($100,000) (and to the extent prepayment is required, the required amount of such prepayment shall only be the Net Cash Proceeds in excess of the amount thereof).
(B) Insurance/Condemnation Proceeds. Within five (5) Business Days after the receipt by Holdings or any of its Subsidiaries of any Net Cash Proceeds of insurance or condemnations awards, an amount equal to one hundred percent (100%) of such Net Cash Proceeds; provided however, (i) that no such prepayment shall be required unless and until the total aggregate amount of such Net Cash Proceeds received by Holdings and its Subsidiaries in any fiscal year (and not paid to the Administrative Agent as a prepayment of the Loans) exceeds One Hundred Thousand Dollars ($100,000) (and to the extent prepayment is required, the required amount of such prepayment shall only be the Net Cash Proceeds in excess of the amount thereof) and (ii) if the Borrower notifies the Administrative Agent and Lenders of Holdings or any Subsidiary of Holdings’ intent to reinvest such Net Cash Proceeds on or prior to the fifth day after such receipt of Net Cash Proceeds then so long as (x) no Default or Event of Default shall have occurred or be continuing at the time of such notice, at the time of reinvestment or at any time in between (and if any Default or reinvestment is pending, the Net Cash Proceeds will be promptly applied to repay the Loan Obligations) and (y) the proceeds of such insurance or condemnation award are held in a Controlled Account, the Borrower shall have the option, directly or through one or more of the Loan Parties or its Subsidiaries, to use such Net Cash Proceeds to reinvest in similar productive assets of the business, in each case, (x) that are used or useful in the business of Holdings and its Subsidiaries and (y) that comprise Collateral to the extent such property or asset sold or otherwise disposed of was Collateral, within one hundred and eighty (180) days of receipt of such Net Cash Proceeds (subject to, if Holdings or the applicable Subsidiary enters into a binding commitment to reinvest such proceeds not later than the end of such one hundred and eighty (180) day period with the good faith expectation that such proceeds will be applied to satisfy such reinvestment commitment within one hundred eighty (180) days, an extension for a period of up to an additional one hundred eighty (180) days from the end of such one hundred and eighty (180) day period) (the “Reinvestment Period”) Any amounts not previously repaid or reinvested during the Reinvestment Period, must immediately be repaid pursuant to this Section 2.01(e) on the last day of the applicable Reinvestment Period.
| Annex A-64 |
(C) Issuance of Indebtedness. Substantially concurrently with the receipt by Holdings or any of its Subsidiaries of any Net Cash Proceeds from any issuance of any Indebtedness of Holdings or any of its Subsidiaries (excluding Permitted Indebtedness) in an amount equal to one hundred percent (100%) of such Net Cash Proceeds.
(D) Consolidated Excess Cash Flow. In the event that there shall be Consolidated Excess Cash Flow for any fiscal year of Holdings and its Subsidiaries (commencing with the fiscal year ending December 31, 2021), Borrower shall, no later than the earlier of (i) one hundred and eighty five (185) days after the end of such fiscal year and (ii) five (5) days after the date of delivery by the Borrower of the financial statements described in Section 6.02(a), prepay the Loans and/or the applicable Term Loan Commitments shall be permanently reduced as set forth in Section 2.01(d) in an aggregate amount equal to fifty percent (50%) of such Consolidated Excess Cash Flow. Any amounts prepaid pursuant to this Section 2.01(e) with respect to any Fiscal Year in excess of fifty percent (50%) of Consolidated Excess Cash Flow shall be treated as voluntary prepayments made pursuant to Section 2.01(d).
(E) Issuance of Equity Securities. On the date of receipt by Holdings of any cash, Cash Equivalents or other proceeds from any capital contributions to, or issuances or other sales of or transactions with respect to any Equity Interests of Holdings or any of its Subsidiaries resulting in gross proceeds in excess of Seventy-Five Million Dollars ($75,000,000) in the aggregate in any six (6) month period after (but not including) the Restatement Effective Date other than Equity Interests issued (i) pursuant to any employee stock or stock option compensation plan, or (ii) for purposes approved in writing by Administrative Agent, Borrower shall prepay the Loans and/or the applicable Term Loan Commitments shall be permanently reduced as set forth in Section 2.01(d) in an aggregate amount equal to one hundred percent (100%) of such Net Cash Proceeds. Notwithstanding the foregoing, no prepayment shall be required as a result of (x) the Equity Contribution (as described in the Merger Consent) upon the consummation of the De-SPAC Transaction, or (y) the issuance of Qualified Equity Interests of Holdings in accordance with the terms of the Note Purchase Agreement and the Convertible Notes (in each case as in effect on the date hereof or as amended from time to time to the extent permitted by the Pari Passu Intercreditor Agreement) and the Pari Passu Intercreditor Agreement to purchase, redeem, convert or otherwise exchange the Convertible Notes solely for Qualified Equity Interests of Holdings.
| Annex A-65 |
(ii) Prepayments pursuant to Section 2.01(e)(i) shall be applied to the principal balance in inverse order of maturity.
(iii) Notwithstanding any of the foregoing, any Lender may elect by prior written notice to the Administrative Agent prior to the required prepayment date, to decline all or any portion of any prepayment of its Loans pursuant to this Section 2.01(e) (any such Lender, a “Declining Lender”).
(iv) For so long as any Priority Lien Obligations (other than the Loan Obligations) remain outstanding, to the extent that the Loan Parties are required under the other Priority Lien Documents to offer to make a payment of the types described in Section 2.01(d)(i) or Section 2.01(e)(i)(A)-(E) above (a “Pari Passu Payment”), then provided that such payments are required to be made on a pro rata and pari passu basis with the Loan Obligations, the proceeds available for repayment to the Lenders shall equal the Lenders’ allocable share of all such payments then required to be made or offered. In the case that a Declining Lender, or any other Priority Lien Holder that would also be offered or entitled to a Pari Passu Payment, declines its share of such payment (any such amounts, “Declined Proceeds” and any such declining Priority Lien Holder, a “Declining Holder” and all other holders of Priority Lien Obligations, “Non-Declining Holders”), then such Declined Proceeds shall be offered and paid to the Non-Declining Holders in accordance with their pro rata share of the Priority Lien Obligations until all of the remaining Declined Proceeds have been depleted. It being understood that such Declined Proceeds shall be treated in the same manner as the proceeds which required the original payment pursuant to Section 2.01(d)(i) or Section 2.01(e)(i)(A)-(E) above, but for the purposes of determining when such Declined Proceeds are required to be paid by a Loan Party, the date of receipt of such proceeds shall be the first Business Day after the last day that a Declining Holder under any Priority Lien Obligation has the right to decline their share of such proceeds (for example, if a Priority Lien Holder has a right to accept or decline such proceeds of an Asset Disposition for five (5) days under this Agreement and sixty (60) days under other Priority Lien Obligations, then the first day that such Declined Proceeds would be required to be offered to the other non-Declining Holders would be the first Business Day after the sixty (60) day period allowed under the other Priority Lien Obligations). For the avoidance of doubt, nothing in this Section 2.01(e)(iv) shall confer on any Lender the option to elect to decline all or any portion of any voluntary prepayment of its Loans under Section 2.01(d) of this Agreement.
(f) End of Term Fee; Payment of Applicable Prepayment Premiums.
(i) Notwithstanding anything herein to the contrary, upon the earliest to occur of: (A) the Maturity Date, (B) payment in full of the principal amount of Loans and other Loan Obligations upon the occurrence of a Prepayment Event, and (C) a termination of this Agreement for any other reason (the occurrence of any of the events set forth in the foregoing clauses (A) through (C), the “End of Term Fee Event”), Borrower shall pay to the Administrative Agent (for further distribution to the Lenders in accordance with their pro rata share of the Loans) as an inducement for making the Loans (and not as a penalty) an amount equal to the End of Term Fee, which End of Term Fee shall be fully earned, and due and payable, on the date of such End of Term Fee Event, and non-refundable when made.
(ii) Notwithstanding anything herein to the contrary, if a Prepayment Event occurs (other than pursuant to Section 2.01(e)(i)(B) or Section 2.01(e)(i)(D)), Borrower shall pay the Lenders as an inducement for making the Loans (and not as a penalty) an amount equal to the Applicable Prepayment Premium (if any) then due and owing, which Applicable Prepayment Premium shall be fully earned, and due and payable, on the date of such Prepayment Event, and non-refundable when made.
| Annex A-66 |
(iii) If the Loans are accelerated for any reason under this Agreement pursuant to the terms herein, the End of Term Fee and Applicable Prepayment Premium applicable thereto shall be calculated as if the date of acceleration of the Loans was the date of prepayment of such Loans. The parties hereto further acknowledge and agree that neither the End of Term Fee nor the Applicable Prepayment Premium is intended to act as a penalty or to punish the Loan Parties for any such repayment, prepayment or cancellation. Any cancellation, prepayment or repayment, whether voluntary or involuntary, of the Loans upon the occurrence of any End of Term Fee Event or Prepayment Event shall be accompanied by all accrued interest on the principal amount prepaid or repaid, together with the End of Term Fee and/or the Applicable Prepayment Premium, as applicable. Without limiting the generality of the foregoing, and notwithstanding anything to the contrary in this Agreement or any Loan Document, it is understood and agreed that if the Loan Obligations are accelerated (whether as a result of the occurrence and continuance of any Event of Default, by operation of law or otherwise), the End of Term Fee and the Applicable Prepayment Premium, if any, determined as of the date of acceleration, will also be due and payable and will be treated and deemed as though the applicable Loan was prepaid as of such date and shall constitute part of the Loan Obligations for all purposes herein. The End of Term Fee and the Applicable Prepayment Premium, if any, shall also be payable in the event the Loan Obligations (and/or this Agreement) are satisfied or released by foreclosure (whether by power of judicial proceeding), deed in lieu of foreclosure or by any other similar means. THE LOAN PARTIES EXPRESSLY WAIVE THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE OR LAW THAT PROHIBITS OR MAY PROHIBIT THE COLLECTION OF THE FOREGOING END OF TERM FEE OR APPLICABLE PREPAYMENT PREMIUM IN CONNECTION WITH ANY SUCH ACCELERATION. THE LOAN PARTIES EXPRESSLY AGREE THAT (I) EACH OF THE END OF TERM FEE AND THE APPLICABLE PREPAYMENT PREMIUM IS REASONABLE AND IS THE PRODUCT OF AN ARM’S LENGTH TRANSACTION BETWEEN SOPHISTICATED BUSINESS PEOPLE, ABLY REPRESENTED BY COUNSEL, (II) THE END OF TERM FEE AND APPLICABLE PREPAYMENT PREMIUM SHALL BE PAYABLE NOTWITHSTANDING THE THEN PREVAILING MARKET RATES AT THE TIME PAYMENT IS MADE, (III) THERE HAS BEEN A COURSE OF CONDUCT BETWEEN THE LENDERS AND THE LOAN PARTIES GIVING SPECIFIC CONSIDERATION IN THIS TRANSACTION FOR SUCH AGREEMENT TO PAY THE END OF TERM FEE AND APPLICABLE PREPAYMENT PREMIUM, (IV) THE LOAN PARTIES SHALL BE ESTOPPED HEREAFTER FROM CLAIMING DIFFERENTLY THAN AS AGREED TO IN THIS SECTION 2.01(F), (V) THEIR AGREEMENT TO PAY THE END OF TERM FEE AND APPLICABLE PREPAYMENT PREMIUM IS A MATERIAL INDUCEMENT TO THE LENDERS TO MAKE THE LOANS, AND (VI) THE END OF TERM FEE AND APPLICABLE PREPAYMENT PREMIUM REPRESENTS A GOOD FAITH, REASONABLE ESTIMATE AND CALCULATION OF THE LOST PROFITS OR DAMAGES OF THE LENDERS AND THAT IT WOULD BE IMPRACTICAL AND EXTREMELY DIFFICULT TO ASCERTAIN THE ACTUAL AMOUNT OF DAMAGES TO A LENDER OR PROFITS LOST BY SUCH LENDER AS A RESULT OF SUCH END OF TERM FEE EVENT OR PREPAYMENT EVENT.
Section 2.02 Interest; Fees; Evidence of Debt; Payments.
(a) Interest.
(i) (A) Interest Rate. Subject to Section 2.02(a)(i)(C), the outstanding principal balance of each Loan shall bear interest on and after the date so borrowed (or deemed borrowed) at the then Applicable Rate, which interest shall be payable in arrears on and to (i) each Interest Payment Date applicable to that Loan; (ii) upon any prepayment of that Loan, whether voluntary or mandatory, to the extent accrued on the amount being prepaid; and (iii) at maturity, including the final Maturity Date.
| Annex A-67 |
(B) PIK Interest. On each Interest Payment Date, unless a Default or Event of Default then exists, the Borrower shall pay (1) with respect to the Initial Term Loan and the Delayed Draw Term Loan, five and one half percent (5.5%) of the interest then due in cash and the remainder of the outstanding interest then due in kind, i.e. by adding such outstanding interest to the aggregate principal amount of the Loans and (2) with respect to the Tranche 2 Term Loan, the interest then due in kind. Interest must be paid in cash for any period for which a Default or Event of Default exists. On any applicable Interest Payment Date each Lender will be entitled to receive an amount equal to their pro rata share of the cash interest then due and owing, as well as any such PIK Interest then due and owing.
(C) Default Rate. Immediately upon the occurrence of an Event of Default described in Section 8.01(h) or 8.01(i), and in all other cases, upon the election of the Requisite Lenders, upon the occurrence and during the continuation of a Default or Event of Default, the outstanding principal balance of the outstanding Loan Obligations shall bear interest at the Default Rate and shall be payable in cash on demand. Any election made pursuant to this Section 2.02(a)(i) may be made retroactive to the date of the occurrence of the applicable Event of Default.
(ii) Interest Computation. All interest hereunder shall be computed on the basis of a year of three-hundred and sixty (360) days, except that interest computed by reference to the Base Rate at times when the Base Rate is based on the Prime Rate shall be computed on the basis of a year of three-hundred and sixty-five (365) days (or three-hundred and sixty-six (366) days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first (1st) day but excluding the last day). The applicable Base Rate and LIBO Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.
(iii) Interest Elections; Borrowings.
(A) Each Borrowing initially shall be of the Type specified in the Notice of Borrowing and, in the case of a LIBO Rate Loan, shall have an initial Interest Period as specified in such Notice of Borrowing. Thereafter, the Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a LIBO Rate Loan, may elect Interest Periods therefor, all as provided in this Section 2.02(a)(iii). The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing.
(iv) To make an election pursuant to this Section 2.02(a)(iv), the Borrower shall notify the Administrative Agent of such election by telephone not later than 12 p.m. (New York time), five (5) Business Days before the effective date of the proposed election. Each such telephonic Conversion/Continuation Notice shall be irrevocable and shall be confirmed promptly by hand delivery or facsimile to the Administrative Agent of a written Conversion/Continuation Notice signed by the Borrower.
| Annex A-68 |
(v) Each telephonic and written Conversion/Continuation Notice shall specify the following information:
(A) the Borrowing to which such Conversion/Continuation Notice applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (C) and (D) below shall be specified for each resulting Borrowing);
(B) the effective date of the election made pursuant to such Conversion/Continuation Notice, which shall be a Business Day;
(C) whether the resulting Borrowing is to be a Base Rate Loan or a LIBO Rate Loan; and
(D) if the resulting Borrowing is a LIBO Rate Loan, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period”.
If the Borrower fails to deliver a Conversion/Continuation Notice or any such Conversion/Continuation Notice requests a LIBO Rate Loan but does not specify an Interest Period, then the Borrower shall be deemed to have selected a LIBO Rate Loan with an Interest Period of one (1) month’s duration.
(vi) Promptly following receipt of a Conversion/Continuation Notice, the Administrative Agent shall advise each Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.
(vii) Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Requisite Lenders, so notifies Borrower, then, so long as an Event of Default is continuing (i) no outstanding Borrowing may be converted to or continued as a LIBO Rate Loan and (ii) unless repaid, each LIBO Rate Loan shall be converted to a Base Rate Loan at the end of the Interest Period applicable thereto.
(viii) Notwithstanding any other provision of this Agreement, Borrower shall not be entitled to elect to convert or continue any Borrowing if the Interest Period requested with respect thereto would end after the Maturity Date.
(b) Fees.
(i) The Borrower agrees to pay the following fees:
(A) to the Administrative Agent, an administration fee in an amount equal to Fifty Thousand Dollars ($50,000.00) per annum, which fee shall be due and payable annually in advance on the Closing Date and thereafter on each anniversary of the Closing Date (the “Administration Fee”);
(B) to the Administrative Agent for further distribution to the Lenders in accordance with their pro rata share of the Loans so advanced, an origination fee (the “Origination Fee”) in an amount equal to two percent (2.00%) of the amount of the Delayed Draw Term Loans so advanced upon such Credit Date in the case of a Delayed Draw Term Loan, which fees shall be due and payable on the date such Loans are advanced.
| Annex A-69 |
(ii) In addition to the foregoing, the Borrower agrees to pay to the Agents and the Lenders the End of Term Fee and any other fees and expense reimbursements set forth in any Fee Letter or other Loan Document or as otherwise separately agreed by the parties, in such amounts and at such times so specified.
(iii) The parties hereby agree that the Origination Fee or any similar fee due hereunder may be netted from the Loan proceeds so advanced on such date or if otherwise not paid in cash in immediately available funds on the date when due, may with the consent of the applicable Lenders, added to the principal amount of the applicable Loans and treated as original issue discount.
(iv) Once paid, no fees or any part thereof payable shall be refundable under any circumstances. All such payments shall be made without deduction for any taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any national, state or local taxing authority.
(c) Evidence of Debt; Lenders’ Books and Records; Notes.
(i) Lenders’ Evidence of Debt. Each Lender shall maintain on its internal records an account or accounts evidencing the Obligations of Borrower to such Lender, including the amounts of the Loans made by it and each repayment and prepayment in respect thereof. Any such recordation shall be conclusive and binding on the Loan Parties, absent manifest error; provided that the failure to make any such recordation, or any error in such recordation, shall not affect any Lender’s Term Loan Commitments or Borrower’s Obligations in respect of any applicable Loans; and provided further, in the event of any inconsistency between the Register and any Lender’s records, the recordations in the Register shall govern.
(ii) Notes. If so requested by any Lender by written notice to Borrower at least two (2) Business Days prior to the Credit Date, or at any time thereafter, Borrower shall execute and deliver to such Lender (and/or, if applicable and if so specified in such notice, to any Person who is an assignee of such Lender pursuant to Section 13.01) on the Credit Date (or, if such notice is delivered after the Credit Date, promptly after Borrower’s receipt of such notice) a Note or Notes to evidence such Lender’s Loans.
(d) Payments. Interest on the Loan Obligations shall be payable on each Interest Payment Date provided that (i) interest accrued pursuant to Section 2.02(a)(i)(C) shall be payable in cash on demand and (ii) in the event of any repayment or prepayment of any Loan, accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment. Except where interest is permitted to be paid in kind, all payments under the Loan Documents shall be made in immediately available funds in Dollars. Accrued interest payable on any Loans which is paid in the form of PIK Interest shall be added to the outstanding principal amount of the applicable Class of Loans as of the applicable Interest Payment Date. All payments (including prepayments) to be made by the Loan Parties under any Loan Document shall be made without setoff or counterclaim. Payments received after 2:00 p.m. New York time are considered received at the opening of business on the next Business Day. When a payment is due on a day that is not a Business Day, the payment shall be due the next Business Day, and additional fees or interest, as applicable, shall continue to accrue until paid. Each payment made by a Loan Party under a Loan Document is in addition to any payment or distribution to which the Lenders may be entitled or may receive pursuant to such Loan Party’s Organization Documents, and nothing in any Loan Document shall be construed as limiting, reducing or in any way diminishing any payment or distribution to which the Lenders may be entitled or may receive under or with respect to such Loan Party’s Organization Documents.
| Annex A-70 |
(e) Application of Payments. The Borrower shall have no right to specify the order or the accounts to which the Lenders shall allocate or apply any payment required to be made by the Borrower or any Loan Party to any Secured Party or otherwise received by a Secured Party under this Agreement or any Loan Document when any such allocation or application is not specified elsewhere in this Agreement or such Loan Document.
(f) Break Funding Payments. Notwithstanding anything herein to the contrary, in the event of the conversion, payment or prepayment by Borrower of any principal of the Loans other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), then, in any such event, Borrower shall compensate each Lender for the loss, cost and expense substantiated by such Lender as a result of such event in connection with the liquidation or re-deployment of such funds (but excluding a loss of anticipated profits). A certificate of the applicable Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate upon receipt thereof.
Section 2.03 Taxes.
(a) Payments Free of Taxes. Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by applicable Law. If any applicable Law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable Law and, if such Tax is an Indemnified Tax, then the sum payable by the applicable Loan Party shall be increased as necessary so that after making such deduction or withholding (including such deductions and withholdings applicable to additional sums payable under this Section 2.03) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.
(b) Payment of Other Taxes by Loan Parties. Without limiting the provisions of Section 2.03(a) above, the Loan Parties shall timely pay to the relevant Governmental Authority in accordance with applicable Law, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.
(c) Tax Indemnification. The Loan Parties shall jointly and severally indemnify each Recipient, and shall make payment in respect thereof within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto (including any recording and filing fees with respect thereto or resulting therefrom and any liabilities with respect to, or resulting from, any delay in paying such Indemnified Taxes), whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the applicable Loan Party by the applicable Recipient shall be conclusive absent manifest error. If any Loan Party fails to timely pay to the appropriate Governmental Authority any Taxes payable under this Section 2.03, such Loan Party shall indemnify the applicable Recipient for any incremental taxes, interest or penalties that may become payable by such Recipient as a result of any such failure.
| Annex A-71 |
(d) Evidence of Payments. As soon as practicable after any payment of Taxes by any Withholding Agent to a Governmental Authority as provided in this Section 2.03, such Loan Party shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of any return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.
(e) Status of Lender. (i) If a Lender is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document, such Lender shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation as prescribed by applicable Laws and reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, if reasonably requested by the Borrower or the Administrative Agent, such Lender shall deliver such other documentation prescribed by applicable Law and reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 2.03(e)(ii)(A), Section 2.03(e)(ii)(B), and Section 2.03(e)(ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender or if such Lender is legally prohibited from completing, executing or submitting such documentation or cannot obtain, using best efforts and following a good faith effort to do so, any information requested by the Borrower.
(ii) Without limiting the generality of the foregoing,
(A) any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed copies of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax;
(B) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever of the following is applicable:
(1) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed copies of IRS Form W-8BEN or W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, executed copies of IRS Form W-8BEN or W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;
| Annex A-72 |
(2) executed copies of IRS Form W-8ECI;
(3) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit J-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10-percent shareholder” of the Borrower or of Holdings within the meaning of Section 881(c)(3)(B) of the Code or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed copies of IRS Form W-8BEN or W-8BEN-E; or
(4) to the extent a Foreign Lender is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN or W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form of Exhibit J-2 or Exhibit J-3, IRS Form W-9 and/or other certification documents from each beneficial owner, as applicable; provided that, if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit J-4 on behalf of each such direct and indirect partner;
(C) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed copies of any other form prescribed by applicable Law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made; and
(D) if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this Section 2.03(e)(ii)(D), “FATCA” shall include any amendments made to FATCA after the Closing Date.
Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.
| Annex A-73 |
(f) Treatment of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified by a Loan Party pursuant to this Section 2.03 (including by the payment of additional amounts pursuant to this Section 2.03), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section 2.03 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided that the indemnifying party, upon the request of such indemnified party, agrees to repay such indemnified party the amount paid over to the indemnifying party pursuant to this Section 2.03(f) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this Section 2.03(f), in no event will the indemnified party be required to pay any amount to any Loan Parties pursuant to this Section 2.03(f), the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This Section 2.03(f) shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.
(g) VAT. Notwithstanding anything in this Section 2.03 to the contrary:
(i) All amounts expressed to be payable under a Loan Document by any Loan Party to a Secured Party which (in whole or in part) constitute the consideration for any supply for VAT purposes are deemed to be exclusive of any VAT which is chargeable on that supply, and accordingly, subject to paragraph (ii) below, if VAT is or becomes chargeable on any supply made by any Lender to any Loan Party under a Loan Document and such Secured Party is required to account to the relevant tax authority for the VAT, that Loan Party must pay to such Secured Party (in addition to and at the same time as paying any other consideration for such supply) an amount equal to the amount of the VAT (and such Lender must promptly provide an appropriate VAT invoice to that Loan Party).
(ii) If VAT is or becomes chargeable on any supply made by any Secured Party (the “Supplier”) to any other Secured Party (the “Specified Recipient”) under a Loan Document, and any Loan Party other than the Specified Recipient (the “Relevant Party”) is required by the terms of any Loan Document to pay an amount equal to the consideration for that supply to the Supplier (rather than being required to reimburse or indemnify the Specified Recipient in respect of that consideration):
(A) (where the Supplier is the person required to account to the relevant tax authority for the VAT) the Relevant Party must also pay to the Supplier (at the same time as paying that amount) an additional amount equal to the amount of the VAT. The Specified Recipient must (where this paragraph (A) applies) promptly pay to the Relevant Party an amount equal to any credit or repayment the Specified Recipient receives from the relevant tax authority which the Specified Recipient reasonably determines relates to the VAT chargeable on that supply; and
(B) (where the Specified Recipient is the person required to account to the relevant tax authority for the VAT) the Relevant Party must promptly, following demand from the Specified Recipient, pay to the Specified Recipient an amount equal to the VAT chargeable on that supply but only to the extent that the Specified Recipient reasonably determines that it is not entitled to credit or repayment from the relevant tax authority in respect of that VAT.
| Annex A-74 |
(iii) Where a Loan Document requires any Loan Party to reimburse or indemnify a Secured Party for any cost or expense, that Loan Party shall reimburse or indemnify (as the case may be) such Lender for the full amount of such cost or expense, including such part thereof as represents VAT, save to the extent that such Secured Party reasonably determines that it is entitled to credit or repayment in respect of such VAT from the relevant tax authority.
(iv) Any reference in this Section 2.03(g) to any Loan Party shall, at any time when such Loan Party is treated as a member of a group for VAT purposes, include (where appropriate and unless the context otherwise requires) a reference to the representative member of such group at such time (the term “representative member” to have the same meaning as in the Value Added Tax Act 1994).
(v) In relation to any supply made by a Secured Party to any Loan Party under a Loan Document, if reasonably requested by such Lender, that Loan Party must promptly provide such Secured Party with details of that Loan Party’s VAT registration and such other information as is reasonably requested in connection with such Secured Party’s VAT reporting requirements in relation to such supply.
(h) Survival. Each party’s obligations under this Section 2.03 shall survive any assignment of rights by, or the replacement of, a Lender and the repayment, satisfaction or discharge of all obligations under any Loan Document.
Section 2.04 Ratable Sharing; Pro Rata Shares; Availability of Funds.
(a) Ratable Sharing; Pro Rata Shares. Except as otherwise expressly provided in this Agreement, each payment or prepayment of principal of any Loan, each payment of interest on the Loans, each payment of fees payable to the Lenders, each reduction of Commitments and each conversion to or continuation of any Loan shall be allocated pro rata among the Lenders of all Classes of Loans then held by the Lenders and entitled to such payment in accordance with their respective Commitments (or, if the Commitments shall have expired or been terminated, pro rata in accordance with the respective principal amounts of the outstanding Loans) held by the Lenders (unless a given Lender or Class of Loans has elected to receive a lesser allocation). The Lenders hereby agree among themselves that, if any of them shall, whether by voluntary payment (other than a voluntary prepayment of Loans made and applied in accordance with the terms hereof), through the exercise of any right of set-off or banker’s lien, by counterclaim or cross action or by the enforcement of any right under the Loan Documents or otherwise, or as adequate protection of a deposit treated as cash collateral under the Bankruptcy Code of the United States, receive payment or reduction of a proportion of the aggregate amount of principal, interest, amounts payable in respect of letter of credit fees and other amounts then due and owing to such Lender hereunder or under the other Loan Documents (collectively, the “Aggregate Amounts Due” to such Lender) which is greater than the proportion received by any other Lender in respect of the Aggregate Amounts Due to such other Lender, then the Lender receiving such proportionately greater payment shall (a) notify Administrative Agent and each other Lender of the receipt of such payment and (b) apply a portion of such payment to purchase participations (which it shall be deemed to have purchased from each seller of a participation simultaneously upon the receipt by such seller of its portion of such payment) in the Aggregate Amounts Due to the other Lenders so that all such recoveries of Aggregate Amounts Due shall be shared by all Lenders in proportion to the Aggregate Amounts Due to them; provided, if all or part of such proportionately greater payment received by such purchasing Lender is thereafter recovered from such Lender upon the bankruptcy or reorganization of Borrower or otherwise, those purchases shall be rescinded and the purchase prices paid for such participations shall be returned to such purchasing Lender ratably to the extent of such recovery, but without interest. Borrower expressly consents to the foregoing arrangement and agrees that any holder of a participation so purchased may exercise any and all rights of banker’s lien, set-off or counterclaim with respect to any and all monies owing by Borrower to that holder with respect thereto as fully as if that holder were owed the amount of the participation held by that holder.
| Annex A-75 |
(b) Availability of Funds. Unless Administrative Agent shall have been notified in writing by any Lender prior to the applicable Credit Date that such Lender does not intend to make available to Administrative Agent the amount of such Lender’s Loan requested on such Credit Date, Administrative Agent may assume that such Lender has made such amount available to Administrative Agent on such Credit Date and Administrative Agent may, in its sole discretion, but shall not be obligated to, make available to Borrower a corresponding amount on such Credit Date. If such corresponding amount is not in fact made available to Administrative Agent by such Lender, Administrative Agent shall be entitled to recover such corresponding amount on demand from such Lender together with interest thereon, for each day from such Credit Date until the date such amount is paid to Administrative Agent, at the customary rate set by Administrative Agent for the correction of errors among banks for three (3) Business Days and thereafter at the Base Rate. If such Lender does not pay such corresponding amount forthwith upon Administrative Agent’s demand therefor, Administrative Agent shall promptly notify Borrower and Borrower shall immediately pay such corresponding amount to Administrative Agent together with interest thereon, for each day from such Credit Date until the date such amount is paid to Administrative Agent, at the rate payable hereunder for Base Rate Loans for such Loans. Nothing in this Section 2.04(b) shall be deemed to relieve any Lender from its obligation to fulfill its Term Loan Commitments hereunder or to prejudice any rights that the Loan Parties may have against any Lender as a result of any default by such Lender hereunder.
Section 2.05 Benchmark Replacement Settings. Notwithstanding anything to the contrary herein or in any other Loan Document:
(a) Replacing USD LIBOR. On March 5, 2021 the Financial Conduct Authority (“FCA”), the regulatory supervisor of USD LIBOR’s administrator (“IBA”), announced in a public statement the future cessation or loss of representativeness of overnight/Spot Next, 1-month, 3-month, 6-month and 12-month USD LIBOR tenor settings. On the earlier of (i) the date that all Available Tenors of USD LIBOR have either permanently or indefinitely ceased to be provided by IBA or have been announced by the FCA pursuant to public statement or publication of information to be no longer representative and (ii) the Early Opt-in Effective Date, if the then-current Benchmark is USD LIBOR, the Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of any setting of such Benchmark on such day and all subsequent settings without any amendment to, or further action or consent of any other party to this Agreement or any other Loan Document. If the Benchmark Replacement is Daily Simple SOFR, all interest payments will be payable on a monthly basis.
(b) Replacing Future Benchmarks. Upon the occurrence of a Benchmark Transition Event, the Benchmark Replacement will replace the then-current Benchmark for all purposes hereunder and under any Loan Document in respect of any Benchmark setting at or after 5:00 p.m. on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided to the Lenders without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document so long as the Administrative Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Lenders comprising the Requisite Lenders of each Class. At any time that the administrator of the then-current Benchmark has permanently or indefinitely ceased to provide such Benchmark or such Benchmark has been announced by the regulatory supervisor for the administrator of such Benchmark pursuant to public statement or publication of information to be no longer representative of the underlying market and economic reality that such Benchmark is intended to measure and that representativeness will not be restored, the Borrower may revoke any request for a borrowing of, conversion to or continuation of Loans to be made, converted or continued that would bear interest by reference to such Benchmark until the Borrower’s receipt of notice from the Administrative Agent that a Benchmark Replacement has replaced such Benchmark, and, failing that, the Borrower will be deemed to have converted any such request into a request for a borrowing of or conversion to Base Rate Loans. During the period referenced in the foregoing sentence, the component of Base Rate Loans based upon the Benchmark will not be used in any determination of the Base Rate.
| Annex A-76 |
(c) Benchmark Replacement Conforming Changes. In connection with the implementation and administration of a Benchmark Replacement, the Administrative Agent will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement.
(d) Notices; Standards for Decisions and Determinations. The Administrative Agent will promptly notify the Borrower and the Lenders of (i) the implementation of any Benchmark Replacement and (ii) the effectiveness of any Benchmark Replacement Conforming Changes. Any determination, decision or election that may be made by the Administrative Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section 2.05(d), including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party hereto, except, in each case, as expressly required pursuant to this Section 2.05(d).
(e) Unavailability of Tenor of Benchmark. At any time (including in connection with the implementation of a Benchmark Replacement), (i) if the then-current Benchmark is a term rate (including Term SOFR or USD LIBOR), then the Administrative Agent may remove any tenor of such Benchmark that is unavailable or non-representative for Benchmark (including Benchmark Replacement) settings and (ii) the Administrative Agent may reinstate any such previously removed tenor for Benchmark (including Benchmark Replacement) settings.
Section 2.06 Increased Costs; Capital Requirements.
(a) Compensation For Increased Costs. If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement reflected in the LIBO Rate);
(ii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or
(iii) impose on any Lender or the London interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or Loans made by such Lender;
and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, converting to, continuing or maintaining any Loan or of maintaining its obligation to make any such Loan, or to reduce the amount of any sum received or receivable by such Lender or other Recipient hereunder (whether of principal, interest or any other amount) then, upon request of such Lender or such other Recipient, Borrower will pay to such Lender or other Recipient, as the case may be, such additional amount or amounts as will compensate such Lender or other Recipient, as the case may be, for such additional costs incurred or reduction suffered.
| Annex A-77 |
(b) Capital Requirements. If any Lender determines that any Change in Law affecting such Lender or any lending office of such Lender or such Lender’s holding company, if any, regarding capital or liquidity requirements, has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement, the Term Loan Commitments of such Lender or the Loans made by, or participations in letters of credit held by such Lender, to a level below that which such Lender such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered.
Section 2.07 Application of Prepayments/Reductions.
(a) Subject to the terms of the Pari Passu Intercreditor Agreement, which shall govern the payments on account of the Obligations and any other Priority Lien Obligations from time to time, after any voluntary or mandatory prepayments or repayments of Loans pursuant to Section 2.1 or the exercise of remedies provided for in Section 8.02 (or after the Loan Obligations (including, without limitation, any Applicable Prepayment Premium) have automatically become immediately due and payable as set forth in the proviso to Section 8.02), any amounts received on account of the Loan Obligations (including, without limitation, any Applicable Prepayment Premium) shall be applied by the Administrative Agent in the following order:
first, to the payment of that portion of the Loan Obligations constituting fees, indemnities, expenses and other amounts (including fees, charges and disbursements of counsel to the Agents and amounts payable under Section 2.03, Section 2.05, Section 2.06 and Section 13.02) payable to the Administrative Agent;
second, to the payment of that portion of the Loan Obligations constituting fees, indemnities, expenses and other amounts (including fees, charges and disbursements of counsel to the Lenders and amounts payable under Section 2.03, Section 2.05, Section 2.06 and Section 13.02) payable to the Lenders;
third, to payment of indemnities and other amounts (other than principal, interest and fees) payable to the Lenders, ratably among them in proportion to the amounts described in this clause third payable to them;
fourth, to payment of that portion of the Loan Obligations constituting accrued and unpaid interest on the Loans, premiums (including, without limitation, any Applicable Prepayment Premium) and fees, ratably among the Lenders in proportion to the respective amounts described in this clause fourth payable to them;
fifth, to payment of that portion of the Loan Obligations constituting unpaid principal of the Loans, ratably among the Lenders in proportion to the respective amounts described in this clause fifth held by them;
| Annex A-78 |
sixth, except in connection with any waivable prepayment of the type described in Section 2.01(e)(iii) and Section 2.01(e)(iv), to prepay Loans on a pro rata basis (in accordance with the respective outstanding principal amounts thereof) and shall be further applied in inverse order of maturity to reduce the remaining scheduled installments of principal of the Loans;
seventh, to the payment in full of all other Loan Obligations then owing, ratably among the Secured Parties in proportion to the respective amounts described in this clause sixth held by them; and
eighth, the balance, if any, after all of the Loan Obligations have been indefeasibly paid in full in cash, to the Loan Parties or as otherwise required by applicable Law.
Subject to items “first” through “seventh” preceding, Administrative Agent shall have the continuing and exclusive right to apply and reverse and reapply any and all such proceeds and payments to any portion of the Loan Obligations.
Section 2.08 Defaulting Lenders.
(a) Defaulting Lender Adjustments. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as such Lender is no longer a Defaulting Lender, to the extent permitted by applicable Law:
(i) Waivers and Amendments. Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definition of Requisite Lenders and as set forth in Section 13.05(b):
(ii) Defaulting Lender Waterfall. Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VIII or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to Section 13.15 shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder; second, as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; third, if so determined by the Administrative Agent and the Borrower, to be held in a deposit account and released pro rata in order to satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement; fourth, to the payment of any amounts owing to the Lenders as a result of any judgment of a court of competent jurisdiction obtained by any Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; fifth, so long as no Default or Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and sixth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Loans were made when the conditions set forth in Section 3.02 were satisfied or waived, such payment shall be applied solely to pay the Loans of all non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of such Defaulting Lender until such time as all Loans are held by the Lenders pro rata in accordance with the Term Loan Commitments. Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.
(iii) Certain Fees. (A) No Defaulting Lender shall be entitled to receive the Administration Fee described in Section 2.02(b)(i)(A) or the Origination Fee described in Section 2.02(b)(i)(B) for any period during which that Lender is a Defaulting Lender (and the Borrower shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender).
| Annex A-79 |
(b) Defaulting Lender Cure. If the Borrower and the Administrative Agent agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein, that Lender will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Loans to be held pro rata by the Lenders in accordance with the Term Loan Commitments, whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.
Section 2.09 Mitigation of Obligations; Replacement of Lenders.
(a) Designation of a Different Lending Office. If any Lender requests compensation under Section 2.05, 2.06(a) or 2.06(b), or requires the Loan Parties to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.03, then such Lender shall (at the request of the Borrower) use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or Affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.03 or 2.06 as the case may be, in the future, and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Loan Parties hereby agree to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.
(b) Removal or Replacement of a Lender. Anything contained herein to the contrary notwithstanding, in the event that: (a)(i) any Lender (an “Increased-Cost Lender”) shall give notice to Borrower that such Lender is entitled to receive payments under Section 2.03 or 2.06, (ii) the circumstances which have caused such Lender to be entitled to receive such payments shall remain in effect, (iii) such Lender shall fail to withdraw such notice within five (5) Business Days after Borrower’s request for such withdrawal and (iv) such Lender has declined or is unable to designate a different lending office in accordance with Section 2.09(b); or (b) (i) any Lender shall become a Defaulting Lender, (ii) the Default Period for such Defaulting Lender shall remain in effect, and (iii) such Defaulting Lender shall fail to cure the default as a result of which it has become a Defaulting Lender within five (5) Business Days after Borrower’s request that it cure such default; or (c) in connection with any proposed amendment, modification, termination, waiver or consent with respect to any of the provisions hereof as contemplated by Section 13.05(b), the consent of Administrative Agent shall have been obtained but the consent of one (1) or more of such other Lenders (each a “Non-Consenting Lender”) whose consent is required shall not have been obtained; then, with respect to each such Increased-Cost Lender, Defaulting Lender or Non-Consenting Lender (the “Terminated Lender”), Administrative Agent may (which, in the case of an Increased-Cost Lender, only after receiving written request from Borrower to remove such Increased-Cost Lender), by giving written notice to Borrower and any Terminated Lender of its election to do so, elect to cause such Terminated Lender (and such Terminated Lender hereby irrevocably agrees) to assign and delegate its outstanding Loans and its Term Loan Commitments, if any, in full to one (1) or more Eligible Assignees (each a “Replacement Lender”) in accordance with the provisions of Section 13.01 and Terminated Lender shall pay any fees payable thereunder in connection with such assignment; provided, (1) on the date of such assignment, the Replacement Lender shall pay to Terminated Lender an amount equal to the sum of (A) an amount equal to the principal of, and all accrued interest on, all outstanding Loans of the Terminated Lender and (B) an amount equal to all accrued, but theretofore unpaid fees owing to such Terminated Lender pursuant to Section 2.01(d)(i), Section 2.01(f) and Section 2.02(b); (2) on the date of such assignment, Borrower shall pay any amounts payable to such Terminated Lender pursuant to Section 2.03 or Section 2.06; (3) in the event such Terminated Lender is a Non-Consenting Lender, each Replacement Lender shall consent, at the time of such assignment, to each matter in respect of which such Terminated Lender was a Non-Consenting Lender. In the event that the Terminated Lender fails to execute an Assignment Agreement pursuant to Section 13.01 within five (5) Business Days after receipt by the Terminated Lender of notice of replacement pursuant to this Section 2.09(b) and presentation to such Terminated Lender of an Assignment Agreement evidencing an assignment pursuant to this Section 2.09(b), the Terminated Lender shall be deemed to have executed and delivered such Assignment Agreement, and upon the execution and delivery of Assignment Agreement by the Replacement Lender and Administrative Agent, shall be effective for purposes of this Section 2.09(b) and Section 13.01. Upon the prepayment of all amounts owing to any Terminated Lender and the termination of such Terminated Lender’s Term Loan Commitments, if any, such Terminated Lender shall no longer constitute a “Lender” for purposes hereof; provided, any rights of such Terminated Lender to indemnification hereunder shall survive as to such Terminated Lender.
| Annex A-80 |
Article
III
CONDITIONS Precedent to the LOANs
Section 3.01 Conditions to the Closing Date and Closing Date Term Loans. In addition to the conditions precedent set forth in Schedule 2 of the Reaffirmation and Omnibus Amendment Agreement, each Lender’s obligation to fund the Closing Date Term Loans was also subject to its satisfactory completion of due diligence prior to Loan Parties entering into this Agreement with such Lender (including financial due diligence conducted by a service provider of such Lender’s choosing) and it having received evidence in form and substance satisfactory to it of the satisfaction of each of the following conditions precedent prior to or contemporaneously with the making of the Closing Date Term Loans and the consummation of the Loan Amendment Transactions (or such Lender agreeing to waive such condition):
(a) Documentation. The Agent and each Lender received, in form and substance satisfactory to it and its counsel, each of the following duly executed and delivered:
(i) each of the Loan Documents and Transaction Documents to be executed on the Closing Date (except in each case, any Loan Document or Transaction Document delivery of which was a Post Closing Obligation (as defined in the Existing Credit Agreement);
(ii) from each Loan Party which is a party to any Loan Documents other than the UK Guarantor, a certificate dated as of the Closing Date executed by two (2) authorized officers, or as the context may require, two (2) directors of such Loan Party (or, with respect to the Japanese Guarantor and the Israeli Guarantor, one such officer or director) certifying and attaching: (A) copies of the Organizational Documents of such Loan Party, together with all amendments thereto (including, without limitation, a true and complete copy of the charter, certificate of formation, certificate of limited partnership or other publicly filed organizational document of each Loan Party certified (except in respect of the Israeli Guarantor) as of a recent date not more than thirty (30) days prior to the Closing Date by an appropriate official of the jurisdiction of organization of such Loan Party which set forth the same complete name of such Loan Party as is set forth herein and the organizational number of such Loan Party, if an organizational number is issued in such jurisdiction), (B) a copy of the resolutions or written consents (1) of such Loan Party authorizing the borrowings hereunder and the transactions contemplated by the Transaction Documents and the Transaction Documents to which such Loan Party is or will be a party, and (2) of such Loan Party authorizing the execution, delivery and performance by such Loan Party of each Loan Document and Transaction Documents to which such Loan Party is or will be a party and the execution and delivery of the other documents to be delivered by such Person in connection herewith and therewith, including, without limitation, in the case of the Borrower, the Warrants, (C) the names and true signatures of the representatives of such Loan Party authorized to sign each Loan Document and Transaction Document (in the case of a Borrower, including, without limitation, Notices of Borrowing and all other notices under the Existing Credit Agreement and the other Loan Documents and Transaction Documents) to which such Loan Party is or will be a party and the other documents executed and delivered by such Loan Party in connection herewith and therewith, together with evidence of the incumbency of such authorized officers, (D) [Reserved], (E) with respect to the Borrower and the Loan Parties that are Subsidiaries organized in the United States or the District of Columbia, a certificate of the Secretary of State or other appropriate official(s) of the jurisdiction of organization and, except to the extent such failure to be so qualified could not reasonably be expected to have a Material Adverse Effect, in each U.S. state of foreign qualification of such Loan Party certifying as of a recent date not more than fifteen (15) days prior to the Closing Date as to the existence or subsistence in good standing of such Loan Party in such jurisdictions, in each case to the extent generally available in such jurisdictions and (F) in the case of the Israeli Guarantor, a certification from the board of directors that pursuant to sections 256(d) and 282 of the Israeli Companies Law, that all approvals, as required under the Israeli Companies Law (including, without limitation, under sections 255, 270-272 and Section 277 thereof) and the Organization Documents of Israeli Guarantor, had been duly obtained for, amongst other things, the transactions contemplated by the Loan Documents and the Transaction Documents;
| Annex A-81 |
(iii) with respect to the UK Guarantor, a certificate dated as of the Closing Date executed by a director in usual and customary format in the context of loan transactions in the U.K. as agreed between counsel to the Administrative Agent and counsel to the Borrower certifying and attaching: (A) resolutions of its Board of Directors then in full force and effect (i) authorizing the execution, delivery and performance of each Loan Document and the UK Security Documents to which it is party, (ii) authorizing a specified person or persons on its behalf to sign and/or dispatch all documents and notices to be signed and/or dispatched by it under or in connection with the Loan Documents and the UK Security Documents to which it is a party; and (iii) certifying that the guaranteeing of the obligations of the Borrower would not cause any guaranteeing or similar limit binding on it to be exceeded; (B) a specimen signature of each person authorized by the resolution referred to at (A); (C) resolutions of the Borrower as the shareholder of UK Guarantor, approving the execution, delivery and performance of each Loan Document and the UK Security Documents to which UK Guarantor is party; (D) resolution of the Board of Directors of the Borrower as the shareholder of UK Guarantor, approving the resolutions of shareholders referred to at (C); and (E) true, complete and up-to-date copies of the constitutional documents of the UK Guarantor.
(iv) evidence of the insurance coverage and endorsements required by Section 6.13 and the terms of the Collateral Documents and such other insurance coverage with respect to the business and operations of the Loan Parties as the Collateral Agent may reasonably request;
(v) [Reserved];
(vi) evidence of the third-party consents listed on Schedule 5.03 to the Existing Credit Agreement;
(vii) a customary legal opinion from
(A) Dorsey & Whitney LLP, as United States counsel to the Loan Parties;
(B) City-Yuwa Partners, as Japanese counsel to the Loan Parties;
(C) Herzog Fox & Neeman, as Israeli counsel to the Loan Parties; and
(D) Reed Smith LLP, as counsel to the Administrative Agent in England and Wales.
| Annex A-82 |
(viii) the audited financial statements of Borrower and its Subsidiaries for the fiscal year ending December 31, 2019; and
(ix) such other documents, evidence and information as the Administrative Agent reasonably required.
(b) [Reserved].
(c) [Reserved]
(d) [Reserved]
(e) [Reserved].
(f) [Reserved].
(g) [Reserved].
(h) [Reserved].
(i) Solvency Certificate. The Administrative Agent and each Lender’s receipt of a Solvency Certificate from the chief financial officer of the Borrower dated as of the Closing Date and addressed to Administrative Agent and the Lenders, and in form, scope and substance satisfactory to Administrative Agent, with appropriate attachments and demonstrating that both before and after giving effect to the Transactions that (A) each of Borrower and each of the other Loan Parties that are Persons organized in a state of the United States or the District of Columbia was and would be Solvent, and (B) that the Borrower and each of its Subsidiaries, on a consolidated basis, were and would be Solvent.
(j) Personal Property Collateral. In order to create in favor of Collateral Agent, for the benefit of the Lenders, a valid, perfected security interest in the personal property Collateral, the Agent and the Lenders received (in form and substance satisfactory to them):
(i) evidence satisfactory to Collateral Agent and the Lenders of the compliance by each Loan Party with their obligations under the Collateral Documents and the other Loan Documents (including, without limitation, (A) their obligations to authorize or execute, as the case may be, and deliver UCC financing statements (or their equivalent), (B) a copy of all notices required to be sent under the UK Security Documents executed by the UK Guarantor and (where required by the UK Security Documents) duly acknowledged by the addressee, (C) all share certificates, transfers and stock transfer forms or equivalent duly executed by the applicable Loan Party in blank, (D) intellectual property filings (including IP Security Agreements to be filed with the Copyright Office, or the Patent and Trademark Office or any other equivalent foreign office of competent jurisdiction in Israel or England and Wales), and (E) originals of securities, instruments and chattel paper and any Control Agreements, notice or agreements governing deposit and/or securities accounts as provided therein);
| Annex A-83 |
(ii) a completed Perfection Certificate dated as of the Closing Date and executed by a Responsible Officer of each Loan Party, together with all attachments contemplated thereby, including (A) the results of a recent search, by a Person satisfactory to Collateral Agent, of all effective UCC financing statements (or equivalent filings) made with respect to any personal or mixed property of any Loan Party in the jurisdictions specified in the Perfection Certificate, together with copies of all such filings disclosed by such search, and (B) UCC amendment or termination statements (or similar documents), where applicable, duly executed by all applicable Persons for filing in all applicable jurisdictions as may be necessary to amend, or as the context may require, terminate any effective UCC financing statements (or equivalent filings in such other jurisdictions) disclosed in such search (other than any such financing statements in respect of Permitted Liens);
(iii) [Reserved];
(iv) [Reserved];
(v) [Reserved];
(vi) [Reserved];
(vii) a copy of an excerpt from a search against the Israeli Guarantor at the Israeli Companies Registrar, and a copy of an excerpt from a search against Borrower, Airspan Communication Limited and IP Hold-Co at the Israeli Pledges Registrar, in each case, evidencing that there were no outstanding Liens over its assets, save as permitted under this Agreement;
(viii) [Reserved];
(ix) [Reserved]; and
(x) a resolution of the shareholders of Israeli Guarantor approving the terms of, and the transactions contemplated by, the Loan Documents to which it is a party and the amendment of its articles of association to include substantially the following provision: “Notwithstanding anything to the contrary herein or in any shareholders agreement including, without limitations, Articles 12.1, 12.2 and 12.4(c) of these Articles of Association: (a) any: (i) creation of a charge or other security interest over the shares of the Company; or (ii) any transfer of shares of the Company to any person, in each case by way of realization of a charge or other security interest granted in favor of the Collateral Agent on behalf of the Secured Parties under or in connection with that certain Credit Agreement dated as of December 30, 2020, among, inter alia, Airspan Networks Inc., a Delaware corporation, the Lenders and DBFIP ANI LLC as administrative agent and collateral agent for the Secured Parties and the other parties listed therein, as may be amended, restated, refinanced, replaced, supplemented or otherwise modified from time to time, shall not require approval of the Board under these Articles of Association or any such shareholders agreement or otherwise be restricted in any manner; (b) the registration of any such share transfer(s) in the shareholders registry of the Company or the exercise of any rights, preferences, privileges and powers attached to such shares or conferred upon the holders thereof under law or by virtue of these Articles of Association or any contract shall not be limited or restricted in any manner and shall not require approval of the Board under these Articles of Association; (c) the registration of a liquidator, trustee, receiver or other authorized functionary (“baal tafkid”) in the shareholders register of the Company in connection with the realization of a charge or other security interest granted in favor of the Secured Party in connection with the Credit Agreement shall not require approval of the Board under these Articles of Association; and (d) the company may grant a guarantee, charge or other security interest, in favor of the Secured Party, to guarantee or otherwise secure the Obligations (as defined in the Credit Agreement) of any Obligor (as defined in the Credit Agreement) under the Credit Agreement and the other Loan Documents. The Secured Party (and its beneficiaries and permitted assigns) and any receiver shall be third party beneficiaries of the provisions of this Article and no waiver, amendment or modification of this Article may be made without the prior written consent of the Secured Parties.”
| Annex A-84 |
(k) Formation of IP Hold-Co. Administrative Agent received evidence of the formation of the IP Hold-Co with Organization Documents in form and substance satisfactory to the Administrative Agent and the Lenders and duly executed copies of the IP Hold-Co Documents delivered in escrow to the Administrative Agent;
(l) Control Agreements. Administrative Agent and Lenders received, in form and substance reasonably satisfactory to it, a duly executed and delivered Control Agreement for each of the US Loan Parties’ deposit accounts other than the Excluded Accounts and the accounts excluded from requirement to enter into a Control Agreement under the terms of the Collateral and Guarantee Requirements and notice and acknowledgement of the notice of assignment relating to accounts charged under the UK Security Documents;
(m) Qualified Equity Interest Issuance. Administrative Agent and Lenders received evidence, in form and substance satisfactory to them (in their sole discretion), that the Borrower received (or received substantially simultaneously with the Closing Date) Net Cash Proceeds from the issuance of common stock or other Qualified Equity Interests of the Borrower in an amount not less than Ten Million Dollars ($10,000,000);
(n) Appointment of Process Agent. All documents or evidence requested by the Administrative Agent, in its sole discretion, to effect the appointment of the Borrower as Process Agent in accordance with the terms of Section 12.05 have been delivered to the Administrative Agent.
(o) [Reserved].
(p) [Reserved].
(q) Softbank Subordination Agreement. Administrative Agent and Lenders have received, in form and substance satisfactory to them (in their sole discretion) a duly executed copy of the Softbank Subordination Agreement.
(r) [Reserved].
(s) [Reserved].
(t) Miscellaneous. Administrative Agent and the Lenders’ receipt of (i) formal approval of the transactions contemplated in the Existing Credit Agreement by such Lender’s Investment Committee, (ii) satisfactory review of all Material Contracts, (iii) satisfactory management background investigation results, (iv) copies of any other third-party due diligence reports conducted by Borrower or its Subsidiaries, (v) appropriate documentation of all proceedings in connection with the making of the initial Loans and the other transactions contemplated by the Existing Credit Agreement and the other Transaction Documents, and all documents incidental hereto and thereto (vi) copies of each of the other closing deliverables described in the closing checklist attached as Exhibit E to the Reaffirmation and Omnibus Amendment Agreement and such other documents and information as the Administrative Agent and the Lenders reasonably required and such counterpart originals or certified or other copies of such documents.
| Annex A-85 |
Section 3.02 Conditions to all Loans after the Closing Date. The obligation of any Lender to fund a Delayed Draw Term Loan after the Closing Date or the Administrative Agent to assist the Borrower in such extension of credit, is subject to it having received evidence in form and substance satisfactory to it of the satisfaction of each of the following conditions precedent prior to or contemporaneously with the making of such Loan (or such Lender agreeing to waive such condition):
(a) Borrowing Notice. The Administrative Agent and Lenders shall have received (in form and substance satisfactory to them) a fully executed, assembled Notice of Borrowing (including any attachments, calculations or other supporting information and specifying a permitted use for the proceeds of the Loan).
(b) Representations and Warranties. The representations and warranties of each Loan Party and Subsidiary which is a party to any Loan Documents contained in each Loan Document or in any document furnished at any time under or in connection herewith or therewith, shall be true and correct in all material respects (provided, that such materiality qualifier shall not be applicable to those representations and warranties qualified or modified by materiality in the text thereof) on and as of the date of such credit extension, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date. The Secured Parties shall not have become aware of any material adverse new or inconsistent information or other matter which was not previously disclosed to the Secured Parties.
(c) Absence of Default. No Default or Event of Default exists or would result from the proposed credit extension or the application of the proceeds thereof and no event or circumstance exists that could reasonably be expected to have a Material Adverse Effect.
(d) [Reserved].
(e) Fees. Evidence that all fees required to be paid to the Agents and Lenders pursuant to Section 2.02(b) or any fee letter on or before the date of such credit extension, shall have been paid and (ii) all other fees and expenses required to be paid to the Lenders or the Agents (including all out-of- pocket expenses of the Agents and the Lenders (including the reasonable fees, charges and disbursements of counsel to the Secured Parties) required to be paid or reimbursed by the Loan Parties) on or before or substantially concurrently with the applicable credit extension shall have been paid (or the Administrative Agent shall have received evidence in form and substance satisfactory to it that such fees will be paid substantially concurrently with the extension of credit).
(f) Financial Condition. There is no event or circumstance that has occurred since the date of the most recently delivered financial statements delivered pursuant to Section 6.02(a) that could reasonably be expected to have a Material Adverse Effect.
(g) Conditions for the Delayed Draw Term Loans. Solely with respect to the funding of a Delayed Draw Term Loan, the Delayed Draw Funding Conditions shall have been satisfied.
(h) Officer’s Certificate. The Secured Parties’ receipt of an officer’s certificate of Borrower certifying that each of the conditions specified in this Section 3.02 have been satisfied.
| Annex A-86 |
(i) Approvals. All consents, authorizations and approvals of, and filings and registrations with, and all other actions in respect of, any Governmental Authority or other Person required in connection with the making of the Loans shall have been obtained and shall be in full force and effect.
(j) Miscellaneous. Any Agent or Lender shall be entitled, but not obligated to, request and receive, prior to any Credit Date, any additional information, approvals, documents or opinions reasonably satisfactory to the requesting party as such Agent or Lender may reasonably request or that it reasonably deems necessary to confirm its satisfaction with any of the conditions set forth in this Section 3.02.
Each Lender, by funding a Loan on a Credit Date, shall be deemed to have acknowledged receipt of, and consented to and approved, each condition precedent, Loan Document and each other document or evidence required to be approved by any Agent, Requisite Lenders or Lenders, as applicable on such date.
Article
IV
Reserved
Article
V
REPRESENTATIONS AND WARRANTIES
In order to induce Agents and the Lenders to enter into this Agreement and to make each Credit Extension to be made thereby, each Loan Party represents and warrants to Agents and the Lenders, on the Closing Date, the Restatement Effective Date, and on each Credit Date, that the following representations are true, complete and correct:
Section 5.01 Existence, Qualification and Power. Each Loan Party and each Subsidiary thereof (a) is duly organized or formed, validly existing and, as applicable, in good standing under the Laws of the jurisdiction of its incorporation or organization as identified in Schedule 5.13; (b) has all requisite corporate power and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own or lease its assets and carry on its business; and (ii) execute, deliver and perform its obligations under the Loan Documents and Transaction Documents to which it is a party; (c) is duly qualified and is licensed and, as applicable, in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license in each case except to the extent any failure would not reasonably be expected to have a Material Adverse Effect; and (d) Israeli Guarantor is not a “company in breach” (“hevrah meferah”), as such term is defined in the Israeli Companies Law 1999, and neither has received a notice that it is expected to be registered as such. Schedule 5.13 also correctly sets forth a fully diluted capitalization table of each Subsidiary of Holdings and their respective subsidiaries showing all Equity Interests held in each subsidiary.
Section 5.02 Authorization; No Contravention. The execution, delivery and performance by each Loan Party of each Loan Document and Transaction Document to which it is a party, have been duly authorized by all necessary corporate or other organizational action, and do not and will not contravene the terms of any of its Organization Documents or conflict with or result in any breach or contravention of, or the creation of any Lien under, or require any payment to be made under (i) any material Contractual Obligation to which it is a party or affecting it or its properties or any of its Subsidiaries; or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which it or its property is subject; or (c) violate any applicable Law, in each case except to the extent any failure would not reasonably be expected to have a Material Adverse Effect.
| Annex A-87 |
Section 5.03 Governmental Authorization; Other Consents. Except as set forth in Schedule 5.03 and other than actions to perfect security interests, no approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or any other Loan Document. No grants, funds or benefits (including, but not limited to, tax benefits actually applied) from the Israel Innovation Authority (formerly known as, the National Authority for Technological Innovation) or any other Governmental Authority were received by any Loan Party and any Loan Party is not obligated to pay any royalties or any other payments to the Israel Innovation Authority or any other Governmental Authority. The transactions contemplated under any Loan Document (including the Transactions occurring on the Restatement Effective Date) are not subject to any right and do not require the approval of the Israel Innovation Authority.
Section 5.04 Binding Effect. This Agreement has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by each Loan Party that is party thereto. This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally.
Section 5.05 Financial Statements; No Material Adverse Effect. The Audited Financial Statements (a) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (b) fairly present the financial condition of (x) prior to the Restatement Effective Date, Borrower and its Subsidiaries, and (y) with respect to any Audited Financial Statements for a period after the Restatement Effective Date, Holdings and its Subsidiaries, as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (c) show all material indebtedness and other liabilities (including, without limitation, Indebtedness, liabilities for taxes, long-term leases, Indebtedness and other unusual forward or long-term commitments), direct or contingent, of such Person and its Subsidiaries as of the date thereof. Since the date of the Audited Financial Statements, there has been no event or circumstance, either individually or in the aggregate, that has had or could reasonably be expected to have a Material Adverse Effect, except as disclosed to the Secured Parties in Schedule 5.05.
Section 5.06 Litigation. There are no actions, suits, proceedings, claims, investigations or disputes pending or, to the Knowledge of Holdings or any of its Subsidiaries, threatened in writing, at Law, in equity, in arbitration or before any Governmental Authority, by or against Holdings or any of its Subsidiaries or against any of their properties or revenues that purport to affect or pertain to this Agreement or any other Loan Document, or any of the transactions contemplated hereby which would be adverse to the Loan Parties or the Secured Parties in any material respect. Neither Holdings nor any of its Subsidiaries, nor any director or officer thereof, is or since December 31, 2019 has been the subject of any action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. The SEC has not issued any stop order or other order suspending the effectiveness of any registration statement filed by Holdings or any Subsidiary under the Securities Act and Exchange Act, as applicable.
| Annex A-88 |
Section 5.07 No Default. Neither any Loan Party nor any Subsidiary thereof is in default or event of default under or with respect to any Contractual Obligation that could either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. No Default or Event of Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document.
Section 5.08 Ownership of Property; Liens; Permits.
(a) Holdings and each of its Subsidiaries has, in all material respects, good, indefeasible and merchantable title to and ownership of its property, and is the beneficial owner of all Equity Interests in its Subsidiaries and other Persons purported to be owned by such Person, free and clear of all Liens, except Permitted Liens.
(b) Each Loan Party has, and is in compliance with, all permits, licenses, authorizations, approvals, entitlements and accreditations required for such Person lawfully to own, lease, manage or operate, or to acquire, each property or asset or business currently owned, leased, managed or operated, or to be acquired, by such Person, except to the extent the failure to have or be in compliance therewith could not reasonably be expected to have a Material Adverse Effect. No condition exists or event has occurred which, in itself or with the giving of notice or lapse of time or both, would result in the suspension, revocation, impairment, forfeiture or non-renewal of any material permit, license, authorization, approval, entitlement or accreditation necessary to the operation of the business of the Loan Parties as it is currently operated, and, to the Knowledge of the Loan Parties, there is no claim that any thereof is not in full force and effect.
Section 5.09 Environmental Compliance. Except as set forth on Schedule 5.09, (i) no Loan Party or any of its Subsidiaries is in material violation of any applicable Environmental Law, (ii) each Loan Party and its Subsidiaries has, and is in compliance with, all Environmental Permits for its respective operations and businesses, except to the extent any failure to have or be in compliance therewith could not reasonably be expected to result in any material Environmental Claim or Environmental Liability; (iii) to the knowledge of the Loan Parties or its Subsidiaries, there has been no Release of Hazardous Materials at any properties currently or formerly owned, leased or operated by any Loan Party, its Subsidiaries or a respective predecessor in interest or at any disposal or treatment facility which received Hazardous Materials generated by any Loan Party, its Subsidiaries or any respective predecessor in interest, which in any case of the foregoing could reasonably be expected to result in any material Environmental Claim or Environmental Liability; (iv) neither any Loan Party nor any of its Subsidiaries has received written notice of any pending or threatened Environmental Claims against, or Environmental Liability of, any Loan Party, its Subsidiaries or any respective predecessor in interest that could reasonably be expected to result in any material Environmental Claim or Environmental Liability; (v) neither any Loan Party nor any of its Subsidiaries is performing or responsible for any Remedial Action that could reasonably be expected to result in any material Environmental Claim or Environmental Liability; and (vi) the Loan Parties have made available to the Collateral Agent and Lenders true and complete copies of all material environmental reports, audits, and investigations in the possession or control of any Loan Party or any of its Subsidiaries with respect to the operations and business of the Loan Parties and its Subsidiaries.
Section 5.10 Insurance. The properties of Holdings and its Subsidiaries are insured with insurance companies that are not Affiliates of the Loan Parties that, to their Knowledge, are financially sound and reputable, in such amounts (after giving effect to any self-insurance reasonable and customary for similarly situated Persons engaged in the same or similar business as Holdings or applicable Subsidiary), with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where Holdings or the applicable Subsidiary operates.
| Annex A-89 |
Section 5.11 Taxes. Holdings and each Subsidiary (a) have properly prepared and timely filed all material Tax returns and reports required to have been filed by them with all appropriate Governmental Authority and (b) have fully and timely paid all Taxes required to be paid by them, other than Taxes that are being contested in good faith by appropriate proceedings and for which adequate reserves have been provided and reflected in Holdings and its Subsidiaries’ financial statements in accordance with the applicable GAAP. The charges, accruals and reserves on the books of Holdings and its Subsidiaries in respect of Taxes for all fiscal periods are adequate in all material respects, and there are no material unpaid assessments against Holdings or any Subsidiary nor, to Holdings’ or any Subsidiary’s Knowledge, any basis for the assessment of any additional Taxes, penalties or interest for any fiscal period or audits by any federal, state or local taxing authority. All Taxes and other assessments and levies that Holdings or any Subsidiary is required to withhold or to collect for payment have been duly withheld and collected and paid to the proper Governmental Authority or third party when due. There are no Tax liens or claims pending or threatened against Holdings or any Subsidiary or any of their respective assets or property other than Permitted Liens. Neither the Holdings nor any of its Subsidiaries is a party to any Tax sharing agreement or other similar arrangement.
Section 5.12 ERISA and Foreign Plans Compliance; Pensions
(a) (i) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state Laws and (ii) each Foreign Plan is in material compliance with applicable Law and regulations, special arrangements, collective bargaining agreements and extension orders in any applicable jurisdiction. Each Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS or, with respect to a prototype or volume submitter plan, can rely on an opinion letter from the IRS to the document sponsor, to the effect that such Plan is so qualified and, to the Knowledge of Holdings and its Subsidiaries, nothing has occurred which would prevent, or cause the loss of, such qualification. Holdings and each ERISA Affiliate have made all required contributions to each 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 Holdings or its Subsidiaries, threatened claims, actions or lawsuits, or action by any Governmental Authority. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan.
(c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) no Loan Party nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA) (or equivalent Law in a non-US jurisdiction with respect to a Foreign Plan); (iv) no Loan Party nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan (or equivalent Law in a non-US jurisdiction); and (v) no Loan Party nor any ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or 4212(c) of ERISA (or equivalent Law in a non-US jurisdiction).
(d) To the best of its Knowledge, no Loan Party nor any of its Affiliates is or has at any time been (i) an employer (for the purposes of sections 38 to 51 of the Pensions Act 2004) of an occupational pension scheme which is not a money purchase scheme (both terms as defined in the Pensions Schemes Act 1993); or (ii) ‘connected’ with or an ‘associate’ of (as those terms are used in sections 38 and 43 of the Pensions Act 2004) such an employer.
| Annex A-90 |
Section 5.13 Subsidiaries; Equity Interests. Holdings has no Subsidiaries other than those specifically disclosed in Schedule 5.13 or as disclosed to the Administrative Agent in writing pursuant to Section 6.12(a), and all of the outstanding Equity Interests in such Subsidiaries have been validly issued, are fully paid and nonassessable and are owned by a Loan Party, free and clear of all Liens other than Permitted Liens. IP Hold-Co has no equity investments in any other corporation or entity. All of the outstanding Equity Interests in the Holdings and its Subsidiaries have been validly issued and, where applicable, are fully paid and nonassessable.
As of the Restatement Effective Date and after giving effect to the transaction occurring as of the Restatement Effective Date, Schedule 5.13 sets forth (a) the name and jurisdiction of organization of Holdings and each Subsidiary, (b) sets forth the ownership interests of each of the Subsidiaries of Holdings and each of its Subsidiaries, including the percentage and classes of such Equity Interests on a fully diluted basis and (c) identifies each Person the Equity Interests of which are required to be pledged on the Restatement Effective Date pursuant to the Collateral and Guarantee Requirements.
Section 5.14 Margin Regulations; Investment Company Act. No Loan Party is engaged nor will it engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the Federal Reserve Board), or extending credit for the purpose of purchasing or carrying margin stock. No Loan Party nor any of their Subsidiaries is or is required to be registered as an “investment company” under the Investment Company Act of 1940, as amended, as such terms are defined in the Investment Company Act of 1940. Neither the making of any Loan nor the use of proceeds thereof will violate the provisions of Regulation T, Regulation U or Regulation X of the Federal Reserve Board.
Section 5.15 Disclosure.
(a) Each Loan Party has disclosed to the Agents all agreements, instruments and corporate or other restrictions to which it is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. None of the reports, financial statements, certificates or other information furnished by or on behalf of any Loan Party to the Agents (other than forward-looking information and projections and information of a general economic nature and general information about the Loan Parties’ industry) in connection with the negotiation of this Agreement or delivered hereunder (as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which it was made, not materially misleading.
(b) All projections have been prepared in good faith on a basis that is believed by the Loan Parties to be, and based on assumptions, estimates, methods and tests that are believed by the Loan Parties to be reasonable at the time such projections were prepared and information believed by the Loan Parties to have been accurate based upon the information available to the Loan Parties at the time such projections were furnished to the Agents, and no Loan Party is aware of any facts or information that would lead it to believe that such projections are incorrect or misleading in any material respect; it being understood that projections are by their nature subject to significant uncertainties and contingencies, many of which are beyond the Loan Parties’ control and actual results may differ materially from the projections and such variations may be material.
Section 5.16 Compliance with Laws. Each Loan Party and each Subsidiary thereof is and has been in compliance in all respects with the requirements of all applicable Laws and all orders, writs, injunctions and decrees applicable to it or to its business or properties, except to the extent any noncompliance would not be reasonably expected to adversely affect Holdings and its Subsidiaries taken as a whole or the Obligations in any material respect.
| Annex A-91 |
Section 5.17 Intellectual Property; Licensing.
(a) Schedule 5.17(a) sets forth a complete and accurate list of all: (i) issuances, registrations and applications for Intellectual Property owned or exclusively licensed by Holdings or a Subsidiary, indicating for each, as applicable, the title, jurisdiction, record owner, and application or registration number; and (ii) Licenses to which Holdings or any of its Subsidiaries is a party or otherwise bound that are material to the conduct of the business of Holdings or any Subsidiary or that involve any Assigned Patent, excluding for the avoidance of doubt, any commercially available ‘off-the-shelf’ software or open source software licenses used in the business of Holdings or any Subsidiary, or any licenses granted to customers, distributors or agents of Holdings or any Subsidiary for the purpose of testing, demonstrating, using, installing, maintaining, updating, repairing, decommissioning and otherwise exploiting the Products (each, a “Material License”).
(b) Except as set forth on the Disclosure Schedule, Holdings and each Subsidiary exclusively own all right, title and interest in and to, or have a valid and enforceable right to use, free and clear of any Lien other than any Permitted Liens, all Intellectual Property necessary for the conduct of its business as presently conducted. Except as set forth in Schedule 5.17(b), within the (3) three years preceding the Closing Date, no claim has been brought, is pending, or, to the knowledge of the Loan Parties, has been threatened, by any Person (i) alleging that the conduct of the business of Holdings or a Subsidiary infringes, misappropriates, dilutes or otherwise violates the Intellectual Property of any Person or (ii) challenging or questioning the validity, enforceability, ownership, use, registrability or patentability of any Material Intellectual Property. To the knowledge of the Loan Parties, no Person is infringing, misappropriating, diluting or otherwise violating any Intellectual Property of Holdings or any Subsidiary.
(c) Other than as set forth on Schedule 5.17(c), no Foreign Subsidiary owns any registrations or applications to register any Material Intellectual Property. To the knowledge of the Loan Parties, all registrations and pending applications for Material Intellectual Property listed in accordance with paragraph (a) are (i) subsisting and have not been adjudged invalid or unenforceable, in whole or part, and (ii) valid and in full force and effect. Holdings and each Subsidiary has taken commercially reasonable steps to maintain, enforce and protect its Intellectual Property, including by requiring each employee, consultant and independent contractor involved in the creation, development or authorship of any Intellectual Property to execute an agreement pursuant to which such Person (x) agrees to protect the confidential information of Holdings and each Subsidiary and (y) assigns to Holdings or a Subsidiary, as applicable, all rights in any Intellectual Property created in the course of his, her or its employment or other engagement with Holdings or a Subsidiary.
(d) Except as may be disclosed to the Administrative Agent in writing prior to the Restatement Effective Date, the Loan Parties have obtained and properly recorded previously executed assignments from inventors and all other Persons for the Assigned Patents as necessary to fully perfect their rights and title therein in accordance with applicable Law in each respective jurisdiction. All inventors named on the Assigned Patents are true and correct.
(e) Except as may be set forth on Schedule 5.17(e), there is no obligation imposed by a standards-setting organization with respect to any of the Assigned Patents. No funding, facilities or personnel of any Governmental Authority were used, directly or indirectly, to develop or create, in whole or in part, any Intellectual Property assets, or any other products or services of Holdings or its Subsidiaries.
(f) Except as set forth in Schedule 5.17(f), none of the Assigned Patents has ever been found invalid, unpatentable, or unenforceable for any reason in any proceeding and Holdings and its Subsidiaries have no Knowledge of and has not received any notice or information of any kind suggesting that the Assigned Patents may be invalid, unpatentable, or unenforceable. If any of the Assigned Patents are terminally disclaimed to another patent or patent application, all patents and patent applications subject to such terminal disclaimer are included in the Assigned Patents. To the extent “small entity” fees were paid to the United States Patent and Trademark Office for any Assigned Patent, such reduced fees were then appropriate because the payor qualified to pay “small entity” fees at the time of such payment and specifically had not licensed rights in any Assigned Patent to an entity that was not a “small entity”.
| Annex A-92 |
(g) Holdings and each Subsidiary has taken all reasonable and necessary steps to maintain and enforce the Material Intellectual Property and Material Licenses and to preserve the confidentiality of all trade secrets and proprietary information included in the set of Material Intellectual Property, including by requiring Persons having access thereto to execute binding, written non-disclosure agreements or otherwise effectively obligate themselves with respect to non-disclosure and non-use. Neither Holdings or any of its Subsidiaries, including their employees, and to the knowledge of the Loan Parties, their agents and contractors, has disclosed any trade secrets or other proprietary, confidential or personal information in which the Holdings or any of its Subsidiaries or any other Person has (or purports to have) any right, title, or interest (or any tangible embodiment thereof) to any Person without having the recipient thereof execute a written agreement regarding the non-disclosure and non-use thereof or otherwise effectively obligate themselves with respect to non-disclosure and non-use. All use, disclosure, or appropriation of any trade secret or other proprietary, confidential or personal information not owned by Holdings or any of its Subsidiaries has been pursuant to the terms of a written agreement between Holdings or one or its Subsidiaries and the owner of such trade secret or proprietary, confidential or personal information, or otherwise with such owner’s express written consent. Neither Holdings nor any of its Subsidiaries has received any notice in the past two (2) years from any Person that there has been an unauthorized use or disclosure of any trade secrets or other proprietary, confidential or personal information by Holdings or any of its Subsidiaries, or any of their employees, agents, or contractors. No escrow agents or other Persons other than Holdings or any of its Subsidiaries, and their employees and independent contractors who are subject to written obligations of confidentiality, have access to or otherwise possess any source code, or any current or contingent rights of any kind to any source code, included in the set of Material Intellectual Property, nor has Holdings or any of its Subsidiaries granted access or any current or contingent rights of any kind to any source code that is part of the Intellectual Property owned or controlled by Holdings or any of its Subsidiaries. To the knowledge of Holdings and the Loan Parties, no product, system, program or software module designed, developed, distributed or otherwise made available by Holdings or any of its Subsidiaries to any Person, including products and services, contains any “back door,” “time bomb,” “Trojan horse,” “worm,” “drop dead device,” “virus” or other software routines or hardware components designed to permit unauthorized access or to disable or erase software, hardware or data without the consent of the user (“Harmful Code”).
(h) Schedule 5.17(h) delivered to the Agent on or before the Restatement Effective Date is a complete and correct list of the following: (i) each open source software module by name and version number that is associated with a Reciprocal License that is incorporated in, linked to, or used in relation to, any product or service sold or distributed by the business of Holdings or any of its Subsidiaries; (ii) the Reciprocal License applicable to each such open source software module and a reference to where the terms of such Reciprocal License may be found (e.g., a link to a site that has the applicable Reciprocal License); (iii) whether Holdings or any of its Subsidiaries has modified any such open source software module, and (iv) whether such open source software module has been, or is expected to be, distributed by Holdings or any of its Subsidiaries or only used internally by Holdings or any of its Subsidiaries. Holdings’ and its Subsidiaries’ use or distribution of each component of software subject to a Reciprocal License complies with the applicable Reciprocal License governing such software, including all notice and attribution requirements. Neither Holdings nor any of its Subsidiaries has used any materials subject to a Reciprocal License in any manner that would (A) require the disclosure or distribution in source code form, (B) require the license thereof for the purpose of making derivative works, (C) impose any restriction on the consideration to be charged for distribution of any Material Intellectual Property, or (D) impose any restriction on Holdings or any of its Subsidiaries, from asserting its rights in relation to any Material Intellectual Property or the Collateral Agent or any Secured Party in exercising its rights hereunder.
| Annex A-93 |
(i) Neither Holdings nor any Subsidiary, or to Holdings’ or its Subsidiaries’ Knowledge, any counterparty, is in material breach of or default under the provisions of any of the Material Licenses, or has received written notice of any such breach or default or the intention of the other party to terminate such License, nor is there any event, fact, condition or circumstance which, with notice or passage of time or both, would constitute or result in a material conflict, breach, default or event of default under, any of the foregoing.
(j) Except as set forth in Schedule 5.17(j), none of the Intellectual Property has been or is currently involved in any reexamination, supplemental examination, reissue, interference proceeding, or any similar proceeding, and no such proceedings are pending or threatened.
(k) Except as set forth in Schedule 5.17(b), none of the Loan Parties nor any of their respective Subsidiaries has received any notices alleging that the conduct of its business (including the development, manufacture, use, sale or other commercialization of any Product) infringes any Intellectual Property of any third party, and to the Knowledge of the Loan Parties, the conduct of the business of the Loan Parties and their respective Subsidiaries (including the development, manufacture, use, sale or other commercialization of any Product) does not infringe any Intellectual Property of any third party.
(l) No Loan Party nor any Subsidiary is a party to any agreement that conflicts with the security interest in the Intellectual Property of Holdings or any Asset Security Provider granted under the Collateral Documents, and no license agreement with respect to any such Intellectual Property diminishes in any material respect the value of the any Intellectual Property Holdings or any Subsidiary or interferes with the security interest granted to the Administrative Agent pursuant to the terms of the Loan Documents. No material Intellectual Property of Holdings or any of its Subsidiaries is included in the set of Excluded Assets of the Loan Parties. The consummation of the transactions contemplated hereby and the exercise by the Administrative Agent or the Lenders of any right or protection set forth in the Transaction Documents will not constitute a breach or violation of, or otherwise affect the enforceability of, any licenses of any Intellectual Property owned or licensed by any Loan Party or Subsidiary.
(m) Holdings and its Subsidiaries have or had, as appropriate, complete, valid and enforceable rights to use a complete and correct copy of all data, data sets and databases used in, held for use in, or necessary for the conduct of the business of Holdings and its Subsidiaries (including their products), as currently conducted and as had been conducted in the past (collectively, “Company Data and Data Sets”), and all such material Company Data and Data Sets are or were, as appropriate, either (i) owned by Holdings or one of its Subsidiaries, (ii) used under valid, enforceable licenses to Holdings or one of its Subsidiaries, or (iii) otherwise used without encroaching on the rights of any third party.
(n) All IT Systems of the business of Holdings and its Subsidiaries are in good working condition and are sufficient for the operation of such business as currently conducted. In the past twelve (12) months, other than as disclosed in Schedule 5.17(n), there has been no malfunction, failure, continued substandard performance, denial-of-service, or other cyber incident, including any cyberattack or other impairment of the IT Systems that has resulted or is reasonably likely to result in the introduction of any Harmful Code into its products or any other material disruption or damage to Holdings or any of its Subsidiaries. Holdings and its Subsidiaries have been, and is, in compliance in all material respects with all contractual obligations concerning the security and privacy of the IT Systems and information contained therein (including Intellectual Property and personal data, and other information subject to confidentiality obligations). Holdings and its Subsidiaries have taken all commercially reasonable steps to safeguard the confidentiality, availability, security, and integrity of the IT Systems of Holdings and its Subsidiaries, including implementing and maintaining appropriate backup, disaster recovery, and software and hardware support arrangements. Other than as set forth on Schedule 5.17(n) neither of the business of Holdings nor any of its Subsidiaries has suffered any security breaches in the past twelve (12) months that have resulted in a third party obtaining access to any proprietary or confidential information of Holdings or any of its Subsidiaries or any third parties. Holdings and its Subsidiaries have implemented and maintained, consistent with commercially reasonable practices and its obligations to third persons, security, disaster recovery, business continuity plans, procedures, and facilities, and other measures adequate to protect computers, networks, software, and systems used by Holdings or any of its Subsidiaries to store, process, or transmit information or content from unauthorized access, use or modification.
| Annex A-94 |
(o) Holdings and its Subsidiaries have complied with, and are in compliance with, in each case in all material respects, all applicable Laws (including privacy Laws), rules, and regulations governing the collection and use of personal information and such collection and use is in accordance in all material respects with such member of Holdings’ and each Subsidiaries’ privacy policy. There are not, and have not been in the past two (2) years, any investigations, allegations, claims or occurrences pertaining to an actual or potential security or privacy breach. Holdings and its Subsidiaries have implemented industry standard or better information and data security policies and procedures that safeguard the confidential information of Holdings and its Subsidiaries (including the confidential information of Holdings’ and its Subsidiaries’ customers), as well as all Personal Information collected by Holdings and its Subsidiaries both on its own behalf and on behalf of third parties. In the past two (2) years, neither Holdings nor any of its Subsidiaries has (i) experienced any actual, alleged, or suspected unauthorized access, use, or disclosure of, or data breach or other security incident involving Personal Information in its possession or control, or (ii) been subject to or received any notice of any proceeding by any Governmental Authority or other Person concerning Holdings’ or any of its Subsidiaries’ collection, use, processing, storage, transfer, or protection of Personal Information or any actual, alleged, or suspected violation of any applicable Law concerning privacy, data security, or data breach notification, and there are no facts or circumstances that could reasonably be expected to give rise to any such proceedings.
Section 5.18 Rights in Collateral; Priority of Liens. Each Loan Party owns the property granted by it as Collateral under the Loan Documents, free and clear of any and all Liens in favor of third parties other than Permitted Liens. Upon the proper filing and registration (as applicable) of the UCC financing statements or the equivalent thereof in any other country, the Liens in the Collateral granted to the Collateral Agent on behalf of the and for the benefit of the Secured Parties pursuant to the Loan Documents will constitute valid and enforceable first, prior and perfected Liens on the Collateral, subject only to the Pari Passu Intercreditor Agreement and Permitted Liens.
Section 5.19 Solvency. Holdings and each of the Loan Parties which are Domestic Subsidiaries are and will be Solvent both before and after giving effect to the transactions occurring on the Restatement Effective Date and on the date of each Credit Extension. Holdings and its Subsidiaries, on a consolidated basis, are and will be Solvent both before and after giving effect to the transactions occurring on the Restatement Effective Date and on the date of each Credit Extension. No transfer of property is being made by any Loan Party and no obligation is being incurred by any Loan Party in connection with the Transactions, the De-SPAC Transactions and the other transactions contemplated by this Agreement or the other Loan Documents or IP Hold-Co Documents with the intent to hinder, delay, or defraud either present or future creditors of such Loan Party.
Section 5.20 Business Locations; Taxpayer Identification Number. Set forth in Schedule 5.20 are the list of all of each Loan Party’s locations and all locations where any Collateral is kept and each Loan Party’s chief executive office, exact legal name, U.S. taxpayer identification number and organizational identification number. Except as set forth in Schedule 5.20, no Loan Party has during the five (5) years preceding the Restatement Effective Date (i) changed its legal name; (ii) changed its state of formation; or (iii) been party to a merger, consolidation or other change in structure (other than the De-SPAC Transactions).
| Annex A-95 |
Section 5.21 [Reserved].
Section 5.22 PATRIOT Act; Sanctions; Export Controls; FCPA.
(a) To the extent applicable, Holdings and each of its Subsidiaries is in compliance, in all material respects, with the PATRIOT Act.
(b) Each Loan Party represents that neither Holdings nor any of its Subsidiaries nor any director, officer or employee thereof, nor, to its knowledge, any agent, affiliate or representative of Holdings or any Subsidiary, is an individual or entity that is a Person that is:
(i) listed in the annex to, or otherwise subject to the provisions of, Executive Order No. 13224 on Terrorist Financing effective September 24, 2001 (the “Executive Order”);
(ii) prohibited from dealing or otherwise engaging in any transaction by any domestic or applicable foreign laws with respect to terrorism or money laundering;
(iii) engaged in “terrorism” as defined in the Executive Order or in any applicable foreign laws;
(iv) the subject or target of any sanctions administered or enforced by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), the U.S. Department of State, the United Nations Security Council, the European Union, the State of Israel or Her Majesty’s Treasury (collectively, “Sanctions”); or
(v) located, organized or resident in a country or territory that is the subject of comprehensive Sanctions (including, without limitation, as of the Closing Date, Cuba, Iran, North Korea, Syria and the Crimea region of the Ukraine) (each a “Designated Jurisdiction”).
(c) Each Loan Party represents and covenants that it and its Subsidiaries will not, directly or, to its knowledge, indirectly, use the proceeds of the Loans, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other Person:
(i) to fund or facilitate any activities or business (x) of or with any Person that, at the time of such funding or facilitation, is the subject or target of Sanctions or (y) in any country or territory that, at the time of such funding or facilitation, is the subject of comprehensive Sanctions; or
(ii) in any other manner that will result in a violation of Sanctions by any Person (including the Lenders or other party hereto).
(d) To the extent applicable, each of Holdings and its Subsidiaries is in compliance with the Export Control Regulations. Each Loan Party represents that neither it nor any of its Subsidiaries have engaged in transactions with, or exported any products, services or associated technical data: (i) into (or to a national or resident of) Cuba, Iran, North Korea, Syria, the Crimea region of the Ukraine or any other country or territory to which the United States had embargoed exports or with which the United States had proscribed economic transactions as of the date of such export or transaction; or (ii) to any person or entity included on the list of Specially Designated Nationals and Blocked Persons maintained by OFAC or the Denied Persons List maintained by the U.S. Department of Commerce as of the date of such transaction or export; or (iii) that would otherwise constitute or give rise to a violation of the Export Control Regulations. Each Loan Party further represents that it and its Subsidiaries have instituted policies and procedures designed to ensure, and which are reasonably expected to ensure, compliance with the Export Control Regulations and with the representation and warranty contained herein.
| Annex A-96 |
(e) Each Loan Party represents that neither it nor any of its Subsidiaries nor any director, officer or employee thereof, has taken any action, directly or indirectly, that would result in a violation by any of the foregoing of the FCPA and the rules and regulations thereunder or any other applicable domestic or foreign anti-corruption law in any material respect. Each Loan Party represents that to its knowledge, no agent, affiliate, representative or any other Person acting on behalf of Holdings or any of its Subsidiaries has taken any action, directly or indirectly, that would result in a violation by any of the foregoing of the FCPA and the rules and regulations thereunder or any other applicable domestic or foreign anti-corruption law. Each Loan Party further represents that it and its Subsidiaries have instituted policies and procedures designed to ensure, and which are reasonably expected to ensure, compliance with the FCPA and any other applicable domestic or foreign anti-corruption law and with the representation and warranty contained herein.
(f) Borrower represents that the proceeds of the Loans will not be used by it or any of its Subsidiaries for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage in violation of the FCPA or any other applicable anti-corruption law in any material respect.
Section 5.23 Material Contracts. Schedule 5.23 (as supplemented from time to time) contains a true, correct and complete list of all the Material Contracts of Holdings and its Subsidiaries and, except as previously disclosed and consented to by the Requisite Lenders and the Agents, all such Material Contracts are in full force and effect and no defaults currently exist thereunder which would be adverse to Holdings and its Subsidiaries or the Secured Parties in any material respect.
Section 5.24 Employee Matters. Except as set forth on Schedule 5.24, (i) each Loan Party and its Subsidiaries is in compliance with all requirements of applicable Law in all material respects pertaining to employment and employment practices, terms and conditions of employment, wages and hours, and occupational safety and health, (ii) no Loan Party or any Subsidiary is party to any collective bargaining agreement, nor has any labor union been recognized as the representative of the employees of any Loan Party of Subsidiary, (iii) there is no material unfair labor practice complaint pending or, to the best knowledge of any Loan Party, threatened against any Loan Party or any Subsidiary before any Governmental Authority and no grievance or arbitration proceeding pending or threatened against any Loan Party or any Subsidiary which arises out of or under any collective bargaining agreement, (iv) there has been no strike, work stoppage, slowdown, lockout, or other material labor dispute pending or, to the knowledge of any Loan Party, threatened against any Loan Party or any Subsidiary, (v) to the best knowledge of each Loan Party, no labor organization or group of employees has made a pending demand for recognition or certification, and there are no representation or certification proceedings or petitions seeking a representation proceeding presently pending or threatened to be brought or filed, with the National Labor Relations Board, or any other labor relations tribunal or authority, and (vi) there are no outstanding claims, complaints, assessments or investigations against the Loan Parties or their Subsidiaries under the Employment Standards Act, Labour Relations Code, Human Rights Code or other comparable legislation in any applicable jurisdiction, nor are there any claims, complaints, assessments, or investigations filed against the Loan Parties or their Subsidiaries with the courts, boards and tribunals which govern the aforementioned legislation and regulations in each case which would be adverse to Holdings and its Subsidiaries in any material respect. No Loan Party or Subsidiary has incurred any material liability or obligation under the Worker Adjustment and Retraining Notification Act (“WARN”) or any similar requirement of applicable Law which remains unpaid or unsatisfied. All material payments due from any Loan Party or Subsidiary on account of wages and employee health and welfare insurance and other benefits have been paid or accrued as a liability on the books of such Loan Party or Subsidiary.
| Annex A-97 |
Section 5.25 No Regulatory Restrictions on Borrowing, Guarantees or Upstreaming Cashflows. Except as disclosed on Schedule 5.25, to the Knowledge of the Loan Parties, no Loan Party nor any of their Subsidiaries is subject to regulation under any other Law, treaty, rule or regulation or determination of an arbitrator or court or other Governmental Authority or any other contractual restriction that limits its ability to incur or guarantee any Indebtedness under this Agreement or any Loan Document or to permit its Subsidiaries to upstream dividends and other distributions in the manner contemplated by Section 6.22 of this Agreement except as would not be adverse to the ability of Holdings and its Subsidiaries to perform under the Loan Documents in any material respect.
Section 5.26 Rank of Debt. The obligations of each of the Loan Parties under the Loan Documents to pay the principal of and interest on the Loans and any and all other amounts due thereunder constitute direct and unconditional senior obligations of each such Loan Party and will at all times rank at least equal in right of payment with all other present and future indebtedness and other obligations of such Loan Party, except for any obligations in respect of employee compensation and benefits and taxes and other Permitted Liens in respect of obligations that are immaterial in the aggregate to the Loan Parties and their Subsidiaries, taken as a whole, which have priority under the laws of each Relevant Jurisdiction.
Section 5.27 No Set-off. The obligations of the Loan Parties under the Loan Documents are not subject to any defense, set-off or counterclaim by any of the Loan Parties or any circumstance whatsoever which might constitute a legal or equitable discharge from its obligations thereunder other than the defense of payment in full.
Section 5.28 No Immunity; Proper Legal Form; No Need To Qualify Under each Relevant Jurisdiction or other Applicable Law.
(a) None of the Loan Parties nor any of their properties have any immunity from the jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) under the laws of the United States, and each other Relevant Jurisdiction in respect of its obligations under the Loan Documents. To ensure the legality, validity, enforceability or admissibility into evidence in each Relevant Jurisdiction of the Loan Documents, it is not necessary that the Loan Documents or any other document be filed or recorded with any Governmental Authority in each Relevant Jurisdiction except for the translation into Hebrew of the Loan Documents by an approved translator and the filings relating to the grant and perfection of security interest in the Collateral described herein and in the other Loan Documents.
(b) Each of the Loan Documents is in proper legal form under the Laws of each Relevant Jurisdiction for the enforcement thereof against any of the Loan Parties under such Laws; provided that, in the event of enforcement of this Agreement in the courts of each Relevant Jurisdiction, the signatures of the parties signing outside of such country must be notarized and apostilled and a translation of this Agreement into the applicable language, prepared by a court-approved translator or other official translator shall be required. The submission to jurisdiction, appointment of the Process Agent, consents and waivers by the Loan Parties in Article XII of the Agreement are valid and irrevocable.
(c) It is not necessary in order for the Administrative Agent or any Lender to enforce any rights or remedies under the Loan Documents or solely by reason of the execution, delivery and performance by any of the Loan Parties of the Loan Documents that the Administrative Agent or any Lender be licensed or qualified with any Governmental Authority in each Relevant Jurisdiction, or be entitled to carry on business in any of the foregoing.
| Annex A-98 |
Section 5.29 Centre of Main Interests and Establishments. For the purposes of Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings (recast) (the “Regulation”), its centre of main interest (as that term is used in Article 3(1) of the Regulation) is situated in its jurisdiction of incorporation and it has no “establishment” (as that term is used in Article 2(10) of the Regulation) in any other jurisdiction.
Section 5.30 Exchange Controls. Under current laws and regulations of each Relevant Jurisdiction and each political subdivision thereof, all interest, principal, premium, if any, and other payments due or to be made on the Loan or otherwise pursuant to the Loan Documents may be freely transferred out of such countries and may be paid in, or freely converted into, United States Dollars.
Section 5.31 Customers and Suppliers. There exists no actual or threatened in writing termination, cancellation or limitation of, or modification to or change in, the business relationship between (i) any Loan Party or any of its Subsidiaries, on the one hand, and any customer or any group thereof, on the other hand, whose agreements with any Loan Party or their Subsidiaries are individually or in the aggregate material to the business or operations of Holdings and its Subsidiaries, or (ii) any Loan Party or Subsidiary, on the one hand, and any supplier or any group thereof, on the other hand, whose agreements with any Loan Party or any of their Subsidiaries are individually or in the aggregate material to the business or operations of Holdings and its Subsidiaries; and there exists no present state of facts or circumstances that could give rise to or result in any such termination, cancellation, limitation, modification or change, in each case which could reasonably be expected to result in a Material Adverse Effect.
Section 5.32 Critical Technologies. Except for any items eligible for license exception ENC of the Export Administration Regulations (15 CFR Part 740.17), Holdings and its Subsidiaries do not produce, design, test, manufacture, fabricate or develop any ‘critical technologies’ as that term is defined at 31 C.F.R. Part 800.215 (each a “Critical Technology”). For any product that is eligible for license exception ENC of the Export Administration Regulations (15 CFR Part 740.17), Holdings and each of its Subsidiaries have complied with all Bureau of Industry Security submission requirements to perfect such exception.
Section 5.33 Products. (i) Except as set forth on Schedule 5.33, each Product has been and/or shall be manufactured, imported, possessed, owned, warehoused, marketed, promoted, sold, labeled, furnished, distributed and marketed in accordance with all applicable Regulatory Permits and applicable Laws, other than samples and Products shipped to the United States not for sale in the ordinary course of business without FCC approval and labeled as such; (ii) with respect to any Product being tested or manufactured by any Loan Party or any Subsidiary of any Loan Party, such Person has received, and such Product shall be the subject of, all Material Regulatory Permits needed in connection with the testing or manufacture of such Product as such testing is currently being conducted by or on behalf of such Person, and such Person has not received any notice from any applicable Governmental Authority that such Governmental Authority is conducting an investigation or review of (A) such Person’s manufacturing facilities and processes for such Product which have disclosed any material deficiencies or violations of applicable Law (and/or the Material Regulatory Permits related to the manufacture of such Product), or (B) any such Material Regulatory Permit or that any such Material Regulatory Permit has been revoked or withdrawn, nor has any such Governmental Authority issued any order or recommendation stating that the development, testing and/or manufacturing of such Product by such Person should cease; and (iii) with respect to any Product marketed, leased, rented, or sold by any Loan Party or any Subsidiary of any Loan Party, such Person shall have received, and such Product shall be the subject of, all Material Regulatory Permits needed in connection with the marketing and sales of such Product as currently being marketed, leased, rented, or sold by such Person, and such Person has not received any notice from any applicable Governmental Authority that such Governmental Authority is conducting an investigation or review of any such Material Regulatory Permit or approval or that any such Material Regulatory Permit has been revoked or withdrawn, nor has any such Governmental Authority issued any order or recommendation stating that such marketing or sales of such Product cease or that such Product be withdrawn from the marketplace.
| Annex A-99 |
Each of the Secured Parties shall be entitled to rely on each such representation, warranty, certification or other statement made herein or in any Loan Document, including, for the avoidance of doubt, all representations and warranties in this Article V, notwithstanding whether any employee, representative or agent of a Secured Party seeking to enforce a remedy hereunder or under any other Loan Document knew or had reason to know of any breach or potential breach of any such representation, warranty, certification or other statement and regardless of any investigation by any Secured Party.
Article
VI
AFFIRMATIVE COVENANTS
Until the Obligations have been fully satisfied and the Lenders’ commitment to advance credit has expired, the Borrower and the Loan Parties shall, and shall each cause each of their Subsidiaries to:
Section 6.01 Compliance with Laws. Comply in all respects with all applicable Laws, rules, regulations, orders, judgments and decrees of all Governmental Authorities except to the extent noncompliance therewith individually or in the aggregate could not reasonably be expected to have a Material Adverse Effect.
Section 6.02 Financial Statements. Deliver to the Administrative Agent and the Lenders, in form and detail satisfactory to the Administrative Agent and the Lenders:
(a) as soon as available, but in any event within ninety (90) days after the end of each fiscal year of Holdings ended after the Restatement Effective Date, (A) a consolidated balance sheet of Holdings and its consolidated Subsidiaries as at the end of such fiscal year, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year and to the Financial Plan (as defined below), all in reasonable detail and prepared in accordance with GAAP, such consolidated statements to be audited and accompanied by a report and opinion of Grant Thorton LLP or any other independent certified public accounting firm of nationally recognized standing selected by the Loan Parties and reasonably acceptable to the Administrative Agent, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit (other than a “going concern” or like qualification or exception in either case resulting solely from an upcoming maturity date of any Permitted Indebtedness occurring within one year from the time such opinion is delivered or as permitted in writing by the Administrative Agent); and (B) for each other Subsidiary of Holdings for which separate audited annual reports are available, a copy of such annual report containing unconsolidated and consolidated balance sheets of such reporting Person and its Subsidiaries as of the end of such fiscal year, in each case accompanied by a certification of such accountants as to the amount of Distributable Income with respect to such Person and each such Subsidiary during the preceding fiscal year (except to the extent already explicitly included in the foregoing financial statements);
| Annex A-100 |
(b) as soon as available, but in any event within forty-five (45) days after the end of each fiscal quarter (or such longer period as may be agreed by the Administrative Agent in its sole discretion), an unaudited consolidated balance sheet of, (x) with respect to each fiscal quarter prior to the consummation of the De-SPAC Transaction, Borrower and its Subsidiaries and (y) thereafter, Holdings and its Subsidiaries, in each case as at the end of such fiscal quarter, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal quarter and for the portion of Borrower’s, or as the context may require, Holdings’ fiscal year then ended, setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and corresponding portion of the previous fiscal year and to the Financial Plan, all in reasonable detail and prepared in accordance with GAAP;
(c) commencing with the fiscal month ending June 30, 2021, as soon as available, but in any event within thirty (30) days after the end of each month (or forty-five (45) days after the end of each month that is also the last month of a fiscal quarter) (or such longer period as may be agreed by the Administrative Agent in its sole discretion), (i) an unaudited consolidated balance sheet of, (x) with respect to each month ended prior to the consummation of the De-SPAC Transaction, Borrower and its Subsidiaries and (y) thereafter, Holdings and its Subsidiaries, in each case, as at the end of such month, (ii) the related consolidated statements of income or operations, shareholders’ equity and cash flows for such month and for the portion of Borrower’s, or as the context may require, Holdings’ fiscal year then ended, (iii) Unrestricted Cash, expense summaries and gross and net revenue with respect to each Product of the Loan Parties and their Subsidiaries as at the end of such month (and if such month is also a fiscal quarter end, for such fiscal quarter) and (iv) if such month is also a fiscal quarter end, a summary detailing the Products sold to each Key Customer for such fiscal quarter and for the portion of Borrower’s, or as the context may require, Holdings’ fiscal year then ended, setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and corresponding portion of the previous fiscal year and to the Financial Plan (if available), all in reasonable detail (and where applicable prepared in accordance with GAAP). Notwithstanding anything to the contrary herein, to the extent the deliveries under Section 6.02(b) and 6.02(c) are duplicative, the Borrower shall only be required to provide such information once;
(d) as soon as available and not later than the date quarterly financial statements are required to be delivered pursuant to Section 6.02(b) above, a report specifying the cash and Cash Equivalents of Borrower and its Subsidiaries, or as the context may require after giving effect to the De-SPAC Transactions, Holdings and its Subsidiaries by entity and by account jurisdictions, Operating Expenses, account aging and other key operating metrics, and detailing the products sold by the Loan Parties and their Subsidiaries, the number of revenue producing customers, backlog and headcount of the Loan Parties and their Subsidiaries, in each case certified by the chief financial officer (or equivalent) of Borrower, or as the context may require, Holdings;
(e) as soon as available, but in any event within forty-five (45) days after the end of each fiscal year of Borrower and its Subsidiaries, or as the context may require after giving effect to the De-SPAC Transactions, Holdings and its Subsidiaries, an annual operating budget and plan prepared on a quarterly basis together with financial projections for such year each in the form approved by the Borrower’s, or as the context may require, Holdings’ Board of Directors and otherwise in form and substance satisfactory to the Administrative Agent (any such approved budget, plan and projection, a “Financial Plan”), including (i) a forecasted consolidated balance sheet and forecasted consolidated statements of income and cash flows of Borrower and its Subsidiaries, or as the context may require, Holdings and its Subsidiaries for each such fiscal year, together with pro forma Compliance Certificates for each such fiscal year and an explanation of the assumptions on which such forecasts are based, (ii) forecasted consolidated statements of income and cash flows of Holdings and its Subsidiaries or the Borrower and its Subsidiaries, as the context requires, for each quarter of each such fiscal year, (iii) forecasts demonstrating adequate liquidity and projected compliance with the requirements of Section 7.16 through the final maturity date of the Loans, together, in each case, with an explanation of the assumptions on which such forecasts are based and for each fiscal year (or portion thereof) through the final Maturity Date, accompanied by a certificate of a Responsible Officer certifying that such Financial Plan is a reasonable estimate for the periods covered thereby;
| Annex A-101 |
(f) if, as a result of any change in accounting principles and policies from those used in the preparation of the Historical Financial Statements, the consolidated financial statements of Holdings and its Subsidiaries or the Borrower and its Subsidiaries, as applicable delivered pursuant to Section 6.02(a) or Section 6.02(b) will differ in any material respect from the consolidated financial statements that would have been delivered pursuant to such subdivisions had no such change in accounting principles and policies been made, then, together with the first delivery of such financial statements after such change, one (1) or more statements of reconciliation for all such prior financial statements in form and substance reasonably satisfactory to Administrative Agent and the Lenders.
Section 6.03 Certificates; Other Information. Deliver to the Administrative Agent and the Lenders, in form and detail reasonably satisfactory to the Administrative Agent and the Requisite Lenders:
(a) concurrently with the delivery of the financial statements referred to in Section 6.02(a), a certificate of independent certified public accountants certifying such financial statements;
(b) (i) concurrently with the delivery of the financial statements referred to in Sections 6.02(a), 6.02(b), and 6.02(c) (provided that solely with respect to financial statements referred to in Section 6.02(c) with respect to a month that is also the last month in a fiscal quarter, such Compliance Certificate shall be combined with the Compliance Certificate delivered and such combined Compliance Certificate shall be required to be for the quarterly financial statement (without a requirement for a separate monthly Compliance Certificate for the month ended contemporaneously therewith)), a duly completed Compliance Certificate signed by the chief executive officer, chief financial officer or treasurer of Borrower, or after giving effect to the De-SPAC Transactions, Holdings and certifying to and, as applicable, attaching (i) the calculations necessary for determining compliance of the Loan Parties and their Subsidiaries with Section 7.16 of this Agreement as of the last date of such the relevant fiscal period referred to therein, (ii) a copy in form satisfactory to the Administrative Agent of management’s discussion and analysis for the financial conditions and results of operations of the Loan Parties and their Subsidiaries for such period, as compared to prior periods and the Financial Plan, along with details of any material developments or proposals affecting the Loan Parties or their business and the reason for any significant variations from the Financial Plan and prior periods, provided that delivery to the Administrative Agent of the board kit and related materials (“Board Reporting Materials”) with respect to such fiscal quarter shall be deemed to satisfy such requirement if the Board Reporting Materials are of a level of detail substantially similar to that provided to the Administrative Agent with respect to the Board Reporting Materials delivered for the fiscal quarter of the Borrower ended March 31, 2021, (iii) that all UCC financing statements and other appropriate filings, recordings or registrations, including all re-filings, re-recordings and re-registrations, have been filed of record in each governmental, municipal or other appropriate office in each jurisdiction necessary to protect and perfect the Liens under the Collateral Documents for a period of not less than twelve (12) months after the date of such certificate, or indicating otherwise; (iv) that such consolidated statements fairly present the financial condition, results of operations, shareholders’ equity and cash flows, expenses and sales, as applicable, of Borrower, or as the context may require, Holdings and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes, and (v) a report supplementing Schedules 1, 3(a), 4, 5, 6, 7 and 8 to the Security Agreement and Sections 5(a) and 18 of the Perfection Certificate;
| Annex A-102 |
(c) promptly and in no case later than the tenth (10th) day after the same are received by a Responsible Officer of a Loan Party, copies of any final audit reports, management letters or recommendations submitted to Holdings’ or such Subsidiary’s Board of Directors (or the audit committee of the Board of Directors) by independent accountants in connection with the accounts or books of Holdings or any Subsidiary, or any audit of any of them;
(d) promptly after the same are released, copies of all press releases;
(e) promptly and in no case later than the third (3rd) Business Day after the furnishing thereof, copies of any material statement or report furnished to any holder of debt or equity securities of any Loan Party or any Subsidiary thereof pursuant to the terms of any indenture, loan or credit or similar agreement and not otherwise required to be furnished to the Secured Parties pursuant hereto;
(f) promptly, and in any event within five (5) Business Days after receipt thereof by any Loan Party or any Subsidiary thereof, copies of (i) each notice or other correspondence received from any Governmental Authority (including the FCC, The Office of Communications, the SEC or comparable agencies in any applicable jurisdictions) concerning any investigation or possible investigation or other inquiry by such agency regarding financial or other operational results of any Loan Party or any Subsidiary thereof; and (ii) subpoenas, requests for information and other notices regarding any licenses or permits necessary to operate the business, any active or potential investigation of, or claim or litigation against, any Loan Party or any Subsidiary thereof by any Governmental Authority, and the results of any Governmental Authorities or any inspections of any manufacturing facilities of any Loan Party or any Subsidiary thereof or to the extent provided to a Loan Party or a Subsidiary thereof, any third party suppliers of any Loan Party or any Subsidiary thereof by any Governmental Authority;
(g) promptly and in no case later than the third (3rd) Business Day following the Administrative Agent’s, the Collateral Agent’s or a Lender’s request, proof of the Loan Parties’ compliance with Section 7.16(a);
(h) within 45 days (or such longer period as the Administrative Agent may agree in its sole discretion) after the Administrative Agent’s request (which shall not be made more than once per fiscal quarter), a report (x) supplementing the Perfection Certificate (as to other matters other than those described in Section 6.03(b)(v)) and disclosure schedules to this Agreement and the Security Documents and Collateral Documents, including (A) a list and description (including the street address, county or other relevant jurisdiction, state, record owner, book value thereof and, in the case of leases of property, lessor, lessee, expiration date and annual rental cost thereof) of all material real property acquired or leased during such fiscal year and a description of such other changes in the information included in such certificate or as may be necessary for the Schedules to the Security Documents and Collateral Documents to be accurate and complete; (B) a list of registration numbers for all patents, trademarks, service marks, trade names and copyrights awarded to any Loan Party or any Subsidiary thereof during such fiscal period, and (C) a list of all patent applications, trademark applications, service mark applications, trade name applications and copyright applications submitted by any Loan Party or any Subsidiary thereof during such period and the status of each such application;
(i) within five (5) days of delivery, copies of all statements, reports and notices (including board kits and other materials) made available to the Board of Directors of any Loan Party or any of their Subsidiaries or the holders of their Equity Interests generally;
(j) [Reserved];
| Annex A-103 |
(k) promptly, and in any event within ten (10) days after any Loan Party or any Subsidiary thereof obtains knowledge of any return, recovery, dispute or claim related to Products or inventory or other property or assets of the Loan Parties or their Subsidiaries that involves more than One Million Dollars ($1,000,000) in each instance or in the aggregate;
(l) Borrower will furnish to Administrative Agent and the Lenders prior written notice of any change (i) in any Loan Party’s corporate name, (ii) in any Loan Party’s identity or corporate structure, or (iii) in any Loan Party’s Federal Taxpayer Identification Number. Each Loan Party agrees not to effect or permit any change referred to in the preceding sentence unless all filings have been made under the UCC (or the local law equivalent in each applicable jurisdiction) or equivalent foreign filings or otherwise that are required in order for Administrative Agent to continue at all times following such change to have a valid, legal and perfected security interest in all of the Collateral and for the Collateral at all times following such change to have a valid, legal and perfected security interest as contemplated in the Loan Documents. Borrower also agrees promptly to notify Administrative Agent and the Lenders if any material portion of the Collateral is damaged or destroyed which would be adverse to Holdings and its Subsidiaries or the Secured Parties in any material respect;
(m) promptly, and in any event within five (5) Business Days after receipt thereof by any Loan Party or any Subsidiary, (i) copies of each notice or other correspondence received from the SEC (or comparable agency in any applicable non-U.S. jurisdiction) concerning any investigation or possible investigation or other inquiry by such agency regarding financial or other operational results of any Loan Party or any Subsidiary and (ii) copies of any material written correspondence or any other material written communication from the FCC or any other Governmental Authority or other regulatory body;
(n) promptly upon their being filed, copies of (i) after an initial public offering or SPAC Transaction, all copies of each annual report, financial statements, proxy statements, or other reports, notices or communications sent to its security holders acting in such capacity and (ii) all regular, special and periodic reports and all registration statements and prospectuses, if any, filed by the issuer of the initial public offering or SPAC Transaction or Holdings or any of their Subsidiaries with any securities exchange or with the SEC;
(o) [Reserved];
(p) promptly, such additional information regarding the business, financial or corporate affairs of Holdings or any Subsidiary, or compliance with the terms of the Loan Documents, as the Agents or any of the Lenders may from time to time reasonably request; or
(q) promptly upon request by the Administrative Agent or any Lender, information and documentation for purposes of compliance with beneficial ownership regulations or any applicable “know your customer” requirements under the PATRIOT Act or other applicable anti-money laundering laws.
| Annex A-104 |
Documents required to be delivered pursuant to this Agreement shall be deemed to have been delivered on the date on which such documents are made available on the SEC’s Electronic Data Gathering, Analysis, and Retrieval system (or any successor system thereto). Documents required to be delivered pursuant to Section 6.02 or Section 6.03(d) may additionally be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which Borrower (or another Loan Party) posts such documents, or provides a link thereto on Borrower’s or Holdings’ website on the Internet at the website address listed in Schedule 6.03; or (ii) on which such documents are posted on Borrower’s or Holdings’ behalf on an Internet or intranet website, if any, to which the Secured Parties have access (whether a commercial, third-party website or whether sponsored by the Agents); provided that upon the Lenders’ request Borrower shall (A) deliver paper copies of such documents to the Agents and the Lenders or (B) provide the Agents and Lenders (by fax or electronic mail) with notice of the posting of any such documents contemporaneously with each such posting. Notwithstanding anything to the contrary contained in Section 6.02, Section 6.03 or Section 6.04, effective immediately upon delivery of a written notice (an “Information Declination Notice”) by a Lender to Borrower and the Administrative Agent that such Lender no longer wishes to receive the items described in such sections (or any subclauses thereof), neither Borrower nor any other Loan Party shall be required to deliver any such items to such Lender, pursuant to the terms of this Agreement or any other Loan Document. Each Lender may, in its sole discretion, rescind any Information Declination Notice by the delivery of written notice of such rescission to Borrower, at which time any obligations to comply with Section 6.02, Section 6.03 and/or Section 6.04 (or any subclauses thereof) shall be reinstated as of the date of delivery of such notice.
Section 6.04 Notices. The Borrower shall furnish to the Administrative Agent and the Lenders written notice of any of the following:
(a) promptly, but in any event not later than the third (3rd) Business Day after a Responsible Officer of Holdings or any Subsidiary obtaining Knowledge of the occurrence of any Default or Event of Default, specifying the nature and extent thereof and the corrective action (if any) proposed to be taken with respect thereto;
(b) promptly, but in any event not later than five (5) Business Days after a Responsible Officer of Holdings or any Subsidiary obtaining Knowledge of any of the following: (A) (i) of the occurrence of any ERISA Event specifying in such notice a description ERISA Event and the actions, if any, proposed to be taken with respect to such ERISA Event together with a copy of any notice filed with the PBGC or the IRS pertaining to such ERISA Event, (ii) the receipt of any other notices received by Holdings, such Subsidiary or such ERISA Affiliate from the PBGC or any other governmental agency with respect thereto (attaching copies thereof), and/or (iii) (1) becoming aware that there has been an increase in Unfunded Pension Liabilities (not taking into account Pension Plans with negative Unfunded Pension Liabilities) of more than One Million Dollars ($1,000,000) since the date the representations hereunder are given or deemed given, or from any prior notice, as applicable, (2) of the existence of any Withdrawal Liability, (3) of the adoption of, or the commencement of contributions to, any Pension Plan subject to Section 412 of the Code by Holdings, any of its Subsidiaries or any ERISA Affiliate, or (4) of the adoption of any amendment to a Pension Plan subject to Section 412 of the Code which results in a material increase in contribution obligations of Holdings, any of its Subsidiaries or any ERISA Affiliate, a detailed written description thereof, as well as, (B) together copies of such other documents or governmental reports or filings relating to any Pension Plan as Administrative Agent or the Lenders shall reasonably request;
(c) promptly, but in any event not later than the third (3rd) Business Day after a Responsible Officer of Holdings, or any Subsidiary obtaining Knowledge 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, any Material Indebtedness of Holdings, or any subsidiary; (ii) any dispute, litigation, investigation, proceeding or suspension between Holdings, or any Subsidiary and any Governmental Authority; or (iii) the commencement of, or any material development in, any litigation or proceeding affecting Holdings, or any Subsidiary, including pursuant to any applicable Environmental Laws in each case to the extent it would reasonably be expected to result in a liability in excess of One Million Dollars ($1,000,000) or a Material Adverse Effect;
| Annex A-105 |
(d) promptly, but in any event not later than five (5) Business Days after a Responsible Officer of Holdings, or any Subsidiary obtaining Knowledge of any of the following (i) the termination of any Material Contract other than in accordance with its terms; or (ii) any material amendment to a Material Contract or other notice or event relating to a Material Contract or Material Indebtedness, in each case that could materially impair the value of the interests or rights of Holdings or its Subsidiaries, and in each case, together with copies of all notices, requests and other documents (including amendments, waivers and other modifications) entered into or received in connection therewith;
(e) promptly, but in any event not later than five (5) Business Days after a Responsible Officer of Holdings or any Subsidiary obtaining Knowledge of any of the following: (i) any litigation, arbitration, governmental investigation or Adverse Proceeding not previously disclosed to Holdings which has been instituted or is threatened against the Loan Parties or their Subsidiaries or their properties which could be reasonably be expected to result in losses and/or expenses in excess of One Million Dollars ($1,000,000), or (ii) any material development in any Adverse Proceeding that could be reasonably expected to have a Material Adverse Effect, or that seeks to enjoin or otherwise prevent the consummation of, or to recover any damages or obtain relief as a result of, the transactions contemplated hereby, written notice thereof together with such other information regarding the details thereof and anticipated costs and liabilities associated therewith as may be reasonably available to the Loan Parties and/or necessary or desirable to enable the Secured Parties and their counsel to evaluate such matters;
(f) promptly, but in any event not later than five (5) Business Days after a Responsible Officer of Holdings or any Subsidiary obtaining Knowledge of any of the following, written notice of any change in the board of directors (or similar governing body) of Holdings or any of its subsidiaries (other than changes occurring on the Restatement Effective Date in connection with the De-SPAC Transaction);
(g) promptly, but in any event not later than ten (10) Business Days after a Responsible Officer of Holdings or any Subsidiary obtaining Knowledge of any of the following, written notice of any material change in accounting policies or financial reporting practices by any Loan Party or any Subsidiaries thereof;
(h) promptly, but in any event not later than five (5) Business Days after a Responsible Officer of Holdings or any Subsidiary obtaining Knowledge of any material deviations or updates to the Patent Prosecution Workplan then in effect;
(i) promptly upon the occurrence of any Transfer of property or assets, incurrence of Indebtedness or other event, in each case for which the Loan Parties are required to make a mandatory prepayment pursuant to Section 2.01(e) and the receipt of Net Cash Proceeds in connection therewith;
(j) promptly, and in any event within five (5) Business Days after receipt thereof by any Loan Party or any Subsidiary, copies of the findings of any inspections of any manufacturing facilities of any Loan Party, any Subsidiary or any third party suppliers of any Loan Party or any Subsidiary by any Governmental Authority in each case if the result of such inspection would reasonably be expected to result in a material fine, or have an adverse impact on Holdings and its Subsidiaries or their business in any material respect; and
(k) to the extent (i) any pre-existing products or services provided by Holdings or any of its Subsidiaries are re-categorized by the U.S. government as a Critical Technology, or would reasonably be considered to constitute the design, fabrication, development, testing, production or manufacture of a Critical Technology after a re-categorization of selected technologies by the U.S. government, or (ii) after the Closing Date any Loan Party engages in any activity that could reasonably be considered to constitute the design, fabrication, development, testing, production or manufacture of a Critical Technology, in each case, that is not eligible for license exception ENC, Borrower shall promptly, and in any event within ten (10) Business Days after a Responsible Officer of Holdings or its Subsidiaries obtains Knowledge thereof notify the Administrative Agent of such change in the categorization of its products or services.
| Annex A-106 |
Section 6.05 Payment of Obligations. Pay and discharge as the same shall become due and payable, (a) all 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 diligently conducted and adequate reserves in accordance with GAAP are being maintained by Holdings or such Subsidiary; (b) all lawful claims which, if unpaid, would by Law become a Lien upon its property other than Permitted Liens; (c) all Obligations, as and when due and payable subject to any applicable grace or cure periods and (d) all other material obligations and liabilities, in each case except to the extent such nonpayment could not reasonably be expected to have a Material Adverse Effect.
Section 6.06 Books and Records. (a) Maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made in all material respects of all financial transactions and matters involving the assets and business of Holdings or such Subsidiary, as the case may be and (b) maintain such books of record and account in material conformity with all applicable requirements of any Governmental Authority having regulatory jurisdiction over Holdings or such Subsidiary, as the case may be.
Section 6.07 Inspection Rights. Permit representatives and independent contractors of the Secured Parties to visit and inspect any of its properties, to examine its corporate, financial and operating books and records and to discuss its affairs, finances and accounts with its directors, officers, and independent public accountants, all at the expense of the Loan Parties and at such reasonable times during normal business hours, upon reasonable advance notice to Borrower not more than two (2) times each calendar year (in the absence of an Event of Default); provided, however, that (a) when an Event of Default exists the Secured Parties (or any of their respective representatives or independent contractors) may do any of the foregoing as often as may be reasonably desired, at the expense of the Loan Parties at any time during normal business hours and without advance notice; and (b) the Loan Parties shall pay the reasonable expenses of two visits and inspections during any calendar year unless an Event of Default has occurred and is continuing.
Section 6.08 Litigation Cooperation. Make available to the Secured Parties, without expense to the Secured Parties, Holdings, its Subsidiaries and their directors, officers, employees and agents and its corporate, financial and operating books and records to the extent that the Secured Parties may deem them reasonably necessary to prosecute or defend any third-party suit or proceeding instituted by or against the Secured Parties with respect to any Collateral (including the Assigned Patent Rights) or the Obligations.
Section 6.09 Use of Proceeds. Use the Loan proceeds for growth capital, working capital, the retirement or exchange of any Existing Indebtedness and other general corporate purposes; provided however, in no case can any portion of proceeds be used (x) to fund any dividend or similar payments or (y) in a manner that causes or might cause such credit extension or the application of such proceeds to violate Regulation T, Regulation U or Regulation X of the Federal Reserve Board or any other regulation thereof or to violate the Exchange Act or any applicable laws. Up to Five Hundred Thousand Dollars ($500,000) of such Loan proceeds (or such lesser amount agreed with the Administrative Agent) must be applied to patent prosecution, development and enhancement (such patent prosecution, development and enhancement to be subject to and in accordance with the Patent Prosecution Workplan).
Section 6.10 Preservation of Existence, Etc. (a) Preserve, renew and maintain in full force and effect its legal existence and good standing under the Laws of the jurisdiction of its organization, except changes otherwise permitted under this Agreement or a loss of status that is not material or adverse in any respect to the Secured Parties or Obligations and that is reinstated promptly after any Loan Party has Knowledge of such loss of status; (b) take all action to maintain all rights, privileges, permits, licenses and franchises reasonably necessary in the normal conduct of its business.
| Annex A-107 |
Section 6.11 Maintenance of Properties. (a) Maintain or cause to be maintained in good repair, working order and condition (ordinary wear and tear excepted) all material properties used or useful in the business of Holdings and its Subsidiaries and from time to time will make or cause to be made all appropriate repairs, renewals and replacements thereof and (b) improve, maintain, enforce and protect all of the Material Intellectual Property, maintain and keep in full force and effect all issued or registered Material Intellectual Property and continue to prosecute all applications for any Material Intellectual Property.
Section 6.12 Collateral and Guarantee Requirements; Formation or Acquisition of Subsidiaries. At the Borrower’s expense, take all action necessary or reasonably requested by either Agent to ensure that the Collateral and Guarantee Requirement (subject to the limitations set forth therein and in the Collateral Documents) continues to be satisfied, including:
(a) With respect to each new Subsidiary of the Loan Parties acquired or formed from time to time, on or prior to the date such Person becomes a Subsidiary of the Loan Parties (or such later date agreed by the Administrative Agent (in its sole discretion)), the Borrower shall send a notice to the Administrative Agent (i) setting forth the date on which such Person became (or will become) a Subsidiary of a Loan Party, (ii) setting forth all of the data required to be set forth in Schedule 5.13 with respect to all Subsidiaries of the Loan Parties (and any such written notice shall be deemed to supplement Schedule 5.13 for all purposes hereof) and (iii) confirming that such Person will be a Guarantor and that the Equity Interests in and assets of such Person will become Collateral (or detailing why such Persons or assets are Excluded Assets or such person is an Immaterial Foreign Subsidiary).
(b) Domestic Subsidiaries and Holdings.
(i) In the event that (x) any Person becomes a Domestic Subsidiary of Holdings or any other Loan Party, or (y) any Loan Party or any of their Subsidiaries, divides or splits itself or an existing Subsidiary otherwise creates a new Domestic Subsidiary, then within twenty (20) days after such event (or such later date agreed by the Administrative Agent (in its sole discretion)) the Loan Parties shall (a) cause such Subsidiary to become a Guarantor hereunder and a Grantor under the applicable Collateral Documents by executing and delivering to the Agents and the Lenders a joinder or Counterpart Agreement to this Agreement, the Intercreditor and Subordination Agreements and all other applicable Subsidiary Accession Requirements, and (b) take all such actions and execute and deliver, or cause to be executed and delivered, all such formalities, opinions, documents, instruments, agreements, and certificates and other requirements as are similar to those described in, in each case, as applicable, Schedule E to the Reaffirmation and Omnibus Amendment Agreement, Section 3.01 and Section 6.26 of this Agreement delivered with respect to Domestic Subsidiaries on the Closing Date (or required to be delivered as part of the post-closing obligations described in Section 6.26), or that are requested by the Agents or the Lenders and necessary or desirable to protect, evidence or perfect the security interest of the Collateral Agent in a manner similar to the Liens and assets granted by the existing Loan Parties under the existing Collateral Documents and/or to comply with the Collateral and Guarantee Requirements and/or the applicable Intercreditor and Subordination Agreements or as are necessary or desirable to evidence, grant or perfect a First Priority Lien in such assets in favor of Collateral Agent, for the benefit of the Lenders.
(ii) Within the time periods set forth in Schedule B to the Merger Consent (or such later date agreed by the Administrative Agent (in its sole discretion)), Holdings and the other Loan Parties shall take the actions described in Exhibit B of the Merger Consent and take such actions and execute and deliver, or cause to be executed and delivered, all formalities, opinions, documents, instruments, agreements, and certificates and other requirements as are similar to those described in Schedule E to the Reaffirmation and Omnibus Amendment Agreement, Section 3.01 and Section 6.26 of this Agreement delivered with respect to the Loan Parties on the Closing Date (or required to be delivered as part of the post-closing obligations described in Section 6.26), or that are requested by the Agents or the Lenders and necessary or desirable to protect, evidence or perfect the security interest of the Collateral Agent in a manner similar to the Liens and assets granted by the existing Loan Parties under the existing Collateral Documents and/or to comply with the Collateral and Guarantee Requirement either by executing and delivering to the Agents a counterpart or supplement to the existing Security Documents and the Intercreditor and Subordination Agreements and/or such other new documents, power, certificates, registrations, filings, instruments or agreements, as are necessary or desirable to evidence, grant or perfect a First Priority Lien in such assets in favor of Collateral Agent, for the benefit of the Lenders and Secured Parties.
| Annex A-108 |
(c) Foreign Subsidiaries.
(i) Existing Asset Security Jurisdictions. In the event that (x) any Person becomes a Foreign Subsidiary of Holdings or any other Loan Party (other than any member of the Dense Air Group and the Specified Immaterial Foreign Subsidiary) that is organized or formed in an Asset Security Jurisdiction which is an Initial Asset Security Jurisdiction under the Loan Documents or another Priority Lien Obligation as of the Restatement Effective Date or a jurisdiction in which an existing Foreign Subsidiary which is already a Loan Party is organized or formed (the “Existing Asset Security Jurisdictions” and each, an “Existing Asset Security Jurisdictions”), (y) any Loan Party or any of their Subsidiaries, limited liability companies, other entities or other Persons divides or splits itself or an existing Subsidiary otherwise creates a new Subsidiary that is organized or formed in an Existing Asset Security Jurisdiction (other than any member of the Dense Air Group), then within (A) in the case of a Person organized or formed in England and Wales, twenty (20) days after such event (or such later date agreed by the Administrative Agent (in its sole discretion)) or (B) in the case of a Person organized or formed in a jurisdiction other than the United States of America or England or Wales, sixty (60) days after such event (or such later date agreed by the Administrative Agent (in its sole discretion)), the Loan Parties shall (a) cause such Subsidiary to become a Guarantor hereunder and a Grantor under the applicable Collateral Documents by executing and delivering to the Administrative Agent and the Lenders a joinder or Counterpart Agreement to this Agreement, to the Intercreditor and Subordination Agreements, and to the other applicable Collateral Documents, or as the context may require, such new or additional Loan Documents to provide a guarantee by such new Subsidiary, and (b) take all such actions and execute and deliver, or cause to be executed and delivered, all such formalities, opinions, documents, instruments, agreements, and certificates, filings, registrations and comply with such and other requirements as are necessary or desirable to provide Collateral Liens and perfection and Liens similar to those described in Schedule E to the Reaffirmation and Omnibus Amendment Agreement, Section 3.01 and Section 6.26 of this Agreement delivered with respect to a Loan Party organized in such Existing Asset Security Jurisdiction on the Closing Date (or required to be delivered as part of the post-closing obligations described in Section 6.26), or that are requested by the Agents or the Lenders and necessary or desirable to protect, evidence or perfect the security interest of the Collateral Agent in a manner similar to the Liens and assets granted by the existing Loan Parties to the Collateral Agent for the benefit of the Secured Parties under the existing Collateral Documents and/or to comply with the Collateral and Guarantee Requirement either by executing and delivering to the Agents a counterpart or supplement to the existing Collateral Documents or such new documents as are necessary or desirable to evidence, grant or perfect a First Priority Lien to the Collateral Agent for the benefit of the Lenders in the assets of such new Subsidiary and, if such new Subsidiary is a first tier Subsidiary of a Loan Party, the Equity Interests in such Subsidiary as has been previously provided to any holder of Priority Lien Obligations in the Existing Asset Security Jurisdictions (including, if necessary, any new Collateral Documents or additional documents, evidences, certificates, instruments, agreements and filings as may be reasonably requested by the Agent in order to provide a Guarantee or evidence, grant, perfect or protect a First Priority Lien in such assets in favor of Collateral Agent, for the benefit of the Secured Parties (including, without limitation, any parallel debt arrangements, local law debentures or share charges, any counterparts or joinders to the Intercompany Subordination Agreement, together with any notices, acknowledgements, powers, certificates, registrations, filings, or local law Mortgages or equivalent Collateral Documents or deliveries necessary or desirable in connection therewith to cover assets classes that had previously been granted or perfected in favor of any holder of Priority Lien Obligations by Collateral Documents in such jurisdiction or in order to cover additional asset classes which had not previously been granted and perfected in such jurisdiction, but that had been previously granted or had previously been required to be granted as Collateral to any holder of Priority Lien Obligations in the Existing Asset Security Jurisdictions generally, including, without limitation, any pledges of Equity Interests in subsidiaries of such Person in Existing Asset Security Jurisdictions)) (each in form and substance reasonably acceptable to the Agent, (a) and (b) collectively, the “Foreign Subsidiary Accession Requirements”).
| Annex A-109 |
(ii) Additional Asset Security Jurisdictions. In the event that (x) any Foreign Subsidiary (other than any member of the Dense Air Group) organized in a jurisdiction other than the Existing Asset Security Jurisdictions or the Other Material Jurisdictions ceases to be an Immaterial Foreign Subsidiary or (y) the Subsidiaries of Holdings which are not Asset Security Providers (as defined below) taken as a whole exceed the Immaterial Foreign Subsidiary Threshold, then the Loan Parties shall notify the Agent of such event and, if requested by the Agent, within sixty (60) days after such event (or such later date agreed by the Administrative Agent (in its sole discretion) (the “Joinder Date”), the Loan Parties shall cause a Subsidiary or Subsidiaries as they elect to become parties to the Credit Agreement and other Loan Documents as Guarantors and Asset Security Providers (or if such Subsidiary is organized in India for so long as a guarantee, pledge of its Equity Interests, or other grant of security interest would require consent of the Reserve Bank of India, the Borrower may designate other Subsidiaries of Holdings which are not Loan Parties and Asset Security Providers in jurisdictions other than India or the Existing Asset Security Jurisdictions) (such additional designated jurisdictions, the “Additional Asset Security Jurisdictions” and each, an “Additional Asset Security Jurisdiction” and together with any Existing Asset Security Jurisdictions, the “Asset Security Jurisdictions” and each, an “Asset Security Jurisdiction” and each such additional Subsidiary, an “Additional Asset Security Provider”) as it elects in order comply with the Collateral and Guarantee Requirements and Subsidiary Accession Requirements such that after giving pro forma effect to the Guarantees and additional Collateral Documents in the Additional Asset Security Jurisdiction the Subsidiaries that are not Loan Parties and not Asset Security Providers shall not exceed the Immaterial Foreign Subsidiary Threshold. It being understood that each such Loan Party and Additional Asset Security Provider shall deliver and cause such Subsidiaries to take all actions and execute and deliver, or cause to be executed and delivered by not later than the applicable Joinder Date a joinder to this Agreement as a Guarantor, the Intercreditor and Subordination Agreements, and supplements and/or joinders to any applicable Collateral Documents and/or other Loan Documents and/or applicable foreign equivalents of the Collateral Documents together with appropriate corporate formalities, opinions, documents, instruments, agreements and certificates and other requirements for such Guarantees and/or Collateral that would have be the local law equivalent of those conditions precedent required to be delivered pursuant Section 5 of the Reaffirmation and Omnibus Amendment Agreement, Section 3.01 and Section 6.26 of this Agreement, the Intercreditor and Subordination Agreements, the Collateral and Guarantee Requirements and the Foreign Subsidiary Accession Requirements, together with such additional documents, evidence, certificates, instruments, agreements and filings as may be reasonably requested by the Agent in order to evidence, grant, perfect or protect a First Priority Lien in the same types and classes of as had been previously required of the existing Loan Parties in the Existing Asset Security Jurisdictions described above but, in each case, taking into account local law formalities, market practices and requirements in order to effectuate such guarantee and collateral arrangements).
| Annex A-110 |
(d) If any Loan Party acquires any assets or property that are required to become Collateral pursuant to the Convertible Note or the Note Purchase Documents, or any Loan Party is required to pledge its assets or property as Collateral pursuant to the Note Purchase Documents, such Loan Party shall promptly (and in any event within the time period(s) required by the Collateral and Guarantee Requirements (or such longer period as the Collateral Agent may agree in its sole discretion)) execute a joinder to an existing Collateral Document or enter into a new Collateral Document (in each case, to the extent necessary to cause such Collateral be so pledged) and take such steps necessary to validly perfect the Collateral Agent’s Lien (to the extent required by the Loan Documents). To the extent that a Loan Party is entering into a joinder, entering into a new Collateral Document, or taking other steps to perfect a Lien in order to secure the obligations evidenced by the Note Purchase Documents, the Loan Parties shall take the same steps in connection with this Agreement (with such changes as are appropriate to reflect the applicable priority of the Lien, or the applicable perfection requirements, consistent with the terms of the Pari Passu Intercreditor Agreement and the Liens being created on the Restatement Effective Date), which shall satisfy the Obligations hereunder, and the Collateral Agent, as applicable, is authorized and directed to execute any documentation consistent therewith. Each Loan Party shall execute such further documents, financing statements, agreements and instruments, and take all further commercially reasonable further actions (including the filing and recording of financing statements or amendments or continuation statements or equivalent in respect thereof), that may be required under any applicable Law, to ensure that the Liens of the Secured Parties under the Loan Documents on the Collateral remain perfected (to the extent required by the Loan Documents) with the priority required by the Pari Passu Intercreditor Agreement, all at the expense of the Loan Parties and provide to the Collateral Agent and the Lenders, from time to time upon reasonable request, evidence reasonably satisfactory to the Collateral Agent as to the perfection and priority of the Liens created or intended to be created by the Loan Documents. It being understood and agreed that the Loan Parties shall not be required to provide, and neither the Collateral Agent nor the Lenders shall request, any additional Liens in respect of the Excluded Assets.
Notwithstanding the foregoing, if a Loan Party does not own assets of a particular category at the time it enters into Collateral Document(s) in respect of assets of one or more other categories specified in the existing Collateral Documents or the Collateral and Guarantee Requirements, such Loan Party will not be required to enter into a Collateral Document solely to create a security interest over future assets of that particular category unless the same can be effected under a composite Collateral Document that also secures assets it owns at the time it enters into the Collateral Document or pursuant to entering into a joinder to the same form of Collateral Document as entered into by another Loan Party in the same jurisdiction covering the same class of assets. However, if such Loan Party subsequently acquires assets of that particular category and other existing Loan Parties in that jurisdiction were required to create a security interest over such class of assets or would have been so required if such assets had been owned at the time the relevant Collateral Document(s) was entered into, the Borrower shall notify the Agent by not later than the date that the next Compliance Certificate is delivered pursuant to Section 6.02(e), and if requested by the Agent, as soon as reasonably practicable thereafter, such Loan Party shall create and perfect its security interest over that asset or those assets to the extent required by the Collateral and Guarantee Requirements and take such actions required under the applicable Law in order to ensure the grant, perfection, protection and enforceability of a First Priority Lien in such assets.
| Annex A-111 |
Notwithstanding any of the other Collateral and Guarantee Requirements contained in this Agreement, it is understood and agreed with respect to the Japanese Guarantor that, other than the execution of the Intercompany Subordination Agreement and the Assignment of Receivables from Japanese Guarantor to the Lenders and the Purchasers under the Note Purchase Agreement, there will be no requirement for the Borrower to enter into any additional Japanese law governed Collateral Documents to pledge its Equity Interests in the Japanese Guarantor or for the Japanese Guarantor to enter into any additional Collateral Documents to grant, evidence or perfect the Collateral Agent’s security interest in any of the Japanese Guarantor’s assets prior to November 30, 2021. If the Borrower has not delivered evidence in form and substance satisfactory to the Agent prior to November 30, 2021, that the Borrower (Holdings or one of the Loan Parties which is a Domestic Subsidiary or a Subsidiary organized or formed in England and Wales) has become the Rakuten receivables billing entity, then within sixty (60) days after such anniversary (or such later date agreed by the Administrative Agent (in its sole discretion)), Holdings and its Subsidiaries shall enter into such Collateral Documents necessary or desirable to evidence a pledge of the Borrower’s Equity Interests in the Japanese Guarantor and to grant, perfect, protect and evidence a First Priority Lien in the assets of the Japanese Guarantor (including, taking all such additional steps and providing all such additional Collateral Documents, corporate formalities, opinions, documents, instruments, agreements and certificates and other requirements that are the local law equivalents of those conditions precedent required to be delivered pursuant Section 5 of the Reaffirmation and Omnibus Amendment Agreement, Section 3.01 and Section 6.26 of this Agreement by the other Asset Security Providers on the Closing Date (or required to be delivered as part of the post-closing obligations described in Section 6.26) taking into account Japanese local law formalities, market practices and requirements in order to effectuate such guarantee and collateral arrangements).
Section 6.13 Insurance. Keep its business insured for risks and in amounts standard for companies in Holdings’ and its Subsidiaries’ industry and location. Insurance policies shall be in a form, with companies, and in amounts that are reasonably satisfactory to the Agent. (i) All property policies of Holdings and its Subsidiaries shall have an endorsement evidencing, to the reasonable satisfaction of the Agent, the Agent as a lender loss payee; (ii) all liability policies of Holdings and its Subsidiaries shall show, or have endorsements showing, the Agent as an additional insured; and (iii) all policies of Holdings and its Subsidiaries (or their respective endorsements) shall provide that the insurer shall give the Agent at least thirty (30) days’ before canceling, amending or declining to renew its policy. At the Agent’s request, Holdings and its Subsidiaries shall deliver copies of policies, certificates of insurance, endorsements and evidence of all premium payments. If the Loan Parties fail to obtain insurance as required under this Section 6.13 or to pay any amount or furnish any required proof of payment to third persons and the Agent, the Agent may upon concurrent notice to Holdings make all or part of such payment or obtain such insurance policies required in this Section 6.13, and take any action under the policies the Administrative Agent reasonably deems prudent.
Section 6.14 Conduct of Business and SPV Compliance. Holdings shall, and shall use all commercially reasonable efforts to the full extent of its power to cause each of its Subsidiaries to, comply with the following conduct of business provision (the “Conduct of Business Provisions”):
(a) Except with the advance written consent of the Administrative Agent acting at the direction of the Requisite Lenders, the IP Hold-Co will not own any asset or property other than (i) the Company Patent Portfolio (as defined in the IP Hold-Co Operating Agreement) and the proceeds and revenues thereof; and (ii) incidental tangible property necessary for the ownership or maintenance of the Company Patent Portfolio;
| Annex A-112 |
(b) Holdings and its Subsidiaries (other than the IP Hold-Co) will (A) not own any Patents; (B) ensure that the IP Hold-Co maintains, and take all commercially reasonable actions to assist the IP Hold-Co in maintaining, all issued patents in the Company Patent Portfolio in full force and effect (except for patents that naturally expire or as a result of pruning activities that rely on the advice of Fortress) including paying all fees in a timely manner and taking all reasonable legal actions to protect and maintain such issued patents for which the Administrative Agent has consented; (C) ensure that the IP Hold-Co takes all commercially reasonable actions to prosecute all patent applications in the Company Patent Portfolio in an attempt to obtain all patent rights possible using the same care and skill as used by patent practitioners in the industry and according the requirements of applicable Law (including the Patent Act); (D) not permit the IP Hold-Co to engage, directly or indirectly, in any business other than the Business (as defined in the IP Hold-Co Operating Agreement) and it will conduct its Business (as defined in the IP Hold-Co Operating Agreement) as presently conducted, except upon the occurrence of and for the duration of a Liquidation Event or in connection with any Monetization (as defined in the IP Hold-Co Operating Agreement), in which case it will operated in the manner directed by the Fortress Manager (as defined in the IP Hold-Co Operating Agreement) pursuant to the terms of the IP Hold-Co Operating Agreement; (E) will not, and will ensure that the IP Hold-Co does not enter into any contract, agreement or transaction with any third party or any Affiliate except as otherwise expressly permitted in the Loan Documents or as expressly consented to by the Administrative Agent, provided that, in the event the Fortress Members (as defined in the IP Hold-Co Operating Agreement) consent to such contract, agreement or transaction, the terms and conditions of such contract, agreement or transaction (other than any contract, agreement or transaction with the Borrower Member (as defined in the IP Hold-Co Operating Agreement) that is expressly permitted under the Credit Agreement) must be on the terms described in Section 7.06 of this Agreement; or (F) will not, and will ensure that the IP Hold-Co does not violate the terms of its Organization Documents or any other Loan Document or Transaction Document;
(c) Each Loan Party has done or caused to be done and will do all things necessary to observe organizational formalities and preserve the existence of the IP Hold-Co, and the Borrower will not nor will Holdings or any of its Subsidiaries: (A) amend, modify or otherwise change the IP Hold-Co’s Organization Documents without the prior written consent of the Administrative Agent acting at the direction of the Requisite Lenders; (B) commingle the funds and other assets of the IP Hold-Co with those of any Loan Party, Subsidiary, Affiliate or member, or any affiliate of any constituent party of the thereof, or any other Person and (C) permit the IP Hold-Co to (x) guarantee or become obligated for the debts of any other Person, other than the Obligations, or (y) pledge its assets for the debts or obligations of any other Person, other than the Obligations, except upon the occurrence of and for the duration of a Liquidation Event or in connection with any Monetization (as defined in the IP Hold-Co Operating Agreement), in which case it will operated in the manner directed by the Fortress Manager (as defined in the IP Hold-Co Operating Agreement) pursuant to the terms of the IP Hold-Co Operating Agreement; and
(d) Except upon the occurrence of and for the duration of a Liquidation Event or in connection with any Monetization (as defined in the IP Hold-Co Operating Agreement), in which case it will be operated in the manner directed by the Fortress Manager (as defined in the IP Hold-Co Operating Agreement) pursuant to the terms of the IP Hold-Co Operating Agreement, the IP Hold-Co will comply with the requirements described in Section 17 of the IP Hold-Co Operating Agreement.
| Annex A-113 |
Section 6.15 Controlled Accounts; Cash Management Systems. Holdings and its Subsidiaries shall establish and maintain cash management systems reasonably acceptable to the Collateral Agent. Holdings, Borrower and the Loan Parties which are Domestic Subsidiaries shall deliver to the Collateral Agent a fully executed Control Agreement with respect to each of their Deposit Accounts or Securities Accounts other than Excluded Accounts and De Minimis Accounts, and the Loan Parties which are not Domestic Subsidiaries shall (i) take such steps as required by the Collateral Documents or which are otherwise necessary or desirable to make such accounts Controlled Accounts and provide for the equivalent perfection and priority arrangements with respect to accounts (and the funds deposited therein) under the laws of the applicable non-US jurisdiction or (ii) ensure that not more than Two Million Dollars ($2,000,000) in the aggregate in excess of the amount necessary for payroll and to operate its business as currently operated are held at any time in the deposit accounts, security accounts, custodial accounts or equivalent of the Loan Parties and their Subsidiaries in jurisdictions other than a State of the United States, England and Wales or other jurisdictions in which such accounts can be subject to a Control Agreement. Other than Excluded Accounts, De Minimis Accounts, or as expressly agreed with the Agents, the Loan Parties shall not maintain any Deposit Account or Securities Accounts not subject to a Control Agreement (or otherwise Controlled Accounts); provided that the Loan Parties may open new accounts, so long as prior to opening any such account (i) the Borrower has notified the Agents of the account and (ii) the financial institution with which such account is opened, together with such Loan Party has executed and delivered to the Agents, a fully executed Control Agreement with respect to such account (or equivalent arrangement to ensure that such account is a Controlled Account), each in form and substance satisfactory to the Agents. The Loan Parties shall ensure that their Subsidiaries which are (x) non-Loan Parties or (y) are organized or formed in jurisdictions where Control Agreements or equivalent cash control arrangements are not possible sweep cash and Cash Equivalents in their accounts into Controlled Accounts of Loan Parties on a periodic basis (prior to an Event of Default, at least once per week and after the occurrence of an Event of Default, as frequently as requested by the Agents but not more frequently than once daily); provided that prior to receipt of a written notice of an Event of Default from Agent, the Subsidiaries shall only be required to sweep into the Controlled Accounts, cash and Cash Equivalents held in such accounts in excess of the amounts necessary for required debt service and to operate its business as currently operated (in each case, based on the amounts needed for such debt service and operations as reflected in the historical financial statements and the projections delivered to the Secured Parties from time to time in accordance with the terms of this Agreement). To the fullest extent permitted by applicable law and in order to ensure that such periodic distributions described above are timely made, each of the Loan Parties shall cause each of their Subsidiaries to declare and pay dividends and/or such other payments or distributions of the types and in the manner and frequency required by Section 6.22.
Section 6.16 Lender Meetings. Loan Parties and their Subsidiaries will, upon the request of Administrative Agent or the Lenders, participate in a meeting of the Agents and the Lenders once during each fiscal quarter to be held at Borrower’s corporate offices (or at such other location as may be agreed to by the Borrower, Agents and the Lenders) at such time as may be agreed to by Borrower and Administrative Agent.
Section 6.17 [Reserved].
Section 6.18 Assigned Patents and Assigned Patent Rights.
(a) Holdings shall not, and shall not permit any Loan Party to, waive or modify, and Holdings shall, and shall cause each Loan Party to, use its best efforts not to suffer the waiver or modification of, any legal rights of a material nature arising out of or relating to the Assigned Patent Rights without the express prior written consent of the Collateral Agent (acting at the direction of the Requisite Lenders). Holdings shall, and shall cause each Loan Party to, use its best efforts in obtaining patent protection for applications for Intellectual Property including but not limited to applications for patents, including submitting claim amendments that may change the material scope of coverage of the claims. For the avoidance of doubt, patent prosecution of such pending patent applications will proceed without involvement of the Collateral Agent (except during the pendency of an Event of Default).
| Annex A-114 |
(b) The Loan Parties will be liable to the Secured Parties for (and Holdings shall, and shall cause each Loan Party to, pay the Secured Parties within fifteen (15) days of delivery by the Agent of any demand or invoice for any expenditures by a Secured Party) in connection with (i) the maintenance and preservation of the Collateral, including, but not limited to, taxes, recording fees, appraisal fees, certificate of title charges, recording and filing fees (including UCC financing statement fees and other equivalent filing fees and expenses in other jurisdictions, taxes (including documentary stamps) and search fees), fees arising out of or relating to the Assigned Patent Rights, the fees and disbursements for the Secured Parties’ counsel, levies, insurance and repairs; and (ii) in addition to damages for breach of warranty, misrepresentation, or breach of covenant by any Loan Party, the enforcement of this Agreement and the Loan Documents and other Transaction Documents as a result of such breach or misrepresentation, including, but not limited to, the repossession, holding, preparation for sale, and the sale of the Collateral (including attorneys’ and accountants’ fees and expenses), and all such liabilities shall be included in the definition of Obligations, shall be secured by the security interest granted herein, and shall be payable upon demand.
(c) Holdings shall, and shall cause each Loan Party to, use its best efforts to ensure that no standards-setting organization shall impose an obligation to license any of the Assigned Patents on particular terms or conditions. No Loan Party shall agree to be subject to any covenant not to sue or other restrictions on its enforcement or enjoyment of the Assigned Patent Rights without the consent of Fortress.
(d) No Loan Party knows of or has received any notice or information of any kind suggesting that the Assigned Patents may be invalid, unpatentable, or unenforceable other than (i) official notices from patent offices in the course of patent prosecution and (ii) allegations from third parties in litigation involving, or invited to take a license under, certain Assigned Patents.
(e) All applications to Patent any Intellectual Property that is owned by any Loan Party (or any of their Subsidiaries) shall be filed in the name of the IP Hold-Co, and (i) Holdings shall, or shall cause each of its Subsidiaries to, file all documents and take such other actions as shall be necessary, desirable or reasonably requested by the Collateral Agent to assign all right, title and interest in and to such patent application, to Holdings or any of its Subsidiaries, including the execution of, and recording with the relevant filing office of, a Patent Assignment Agreement with respect to such patent application, and (ii) each Patent application shall automatically be deemed an Assigned Patent hereunder, and Holdings and each of its Subsidiaries, as applicable, assign to IP Hold-Co all right, title, and interest in and to such Patent applications.
(f) All Patents acquired by Holdings or any of its Subsidiaries from any other Person, or which any right, title or interest arises in Holdings or any of its Subsidiaries, shall be assigned to and held in the name of IP Hold-Co and (i) Holdings shall, or shall cause any of its Subsidiaries to, file all documents and take such other actions as shall be necessary or reasonably requested by the Secured Parties to cause all right, title and interest in and to such Patents, and all related Trade Secrets, to vest in IP Hold-Co including the execution of, and recording with the relevant filing office of, a Patent Assignment Agreement with respect to such Patents, and (ii) such Patents shall automatically be deemed Assigned Patents hereunder and shall be owned by IP Hold-Co together with all Assigned Patent Rights associated therewith, and Holdings and each of its Subsidiaries, as applicable, hereby assign to IP Hold-Co all right, title, and interest in and to such Patents.
(g) Holdings shall, and shall cause each Loan Party to, with respect to all Assigned Patents, obtain, maintain and preserve, comply with in all material respects (except where the failure to so comply could not reasonably be expected to result in the loss thereof), and take all necessary action to timely renew, all Regulatory Permits.
(h) Borrower shall, and shall cause each Loan Party to, (and will cause each of their Subsidiaries to) (i) maintain or cause to be maintained each Regulatory Permit, from, or file any notice or registration in, each jurisdiction in which any Loan Party or licensee is required to obtain any Regulatory Permit or file any notice or registration, in each case, that is necessary and material for the maintenance of the Assigned Patents, and (ii) upon request, promptly provide evidence of same to Administrative Agent.
| Annex A-115 |
Section 6.19 Consent of Licensors. Borrower shall, at the end of each fiscal quarter after Holdings or any Subsidiary entering into or becoming bound by any Material Contract or any inbound license or agreement (other than (i) over-the-counter software that is commercially available to the public and (ii) any license of or agreement relating to Intellectual Property that is not Material Intellectual Property) after the Closing Date: (a) provide written notice or a brief summary to the Agents and Lenders with a description of the material terms of such Material Contract, license or agreement if the actions described in clause (b) below would need to be taken with respect to such Material Contract, license or agreement if requested by the Agent; and (b) take such commercially reasonable actions as the Agent may reasonably request to obtain the consent of, or waiver by, any Person whose consent or waiver is necessary for the Collateral Agent to be granted and perfect a valid security interest in such Material Contract, license or agreement and to fully exercise its rights under any of the Loan Documents in the event of a disposition or liquidation of the rights, assets or property that is the subject of such Material Contract, license or agreement.
Section 6.20 Maintenance of Regulatory Permits, Contracts, Intellectual Property, Etc. Holdings shall, and shall cause each Subsidiary to, with respect to the Assigned Patents, (i) maintain in full force and effect all Material Intellectual Property, and except where the failure to do so could not reasonably be expected to have a Material Adverse Effect, all other contract rights, authorizations or other rights necessary or material for the operations of its business, and comply with the terms and conditions applicable to the foregoing; (ii) maintain in full force and effect or pursue the prosecution of, as the case may be, and pay all costs and expenses relating to, all Material Intellectual Property owned or controlled by such Loan Party or its respective Subsidiaries, excluding the maintenance of Intellectual Property that in the commercially reasonable business judgment of the Loan Parties is not necessary or material for the conduct of the business of any Loan Party or its Subsidiaries; (iii) notify the Agents, promptly after any Responsible Officer of any Loan Party has knowledge thereof, of any infringement or other violation by any Person of its Material Intellectual Property; and (iv) use commercially reasonable efforts to pursue, enforce, and maintain in full force and effect legal protection (except as a Loan Party may otherwise determine in its reasonable business judgment) for all Material Intellectual Property developed or controlled by such Loan Party or any of its respective Subsidiaries.
Section 6.21 Pari Passu Ranking. The Loan Parties shall take, and ensure that each of their Subsidiaries take, all actions to ensure that their obligations under the Loan Documents rank at all times at least pari passu in right of priority and payment with the claims of all their other secured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally.
| Annex A-116 |
Section 6.22 Subsidiary Distributions; Upstreaming Cashflows; Investment Documents.
(a) Each of the Loan Parties shall cause each of its Subsidiaries and Investments to declare, pay and upstream all dividends or other payments or other distributions of all cash and Cash Equivalents (each a, “Distribution”) of such Persons to the Loan Parties on account of such Loan Party’s ownership interests in the Equity Interests of such Persons to the maximum extent and with the maximum frequency permitted by applicable Law. Each of the Loan Parties shall ensure that (i) excess cashflows from each Subsidiary of the Loan Parties are upstreamed to the Borrower in an amount at least equal to the lesser of (A) ninety percent (90%) of Free Cash Flow of such Subsidiary with respect to the period as to which Distributable Income for such Subsidiary was measured for purposes of clause (B) hereof, and (B) the maximum amount of Distributable Income with respect to such Subsidiary as of the date of such Distribution permitted to be distributed under the applicable Laws of the Relevant Jurisdiction, as determined with respect to the preceding fiscal year of such Subsidiary or, in the case of Distributions made more frequently than annually, such lesser period of time as may have elapsed since the most recent determination of Distributable Income with respect to such Subsidiary hereunder (or since the Closing Date, in the case of the initial Distribution hereunder by such Subsidiary); and, (ii) to the extent restrictions are imposed by any Governmental Authority on Distributions in Dollars by any Subsidiary, cause and permit such Subsidiary to maximize Dollars available for distribution hereunder to the maximum extent permitted by applicable Law, including through the purchase and sale of Dollar-denominated Cash Equivalent debt instruments issued by the sovereign of such jurisdiction, through any other appropriate mechanism for the acquisition of Dollars in any exchange market, or through the preferential allocation towards any such distribution of Dollar-denominated and/or off-shore revenues received by such Subsidiary. Notwithstanding the foregoing, Holdings shall not be required to, and shall not be required to cause its Subsidiaries to, make distributions from any Subsidiary to the extent that in the reasonable business discretion of Holdings, including in respect of restrictions imposed by any Governmental Authority it would be illegal or have a material adverse tax consequence to Holdings, or otherwise have a material and detrimental impact on the value of such distributions.
(b) Each Loan Party will and will ensure that each of their Subsidiaries and Investments will diligently enforce all of their rights and remedies in a timely manner under the relevant Organization Documents, shareholders agreements and/or investment agreements with respect to such Subsidiaries and Investments. No Loan Party will (nor shall they permit any Subsidiary to) amend, waive, supplement or terminate any rights under any of the Organization Documents, shareholders agreements or other investment documents with respect to any of their Subsidiaries or Investments in a manner that would adversely affect the Loan Parties or the rights and remedies of the Secured Parties in any material respect; provided that Holdings shall be permitted to amend its Organization Documents to authorize the issuance of Qualified Equity Interests in connection with a conversion under the Note Purchase Documents as in effect on the Restatement Effective Date (or as the same may be amended from time to time to the extent permitted by the Pari Passu Intercreditor Agreement). Holdings shall not nor shall it permit any of its Subsidiaries to enter into any agreement that limits the ability of any Subsidiary to make a dividend or distribution payment to the Loan Parties or to otherwise transfer any property to the Loan Parties, provided, however, that this sentence shall not prohibit any negative pledge incurred or provided in favor of any holder of (x) Priority Lien Obligations as in effect on the Restatement Effective Date (or as the same may be expressly permitted to be amended in accordance with the terms hereof and of the Pari Passu Intercreditor Agreement) and (y) other Indebtedness existing on the Closing Date permitted under Section 7.09 solely to the extent any such negative pledge relates to the property financed by or the subject of such Indebtedness.
Section 6.23 Critical Technologies. To the extent that any of the Loan Parties’ products or services become categorized as a Critical Technology other than any items eligible for license exception ENC of the Export Administration Regulations (15 CFR Part 740.17), the Borrower shall promptly notify the Administrative Agent of such categorization.
| Annex A-117 |
Section 6.24 Further Assurances. Subject to the applicable limitations set forth in the Loan Documents (including those set forth in the definition of Collateral and Guarantee Requirement and in the Collateral Documents), take all such actions and execute, acknowledge and deliver, and cause each of its Subsidiaries to take such all actions and execute, acknowledge and deliver, at their sole cost and expense, such agreements, instruments or other documents as any Agent or Lender may reasonably require from time to time in order (i) to carry out more effectively the purposes of this Agreement, the Pari Passu Intercreditor Agreement and the other Loan Documents, (ii) to ensure that the Guaranteed Obligations are guaranteed in the manner contemplated herein and that the current and future assets and property of the Loan Parties and their Subsidiaries are subject to valid and perfected first priority Liens of the type contemplated by this Agreement and the other Loan Documents in accordance with the Collateral and Guarantee Requirement and the Pari Passu Intercreditor Agreement, (iii) to establish and maintain the validity and effectiveness of any of the Loan Documents and the Transaction Documents and the validity, perfection and priority of the Liens intended to be created thereby and by the Pari Passu Intercreditor Agreement, and (iv) to better assure, convey, grant, assign, transfer and confirm unto each Secured Party the rights now or hereafter intended to be granted to it under this Agreement or any other Loan Document. In furtherance of the foregoing, to the maximum extent permitted by applicable Law, each Loan Party (i) authorizes each Agent to execute any such agreements, notices, acknowledgements, instruments or other documents in such Loan Party’s name to the extent such authorization is granted under the Collateral Documents and to file such agreements, notices, acknowledgments, instruments or other documents in any appropriate filing office, (ii) authorizes each Agent to file any financing statement, registrations or similar required hereunder or under any other Loan Document, and any continuation statement or amendment with respect thereto, in any appropriate filing office without the signature of such Loan Party, (iii) ratifies the filing of any financing statement, and any continuation statement or amendment or equivalent with respect thereto, filed without the signature of such Loan Party prior to the Closing Date and (iv) agrees to execute any further documents, financing statements, agreements, instruments, certificates, notices and acknowledgments (or their equivalents in an applicable Relevant Jurisdiction) and take all such further actions (including the filing and recordation of financing statements, fixture filings, Mortgages and/or amendments thereto and other documents, or any equivalent action in an applicable Relevant Jurisdiction) as the Collateral Agent reasonably requests to evidence, perfect, protect or continue the Collateral Agent’s Lien in the Collateral or to effect the purposes of this Agreement and the other Loan Documents and correct any material defect or error that may be discovered in the execution, acknowledgment, filing or recordation (or equivalent defect or error in a given Relevant Jurisdiction) of any Collateral Document or other document or instrument relating to this Agreement, the Loan Documents or any of the Collateral.
Section 6.25 Covenants Regarding Products and Compliance with Material Regulatory Permits. Each Loan Party and its Subsidiaries shall comply in all material respects with all Material Regulatory Permits at all times issued by any Governmental Authority with respect to such development, testing, manufacture, marketing, sales, or leasing of such Product by such Person as such activities are at any such time being conducted by such Person, including the timely filing (after giving effect to any extension duly obtained) of all notifications, reports, submissions, Material Regulatory Permit renewals, cost reports and other reports of every kind whatsoever required by applicable Laws (which reports shall be materially accurate and complete in all material respects and not misleading in any material respect and shall not remain open or unsettled) and shall operate in a manner such that the Material Regulatory Permits remain in full force and effect.
Section 6.26 Post-Restatement Obligations. The Loan Parties shall deliver, or cause to be delivered, to Administrative Agent, or otherwise complete to Administrative Agent’s reasonable satisfaction, the items set forth in (x) the list of post-closing deliverables set forth in the Closing Agenda and (y) the list of post-merger deliverables set forth in Paragraph 4 of Exhibit B to the Merger Consent (clauses (x) and (y) together, the “Post Restatement Obligations”) on or before the date specified for such item in the applicable Exhibit or in clauses (x) and (y) above (or such later date determined by Administrative Agent in its sole discretion).
Article
VII
NEGATIVE COVENANTS
Until the Obligations have been fully satisfied in cash and the Lenders’ commitments to advance credit has expired, no Loan Party shall, nor shall any Loan Party permit any of its Subsidiaries to, directly or indirectly:
Section 7.01 Dispositions. Transfer, or permit any of its Subsidiaries to Transfer, in one (1) transaction or a series of transactions, any Equity Interests issued by its Subsidiaries or all or any part of its or its Subsidiary’s business, property or assets except for:
| Annex A-118 |
(a) Transfers of surplus, worn-out or obsolete equipment no longer used or useful in the business of Holdings and its Subsidiaries;
(b) Transfers in connection with Permitted Liens, Permitted Indebtedness, Investments, and any dividends or distributions not prohibited by this Agreement;
(c) Transfers of nonexclusive licenses for the use of the property (including intellectual property except for the Assigned Patents) of Holdings or its Subsidiaries in the ordinary course of business and consistent with past practice;
(d) Transfers of cash and Cash Equivalents in the ordinary course of business and in a manner that is not prohibited by the terms of this Agreement;
(e) Permitted Intercompany Investments, provided, that such Transfers comply with the definition of Permitted Intercompany Investments and in no case may any such Transfers consist of assets of the IP Hold-Co unless such Transfer is independently permitted under another clause of this Section 7.01;
(f) Transfers pursuant to the Patent License Agreement and transfers by the IP Hold-Co of nonexclusive licenses to the Assigned Patents in the normal course of their business;
(g) To the extent constituting Transfers, the Transactions occurring in connection with the Closing Date;
(h) Sales of inventory made in the ordinary course of business;
(i) Transfers of the Equity Interests issued by any member of the Dense Air Group;
(j) Transfers of exclusive licenses for the use of the property (including intellectual property except for the Assigned Patents) of Holdings or its Subsidiaries in the ordinary course of business and consistent with past practice; provided that consent of the Lenders or Administrative Agent to exceptions to this clause (j) shall not be unreasonably withheld or delayed;
(k) Cashless repurchases of Equity Interests of Holdings deemed to occur upon the exercise of stock options, warrants or other securities convertible into or exchangeable for Qualified Equity Interests of Holdings if such Qualified Equity Interests represent a portion of the exercise, conversion or exchange price thereof;
(l) Subject to the terms of the Pari Passu Intercreditor Agreement, Holdings may make cash payments in lieu of issuing fractional shares in connection with the exercise of warrants, options or other securities convertible into or exchangeable for Qualified Equity Interests of Holdings; provided that, unless expressly permitted by the Pari Passu Intercreditor Agreement or consented to by the Administrative Agent, no such cash payments shall be made pursuant to this clause (l) in excess of $1,000,000 in the aggregate for the term of this Agreement.
Notwithstanding the foregoing or anything else herein to the contrary, no Loan Party shall Transfer:
(x) the Assigned Patent Rights to any other Person (other than the contemplated transfer to IP Hold-Co) and neither Holdings nor any of its Subsidiaries shall Transfer its rights under the Patent License Agreement without the Requisite Lenders’ prior written consent (in its sole and absolute discretion) (any such Transfer without the Requisite Lenders’ prior written consent shall be null and void); or
| Annex A-119 |
(y) (i) all or a material portion of a Loan Party’s assets except to another Loan Party (other than Equity Interests issued by any member of the Dense Air Group), or (ii) any Equity Interests (other than Equity Interests issued by any member of the Dense Air Group) owned by Holdings, any Subsidiary that is a Guarantor or any Subsidiary directly owned by a Loan Party unless such person to whom the assets or Equity Interests were transferred is or becomes a Guarantor and Asset Security Provider under the Loan Documents and the transferred Equity Interests remain Collateral pledged for the benefit of the Secured Parties.
Section 7.02 Changes in Business, Management, Ownership, or Business Locations. (a) Engage in or permit any of its Subsidiaries to engage in any business other than (i) the businesses currently engaged in by Holdings, Borrower and such Subsidiary, as applicable, or (ii) any additional lines of business engaged in by Holdings, Borrower or such Subsidiary reasonably related thereto; or (b) liquidate or dissolve (other than in the case of any Subsidiary of Holdings (other than IP Hold-Co), and solely to the extent that, if such Subsidiary is a Loan Party, the assets of such Subsidiary are transferred to another Loan Party); provided however that the Loan Parties are expressly permitted to consummate the De-SPAC Transactions including the Merger (as defined in the Merger Consent) on the terms set forth in the Merger Consent. No Loan Party shall, and shall not permit any of their Subsidiaries which are Loan Parties to, without at least ten (10) days prior written notice to the Agents and the Secured Parties (or such shorter period as it may agree) (i) change its jurisdiction of organization; (ii) change its organizational structure or type; (iii) change its legal name; (iv) change any organizational number (if any) assigned by its jurisdiction of organization, in each case, without the prior written consent of the Requisite Lenders; or (v) form, create or incorporate any new Foreign Subsidiary.
Section 7.03 Mergers or Acquisitions. Consummate a Business Combination (except for the De-SPAC Transactions or a Permitted Investment) without obtaining the prior written consent of the Agents and the Requisite Lenders (in their sole and absolute discretion).
Section 7.04 Liens. Create, incur, assume or suffer to exist any Lien, except Permitted Liens, upon any of its property, assets or revenues, whether now owned or hereafter acquired.
Section 7.05 Distributions; Investments. (a) Pay any dividends or make any distribution or payment or redeem, retire or purchase any of its Equity Interests; provided, that (i) Holdings may convert through a cashless exercise any of its convertible securities into other securities that do not constitute Disqualified Equity Interests pursuant to the terms of such convertible securities or otherwise in exchange thereof, provided that such conversion is not restricted by the terms of this Agreement and the Pari Passu Intercreditor Agreement then in effect, (ii) Holdings may pay dividends solely in the form of common Equity Interests that are not Disqualified Equity Interests, (iii) Holdings may repurchase the stock of current or former employees or consultants of Holdings or its Subsidiaries pursuant to stock repurchase agreements so long as no Default or Event of Default exists at the time of such repurchase and would not exist after giving effect to such repurchase, provided, that such repurchases do not exceed in the aggregate Two Hundred and Fifty Thousand Dollars ($250,000) per fiscal year, (iv) subsidiaries of Holdings may make distributions to the any Loan Party, (v) any Loan Party may make a distribution to any Loan Party (provided however that distributions from IP Hold-Co shall be limited to distributions in the form of cash, Cash Equivalents, or Equity Interests in the ordinary course of business unless agreed otherwise with the Administrative Agent), (vi) the Loan Parties may make any distribution in accordance with Section 6.22, (vii) the consummation of the De-SPAC Transactions on the terms set forth in the Merger Consent, and (viii) Holdings may withhold or repurchase shares of common stock issued by Holdings in connection with withholding taxes related thereto; or (b) directly or indirectly make any Investment other than Permitted Investments, or permit any of its Subsidiaries to do so. Notwithstanding the foregoing, other than Investments in the Dense Air Group existing on the Restatement Effective Date, in no event shall any Loan Party or Subsidiary directly or indirectly make any Investment after the Restatement Effective Date in any member of the Dense Air Group other than as it may relate (on a non-cash basis) to a conversion of the current five percent (5%) equity holding of Airspan Communications Limited in Dense Air Limited into an equivalent equity holding, to be held by Airspan Communications Limited or another group company, in Dense Air Holdco or one of its subsidiaries on the Dense Air Conversion Date, provided such transaction substantially complies with the proposal provided to the Secured Parties prior to the Closing Date in all material respects.
| Annex A-120 |
Section 7.06 Transactions with Affiliates. Enter into or permit to exist any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate of a Loan Party on terms that are less favorable to Holdings or that Subsidiary, as the case may be, than those that might be obtained at the time from Persons who are not such an Affiliate other than (x) the Transactions and any other transactions between Borrower and IP Hold-Co expressly contemplated hereunder and (y) transactions among Loan Parties otherwise independently permitted under another clause of this Agreement (it being understood that any Transactions with IP Hold-Co shall only be permitted to the extent that such Transactions are in full compliance with the restrictions and limitations set forth in this Agreement, including the Conduct of Business Provisions set forth in Section 6.14 and limitation on Transfers set forth in Section 7.01).
Section 7.07 Limitation on Negative Pledges. Enter into, incur or permit to exist, or permit any Subsidiary to enter into, incur or permit to exist, directly or indirectly, any agreement, instrument, deed, lease or other arrangement that prohibits, restricts or imposes any condition upon the ability of any Loan Party or any Subsidiary of any Loan Party to create, incur or permit to exist any Lien upon any of its property or revenues, whether now owned or hereafter acquired, or that requires the grant of any security for an obligation if security is granted for another obligation, except the following: (i) this Agreement and the other Loan Documents, (ii) any customary restrictions and conditions contained in agreements relating to Indebtedness permitted under clause (iii) of the definition of Permitted Indebtedness or in the agreements relating to the sale or other disposition of assets or of a Subsidiary pending such sale or other disposition; provided that such restrictions and conditions apply only to the assets or Subsidiary to be sold or disposed of and such sale or disposition is permitted hereunder, (iii) subject to the terms of the Pari Passu Intercreditor Agreement, Liens granted pursuant to the terms of the Note Purchase Documents as in effect on the Restatement Effective Date and as the same may be amended from time to time in accordance with the terms of the Note Purchase Agreement and the Pari Passu Intercreditor Agreement, and (iv) customary provisions in leases restricting the assignment or sublet thereof.
Section 7.08 Compliance. (a) Become an “investment company” or a company controlled by an “investment company” under the Investment Company Act of 1940, as amended, or undertake as one of its important activities extending credit to purchase or carry margin stock (as defined in Regulation U of the Federal Reserve Board), or use the proceeds of any Loan for that purpose; (b) fail to meet the minimum funding requirements of ERISA, permit a Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; (c) fail to comply with the Federal Fair Labor Standards Act or violate any other applicable Law or regulation, or permit any of its Subsidiaries to do so, except when taken together with all other such events and failures, could not reasonably be expected to result in liability of Holdings and its Subsidiaries in an aggregate total amount exceeding One Million Dollars ($1,000,000); (d) withdraw or permit any Subsidiary to withdraw from participation in, permit partial or complete termination of, or permit the occurrence of any other event with respect to, any present pension, profit sharing and deferred compensation plan which could reasonably be expected to result in any liability of Holdings or its Subsidiaries, including any liability to the PBGC or its successors or any other governmental agency.
| Annex A-121 |
Section 7.09 Indebtedness. Create or suffer to exist any Indebtedness, other than Permitted Indebtedness (it being expressly understood that the Loan Parties may not, and shall not permit any Subsidiary to, guarantee or provide any other security in respect of any Indebtedness of Non-Loan Parties) that is intended to be non-recourse to the Loan Parties and their Subsidiaries and the IP Hold-Co shall not incur, guarantee or provide security in respect of any Indebtedness (other than the Obligations and the Priority Lien Obligations described in clause (xvi) of the definition of Permitted Indebtedness expressly permitted by the terms of the Pari Passu Intercreditor Agreement to rank pari passu with the Obligations).
Section 7.10 Amendments to Organization Documents, Patent Assignment Agreement or Patent License Agreement, Accounting Methods and Fiscal Year. Amend, or permit their Subsidiaries to permit (i) the amendment of any Loan Party’s or any of their Subsidiaries’ Organization Documents in a manner in any way adverse to the Secured Parties, (ii) any amendment to, or the termination (other than termination at its natural term) or waiver of any Material Contract of Holdings or its Subsidiaries or any provision thereof, including the Patent Assignment Agreement or Patent License Agreement, in a manner adverse to Administrative Agent or the Lenders, (iii) the modification or any other change to, Holdings’ or any Subsidiary’s method of accounting or accounting principles from those utilized in the preparation of the Audited Financial Statements (other than as may be required to conform to the applicable GAAP), or (iv) the change of the fiscal year of Holdings and its Subsidiaries (other than any Subsidiary organized in India, which shall be March 31) to a date other than December 31 of each calendar year without the consent of the Administrative Agent (and appropriate related changes to this Agreement). It being understood that notwithstanding the foregoing the consummation of the De-SPAC Transactions in the manner described in the Merger Consent are expressly permitted and the changes to the preparation of the Audited Financial Statements necessary to effectuate Holdings as the reporting entity are expressly permitted provided that upon giving effect to such changes the Loan Parties provide the Secured Parties with a statement reconciling any such changes against the historical financial statements for the Borrower and its Subsidiaries.
Section 7.11 Sanctions. Use the proceeds of the Loans, or lend, contribute or otherwise make available proceeds of the Loans to any Subsidiary of Holdings, joint venture partner or other individual or entity, directly, or knowingly indirectly, (a) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation in any material respect of the United States Foreign Corrupt Practices Act of 1977, the UK Bribery Act 2010, and other similar anti-corruption legislation in other jurisdictions to the extent applicable to the Loan Parties or (b) to fund any activities of or business with any individual or entity, or in any Designated Jurisdiction, that, at the time of such funding, is the subject of Sanctions in material violation thereof, or in any other manner that will result in a material violation by an individual or entity (including any individual or entity participating in the Transactions, whether a Lender or otherwise) of Sanctions.
Section 7.12 Patent Development and Enhancement. Expend any amounts on the prosecution of any Patent of Holdings or any of its Subsidiaries without the consent of the Agents and Requisite Lenders in their sole discretion (which consent may be provided in the form of an email and shall be deemed given in connection with any Patent prosecution made in compliance with Section 6.09), including expenditures on legal counsel to Loan Parties, which counsel shall be selected and engaged by the IP Hold-Co and acceptable to the Agents and the Requisite Lenders.
Section 7.13 Sales and Lease Backs. No Loan Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, become or remain liable as lessee or as a guarantor or other surety with respect to any lease of any property (whether real, personal or mixed), whether now owned or hereafter acquired, which such Loan Party (a) has sold or transferred or is to sell or to transfer to any other Person (other than Borrower, Holdings or any of their Loan Party Subsidiaries), or (b) intends to use for substantially the same purpose as any other property which has been or is to be sold or transferred by such Loan Party to any Person (other than Borrower, Holdings or any of their Loan Party Subsidiaries) in connection with such lease. For the avoidance of doubt, the Transactions occurring on the Closing Date and the related Transfer pursuant to the Patent Assignment Agreement and the licensure pursuant to the terms of the Patent Assignment Agreement shall not be prohibited by this Section 7.13.
| Annex A-122 |
Section 7.14 Deposit Accounts. Except as expressly permitted by Section 6.15, no Loan Party that is a U.S. Person shall establish or maintain a Deposit Account that is not a Controlled Account, and (i) no Loan Party that is a U.S. Person will deposit and maintain proceeds in any Deposit Account (which is not a Controlled Account or an Excluded Account) in excess of the amounts permitted by Section 6.15 and (ii) in the case of a jurisdiction where Controlled Accounts are not possible, no Loan Party shall maintain accounts which are not subject to the cash management systems and periodic sweeps described in Section 6.15 and Section 6.22.
Section 7.15 Prepayments of Certain Indebtedness. No Loan Party shall, nor shall it permit any of its Affiliates to, directly or indirectly, purchase, redeem, defease or prepay any principal of, premium, if any, interest or other amount payable in respect of any Indebtedness prior to its scheduled maturity, other than (i) the Obligations, (ii) the payment of interest accrued on Borrower’s obligations under the Softbank Loan Agreement to the extent permitted the Subordination Agreement provided at the time of such payment both before and after giving effect to such payment no Default or Event of Default shall exist or be caused by such payment, (iii) Permitted Intercompany Investments to the extent permitted by the Intercompany Subordination Agreement; (iv) Indebtedness secured by a Permitted Lien that is senior to the Obligations if the asset securing such Indebtedness has been sold or otherwise disposed of in accordance with Section 7.01, Section 7.03 or Section 7.05, and (v) the prepayment, purchase, redemption, defeasance or other acquisition or retirement of the Convertible Notes, provided that any such prepayment, purchase, redemption, defeasance or other acquisition or retirement complies with the terms hereof and the Pari Passu Intercreditor Agreement and no Default pursuant to Section 7.16 or Event of Default exists as a result of the occurrence of such transaction.
Section 7.16 Financial Covenants. The Loan Parties shall:
(a) Minimum Liquidity. At all times maintain a minimum of (x) Four Million Dollars ($4,000,000) through December 31, 2020, and (y) Five Million Dollars ($5,000,000) thereafter, of Unrestricted Cash of the Borrower and its Subsidiaries or Holdings and its Subsidiaries as the context may require after giving effect to the De-SPAC Transactions.
(b) Minimum LTM Revenue. Not permit the revenue of the Borrower and its Subsidiaries or Holdings and its Subsidiaries as the context may require after giving effect to the De-SPAC Transactions (as recognized in accordance with GAAP) as of the last day of any Test Period set forth in the table below, to be less than the amount set forth opposite such Test Period for such Test Period then ended:
| Test Period Ended | Minimum Revenue |
| December 31, 2020 | $164,535,000 |
| March 31, 2021 | $176,761,000 |
| June 30, 2021 | $199,138,000 |
| September 30, 2021 | $222,000,000 |
| December 31, 2021 | $225,000,000 |
| March 31, 2022 | $247,000,000 |
| June 30, 2022 | $271,000,000 |
| September 30, 2022 | $275,000,000 |
| December 31, 2022 | $275,000,000 |
| March 31, 2023 | $275,000,000 |
| June 30, 2023 | $275,000,000 |
| September 30, 2023 | $275,000,000 |
| December 31, 2023 | $275,000,000 |
| March 31, 2024 | $275,000,000 |
| June 30, 2024 | $275,000,000 |
| September 30, 2024 | $275,000,000 |
| Annex A-123 |
It being understood that for the purposes of determining the revenue of Holdings and its Subsidiaries for any Test Period which includes a fiscal quarter ended prior to the consummation of the Merger (as defined in the Merger Consent), but relating to periods before giving effect to the Merger Agreement, the revenue of Holdings and its Subsidiaries (x) for the fiscal quarter ended June 30, 2021 shall be deemed to be the revenue of the Borrower and its Subsidiaries on a consolidated basis for the fiscal quarter ended June 30, 2021, (y) for the fiscal quarter ended March 31, 2021 shall be deemed $45,935,000, and (z) for the fiscal quarter ended December 31, 2020, shall be deemed $81,546,000.
(c) Minimum LTM EBITDA. Not permit the EBITDA of the Borrower and its Subsidiaries or Holdings and its Subsidiaries as the context may require after giving effect to the De-SPAC Transactions, as of the last day of any Test Period set forth in the table below, to be less than the amount set forth opposite such Test Period for such Test Period then ended:
| Test Period Ended | Minimum LTM EBITDA |
| December 31, 2020 | ($12,792,000) |
| March 31, 2021 | ($11,766,000) |
| June 30, 2021 | ($7,717,000) |
| September 30, 2021 | $2,000,000 |
| December 31, 2021 | $9,500,000 |
| March 31, 2022 | $19,500,000 |
| June 30, 2022 | $29,000,000 |
| September 30, 2022 | $32,000,000 |
| December 31, 2022 | $32,000,000 |
| March 31, 2023 | $32,000,000 |
| June 30, 2023 | $32,000,000 |
| September 30, 2023 | $32,000,000 |
| December 31, 2023 | $32,000,000 |
| March 31, 2024 | $32,000,000 |
| June 30, 2024 | $32,000,000 |
| September 30, 2024 | $32,000,000 |
| December 31, 2024 | $32,000,000 |
Section 7.17 Pensions. No Loan Party shall, nor shall it permit any Loan Party organized under the laws of England and Wales, at any time be (a) an employer (for the purposes of sections 38 to 51 of the Pensions Act 2004) of an occupational pension scheme which is not a money purchase scheme (both terms as defined in the Pensions Schemes Act 1993); or (b) ‘connected’ with or an ‘associate’ of (as those terms are used in sections 38 and 43 of the Pensions Act 2004) such an employer.
Section 7.18 Centre of Main Interests and Establishment. No Loan Party (i) incorporated in a member state of the European Union shall, without the prior written consent of the Administrative Agent, take any action that shall cause its centre of main interests (as that term is used in Article 3(1) of the Regulation) to be situated outside of its jurisdiction of incorporation or (ii) incorporated under the laws of England and Wales shall change its center of main interests or acquire an “establishment” in any other jurisdiction.
| Annex A-124 |
Article
VIII
EVENTS OF DEFAULT
Section 8.01 Events of Default. Any one (1) of the following shall constitute an event of default (an “Event of Default”):
(a) Payment Default. A Loan Party fails to (a) make any payment of principal or interest on any Loan on its due date or (b) pay any other payment Obligation and such default shall continue unremedied for a period of, in the case of clause (a), three (3) Business Days and in the case of clause (b), five (5) Business Days, after the date when due and payable or when declared due and payable in accordance with this Agreement.
(b) Representations and Warranties. Any representation, warranty, certification or other statement made by Holdings or any of its Subsidiaries in any Loan Document or in any statement or certificate at any time given by Holdings or any of its Subsidiaries pursuant hereto or thereto or in connection herewith or therewith shall have been false in any material respect on the date as of which made so as to make such representation, warranty, certification or other statement misleading.
(c) Specific Covenants. Holdings or any Subsidiary thereof fails to deliver any item required in Sections 6.02 or 6.03 or fails to perform or observe any term, covenant or agreement contained in Sections 6.04, 6.05, 6.07, 6.09, 6.10, 6.12, 6.13, 6.14, 6.15, 6.20, 6.21, 6.22, 6.24, 6.25, or 6.26, or Article VII.
(d) Other Defaults. Holdings or any of its Subsidiaries fails to perform or observe any other covenant or agreement (not specified in Sections 8.01(a), (b), or (c)) contained in any Loan Document on its part to be performed or observed and such failure continues for thirty (30) days after the earlier of (i) a Responsible Officer of a Loan Party’s obtaining actual or constructive knowledge of such default or (ii) the Borrower receiving written notice of such default from the Agent or any Lender.
(e) Cross-Default.
(i) Holdings or any of its Subsidiaries shall fail to pay when due any principal of or interest on or any other amount payable in respect of any Priority Lien Obligation or one (1) or more items of Material Indebtedness in an individual principal amount of One Million Dollars ($1,000,000.00) or more or with an aggregate principal amount of Two Million Dollars ($2,000,000.00) or more; or
(ii) The breach or default by Holdings or any of its Subsidiaries with respect to any other term of (a) one (1) or more items of Indebtedness in the individual or aggregate principal amounts referred to in clause (i) above or (b) any loan agreement, mortgage, indenture or other agreement relating to such item(s) of Indebtedness, if the effect of such breach or default is to cause, or to permit the holder or holders of that Indebtedness (or a trustee on behalf of such holder or holders) to cause, that Indebtedness to become or be declared due and payable prior to its stated maturity or the stated maturity of any underlying obligation, as the case may be (upon the giving or receiving of notice, lapse of time, both, or otherwise).
| Annex A-125 |
(f) Restraint on Business. Any injunction, whether temporary or permanent, shall be rendered against any Loan Party or any of its material Subsidiaries that prevents Holdings or any of its material Subsidiaries from operating or otherwise conducting a material portion of the business of Holdings and its Subsidiaries in the aggregate in the ordinary course for more than thirty (30) consecutive calendar days after the earlier of (i) a Responsible Officer of a Loan Party’s obtaining actual or constructive knowledge of such default or (ii) the Borrower receiving written notice of such default from the Agent or any Lender.
(g) Asset Seizure. (a) Any material portion of any Loan Party and its material Subsidiaries’ assets is attached, seized or appropriated, levied on or condemned, or otherwise comes into possession or control of a trustee or receiver or any other Governmental Authority or any Person acting or purporting to act under such authority; or (b) any court order (other than court ordered operational interruptions solely attributable to the COVID-19 pandemic) enjoins, restrains, or prevents Holdings and its Subsidiaries from conducting any material part of its business, in each case, as to each of clauses (a) and (b), which event continues in existence and is not remedied, dismissed or stayed for thirty (30) days after the earlier of (i) a Responsible Officer of a Loan Party’s obtaining actual or constructive knowledge of such default or (ii) the Borrower receiving written notice of such default from the Agent or any Lender.
(h) Insolvency Proceedings. (a) Any Loan Party or any of its material Subsidiaries institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors, or enters into a composition, compromise or arrangement with any creditor (other than in the ordinary course of business and on a solvent basis), or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; (b) any receiver, administrative receiver, trustee, custodian, conservator, liquidator, rehabilitator, administrator, compulsory manager, or similar officer is appointed without the application or consent of such Person; or (c) any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person or an order for relief (including, without limitation, the issue of an order by an Israeli court for the commencement of insolvency proceedings (“tsav le-ptichat halichim”) (as defined in the Israeli Insolvency and Economic Rehabilitation Law, 2018)) is entered in any such proceeding, in each case with respect to clauses (b) and (c) above which event continues in existence and is not dismissed or stayed for sixty (60) days after a Loan Party’s receipt of actual or constructive notice of the occurrence thereof.
(i) Inability to Pay Debts. Any Loan Party or any of their material Subsidiaries becomes unable or admits in writing its inability to pay its debts when due, whether or not the maturity date therefor has arrived or the value of its assets exceeds its obligations (including future and contingent obligations), or fails generally to pay its debts as they become due and such circumstance, event or failure continues in existence and is not remedied for sixty (60) days after a Loan Party’s receipt of actual or constructive notice of such circumstance, event or failure.
(j) Judgments. Any money judgment, writ or warrant of attachment or similar process involving (i) in any individual case an amount in excess of One Million Dollars ($1,000,000.00) over the amount covered by independent third-party insurance as to which liability has been accepted by the applicable insurance carrier or (ii) in the aggregate at any time an amount in excess of Two Million Dollars ($2,000,000.00) over the amount covered by independent third-party insurance as to which liability has been accepted by the applicable insurance carrier, shall be entered or filed against Holdings or any of its Subsidiaries or any of their respective assets and shall remain undischarged, unvacated, unbonded or unstayed for a period of sixty (60) days (or in any event later than five (5) days prior to the date of any proposed sale thereunder).
(k) Change of Control. A Change of Control occurs.
| Annex A-126 |
(l) ERISA and Foreign Plans. An ERISA Event occurs with respect to a Pension Plan, Multiemployer Plan or a Foreign Plan which has resulted or could reasonably be expected to result in liability of a Loan Party or its Subsidiaries under Title IV of ERISA to the Pension Plan, Multiemployer Plan or Foreign Plan or the PBGC (or equivalent Governmental Authority in a non-US jurisdiction) in an aggregate amount in excess of One Million Dollars ($1,000,000.00) and such ERISA Event continues in existence and is not remedied for thirty (30) days after actual or constructive notice of the occurrence thereof, or (b) Holdings, or its Subsidiaries or ERISA Affiliates fails 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 or equivalent under a Foreign Plan in an aggregate amount in excess of One Million Dollars ($1,000,000.00) and such failure to pay continues in existence and is not remedied for thirty (30) days after the date when such payment was due.
(m) Invalidity of Loan Documents. At any time after the execution and delivery thereof, (i) the Guaranty for any reason, other than the satisfaction in full of all Guaranteed Obligations, shall cease to be in full force and effect (other than in accordance with its terms) or shall be declared to be null and void or any Guarantor shall repudiate its obligations thereunder, (ii) (a) this Agreement or any Collateral Document ceases to be in full force and effect (other than by reason of a release of Collateral in accordance with the terms hereof or thereof or the satisfaction in full of the Obligations in accordance with the terms hereof) or shall be declared null and void, or (b) Collateral Agent shall not have or shall cease to have a valid and perfected Lien in any Collateral with a fair market value in excess of One Million Dollars ($1,000,000.00) after delivery thereof pursuant to the terms of the Collateral Documents with the priority required by the relevant Collateral Document, in each case for any reason other than (x) to the extent permitted by the terms hereof or thereof or (y) of such loss of perfection or priority result from the failure of Collateral Agent or a Secured Party to take such actions in the control of such Secured Party (including the failure to maintain possession of any certificated Equity Interests actually delivered to it representing Equity Interests pledged as Collateral pursuant to the Collateral Documents), (iii) Holdings or any of its Subsidiaries shall contest the validity or enforceability of any Loan Document in writing or deny in writing that it has any further liability, including with respect to future advances by Lenders, under any Loan Document to which it is a party, (iv) the Pari Passu Intercreditor Agreement or any of the provisions thereof, ceases to be valid and enforceable against any holder of Priority Lien Obligations or any holder thereof shall so assert in writing; (v) the Subordination Agreement (or subordination provisions incorporated in any Subordinated Indebtedness), or any provisions thereof, ceases to be valid and enforceable against any holder of Indebtedness secured by a Lien intended to be subordinated to the Obligations or any holder of such Indebtedness shall so assert in writing or (vi) the failure of any party thereto to comply with the terms of the Subordination Agreement.
(n) Intellectual Property. (a) Holdings or any of its Subsidiaries fails to comply with the Conduct of Business Provisions or fails to meet its obligations under the Loan Documents and/or Transaction Documents and/or Section 17 of the IP Hold-Co Operating Agreement for the timely payment of maintenance fees, annuities or the like for any Patent or fails to meet its obligations relating to the timely prosecution of each patent application in the set of Assigned Patents (including future filed patent applications), provided such failure or delay can no longer be substantially remedied by making a late payment, obtaining an extension or taking further or remedial action in the prosecution of such patent, or (b) any Assigned Patent that constitutes Material Intellectual Property is found unpatentable or unenforceable due to the inequitable conduct or gross negligence or willful misconduct of any Loan Party.
(o) Moratorium; Availability of Foreign Exchange. A moratorium shall be agreed or declared in respect of any Indebtedness of Holdings or any of its Subsidiaries or any restriction or requirement not in effect on the Closing Date shall be imposed, whether by legislative enactment, decree, regulation, order or otherwise, which limits the availability or the transfer of foreign exchange by Holdings and/or its Subsidiaries for the purpose of performing any payment obligation under any Loan Document to which it is a party and such moratorium, restriction, or requirement, has a material adverse effect on the ability of the Loan Parties to perform their payment obligations under the Loan Documents.
| Annex A-127 |
(p) Invalidity of Upstreaming. Any governmental or other consent, license, approval, permit or authorization which is now or may in the future be necessary or appropriate under any applicable law for the upstreaming or other transfer of dividends, Free Cash Flow or Distributable Income from any of the Subsidiaries to any Loan Party or to make such upstreaming, transfer or loan legal, valid, enforceable and admissible in evidence shall not be obtained or shall be withdrawn, revoked or modified or shall cease to be in full force and effect or shall be modified in any manner that would have a Material Adverse Effect.
Section 8.02 Rights and Remedies.
(a) Rights and Remedies.
(i) (1) Upon the occurrence of any Event of Default described in Sections 8.01(h) or 8.01(i), automatically, and (2) upon the occurrence of any other Event of Default, at the request of (or with the consent of) the Requisite Lenders may, without notice or demand, do any or all of the following, singularly, consecutively or cumulatively:
(A) declare all Guaranteed Obligations (including any Applicable Prepayment Premium and the End of Term Fee) immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Loan Parties (but if an Event of Default described in Section 8.01(h) occurs, all Guaranteed Obligations (including any Applicable Prepayment Premium and the End of Term Fee) are immediately due and payable without any action by the Administrative Agent or Secured Parties);
(B) stop advancing money or extending credit for the Borrower’s benefit under this Agreement or under any other Loan Document or Transaction Document between any of the Loan Parties and any of the Secured Parties; and
(C) exercise all rights and remedies available to the Secured Parties under the Loan Documents or at Law or equity, including all remedies provided under the UCC, all of which rights and remedies shall be cumulative and nonexclusive to the extent permitted by law, including, without limitation, the following:
(1) Upon the occurrence and during the continuance of any Event of Default, the Collateral Agent shall have all rights and remedies provided by Law, including but not limited to those of a lender and/or a secured party under the UCC as in effect in the States of New York and Delaware on the Closing Date and as amended after the Closing Date (and any equivalent rights under the Laws of any other Relevant Jurisdiction), in addition to the rights and remedies provided herein or in the Loan Documents.
(2) All cash proceeds received by the Collateral Agent in respect of any sale of, collection from, or other realization upon all or any part of the Collateral may, in the discretion of the Requisite Lenders, be held by the Collateral Agent as Collateral for, or then or at any time thereafter applied in whole or in part by the Secured Parties against, subject to the Pari Passu Intercreditor Agreement, all or any part of the Obligations in the order set forth in Section 2.07 or in such other order as the Agent acting at the direction of the Requisite Lenders shall elect. Any surplus of such cash or cash proceeds held by the Collateral Agent and remaining after payment in full of all the Obligations shall be paid over to the Loan Parties or to whomsoever may be lawfully entitled to receive such surplus.
| Annex A-128 |
(3) Whether or not an Event of Default shall have occurred, if the Loan Parties fail to perform any agreement contained herein, the Agents may, in their sole discretion, themselves perform, or cause performance of, such agreement, and the reasonable expenses of the Agents incurred in connection therewith shall be payable by Loan Parties. The powers conferred upon the Agents hereunder are solely for the protection of its interest in the Collateral and shall not impose any duty upon it to exercise any such powers.
(ii) The Loan Parties shall pay to the Agents, on behalf of and for the benefit of the Secured Parties, on demand and as part of the Obligations, all reasonable costs and expenses, including court costs and costs of sale, incurred by the Agents in exercising any of the rights or remedies of the Secured Parties hereunder.
(b) Application of Payments and Proceeds Upon Default. If (i) an Event of Default has occurred and is continuing, the Collateral Agent, on behalf of and for the benefit of the Secured Parties, may apply any funds in its possession to the Obligations in the manner provided in Section 2.07 hereof, and (ii) if a Triggering Event (as defined in the IP Hold-Co Operating Agreement) has occurred and is continuing, distributions made pursuant to the IP Hold-Co Operating Agreement shall be made in accordance with the IP Hold-Co Operating Agreement and applied to the Obligations in the order provided by the IP Hold-Co Operating Agreement and then in the manner provided in Section 2.07. It being understood that in all cases the Loan Parties shall remain liable to the Secured Parties for any deficiency. Subject to the Pari Passu Intercreditor Agreement, if the Collateral Agent, in its good faith business judgment, directly or indirectly enters into a deferred payment or other credit transaction with any purchaser at any sale of Collateral, the Secured Parties shall have the option, exercisable at any time, of either reducing the Obligations by the principal amount of the purchase price or deferring the reduction of the Obligations until the actual receipt by the Secured Parties of cash therefor.
(c) No Waiver; Remedies Cumulative. The Collateral Agent and Secured Parties’ failure, at any time or times, to require strict performance by the Loan Parties of any provision of this Agreement or any other Loan Document shall not waive, affect, or diminish any right of the Secured Parties thereafter to demand strict performance and compliance herewith or therewith. No waiver hereunder shall be effective unless signed by the party granting the waiver and then is only effective for the specific instance and purpose for which it is given. The Agents and Secured Parties’ rights and remedies under this Agreement and the other Loan Documents and the Transaction Documents are cumulative. The Agents and Secured Parties have all rights and remedies provided under the UCC, by Law, or in equity. The Agents and Secured Parties’ exercise of one (1) right or remedy is not an election and shall not preclude the Agents or Secured Parties from exercising any other remedy under this Agreement or other remedy available at Law or in equity, and the Agents or Secured Parties’ waiver of any Event of Default is not a continuing waiver. The Agents or Secured Parties’ delay in exercising any remedy is not a waiver, election, or acquiescence.
| Annex A-129 |
Article
IX
Guaranty
Section 9.01 Guaranty of the Obligations. Subject to the provisions of Section 9.02, Guarantors jointly and severally hereby irrevocably and unconditionally guaranty to Administrative Agent for the ratable benefit of the Lenders the due and punctual payment in full of all Loan Obligations when the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a)) (collectively, the “Guaranteed Obligations”).
Section 9.02 Contribution by Guarantors. All Guarantors desire to allocate among themselves (collectively, the “Contributing Guarantors”), in a fair and equitable manner, their obligations arising under this Guaranty. Accordingly, in the event any payment or distribution is made on any date by a Guarantor (a “Funding Guarantor”) under this Guaranty such that its Aggregate Payments exceeds its Fair Share as of such date, such Funding Guarantor shall be entitled to a contribution from each of the other Contributing Guarantors in an amount sufficient to cause each Contributing Guarantor’s Aggregate Payments to equal its Fair Share as of such date. “Fair Share” means, with respect to a Contributing Guarantor as of any date of determination, an amount equal to (a) the ratio of (i) the Fair Share Contribution Amount with respect to such Contributing Guarantor, to (ii) the aggregate of the Fair Share Contribution Amounts with respect to all Contributing Guarantors multiplied by, (b) the aggregate amount paid or distributed on or before such date by all Funding Guarantors under this Guaranty in respect of the obligations guaranteed. “Fair Share Contribution Amount” means, with respect to a Contributing Guarantor as of any date of determination, the maximum aggregate amount of the obligations of such Contributing Guarantor under this Guaranty that would not render its obligations hereunder subject to avoidance as a fraudulent transfer or conveyance under Section 548 of Title 11 of the United States Code or any comparable applicable provisions of state law; provided, solely for purposes of calculating the Fair Share Contribution Amount with respect to any Contributing Guarantor for purposes of this Section 9.02, any assets or liabilities of such Contributing Guarantor arising by virtue of any rights to subrogation, reimbursement or indemnification or any rights to or obligations of contribution hereunder shall not be considered as assets or liabilities of such Contributing Guarantor. “Aggregate Payments” means, with respect to a Contributing Guarantor as of any date of determination, an amount equal to (1) the aggregate amount of all payments and distributions made on or before such date by such Contributing Guarantor in respect of this Guaranty (including in respect of this Section 9.02), minus (2) the aggregate amount of all payments received on or before such date by such Contributing Guarantor from the other Contributing Guarantors as contributions under this Section 9.02. The amounts payable as contributions hereunder shall be determined as of the date on which the related payment or distribution is made by the applicable Funding Guarantor. The allocation among Contributing Guarantors of their obligations as set forth in this Section 9.02 shall not be construed in any way to limit the liability of any Contributing Guarantor hereunder. Each Guarantor is a third party beneficiary to the contribution agreement set forth in this Section 9.02.
Section 9.03 Payment by Guarantors. Subject to Section 9.02, Guarantors hereby jointly and severally agree, in furtherance of the foregoing and not in limitation of any other right which any Beneficiary may have at law or in equity against any Guarantor by virtue hereof, that upon the failure of Borrower to pay any of the Guaranteed Obligations when and as the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a)), Guarantors will upon demand pay, or cause to be paid, in Cash, to Administrative Agent for the ratable benefit of the Beneficiaries, an amount equal to the sum of the unpaid principal amount of all Guaranteed Obligations then due as aforesaid, accrued and unpaid interest on such Guaranteed Obligations (including interest which, but for Borrower’s becoming the subject of a case under the Bankruptcy Code, would have accrued on such Guaranteed Obligations, whether or not a claim is allowed against Borrower for such interest in the related bankruptcy case) and all other Guaranteed Obligations then owed to Beneficiaries as aforesaid.
| Annex A-130 |
Section 9.04 Liability of Guarantors Absolute. Each Guarantor agrees that its obligations hereunder are irrevocable, absolute, independent and unconditional and shall not be affected by any circumstance which constitutes a legal or equitable discharge of a guarantor or surety other than payment in full of the Guaranteed Obligations (other than contingent indemnification obligations for which no claim has been asserted). In furtherance of the foregoing and without limiting the generality thereof, each Guarantor agrees as follows:
(a) this Guaranty is a guaranty of payment when due and not of collectability; this Guaranty is a primary obligation of each Guarantor and not merely a contract of surety;
(b) Administrative Agent may enforce this Guaranty upon the occurrence of an Event of Default notwithstanding the existence of any dispute between Borrower and any Beneficiary with respect to the existence of such Event of Default;
(c) the obligations of each Guarantor hereunder are independent of the obligations of Borrower and the obligations of any other guarantor (including any other Guarantor) of the obligations of Borrower, and a separate action or actions may be brought and prosecuted against such Guarantor whether or not any action is brought against Borrower or any of such other guarantors and whether or not Borrower is joined in any such action or actions;
(d) payment by any Guarantor of a portion, but not all, of the Guaranteed Obligations shall in no way limit, affect, modify or abridge any Guarantor’s liability for any portion of the Guaranteed Obligations which has not been paid; provided that, without limiting the generality of the foregoing, if any Agent or the Secured Parties are awarded a judgment in any suit brought to enforce any Guarantor’s covenant to pay a portion of the Guaranteed Obligations, such judgment shall not be deemed to release such Guarantor from its covenant to pay the portion of the Guaranteed Obligations that is not the subject of such suit, and such judgment shall not, except to the extent satisfied by such Guarantor, limit, affect, modify or abridge any other Guarantor’s liability hereunder in respect of the Guaranteed Obligations;
(e) any Beneficiary, upon such terms as it deems appropriate, without notice or demand and without affecting the validity or enforceability hereof or giving rise to any reduction, limitation, impairment, discharge or termination of any Guarantor’s liability hereunder, from time to time may (i) renew, extend, accelerate, increase the rate of interest on, or otherwise change the time, place, manner or terms of payment of the Guaranteed Obligations; (ii) settle, compromise, release or discharge, or accept or refuse any offer of performance with respect to, or substitutions for, the Guaranteed Obligations or any agreement relating thereto and/or subordinate the payment of the same to the payment of any other obligations; (iii) request and accept other guaranties of the Guaranteed Obligations and take and hold security for the payment hereof or the Guaranteed Obligations; (iv) release, surrender, exchange, substitute, compromise, settle, rescind, waive, alter, subordinate or modify, with or without consideration, any security for payment of the Guaranteed Obligations, any other guaranties of the Guaranteed Obligations, or any other obligation of any Person (including any other Guarantor) with respect to the Guaranteed Obligations; (v) enforce and apply any security now or hereafter held by or for the benefit of such Beneficiary in respect hereof or the Guaranteed Obligations and direct the order or manner of sale thereof, or exercise any other right or remedy that such Beneficiary may have against any such security, in each case as such Beneficiary in its discretion may determine consistent herewith and any applicable security agreement, including foreclosure on any such security pursuant to one (1) or more judicial or nonjudicial sales, whether or not every aspect of any such sale is commercially reasonable, and even though such action operates to impair or extinguish any right of reimbursement or subrogation or other right or remedy of any Guarantor against Borrower or any security for the Guaranteed Obligations; and (vi) exercise any other rights available to it under the Loan Documents; and
| Annex A-131 |
(f) this Guaranty and the obligations of Guarantors hereunder shall be valid and enforceable and shall not be subject to any reduction, limitation, impairment, discharge or termination for any reason (other than payment in full of the Guaranteed Obligations), including the occurrence of any of the following, whether or not any Guarantor shall have had notice or knowledge of any of them: (i) any failure or omission to assert or enforce or agreement or election not to assert or enforce, or the stay or enjoining, by order of court, by operation of law or otherwise, of the exercise or enforcement of, any claim or demand or any right, power or remedy (whether arising under the Loan Documents, at law, in equity or otherwise) with respect to the Guaranteed Obligations or any agreement relating thereto, or with respect to any other guaranty of or security for the payment of the Guaranteed Obligations; (ii) any rescission, waiver, amendment or modification of, or any consent to departure from, any of the terms or provisions (including provisions relating to events of default) hereof, any of the other Loan Documents or any agreement or instrument executed pursuant thereto, or of any other guaranty or security for the Guaranteed Obligations, in each case whether or not in accordance with the terms hereof or such Loan Document or any agreement relating to such other guaranty or security; (iii) the Guaranteed Obligations, or any agreement relating thereto, at any time being found to be illegal, invalid or unenforceable in any respect; (iv) the application of payments received from any source (other than payments received pursuant to the other Loan Documents or from the proceeds of any security for the Guaranteed Obligations, except to the extent such security also serves as collateral for indebtedness other than the Guaranteed Obligations) to the payment of indebtedness other than the Guaranteed Obligations, even though any Beneficiary might have elected to apply such payment to any part or all of the Guaranteed Obligations; (v) any Beneficiary’s consent to the change, reorganization or termination of the corporate structure or existence of Borrower, Holdings or any of their Subsidiaries and to any corresponding restructuring of the Guaranteed Obligations; (vi) any failure to perfect or continue perfection of a security interest in any collateral which secures any of the Guaranteed Obligations; (vii) any defenses, set offs or counterclaims which Borrower may allege or assert against any Beneficiary in respect of the Guaranteed Obligations, including failure of consideration, breach of warranty, payment, statute of frauds, statute of limitations, accord and satisfaction and usury; and (viii) any other act or thing or omission, or delay to do any other act or thing, which may or might in any manner or to any extent vary the risk of any Guarantor as an obligor in respect of the Guaranteed Obligations.
(g) It is expressly agreed that the Israeli Guarantee Law, 1967 (the “Israeli Guarantee Law”) shall not apply to this Agreement or to any Loan Document and that should the Israeli Guarantee Law for any reason be deemed to apply to this Agreement or to any Loan Document, or to it in connection thereof, each Guarantor hereby irrevocably and unconditionally waives all rights and defenses that may have been available to it under the Israeli Guarantee Law, provided that the forgoing shall not in any way affect or constitute a waiver of any rights or defenses available to such Guarantor under the terms of this Agreement or the laws of the State of New York after giving effect to the other provisions of this Article IX.
| Annex A-132 |
Section 9.05 Waivers by Guarantors.
(a) Each Guarantor hereby waives, for the benefit of Beneficiaries: (a) any right to require any Beneficiary, as a condition of payment or performance by such Guarantor, to (i) proceed against Borrower, any other guarantor (including any other Guarantor) of the Guaranteed Obligations or any other Person, (ii) proceed against or exhaust any security held from Borrower, any such other guarantor or any other Person, (iii) proceed against or have resort to any balance of any Deposit Account or credit on the books of any Beneficiary in favor of Borrower or any other Person, or (iv) pursue any other remedy in the power of any Beneficiary whatsoever; (b) any defense arising by reason of the incapacity, lack of authority or any disability or other defense of Borrower or any other Guarantor including any defense based on or arising out of the lack of validity or the unenforceability of the Guaranteed Obligations or any agreement or instrument relating thereto or by reason of the cessation of the liability of Borrower or any other Guarantor from any cause other than payment in full of the Guaranteed Obligations; (c) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; (d) any defense based upon any Beneficiary’s errors or omissions in the administration of the Guaranteed Obligations, except behavior which amounts to gross negligence, willful misconduct, or bad faith; (e) (i) any principles or provisions of law, statutory or otherwise, which are or might be in conflict with the terms hereof and any legal or equitable discharge of such Guarantor’s obligations hereunder, (ii) the benefit of any statute of limitations affecting such Guarantor’s liability hereunder or the enforcement hereof, (iii) any rights to set offs, recoupments and counterclaims, and (iv) promptness, diligence and any requirement that any Beneficiary protect, secure, perfect or insure any security interest or lien or any property subject thereto; (f) notices, demands, presentments, protests, notices of protest, notices of dishonor and notices of any action or inaction, including acceptance hereof, notices of default hereunder, or any agreement or instrument related thereto, notices of any renewal, extension or modification of the Guaranteed Obligations or any agreement related thereto, notices of any extension of credit to Borrower and notices of any of the matters referred to in Section 9.04 and any right to consent to any thereof; and (g) any defenses or benefits that may be derived from or afforded by law which limit the liability of or exonerate guarantors or sureties, or which may conflict with the terms hereof.
(b) Each Guarantor waives all rights and defenses that it may have because the Obligations are secured by real property. This means, among other things: (i) the Beneficiaries may collect from any Guarantor without first foreclosing on any real or personal property Collateral pledged by Borrower or any other Guarantor; and (ii) if the Beneficiaries foreclose on any real property Collateral pledged by Borrower or any Guarantor: (A) the amount of the Obligations may be reduced only by the price for which that Collateral is sold at the foreclosure sale, even if the Collateral is worth more than the sale price; and (B) the Beneficiaries may collect from the other Guarantors even if the Beneficiaries, by foreclosing on the real property Collateral, have destroyed any right the Guarantors may have to collect from Borrower or any other Guarantor. This is an unconditional and irrevocable waiver of any rights and defenses the Guarantors may have because the Obligations are secured by real property. In the event that all or any part of the Guaranteed Obligations at any time are secured by any one (1) or more deeds of trust, security deeds or mortgages creating or granting Liens on any interests in Real Estate Assets, each of the Guarantors authorizes the Beneficiaries, upon the occurrence of and during the continuance of any Event of Default, at their sole option, without notice or demand and without affecting any Obligations, the enforceability of the Guaranteed Obligations under this Guaranty, or the validity or enforceability of any Liens of the Beneficiaries on any Collateral securing the Guaranteed Obligations, to foreclose any or all of such deeds of trust, security deeds or mortgages by judicial or nonjudicial sale. Insofar as the Liens created by the Collateral Documents secure the Guaranteed Obligations of other Persons, each of the Guarantors expressly waives any defenses to the enforcement of this Guaranty or the other Loan Documents or any Liens created or granted hereby or by the other Loan Documents or to the recovery by the Beneficiaries against Borrower, any Guarantor or any other Person liable therefor of any deficiency after a judicial or nonjudicial foreclosure or sale, even though such a foreclosure or sale may impair the subrogation rights of such Guarantor and may preclude any of them from obtaining reimbursement or contribution from any other Person.
| Annex A-133 |
Section 9.06 Guarantors’ Rights of Subrogation, Contribution, etc. Until the Guaranteed Obligations shall have been indefeasibly paid in full (other than contingent indemnification obligations for which no claim has been asserted) and the Term Loan Commitments shall have terminated, each Guarantor hereby waives any claim, right or remedy, direct or indirect, that such Guarantor now has or may hereafter have against Borrower or any other Guarantor or any of its assets in connection with this Guaranty or the performance by such Guarantor of its obligations hereunder, in each case whether such claim, right or remedy arises in equity, under contract, by statute, under common law or otherwise and including (a) any right of subrogation, reimbursement or indemnification that such Guarantor now has or may hereafter have against Borrower with respect to the Guaranteed Obligations, (b) any right to enforce, or to participate in, any claim, right or remedy that any Beneficiary now has or may hereafter have against Borrower, and (c) any benefit of, and any right to participate in, any collateral or security now or hereafter held by any Beneficiary. In addition, until the Guaranteed Obligations shall have been indefeasibly paid in full (other than contingent indemnification obligations for which no claim has been asserted) and the Term Loan Commitments shall have terminated, each Guarantor shall withhold exercise of any right of contribution such Guarantor may have against any other guarantor (including any other Guarantor) of the Guaranteed Obligations, including any such right of contribution as contemplated by Section 9.02. Each Guarantor further agrees that, to the extent the waiver or agreement to withhold the exercise of its rights of subrogation, reimbursement, indemnification and contribution as set forth herein is found by a court of competent jurisdiction to be void or voidable for any reason, any rights of subrogation, reimbursement or indemnification such Guarantor may have against Borrower or against any collateral or security, and any rights of contribution such Guarantor may have against any such other guarantor, shall be junior and subordinate to any rights any Beneficiary may have against Borrower, to all right, title and interest any Beneficiary may have in any such collateral or security, and to any right any Beneficiary may have against such other guarantor. If any amount shall be paid to any Guarantor on account of any such subrogation, reimbursement, indemnification or contribution rights at any time when all Guaranteed Obligations shall not have been finally and indefeasibly paid in full, such amount shall be held in trust for the Agents on behalf of Beneficiaries and shall forthwith be paid over to the Agents for the benefit of Beneficiaries to be credited and applied against the Guaranteed Obligations, whether matured or unmatured, in accordance with the terms hereof.
Section 9.07 Subordination of Other Obligations. Any Indebtedness of Borrower or any Guarantor now or hereafter held by any Guarantor (the “Obligee Guarantor”) is hereby subordinated in right of payment to the Guaranteed Obligations, and any such Indebtedness collected or received by the Obligee Guarantor after an Event of Default has occurred and is continuing shall be held in trust for the Agents on behalf of Beneficiaries and shall forthwith be paid over to Administrative Agent for the benefit of Beneficiaries to be credited and applied against the Guaranteed Obligations but without affecting, impairing or limiting in any manner the liability of the Obligee Guarantor under any other provision hereof.
Section 9.08 Continuing Guaranty. This Guaranty is a continuing guaranty and shall remain in effect until all of the Guaranteed Obligations shall have been indefeasibly paid in full (other than contingent indemnification obligations for which no claim has been asserted) and the Term Loan Commitments shall have terminated. Each Guarantor hereby irrevocably waives any right to revoke this Guaranty as to future transactions giving rise to any Guaranteed Obligations.
Section 9.09 Authority of Guarantors or Borrower. It is not necessary for any Beneficiary to inquire into the capacity or powers of any Guarantor or Borrower or the officers, directors or any agents acting or purporting to act on behalf of any of them.
Section 9.10 Collateral Matters. The Loan Parties irrevocably authorize the Collateral Agent, in its option and in its best discretion,
(a) to release any Lien on any property granted to or held by the Collateral Agent under any Loan Document (i) upon termination of the Term Loan Commitments and payment in full of all Obligations (including, without limitation, any Prepayment Premium but excluding contingent indemnification obligations for which no claim has been asserted), (ii) that is sold or to be sold as part of or in connection with any sale permitted hereunder or under any other Loan Document, or (iii) if approved, authorized or ratified in writing by the Requisite Lenders in accordance with Section 13.19(c);
| Annex A-134 |
(b) to subordinate any Lien on any property granted to or held by the Collateral Agent under any Loan Document to the holder of any Lien on such property that is permitted by clause (h) of the definition of Permitted Liens; and
(c) to release any Guarantor from its obligations under the Guaranty if such Person ceases to be a Subsidiary as a result of a transaction permitted hereunder. Upon request by the Agent at any time, the Requisite Lenders will confirm in writing the Agent’s authority to release or subordinate its interest in particular types or items of property, or to release any Guarantor from its obligations with respect to the Guaranteed Obligations pursuant to this Section 9.10.
In each case as specified in this Section 9.10, the Agent will, at the Loan Parties’ expense, execute and deliver to the applicable Loan Party such documents as such Loan Party may reasonably request to evidence the release of such item of Collateral from the assignment and security interest granted under the Security Documents or to subordinate its interest in such item, or to release such Guarantor from its obligations with respect to the Guaranteed Obligations, in each case in accordance with the terms of the Loan Documents and this Section 9.10.
Section 9.11 Financial Condition of Borrower. Any Credit Extensions may be made to Borrower or continued from time to time without notice to or authorization from any Guarantor regardless of the financial or other condition of Borrower at the time of any such grant or continuation. No Beneficiary shall have any obligation to disclose or discuss with any Guarantor its assessment, or any Guarantor’s assessment, of the financial condition of Borrower. Each Guarantor has adequate means to obtain information from Borrower on a continuing basis concerning the financial condition of Borrower and its ability to perform its obligations under the Loan Documents, and each Guarantor assumes the responsibility for being and keeping informed of the financial condition of Borrower and of all circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations. Each Guarantor hereby waives and relinquishes any duty on the part of any Beneficiary to disclose any matter, fact or thing relating to the business, operations or conditions of Borrower now known or hereafter known by any Beneficiary.
Section 9.12 Bankruptcy, etc.
(a) So long as any Guaranteed Obligations remain outstanding, no Guarantor shall, without the prior written consent of Administrative Agent acting pursuant to the instructions of Requisite Lenders, commence or join with any other Person in commencing any bankruptcy, reorganization or insolvency case or proceeding of or against Borrower or any other Guarantor. The obligations of Guarantors hereunder shall not be reduced, limited, impaired, discharged, deferred, suspended or terminated by any case or proceeding, voluntary or involuntary, involving the bankruptcy, insolvency, receivership, reorganization, liquidation or arrangement of Borrower or any other Guarantor or by any defense which Borrower or any other Guarantor may have by reason of the order, decree or decision of any court or administrative body resulting from any such proceeding.
(b) Each Guarantor acknowledges and agrees that any interest on any portion of the Guaranteed Obligations which accrues after the commencement of any case or proceeding referred to in clause (a) above (or, if interest on any portion of the Guaranteed Obligations ceases to accrue by operation of law by reason of the commencement of such case or proceeding, such interest as would have accrued on such portion of the Guaranteed Obligations if such case or proceeding had not been commenced) shall be included in the Guaranteed Obligations because it is the intention of Guarantors and Beneficiaries that the Guaranteed Obligations which are guaranteed by Guarantors pursuant hereto should be determined without regard to any rule of law or order which may relieve Borrower of any portion of such Guaranteed Obligations. Guarantors will permit any trustee in bankruptcy, receiver, debtor in possession, assignee for the benefit of creditors or similar person to pay the Agent and/or the Secured Parties, or allow the claim of the Agent on behalf of the Secured Parties in respect of, any such interest accruing after the date on which such case or proceeding is commenced.
| Annex A-135 |
(c) In the event that all or any portion of the Guaranteed Obligations are paid by Borrower, the obligations of Guarantors hereunder shall continue and remain in full force and effect or be reinstated, as the case may be, in the event that all or any part of such payment(s) are rescinded or recovered directly or indirectly from any Beneficiary as a preference, fraudulent transfer or otherwise, and any such payments which are so rescinded or recovered shall constitute Guaranteed Obligations for all purposes hereunder.
Section 9.13 Discharge of Guaranty Upon Sale of Guarantor. If all of the Equity Interests of any Guarantor or any of its successors in interest hereunder shall be sold or otherwise disposed of (including by merger or consolidation) in accordance with the terms and conditions hereof, the Guaranty of such Guarantor or such successor in interest, as the case may be, hereunder shall automatically be discharged and released without any further action by any Beneficiary or any other Person effective as of the time of such Transfer.
Article
X
AGENTS
Section 10.01 Appointment of Agents. Fortress is hereby appointed Administrative Agent and Collateral Agent hereunder and under the other Loan Documents and each Lender hereby authorizes Fortress, in such capacity, to act as its agent in accordance with the terms hereof and the other Loan Documents. Each Agent hereby agrees to act upon the express conditions contained herein and the other Loan Documents, as applicable. The provisions of this Article X are solely for the benefit of Agents and the Lenders, and no Loan Party shall have any rights as a third party beneficiary of any of the provisions thereof. In performing its functions and duties hereunder, each Agent shall act solely as an agent of Lenders and does not assume and shall not be deemed to have assumed any obligation towards or relationship of agency or trust with or for Borrower, Holdings or any of their Subsidiaries. It is understood and agreed that the use of the term “agent” herein or in any other Loan Documents (or any other similar term) with reference to the Administrative Agent or the Collateral 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 as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.
Section 10.02 Powers and Duties. Each Lender irrevocably authorizes each Agent to take such action on such Lender’s behalf and to exercise such powers, rights and remedies hereunder and under the other Loan Documents as are specifically delegated or granted to such Agent by the terms hereof and thereof, together with such powers, rights and remedies as are reasonably incidental thereto. Each Agent shall have only those duties and responsibilities that are expressly specified herein and the other Loan Documents and the Transaction Document. Each Agent may exercise such powers, rights and remedies and perform such duties by or through its agents or employees. No Agent shall have, by reason hereof or any of the other Loan Documents or Transaction Documents, a fiduciary relationship or other implied (or express) obligations arising under agency doctrine of any applicable law in respect of any Lender; and nothing herein or any of the other Loan Documents or Transaction Documents, expressed or implied, is intended to or shall be so construed as to impose upon any Agent any obligations in respect hereof or any of the other Loan Documents or Transaction Documents except as expressly set forth herein or therein.
| Annex A-136 |
Section 10.03 General Immunity.
(a) No Responsibility for Certain Matters. No Agent shall be responsible to any Lender for the execution, effectiveness, genuineness, validity, enforceability, collectability or sufficiency hereof or any other Loan Document or Transaction Document, the satisfaction of any condition set forth in Article III or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to either Agent thereunder, or for any representations, warranties, recitals or statements made herein or therein or made in any written or oral statements or in any financial or other statements, instruments, reports or certificates or any other documents furnished or made by any Agent to Lenders or by or on behalf of any Loan Party to any Agent or any Lender in connection with the Loan Documents or Transaction Documents and the transactions contemplated thereby or for the financial condition or business affairs of any Loan Party or any other Person liable for the payment of any Obligations, nor shall any Agent be required to ascertain or inquire as to the performance or observance of any of the terms, conditions, provisions, covenants or agreements contained in any of the Loan Documents or Transaction Documents or as to the use of the proceeds of the Loans or as to the existence or possible existence of any Event of Default or Default or to make any disclosures with respect to the foregoing. Anything contained herein to the contrary notwithstanding, Administrative Agent shall not have any liability arising from confirmations of the amount of outstanding Loans or the component amounts thereof.
(b) Exculpatory Provisions. No Agent nor any of its officers, partners, directors, managers, members, employees or agents shall be liable to Lenders for any action taken or omitted by any Agent under or in connection with any of the Loan Documents except to the extent caused by such Agent’s gross negligence or willful misconduct, as determined by a court of competent jurisdiction in a final, non-appealable order. Each Agent shall be entitled to refrain from any act or the taking of any action (including the failure to take an action) in connection herewith or any of the other Loan Documents or Transaction Document or from the exercise of any power, discretion or authority vested in it hereunder or thereunder unless and until such Agent shall have received instructions in respect thereof from Requisite Lenders (or such other Lenders as may be required to give such instructions under Section 13.05) and, upon receipt of such instructions from Requisite Lenders (or such other Lenders, as the case may be), such Agent shall be entitled to act or (where so instructed) refrain from acting, or to exercise such power, discretion or authority, in accordance with such instructions; provided that no Agent shall be required to take any action that, in its opinion or the opinion of its counsel, may expose such Agent to liability or that is contrary to any Loan Document or any Transaction Document or applicable law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any Debtor Relief Law or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of any Debtor Relief Law. Without prejudice to the generality of the foregoing, (i) each Agent shall be entitled to rely, and shall no liability for relying, upon any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and correct and to have been signed or sent by the proper Person or Persons, and shall be entitled to rely and shall be protected in relying on opinions and judgments of attorneys (who may be attorneys for Holdings and its Subsidiaries), accountants, experts and other professional advisors selected by it; and (ii) no Lender shall have any right of action whatsoever against any Agent as a result of such Agent acting or (where so instructed) refraining from acting hereunder or any of the other Loan Documents or Transaction Documents in accordance with the instructions of Requisite Lenders (or such other Lenders as may be required to give such instructions under Section 13.05). Each Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, that by its terms must be fulfilled to the satisfaction of a Lender, each Administrative Agent may presume that such condition is satisfactory to such Lender unless such Agent shall have received notice to the contrary from such Lender prior to the making of such Loan. No Agent shall, except as expressly set forth herein and in the other Loan Documents or Transaction Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to Holdings, Borrower or any of their Affiliates that is communicated to or obtained by the Person serving as an Agent or any of its Affiliates in any capacity.
| Annex A-137 |
Section 10.04 Agents Entitled to Act as Lender. The agency hereby created shall in no way impair or affect any of the rights and powers of, or impose any duties or obligations upon, any Agent in its individual capacity as a Lender hereunder. With respect to its participation in the Loans, each Agent shall have the same rights and powers hereunder as any other Lender and may exercise the same as if it were not performing the duties and functions delegated to it hereunder, and the term “Lender” shall, unless the context clearly otherwise indicates, include each Agent in its individual capacity. Any Agent and its Affiliates may accept deposits from, lend money to, own securities of, and generally engage in any kind of banking, trust, financial advisory or other business with Holdings, Borrower or any of their Affiliates as if it were not performing the duties specified herein, and may accept fees and other consideration from the Loan Parties and their Subsidiaries for services in connection herewith and otherwise without having to account for the same to Lenders.
Section 10.05 Delegation of Duties. Each Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document or Transaction Document by or through any one or more sub-agents appointed by such Agent. Each Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective and their respective Related Parties. Each Agent shall be entitled to seek and rely on advice of counsel and other advisors or advisory committees of any Secured Party concerning all matters pertaining to such duties, and shall be entitled to act upon, and shall be fully protected in taking action in reliance upon any advice or opinion given by legal counsel or such other advisors or advisory committees of any Secured Party. The exculpatory provisions of this Article X shall apply to any such sub-agent and to the Related Parties of such Agent and any such sub-agent. No Agent shall be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and non-appealable judgment that such Agent acted with gross negligence or willful misconduct in the selection of such sub-agents.
Section 10.06 Lenders’ Representations, Warranties and Acknowledgment.
(a) Each Lender represents and warrants that it has made its own independent investigation of the financial condition and affairs of Holdings and its Subsidiaries in connection with Credit Extensions hereunder and that it has made and shall continue to make its own appraisal of the creditworthiness of Holdings and its Subsidiaries. No Agent shall have any duty or responsibility, either initially or on a continuing basis, to make any such investigation or any such appraisal on behalf of Lenders or to provide any Lender with any credit or other information with respect thereto, whether coming into its possession before the making of the Loans or at any time or times thereafter, and no Agent shall have any responsibility with respect to the accuracy of or the completeness of any information provided to Lenders.
(b) Each Lender, by delivering its signature page to this Agreement and funding its Initial Term Loan and/or Tranche 2 Term Loan on the Closing Date and/or by the funding of any Delayed Draw Term Loan, as the case may be, shall be deemed to have acknowledged receipt of, and consented to and approved, each Loan Document and Transaction Document and each other document required to be approved by any Agent, Requisite Lenders or Lenders, as applicable on the Closing Date or as of the date of funding of such Delayed Draw Term Loans.
(c) Each Lender (other than Fortress) (i) represents and warrants that as of the Closing Date neither such Lender nor its Affiliates or Approved Funds owns or controls, or owns or controls any Person owning or controlling, any trade debt or Indebtedness of any Loan Party other than the Obligations or, except with respect to any Affiliate of Fortress, any Equity Interest of any Loan Party and (ii) covenants and agrees that from and after the Closing Date neither such Lender nor its Affiliates and Approved Funds shall purchase any trade debt or Indebtedness of any Loan Party (other than the Obligations) or Equity Interests described in clause (i) above without the prior written consent of Administrative Agent.
| Annex A-138 |
Section 10.07 Right to Indemnity. Each Lender, in proportion to its Pro Rata Share, severally agrees to indemnify each Agent and their respective Related Parties (each, an “Indemnitee Related Party”), to the extent that such Indemnitee Related Party shall not have been reimbursed by any Loan Party, for and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including counsel fees and disbursements) or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against such Indemnitee Related Party in exercising its powers, rights and remedies or performing its duties hereunder or under the other Loan Documents or otherwise in its capacity as such Indemnitee Related Party in any way relating to or arising out of this Agreement or the other Loan Documents, IN ALL CASES, WHETHER OR NOT CAUSED BY OR ARISING, IN WHOLE OR IN PART, OUT OF THE COMPARATIVE, CONTRIBUTORY, OR SOLE NEGLIGENCE OF SUCH INDEMNITEE RELATED PARTY; provided, (x) no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such Indemnitee Related Party’s gross negligence or willful misconduct, as determined by a court of competent jurisdiction in a final, non-appealable order, and (z) the unreimbursed liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements, as the case may be, was incurred by or asserted against such Agent (or any such sub-agent) in its capacity as such, or against any Indemnitee Related Party of any of the foregoing acting for such Agent (or any such sub-agent) in connection with such capacity. If any indemnity furnished to any Indemnitee Related Party for any purpose shall, in the opinion of such Indemnitee Related Party, be insufficient or become impaired, such Indemnitee Related Party may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional indemnity is furnished; provided, in no event shall this sentence require any Lender to indemnify any Indemnitee Related Party against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement in excess of such Lender’s Pro Rata Share thereof; and provided further, this sentence shall not be deemed to require any Lender to indemnify any Indemnitee Related Party against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement described in the proviso in the immediately preceding sentence.
| Annex A-139 |
Section 10.08 Successor Administrative Agent and Collateral Agent.
(a) Administrative Agent and Collateral Agent may resign at any time by giving thirty (30) days’ prior written notice thereof to Lenders and Borrower. Upon any such notice of resignation, Requisite Lenders shall have the right, upon five (5) Business Days’ notice to Borrower, to appoint a successor Administrative Agent and Collateral Agent; provided that in no event shall any such successor Agent be a Defaulting Lender. Upon the acceptance of any appointment as Administrative Agent and Collateral Agent hereunder by a successor Administrative Agent and Collateral Agent, that successor Administrative Agent and Collateral Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent and Collateral Agent and the retiring Administrative Agent and Collateral Agent shall promptly (i) transfer to such successor Administrative Agent and Collateral Agent all sums, Securities and other items of Collateral held under the Collateral Documents, together with all records and other documents necessary or appropriate in connection with the performance of the duties of the successor Administrative Agent and Collateral Agent under the Loan Documents, and (ii) execute and deliver to such successor Administrative Agent and Collateral Agent such amendments to financing statements, and take such other actions, as may be necessary or appropriate in connection with the assignment to such successor Administrative Agent and Collateral Agent of the security interests created under the Collateral Documents, whereupon such retiring Administrative Agent and Collateral Agent shall be discharged from its duties and obligations hereunder. After any retiring Administrative Agent’s and Collateral Agent’s resignation hereunder as Administrative Agent and Collateral Agent, the provisions of this Article X shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent and Collateral Agent hereunder.
(b) Notwithstanding anything herein to the contrary, Administrative Agent and Collateral Agent may assign their rights and duties as Administrative Agent and Collateral Agent hereunder to an Affiliate of Fortress without the prior written consent of, or prior written notice to, Borrower or the Lenders; provided that Borrower and the Lenders may deem and treat such assigning Administrative Agent and Collateral Agent as Administrative Agent and Collateral Agent for all purposes hereof, unless and until such assigning Administrative Agent or Collateral Agent, as the case may be, provides written notice to Borrower and the Lenders of such assignment. Upon such assignment such Affiliate shall succeed to and become vested with all rights, powers, privileges and duties as Administrative Agent and Collateral Agent hereunder and under the other Loan Documents.
Section 10.09 Collateral Documents and Guaranty
(a) Agents under Collateral Documents and Guaranty. Each Lender hereby further authorizes Administrative Agent or Collateral Agent, as applicable, on behalf of and for the benefit of Lenders, to be the agent for and representative of Lenders with respect to the Guaranty, the Intercreditor and Subordination Agreements, the Collateral and the Collateral Documents. Subject to Section 13.05, without further written consent or authorization from Lenders, Administrative Agent or Collateral Agent, as applicable may execute any documents or instruments necessary to (i) release any Lien encumbering any item of Collateral (A) that is the subject of a sale or other disposition of assets permitted hereby or to which Requisite Lenders (or such other Lenders as may be required to give such consent under Section 13.05) have otherwise consented or (B) upon termination of all Term Loan Commitments and payment in full of all Obligations, or (ii) release any Guarantor from the Guaranty pursuant to Section 9.13 or with respect to which Requisite Lenders (or such other Lenders as may be required to give such consent under Section 13.05) have otherwise consented. Upon request by any Agent at any time, the Requisite Lenders will confirm in writing such Agent’s authority to release its interest in particular types or items of Collateral, or to release any Guarantor from its obligations under the Guaranty pursuant to this Section 10.09.
| Annex A-140 |
(b) Right to Realize on Collateral and Enforce Guaranty. Anything contained in any of the Loan Documents to the contrary notwithstanding, Borrower, Administrative Agent, Collateral Agent and each Lender hereby agree that (i) no Lender shall have any right individually to realize upon any of the Collateral or to enforce the Guaranty, it being understood and agreed that all powers, rights and remedies hereunder may be exercised solely by Administrative Agent, on behalf of Lenders in accordance with the terms hereof and all powers, rights and remedies under the Loan Documents and Transaction Documents may be exercised solely by Collateral Agent, and (ii) in the event of a foreclosure by Collateral Agent on any of the Collateral pursuant to a public or private sale, Collateral Agent or any Lender may be the purchaser of any or all of such Collateral at any such sale and Collateral Agent, as agent for and representative of Secured Parties (but not any Lender or Lenders in its or their respective individual capacities unless Requisite Lenders shall otherwise agree in writing) shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply any of the Obligations as a credit on account of the purchase price for any collateral payable by Collateral Agent at such sale.
(c) No Duty With Respect to Collateral. No Agent shall be responsible for or have a duty to ascertain or inquire into any representation or warranty regarding the existence, value or collectability of the Collateral, the existence, priority or perfection of the Collateral Agent’s Lien thereon, or any certificate prepared by any Loan Party in connection therewith, nor shall such Agent be responsible or liable to the Lenders for any failure to monitor or maintain any portion of the Collateral.
Section 10.10 Administrative Agent May File Proofs of Claim. In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether Administrative Agent shall have made any demand on Borrower) shall be entitled and empowered (but not obligated) by intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and Administrative Agent and their respective agents and counsel and all other amounts due the Lenders and Administrative Agent under Sections 2.01(d), 2.02(b), and 13.02) allowed in such judicial proceeding; and
(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;
(c) and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to Administrative Agent and, in the event that Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of Administrative Agent and its agents and counsel, and any other amounts due Administrative Agent under Sections 2.01(d), 2.02(b), and 13.02.
| Annex A-141 |
Article
XI
[RESERVED]
Article
XII
NOTICES, GOVERNING LAW, SUBMISSION TO JURISDICTION, JURY TRIAL WAIVER, AND JUDICIAL REFERENCE
Section 12.01 Notices. All notices, consents, requests, approvals, demands, or other communication by any party to this Agreement or any other Loan Document must be in writing and shall be deemed to have been validly served, given, or delivered (a) upon transmission, when sent by email or fax transmission (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient); (b) one (1) Business Day after deposit with a reputable overnight courier with all charges prepaid; or (c) when delivered, if hand- delivered by messenger, all of which shall be addressed to the party to be notified and sent to the address, facsimile number, or email address indicated below. The Agents, Lenders or Loan Parties may change their mailing or email address, facsimile number or wiring details by giving the other parties written notice thereof in accordance with the terms of this Section 12.01.
If to the Loan Parties:
Airspan
Networks Inc.
Capital Point
33 Bath Road
Slough, Berkshire SL1 3UF
United Kingdom
Attention: David Brant, Chief Financial Officer
Fax number: [***]
Email: [***]
With a copy (which shall not constitute notice) to:
Dorsey
& Whitney LLP
50 South Sixth Street – Suite 1500
Minneapolis, MN 55402-1498
USA
Attention: Betsy Sanders Parker
Fax number: [***]
Email: [***]
and
Dorsey
& Whitney LLP
51 West 52nd Street 10th Floor
New York, New York 10019-6119
USA
Attention: Ted Farris
Fax number: [***]
Email: [***]
| Annex A-142 |
If to the Agents or the Lenders, at the address, notice and wiring details as indicated on Appendix B next to the name of such Lender or otherwise indicated to Administrative Agent in writing.
Section 12.02 Governing Law; Submission to Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to its rules of conflict of law, except Section 5-1401 of the New York General Obligations Law. Each Loan Party, Agent and Lender hereby irrevocably submits to the exclusive jurisdiction of any New York State or Federal court sitting in the County of New York over any suit, action or proceeding arising out of or relating to this Agreement or any Loan Document, and each Loan Party, Agent and Lender hereby agrees and consents that, in addition to any methods of service of process provided for under applicable Law, all service of process in any such suit, action or proceeding in any New York State or Federal court sitting in the County of New York may be made by certified or registered mail, return receipt requested, or overnight mail with a reputable national carrier, directed to the Loan Parties at the address indicated above, and service so made shall be complete five (5) days after the same shall have been so mailed (one (1) day in the case of an overnight mail service).
Section 12.03 Jury Trial Waiver. EACH OF THE LOAN PARTIES, THE AGENTS AND LENDERS HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS OR TRANSACTION DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY THE LOAN PARTIES AND LENDERS, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. EACH OF THE LOAN PARTIES, THE AGENTS AND LENDERS ARE EACH HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER.
Section 12.04 Additional Waivers in the Event of Enforcement. OTHER THAN WITH RESPECT TO IP HOLD-CO, EACH LOAN PARTY HEREBY EXPRESSLY AND UNCONDITIONALLY WAIVES, IN CONNECTION WITH ANY SUIT, ACTION OR PROCEEDING BROUGHT BY OR ON BEHALF OF THE LENDERS UNDER THIS AGREEMENT, ANY AND EVERY RIGHT THE LOAN PARTIES MAY HAVE TO (A) INJUNCTIVE RELIEF AND (B) ANY COUNTERCLAIM (OTHER THAN COMPULSORY COUNTERCLAIMS) CONSOLIDATED WITH ANY OTHER OR SEPARATE SUIT, ACTION OR PROCEEDING.
| Annex A-143 |
Section 12.05 APPOINTMENT OF PROCESS AGENT; SERVICE OF PROCESS. EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 12.01. EACH NON-U.S. LOAN PARTY IRREVOCABLY DESIGNATES AND APPOINTS THE BORROWER, WITH AN OFFICE ON THE CLOSING DATE AT THE ADDRESS LISTED FOR BORROWER IN SECTION 12.01, AS ITS AUTHORIZED AGENT (THE “PROCESS AGENT”), TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF, SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUIT, ACTION OR PROCEEDING OF THE NATURE REFERRED TO IN THIS ARTICLE XII OR IN ANY OTHER LOAN DOCUMENT IN ANY FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK CITY. EACH OF THE NON-U.S. LOAN PARTIES AND THE BORROWER HEREBY REPRESENTS, WARRANTS AND CONFIRMS THAT THE BORROWER HAS AGREED TO ACCEPT SUCH APPOINTMENT (AND ANY SIMILAR APPOINTMENT BY ANY OTHER NON-U.S. LOAN PARTY). SAID DESIGNATION AND APPOINTMENT SHALL BE IRREVOCABLE BY EACH SUCH NON-U.S. LOAN PARTY UNTIL ALL AMOUNTS PAYABLE BY SUCH NON-U.S. LOAN PARTY HEREUNDER AND UNDER THE OTHER LOAN DOCUMENTS SHALL HAVE BEEN PAID IN FULL IN ACCORDANCE WITH THE PROVISIONS HEREOF AND THEREOF AND, AS APPLICABLE, SUCH NON-U.S. LOAN PARTY SHALL HAVE BEEN TERMINATED OR RELEASED AS A GUARANTOR PURSUANT TO THE TERMS OF THE APPLICABLE LOAN DOCUMENTS. EACH NON-U.S. LOAN PARTY HEREBY CONSENTS TO PROCESS BEING SERVED IN ANY SUIT, ACTION OR PROCEEDING OF THE NATURE REFERRED TO IN THIS ARTICLE XII IN ANY FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK CITY BY SERVICE OF PROCESS UPON THE BORROWER AS PROVIDED IN THIS SECTION 12.05. EACH NON-U.S. LOAN PARTY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL CLAIM OF ERROR BY REASON OF ANY SUCH SERVICE IN SUCH MANNER AND AGREES THAT SUCH SERVICE SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON SUCH NON-U.S. LOAN PARTY IN ANY SUCH SUIT, ACTION OR PROCEEDING AND SHALL, TO THE FULLEST EXTENT PERMITTED BY LAW, BE TAKEN AND HELD TO BE VALID AND PERSONAL SERVICE UPON AND PERSONAL DELIVERY TO SUCH NON-U.S. LOAN PARTY. TO THE EXTENT ANY NON-U.S. LOAN PARTY HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER FROM SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OF A JUDGMENT, EXECUTION OR OTHERWISE), EACH NON-U.S. LOAN PARTY HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THE LOAN DOCUMENTS. NOTHING IN THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
Section 12.06 Borrower as Agent for Notice for Loan Parties. Each Loan Party hereby appoints the Borrower as its agent for delivery and receipt of all notices required under this Article XII and any other Loan Document. Each Loan Party hereby acknowledges and agrees that, notwithstanding anything herein to the contrary, (i) the delivery by the Agents or Secured Parties to the Borrower of any notice required or permitted to be delivered hereunder or under any other Loan Document shall constitute and be deemed to be delivery to all the Loan Parties and (ii) delivery by the Borrower of any notice required to be delivered hereunder or under any other Loan Document shall constitute and shall be deemed to be delivered for and on behalf of all of the Loan Parties, and each Loan Party shall be deemed to have actual notice of the delivery or receipt of and the contents of each such notice.
Section 12.07 Loan Party Agent.
(a) Each Loan Party (other than the Borrower) by its execution of this Agreement or Counterpart Agreement irrevocably appoints Borrower to act on its behalf as the Loan Party Agent (the “Loan Party Agent”) in relation to the Loan Documents and Transaction Documents and irrevocably authorizes:
(i) The Loan Party Agent on its behalf to supply all information concerning itself contemplated by this Agreement to the Secured Parties and to give all notices and instructions, to execute on its behalf a Counterpart Agreement, to make such agreements and to effect the relevant amendments, supplements and variations capable of being given, made or effected by any Loan Party notwithstanding that they may affect the Loan Party, without further reference to or the consent of that Loan Party; and
| Annex A-144 |
(ii) Each Secured Party to give any notice, demand or other communication to the Loan Party Agent pursuant to the Loan Documents and Transaction Documents.
With respect to both Section 12.07(a)(i) and (ii), the Loan Party shall be bound as though the Loan Party itself had given the notices and instructions or executed or made the agreements or effected the amendments, supplements or variations, or received the relevant notice, demand or other communication.
(b) Every act, omission, agreement, undertaking, settlement, waiver, amendment, supplement variation, notice or other communication given or made by the Loan Party Agent or given to the Loan Party Agent under any Loan Document or Transaction Document on behalf of another Loan Party or in connection with any Loan Document or Transaction Document (whether or not known to any other Loan Party and whether occurring before or after such other Loan Party became a Loan Party under any Loan Document or Transaction Document) shall be binding for all purposes on that Loan Party as if that Loan Party had expressly made, given or concurred with it. In the event of any conflict between any notices or other communications of the Loan Party Agent and any other Loan Party, those of the Loan Party Agent shall prevail.
Article
XIII
GENERAL PROVISIONS
Section 13.01 Successors and Assigns; Participations.
(a) Successors and Assigns Generally. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that neither the Borrower nor any other Loan Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of Administrative Agent and each Lender, and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of paragraph (b) of this Section 13.01, (ii) by way of participation in accordance with the provisions of paragraph (d) of this Section 13.01, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of paragraph (e) of this Section 13.01 (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, participants to the extent provided in paragraph (d) of this Section 13.01 and, to the extent expressly contemplated hereby, the Related Parties of each of Administrative Agent and Collateral Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.
(b) Assignments by Lenders. Any Lender may at any time assign to one (1) or more Eligible Assignees all or a portion of its rights and obligations under this Agreement and any other Loan Documents or Transaction Documents (including all or a portion of its Term Loan Commitment and the Loans at the time owing to it); provided that any such assignment shall be subject to the following conditions:
(i) Minimum Amounts.
(1) in the case of an assignment of the entire remaining amount of the assigning Lender’s Term Loan Commitment and/or the Loans at the time owing to it that equal at least the amount specified in Section 13.01(b)(i)(2) in the aggregate or in the case of an assignment to a Lender or an Affiliate of a Lender, no minimum amount need be assigned.
| Annex A-145 |
(2) in any case not described in Section 13.01(b)(i)(1), the aggregate amount of the Term Loan Commitment (which for this purpose includes Loans and Initial Term Loan Exposure, Tranche 2 Term Loan Exposure or Delayed Draw Term Loan Exposure outstanding thereunder) or, if the applicable Term Loan Commitment is not then in effect, the principal outstanding balance of the Loans and Initial Term Loan Exposure, Tranche 2 Term Loan Exposure or Delayed Draw Term Loan Exposure of the assigning Lender subject to each such assignment (determined as of the date the Assignment Agreement with respect to such assignment is delivered to the Administrative Agent) shall not be less than One Million Dollars ($1,000,000), unless each of the Administrative Agent and the Lender shall consent in writing thereto.
(ii) Proportionate Amounts. Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loan or the Term Loan Commitment assigned.
(iii) Required Consents. No consent shall be required for any assignment except to the extent required by Section 13.01(b)(v) and, in addition the consent of the Borrower and the Administrative Agent (in each case such consent not to be unreasonably withheld or delayed) shall be required for assignments in respect of any Loans to a Person who is not a Lender or an Affiliate of a Lender.
(iv) Assignment Agreement. The parties to each assignment shall execute and deliver to Administrative Agent an Assignment Agreement, together with a processing and recordation fee of Three Thousand Five Hundred Dollars ($3,500); provided that Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. The assignee, if it is not a Lender, shall deliver to Administrative Agent an administrative questionnaire (in a form reasonably satisfactory to Administrative Agent) and any and all documentation and other information with respect to the assignee that is required in order to permit the Administrative Agent to complete its review under “know your customer” and anti-money laundering regulations, including the PATRIOT Act.
(v) No Assignment to Natural Persons. No such assignment shall be made to a natural Person (or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural Person).
(c) Register. Administrative Agent, acting solely for this purpose as a non-fiduciary agent of Borrower, shall maintain at its offices a copy of each Assignment Agreement delivered to it and a register for the recordation of the names and addresses of the Lenders, and principal amounts (and stated interest) of and the Term Loan Commitments of, and principal amounts (and stated interest) of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error, and Borrower, Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior written notice.
| Annex A-146 |
(d) Participations. Any Lender may at any time, without the consent of, or notice to, Borrower or Administrative Agent, sell participations to any Person (other than a natural Person, or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural Person, or Borrower or any of Borrower’s Affiliates or Subsidiaries) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Term Loan Commitment and/or the Loans owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, and (iii) Borrower, Administrative Agent, and Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement.
Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the participant, agree to any amendment, modification or waiver described in Section 13.05 that affects such participant. Each Loan Party agrees that each participant (A) shall be entitled to the benefits of Sections 2.03, 2.04, 2.05 and 2.06 subject to the requirements and limitations therein, including the requirements under Section 6.09 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 13.01(b); and (B) shall not be entitled to receive any greater payment under Section 2.03 or 2.06 with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the participant acquired the applicable participation. To the extent permitted by law, each participant also shall be entitled to the benefits of Section 13.15 as though it were a Lender; provided, that such participant agrees to be subject to Section 2.04 as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of Borrower, maintain a register on which it enters the name and address of each participant and the principal amounts (and stated interest) of each participant’s interest in the Term Loan Commitment and/or the Loans or other obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any participant or any information relating to a participant’s interest in any Term Loan Commitments, Loans, or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.
(e) Certain Pledges. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided, that no such pledge or assignment shall release such Lender from any of its obligations hereunder.
| Annex A-147 |
Section 13.02 Costs and Expenses; Indemnification.
(a) Expenses. Whether or not the transactions contemplated hereby shall be consummated, each Borrower agrees to pay promptly (i) all of each Agents’ and Lenders actual and reasonable costs and expenses of preparation of the Loan Documents (including the reasonable fees, charges and disbursements of counsel for each Agent and the Lenders) and any consents, amendments, waivers or other modifications thereto; (ii) all the reasonable fees, expenses and disbursements of counsel to each Agent and the Lenders in connection with the negotiation, preparation, execution and administration of the Loan Documents and any consents, amendments, waivers or other modifications thereto and any other documents or matters requested by a Loan Party; (iii) all the actual costs and reasonable expenses of creating and perfecting Liens in favor of the Collateral Agent, for the benefit of the Secured Parties, including without limitation filing and recording fees, expenses and taxes, stamp or documentary taxes, search fees, translation fees, title insurance premiums and reasonable fees, expenses and disbursements of counsel to each Agent and the Lenders and of counsel providing any opinions that any Agent or Lender may request in respect of the Collateral or the Liens created pursuant to the Collateral Documents; (iv) all of each Secured Party’s actual costs and reasonable fees, expenses for, and disbursements of any of each Secured Party, auditors, accountants, consultants or appraisers whether internal or external, and all reasonable attorneys’ fees (including allocated costs of internal counsel and expenses and disbursements of outside counsel) incurred by each Secured Party; (v) all the actual costs and expenses (including the fees, expenses and disbursements of any appraisers, consultants, advisors and agents employed or retained by each Secured Party and its counsel) in connection with the custody or preservation of any of the Collateral; (vi) all other actual and reasonable costs and expenses incurred by each Secured Party in connection with the syndication of the Loans and Term Loan Commitments and the negotiation, preparation and execution of the Loan Documents and any consents, amendments, waivers or other modifications thereto and the transactions contemplated thereby; and (vii) after the occurrence of a Default or an Event of Default, all costs and expenses, including reasonable attorneys’ fees (including allocated costs of internal counsel) and costs of settlement, incurred by each Agent, any Lender in enforcing any Obligations of or in collecting any payments due from any Loan Party hereunder or under the other Loan Documents by reason of such Default or Event of Default (including in connection with the sale of, collection from, or other realization upon any of the Collateral or the enforcement of the Guaranty) or in connection with any refinancing or restructuring of the credit arrangements provided hereunder in the nature of a “work out” or pursuant to any insolvency or bankruptcy cases or proceedings. For the avoidance of doubt, with respect to the fees of counsel for the Agent and each Lender provided for in clauses (i)-(vi) of this Section 13.02(a), such fees shall be limited to a single external lead counsel, a single special counsel acting in each relevant jurisdiction, a single special counsel for each relevant specialty and in the case of an actual or perceived conflict arises, the fees, costs, client charges and expenses of conflicts counsel.
(b) Indemnification by the Loan Parties. In addition to the payment of expenses pursuant to Section 13.02(a), whether or not the transactions contemplated hereby shall be consummated, each Loan Party shall indemnify the Lenders and each Related Party of the Lenders (each such Person being called an “Indemnitee”) from and against any and all Indemnified Liabilities, IN ALL CASES, WHETHER OR NOT CAUSED BY OR ARISING, IN WHOLE OR IN PART, OUT OF THE COMPARATIVE, CONTRIBUTORY, OR SOLE NEGLIGENCE OF SUCH INDEMNITEE; provided, no Loan Party shall have any obligation to any Indemnitee hereunder with respect to any Indemnified Liabilities to the extent such Indemnified Liabilities arise from the gross negligence or willful misconduct, as determined by a court of competent jurisdiction in a final, non-appealable order, of that Indemnitee. To the extent that the undertakings to defend, indemnify, pay and hold harmless set forth in this Section 13.02(b) may be unenforceable in whole or in part because they are violative of any law or public policy, the applicable Loan Party shall contribute the maximum portion that it is permitted to pay and satisfy under applicable Law to the payment and satisfaction of all Indemnified Liabilities incurred by Indemnitees or any of them. This Section 13.02(b) shall not apply with respect to Taxes (which shall be indemnified pursuant to the provisions of Section 2.03) other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.
| Annex A-148 |
(c) Waiver of Consequential Damages, Etc. To the fullest extent permitted by applicable Law, the Loan Parties shall not assert, and each Loan Party hereby waives, and acknowledges that no other Person shall have, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) (whether or not the claim therefor is based on contract, tort or duty imposed by any applicable legal requirement) arising out of, in connection with, or as a result of, any Loan Document or any agreement or instrument contemplated hereby or thereby, the transactions contemplated hereby or thereby, any Loan or other extension of credit or the use of the proceeds thereof. No Indemnitee shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed to such unintended recipients by such Indemnitee through telecommunications, electronic or other information transmission systems in connection with any Loan Document or the transactions contemplated hereby or thereby other than for direct or actual damages resulting from the gross negligence or willful misconduct of such Indemnitee as determined by a final and nonappealable judgment of a court of competent jurisdiction. No Loan Party shall have any liability for any special, punitive, indirect or consequential damages relating to the Loan Documents or arising out of its activities in connection with any Loan Document.
(d) Payments. Except as otherwise provided in this Agreement, all amounts due under this Section shall be payable not later than ten (10) Business Days following demand therefor.
(e) Survival. The agreements and indemnity provisions in this Section shall survive the repayment, satisfaction or discharge of all the other Obligations.
Section 13.03 Time of Essence. Time is of the essence for the performance of all Obligations in this Agreement and each Loan Document and Transaction Document.
Section 13.04 Severability of Provisions. If any provision of any Loan Document is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of the Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
Section 13.05 Amendments in Writing; Waiver; Integration;
(a) No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by any Loan Party therefrom, shall in any event be effective unless the same shall be in writing and signed (x) in the case of an amendment, consent or waiver to cure any ambiguity, omission, defect or inconsistency or granting a new Lien for the benefit of the Agents and the Lenders or extending an existing Lien over additional property, by the Agents and the Borrower or the applicable Loan Party (or by the Borrower on behalf of the other Loan Parties), (y) in the case of any other waiver or consent, by the Requisite Lenders (or by the Agent with the consent of the Requisite Lenders) and (z) in the case of any other amendment, by the Requisite Lenders (or by the Agent with the consent of the Requisite Lenders) and the Loan Parties (or by the Borrower on behalf of the Loan Parties), and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no amendment, waiver or consent shall:
(i) increase the Term Loan Commitments of any Lender, reduce the principal of, or interest on, the Loans payable to any Lender, reduce the amount of any fee payable for the account of any Lender, or postpone or extend any scheduled date fixed for any payment of principal of, or interest or fees on, the Loans payable to any Lender (including for the avoidance of doubt, any payments in respect of a mandatory prepayment owing to a Lender pursuant to Section 2.01(e)(i)(E)), in each case, without the written consent of such Lender;
(ii) change the percentage of the Term Loan Commitments or of the aggregate unpaid principal amount of the Loans that is required for the Lenders or any of them to take any action hereunder without the written consent of each affected Lender;
| Annex A-149 |
(iii) amend the definition of “Requisite Lenders” or “Pro Rata Share” without the written consent of each Lender;
(iv) release all or a substantial portion of the Collateral (except as otherwise provided in this Agreement and the other Loan Documents), subordinate any Lien granted in favor of the Collateral Agent for the benefit of the Secured Parties (except as otherwise expressly provided in this Agreement and the other Loan Documents), or release Borrower or any Guarantor (except in connection with a Transfer permitted under the Loan Documents), in each case, without the written consent of each affected Lender; or
(v) amend, modify or waive Section 2.04, Section 2.07 or this Section 13.05 of this Agreement without the written consent of each Lender.
(b) Notwithstanding anything to the contrary in Section 13.05(a):
(i) no amendment, waiver or consent shall, unless in writing and signed by an Agent, affect the rights or duties of such Agent (but not in its capacity as a Lender) under this Agreement or the other Loan Documents;
(ii) any amendment, waiver or consent to any provision of this Agreement (including Sections 2.04 and 2.07) that permits any Loan Party, any equity holder of the Borrower or any of their respective Affiliates to purchase Loans on a non-pro rata basis, become an Eligible Assignee pursuant to Section 13.01 and/or make offers to make optional prepayments on a non-pro rata basis shall require the prior written consent of each Lender;
(iii) any Control Agreement, Guaranty, Mortgage, Collateral Document, the Intercreditor and Subordination Agreements, collateral access agreement, landlord waiver or other agreement or document purporting to create or perfect a security interest in any of the Collateral may be amended, waived or otherwise modified with the consent of the applicable Agent and the applicable Loan Party without the need to obtain the consent of any Lender or any other Person if such amendment, modification, supplement or waiver is delivered in order (A) to comply with local requirements of applicable Law (including foreign law or regulatory requirements) or advice of local counsel, (B) to cure any ambiguity, inconsistency, omission, mistake or defect or (C) to cause such Collateral Document to be consistent with this Agreement and the other Loan Documents, and if the Collateral Agent and the Borrower shall have jointly identified an ambiguity, inconsistency, omission, mistake or defect, in each case, in any provision of any Loan Document (other than a Collateral Document), then the Collateral Agent and the Borrower shall be permitted to amend such provision; any amendment, waiver or modification pursuant to this paragraph shall become effective without any further action or consent of any other party to any Loan Document if the same is not objected to in writing by the Requisite Lenders within five (5) Business Days following receipt of notice thereof; and
(iv) no consent of any Loan Party shall be required to change any order of priority set forth in Section 2.07;
(v) the Administrative Agent and the Borrower may enter into an amendment to this Agreement pursuant to Section 2.05 to reflect an alternate service or index rate and such other related changes to this Agreement as may be applicable; and
(vi) no Defaulting Lender or Affiliate thereof that is a Lender shall have any right to approve or disapprove any amendment, waiver or consent under the Loan Documents and any Loans held by such Person for purposes hereof shall be automatically deemed to be voted pro rata according to the Term Loan Commitments of all other Lenders in the aggregate (other than such Defaulting Lender or Affiliate).
| Annex A-150 |
(c) Defaulting Lenders; Events of Default. Notwithstanding anything contained herein to the contrary, (i) no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder, except that (A) the Term Loan Commitments of such Defaulting Lender may not be increased or extended without the consent of such Defaulting Lender and (B) subject in all respects to Section 2.07, no amendment or waiver shall reduce the principal amount of any Loan or reduce the rate of interest on any Loan, in each case, owing to a Defaulting Lender, without the consent of such Defaulting Lender and (ii) this Agreement may be amended and restated without the consent of any Lender (but with the consent of the Borrower and the Administrative Agent) if, upon giving effect to such amendment and restatement, such Lender shall no longer be a party to this Agreement (as so amended and restated), the Term Loan Commitments of such Lender shall have terminated (but such Lender shall continue to be entitled to the benefits of Section 2.02(e), Section 2.03, Section 2.04(a), Section 2.05(c), Section 2.06, Section 13.02(a) and Section 13.02(b)), such Lender shall have no other commitment or other obligation hereunder and shall have been paid in full all principal, interest and other amounts owing to it or accrued for its account under this Agreement. Notwithstanding anything herein or otherwise to the contrary, any Event of Default occurring hereunder shall continue to exist (and shall be deemed to be continuing) until such time as such Event of Default is waived in writing in accordance with the terms of this Section 13.05 notwithstanding (x) any attempted cure or other action taken by the Borrower or any other Person subsequent to the occurrence of such Event of Default or (y) any action taken or omitted to be taken by the Administrative Agent or any Lender prior to or subsequent to the occurrence of such Event of Default (other than the granting of a waiver in writing in accordance with the terms of this Section 13.05).
(d) Execution of Amendments, etc. Administrative Agent may, but shall have no obligation to, with the concurrence of any Lender, execute amendments, modifications, waivers or consents on behalf of such Lender. Any waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given. No notice to or demand on any Loan Party in any case shall entitle any Loan Party to any other or further notice or demand in similar or other circumstances. Any amendment, modification, termination, waiver or consent effected in accordance with this Section 13.05 shall be binding upon each Lender at the time outstanding, each future Lender and, if signed by a Loan Party, on such Loan Party.
(e) Integration. The Loan Documents represent the entire agreement about this subject matter and supersede prior negotiations or agreements. All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of the Loan Documents merge into the Loan Documents.
Section 13.06 Counterparts. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, is an original, and all taken together, constitute one Agreement.
Section 13.07 Survival. All covenants, representations and warranties made in this Agreement continue in full force until this Agreement has terminated pursuant to its terms, and all Obligations (other than inchoate indemnity obligations and any other obligations which, by their terms, are to survive the termination of this Agreement) have been paid in full and satisfied.
| Annex A-151 |
Section 13.08 Affiliate Activities. The obligations of the Lenders hereunder are several and no Lender shall be responsible for the obligations or Term Loan Commitment of any other Lender hereunder. The Loan Parties hereby expressly acknowledge that certain of the Agents, Lenders and/or certain Affiliates of the Fortress Investment Group (collectively, “FIG”) are, or on or after the Closing Date may become, direct or indirect owners of warrants or of equity of a Loan Party. Notwithstanding any common ownership and/or control between FIG, on the one hand, and the Lenders, on the other hand, (i) the Loan Parties acknowledge and agree that: (a) FIG, on the one hand, and the Lenders, on the other hand, are separate and distinct legal entities and (b) the Lenders may exercise all the rights, privileges and benefits of the holder of any Loan and enforce all remedies and other provisions hereunder and under any other Loan Document without regard to the fact that FIG is an owner of warrants or of equity of a Loan Party; (ii) to the maximum extent permitted by applicable law, (x) the Loan Parties hereby waive and release any and all defenses, affirmative defenses, set-offs, claims, counterclaims or causes of action of any kind of nature that the Loan Parties may have against FIG or the Lenders relating to any Loan, this Agreement or the other Loan Documents, or the enforcement by FIG or the Lenders of the rights and remedies hereunder and thereunder, arising by reason of the fact that FIG or any Lender is an owner of warrants or of other Equity Interests of a Loan Party and (y) the Loan Parties waive any and all defenses, affirmative defenses, setoffs, claims counterclaims or causes of action of any kind or nature that the Loan Parties may have against FIG arising by reason of the fact that FIG or any Lender holds warrants or other Equity Interests and is also acting in its capacity as the Agent and/or a lender hereunder; and (iii) the Loan Parties covenant and agree never to institute or cause to be instituted or continue prosecution of any suit or cause of action or proceeding of any kind or nature whatsoever against the Lenders in contravention of the foregoing. Anything in this Agreement or any other Loan Document to the contrary notwithstanding, each Lender hereby agrees with each other Lender that no Lender shall take any action to protect or enforce its rights arising out of this Agreement or any Note or otherwise with respect to the Loan Obligations without first obtaining the prior written consent of the Agents or Requisite Lenders (as applicable), it being the intent of Lenders that any such action to protect or enforce rights under this Agreement and any Note or otherwise with respect to the Loan Obligations shall be taken in concert and at the direction or with the consent of the Agents or Requisite Lenders (as applicable).
Section 13.09 Electronic Execution of Documents. The words “execution,” “signed,” “signature” and words of like import in any Loan Document shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity and enforceability as a manually executed signature or the use of a paper-based recordkeeping systems, as the case may be, to the extent and as provided for in any applicable Law, including any state Law based on the Uniform Electronic Transactions Act.
Section 13.10 Captions. The headings used in this Agreement are for convenience only and shall not affect the interpretation of this Agreement.
Section 13.11 Construction of Agreement. The parties mutually acknowledge that they and their attorneys have participated in the preparation and negotiation of this Agreement. In cases of uncertainty this Agreement shall be construed without regard to which of the parties caused the uncertainty to exist.
Section 13.12 Relationship. The relationship between the parties to this Agreement is determined solely by the provisions of this Agreement. The parties do not intend to create any agency, partnership, joint venture, trust, fiduciary or other relationship with duties or incidents different from those of parties to an arm’s-length contract.
Section 13.13 Third Parties. Nothing in this Agreement or any Loan Document, whether express or implied, is intended to (a) confer any benefits, rights or remedies under or by reason of this Agreement on any Persons other than the express parties to it and their respective permitted successors and assigns; (b) relieve or discharge the obligation or liability of any Person not an express party to this Agreement; or (c) give any Person not an express party to this Agreement any right of subrogation or action against any party to this Agreement.
| Annex A-152 |
Section 13.14 Payments Set Aside. To the extent that any payment applied to any Obligation (including any payment by way of setoff) is subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then 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 setoff had not occurred.
Section 13.15 Right of Setoff. If an Event of Default has occurred and is continuing, the Administrative Agent is hereby authorized, on behalf of and for the benefit of the Secured Parties, at any time and from time to time, to the fullest extent permitted by applicable Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by the Lenders or any of its Affiliates to or for the credit or the account of the Loan Parties against any and all of the Obligations, irrespective of whether the Lenders have made demand under any Loan Document and although such obligations of the Borrower or such Loan Party may be contingent or unmatured or are owed to a branch, office or Affiliate of such Lender different from the branch, office or Affiliate holding such deposit or obligated on such Indebtedness. The Lenders’ rights under this Section are in addition to other rights and remedies (including other rights of setoff) that the Lenders or their Affiliates may have. The Lenders shall endeavor to notify the Loan Parties promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.
Section 13.16 Interest Rate Limitation. Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the “Maximum Rate”). If the Lenders receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the applicable Loan or, if it exceeds such unpaid principal, refunded to Borrower. In determining whether the interest contracted for, charged, or received by the Lenders exceeds the Maximum Rate, the Lenders may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest; (b) exclude voluntary prepayments and the effects thereof; and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations.
Section 13.17 Securitization of Loans; Appointment of Agent. The Loan Parties hereby acknowledge that the Lenders and their Affiliates may sell or securitize the Loans (a “Securitization”) through the pledge of any Loan as collateral security for loans to the Lenders or their Affiliates or through the sale of any Loan or the issuance of direct or indirect interests in any Loan. The Loan Parties shall cooperate with the Lenders and their Affiliates to effect the Securitization including, without limitation, by (i) amending this Agreement and the other Loan Documents, and executing such additional documents, as reasonably requested by the Lenders in connection with the Securitization; provided that (A) any such amendment or additional documentation does not impose material additional costs on the Loan Parties and (B) any such amendment or additional documentation does not materially adversely affect the rights, or materially increase the obligations, of the Loan Parties under the Loan Documents or change or affect in a manner adverse to the Loan Parties the financial terms of such Loan; (ii) providing such information as may be reasonably requested by the Lenders in connection with the rating of such Loan or the Securitization; and (iii) providing in connection with any rating of such Loan a certificate (A) agreeing to indemnify each of the Lenders and its Affiliates, any rating agencies rating such Loan, or any party providing credit support or otherwise participating in the Securitization (collectively, the “Securitization Parties”) for any losses, claims, damages or “liabilities” (the “Liabilities”) to which such Lender, its Affiliates or such Securitization Parties may become subject insofar as the Liabilities arise out of or are based upon any untrue statement or alleged untrue statement of any material fact by Borrower or any Subsidiary or Affiliate of Borrower contained in any Loan Document or in any writing delivered by or on behalf of Borrower or any Subsidiary or Affiliate of Borrower to the Lenders in connection with any Loan Document or arise out of or are based upon the omission or alleged omission by Borrower or any Subsidiary or Affiliate of Borrower to state therein a material fact required to be stated therein, or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, and such indemnity shall survive any transfer by any Lender or its successors or assigns of the Loans and (B) agreeing to reimburse each Lender and its Affiliates for any legal or other expenses reasonably incurred by such Persons in connection with defending the Liabilities.
| Annex A-153 |
Section 13.18 Confidentiality. Each Agent and each Lender shall hold all non-public information regarding the Loan Parties and their subsidiaries and their businesses identified as confidential by Borrower and obtained by such Agent or Lender pursuant to the requirements hereof in accordance with such Agent’s or Lender’s customary procedures for handling its own confidential information of such nature, it being understood and agreed by Borrower that, in any event, an Agent may disclose such information to the Lenders and each Agent and each Lender may make (i) disclosures of such information to Affiliates of such Lender or Agent and to their Affiliates’ and respective current and prospective Related Parties of such Persons and of such Person’s Affiliates (and to other persons authorized by a Lender or Agent to organize, present or disseminate such information in connection with disclosures otherwise made in accordance with this Section 13.18), (it being understood that the Persons to whom disclosure is made will be informed of the confidential nature of such information and instructed to keep such information confidential), (ii) disclosures of such information reasonably required by any bona fide or potential assignee, transferee or participant in connection with the contemplated assignment, transfer or participation by such Lender of any Term Loan Commitments and/Loans or any participations therein or an assignment of any Agent’s obligations hereunder or by any direct or indirect contractual counterparties (or the professional advisors thereto) to any swap or derivative transaction relating to Borrower and its obligations (provided, such assignees, transferees, participants, counterparties and advisors are advised of and agree to be bound by either the provisions of this Section 13.18 or other provisions at least as restrictive as this Section 13.18), (iii) disclosure to any rating agency when required by it, provided that, prior to any disclosure, such rating agency shall undertake in writing to preserve the confidentiality of any confidential information relating to the Loan Parties received by it from any Agent or any Lender, (iv) disclosure to any Lender’s direct or indirect equityholders (including, without limitation, any partners), current and prospective agents, securitization vehicles, financing sources and/or their agents and advisors, provided that prior to any disclosure to such person, such person is informed of the confidential nature of the information, (v) in connection with any litigation or dispute (including with respect to the exercise of any remedies hereunder) which relates to this Agreement or any other Loan Document to which any Agent or any Lender is a party or is otherwise subject and (vi) disclosures to its accountants and auditors and as required or requested by any Governmental Authority or representative thereof (including any self-regulatory authority, such as the NAIC) purporting to have authority over such Person or its Affiliates, respective current and prospective lenders, financing sources, equity holders (including without limitation, partners) and Related Parties of such Person and of such Person’s Affiliates or to the extent required by applicable Law or pursuant to a subpoena or similar legal or judicial process or other legal proceeding; provided, unless specifically prohibited by applicable law or court order, each Agent or such Lender, as the case may be, shall make reasonable efforts to notify Borrower of any request by any Governmental Authority or representative thereof (other than any such request in connection with any examination of the financial condition or other routine examination of such Lender by such Governmental Authority) for disclosure of any such non-public information prior to disclosure of such information. In addition, each Agent and each Lender may disclose the existence of this Agreement and information about this Agreement to market data collectors, similar service providers to the lending industry and service providers to the Agents and the Lenders in connection with the administration and management of this Agreement or the other Loan Documents. Notwithstanding anything to the contrary contained in any Loan Document, none of the Secured Parties shall publicly announce, or authorize any press release regarding, the transactions contemplated hereby, in each case without the prior written consent of the Borrower.
| Annex A-154 |
Section 13.19 No Fiduciary Duty. Each Agent, each Secured Party, and their Affiliates (collectively, solely for purposes of this paragraph, the “Lenders”), may have economic interests that conflict with those of the Loan Parties, their other equityholders and/or their affiliates. Each Loan Party agrees that nothing in the Transaction Documents or otherwise will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty between any Lender, on the one hand, and such Loan Party, its equityholders or its affiliates, on the other. Each Loan Party acknowledges and agrees on its own behalf and on behalf of its subsidiaries that (i) the transactions contemplated by the Transaction Documents (including the exercise of rights and remedies hereunder and under the other Loan Documents) are arm’s-length commercial transactions between the Lenders, on the one hand, and the Loan Parties, on the other, and (ii) in connection therewith and with the process leading thereto, (x) no Lender has assumed an advisory or fiduciary responsibility in favor of any Loan Party, its equityholders, it subsidiaries or its affiliates with respect to the transactions contemplated hereby (or the exercise of rights or remedies with respect thereto) or the process leading thereto (irrespective of whether any Lender has advised, is currently advising or will advise any Loan Party, its equityholders, subsidiaries or its affiliates on other matters) or any other obligation to any Loan Party except the obligations expressly set forth in the Transaction Documents and (y) each Lender is acting solely as principal and not as the agent or fiduciary of any Loan Party, its management, equityholders, subsidiaries, creditors or any other Person. Each Loan Party acknowledges and agrees on its own behalf and on behalf of its subsidiaries that it has consulted its own legal and financial advisors and advisory committees to the extent it deemed appropriate and that it is responsible for making its own independent judgment with respect to such transactions and the process leading thereto. Each Loan Party agrees that neither it nor will any of its subsidiaries claim that any Agent or Lender has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to such Loan Party or any of their subsidiaries, in connection with such transaction or the process leading thereto.
Section 13.20 Judgement Currency. If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder or any other Loan Document in one currency into another currency, the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase the first currency with such other currency on the Business Day preceding that on which final judgment is given. The obligation of the Borrower or any other Loan Party in respect of any such sum due from it to the Agents or the Secured Parties hereunder or under the other Loan Documents shall, notwithstanding any judgment in a currency (the “Judgment Currency”) other than that in which such sum is denominated in accordance with the applicable provisions of this Agreement (the “Agreement Currency”), be discharged only to the extent that on the Business Day following receipt by the Administrative Agent of any sum adjudged to be so due in the Judgment Currency, the Administrative Agent may in accordance with normal banking procedures purchase the Agreement Currency with the Judgment Currency. If the amount of the Agreement Currency so purchased is less than the sum originally due to the Administrative Agent from the Borrower or any Secured Party in the Agreement Currency, the Borrower and Secured Party agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Administrative Agent or the Person to whom such obligation was owing against such loss. If the amount of the Agreement Currency so purchased is greater than the sum originally due to the Administrative Agent in such currency, the Administrative Agent agrees to return the amount of any excess to the Borrower (or to any other Person who may be entitled thereto under applicable law).
| Annex A-155 |
Section 13.21 Corporate Seal. The Borrower represents that neither it nor any other Loan Party is required to affix its corporate seal to this Agreement or any other Loan Document pursuant to any applicable Law.
Section 13.22 Location of Closing. All parties hereto agree that the closing of the transactions contemplated by this Agreement has occurred in New York.
Section 13.23 Waiver of Immunity. To the extent that any Loan Party has or hereafter may acquire (or may be attributed, whether or not claimed) any immunity (sovereign or otherwise) from any legal action, suit or proceeding, from jurisdiction of any court or from set-off or any legal process (whether service of process or notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) with respect to itself or any of its property, such Loan Party hereby irrevocably waives and agrees not to plead or claim, to the fullest extent permitted by law, such immunity in respect of (a) its obligations under the Loan Documents, (b) any legal proceedings to enforce such obligations and (c) any legal proceedings to enforce any judgment rendered in any proceedings to enforce such obligations. Each Loan Party hereby agrees that the waivers set forth in this Section 13.23 shall be to the fullest extent permitted under the Foreign Sovereign Immunities Act and are intended to be irrevocable for purposes of the Foreign Sovereign Immunities Act.
Section 13.24 Intercreditor and Subordination Agreements. For the avoidance of doubt and notwithstanding anything herein to the contrary, the Borrower and the other Loan Parties agree and acknowledge that the Agents and the Lenders may, without any additional consent of any Loan Party or any of their Subsidiaries, enter into any intercreditor agreement, subordination agreement, agreement among lenders, and any one or more side agreements that affect the relative rights and priorities of the Agents and the Secured Parties as between themselves, or as between them and any other creditors of the Loan Parties, including in relation to the Loans, the other Obligations, the Collateral, this Agreement and the other Loan Documents and Transaction Documents, including the Pari Passu Intercreditor Agreement and the other Intercreditor and Subordination Agreements; provided, that no such agreement shall effect an amendment or modification of this Agreement or any other Loan Document or affect any rights or obligations as between the Agents and the Lenders, on the one hand, and any Loan Party or any Loan Party’s Subsidiaries, on the other hand. No reference to any intercreditor agreement, subordination agreement or agreement among lenders in this Agreement or any other Loan Documents shall be construed to provide that any Loan Party or subsidiary thereof is a third party beneficiary of the provisions of such agreement or may assert any rights, defense or claims on account of such agreement or this Section 13.24, and each Loan Party agrees that nothing in any such agreement is intended or shall impair the obligation of any Loan Party to pay the Obligations under this Agreement, or any other Loan Document as and when the same shall become due and payable in accordance with their respective terms, or to affect the relative rights of the creditors with respect to any Loan Party or, except as expressly otherwise provided in such agreement as to a Loan Party’s obligations, such Loan Party’s properties.
Section 13.25 Acknowledgement Regarding Any Supported QFCs.
(a) To the extent that the Loan Documents provide support, through a guarantee or otherwise, for Interest Rate Agreements or any other agreement or instrument that is a QFC (such support “QFC Credit Support” and each such QFC a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States):
| Annex A-156 |
(b) In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the United States.
Section 13.26 English Language. This Agreement and each other Loan Document have been negotiated and executed in English. All certificates, reports, notices and other documents and communications given or delivered by any party hereto pursuant to this Agreement or any other Loan Document shall be in English or, if not in English, accompanied by a certified English translation thereof. The English version of any such document shall control the meaning of the matters set forth herein.
Section 13.27 No Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement.
Section 13.28 Attachments. The exhibits, schedules and annexes attached to this Agreement are incorporated herein and shall be considered a part of this Agreement for the purposes stated herein, except that in the event of any conflict between any of the provisions of such exhibits and the provisions of this Agreement, the provisions of this Agreement shall prevail.
Section 13.29 Original Loans and Initial Term Loans. Upon the Existing Credit Agreement becoming effective on the Closing Date pursuant to the terms of the Reaffirmation and Omnibus Amendment Agreement, from and after the Closing Date: (a) the portion of the Restated Amount held by each Lender became an Initial Term Loan outstanding thereunder in an amount equal to such Lender’s Pro Rata Share of the Restated Amount; (b) the terms and conditions of the Original Credit Agreement and Transaction Documents (as defined in the Resignation Agreement) were amended and restated by the Existing Credit Agreement, the Reaffirmation and Omnibus Amendment Agreement and the other Transaction Documents being executed and delivered on the Closing Date; (c) all indemnification obligations of the Loan Parties under the Original Credit Agreement and Transaction Documents (as defined in the Resignation Agreement) in favor of the Agent and the Lenders survived the execution and delivery of the Reaffirmation and Omnibus Amendment Agreement and continued in full force and effect for the benefit of the Agent and the Lenders and the Secured Parties continued to be indemnified under the indemnification provisions of the Existing Credit Agreement; (d) the obligations incurred under the Original Credit Agreement and Transaction Documents (as defined in the Resignation Agreement) in respect of the Original Loans and any accrued and unpaid interest in respect thereto included in the Restated Amount continued, to the extent outstanding on the Closing Date, to be outstanding under the Existing Credit Agreement and were deemed not to be paid, released, discharged or otherwise satisfied by the execution of the Existing Credit Agreement, and the Existing Credit Agreement constituted an amendment and restatement but did not constitute a substitution or novation of such obligations or any of the other rights, duties and obligations of the parties thereunder. Upon giving effect to the Closing Date and the Loan Amendment Transactions occurring in connection therewith, the Register was marked to reflect the principal amount of each such Loan.
| Annex A-157 |
Section 13.30 Existing Credit Agreement. Upon this Agreement becoming effective as of the Restatement Effective Date, from and after such Restatement Effective Date, (a) the terms and conditions of the Existing Credit Agreement and Loan Documents shall be deemed to be amended and restated by this Agreement and the other Loan Documents being executed and delivered on the Restatement Effective Date; (b) all indemnification obligations of the Loan Parties under the Existing Credit Agreement and Loan Documents in favor of the Agent and the Lenders shall survive the execution and delivery of this Agreement and shall continue in full force and effect for the benefit of the Agent and the Lenders and the Secured Parties shall continue to be indemnified under the indemnification provisions of this Agreement; (c) the obligations incurred under the Existing Credit Agreement and Loan Documents in respect of the Loans and any accrued and unpaid interest in respect thereto shall continue, to the extent outstanding on the Restatement Effective Date, to be outstanding under this Agreement and shall not be deemed to be paid, released, discharged or otherwise satisfied by the execution of this Agreement, and this Agreement shall constitute an amendment and restatement but shall not constitute a substitution or novation of such obligations or any of the other rights, duties and obligations of the parties hereunder.
[Remainder of page intentionally left blank]
| Annex A-158 |
SCHEDULE 1.01(b)
Guarantors
| Legal Name | Jurisdiction | Type of Entity |
| Airspan Networks Holdings Inc. | Delaware | Corporation |
| Airspan IP Holdco LLC | Delaware | Limited Liability Company |
| Airspan Networks (SG) Inc. | Delaware | Corporation |
| Mimosa Networks, Inc. | Delaware | Corporation |
| Mimosa Networks International, LLC | Delaware | Limited Liability Company |
| Airspan Communications Limited | UK | Company |
| Airspan Networks Ltd | Israel | Company |
| Airspan Japan K.K. | Japan | Corporation |
[All remaining Appendices, Schedules and all Exhibits are omitted from this filing pursuant to Item 601(a)(5) of Regulation S-K.]
ANNEX B
AMENDED AND RESTATED SECURITY AGREEMENT
(See Attached)
Execution Version
AMENDED AND RESTATED SECURITY AGREEMENT
by and among
AIRSPAN
NETWORKS Inc.,
as a Grantor
and
AIRSPAN
NETWORKS HOLDINGS INC.
(formerly known as New Beginnings Acquisition Corp.),
as Holdings and as a Grantor
and
CERTAIN OF THEIR DOMESTIC SUBSIDIARIES,
as Grantors,
and
DBFIP ANI LLC,
as Collateral Agent
Dated
as of August 13, 2021
(which amends and restates that certain Security Agreement dated as of December 30, 2020)
TABLE OF CONTENTS
| Page | ||
| ARTICLE I DEFINED TERMS | 3 | |
| SECTION 1.01 | Definitions | 3 |
| SECTION 1.02 | Other Definitional Provisions | 7 |
| ARTICLE II GRANT OF SECURITY INTEREST | 7 | |
| SECTION 2.01 | Collateral | 7 |
| ARTICLE III REPRESENTATIONS AND WARRANTIES | 10 | |
| SECTION 3.01 | [Reserved] | 10 |
| SECTION 3.02 | Title; No Other Liens; Binding Obligation | 10 |
| SECTION 3.03 | Perfected Priority Liens | 10 |
| SECTION 3.04 | Perfection Certificate; Jurisdiction of Organization; Chief Executive Office | 11 |
| SECTION 3.05 | Farm Products | 12 |
| SECTION 3.06 | Investment Property | 12 |
| SECTION 3.07 | Receivables | 14 |
| SECTION 3.08 | Contracts | 14 |
| SECTION 3.09 | Intellectual Property | 14 |
| SECTION 3.10 | Commercial Tort Claims | 18 |
| SECTION 3.11 | Securities Accounts; Commodity Accounts; Deposit Accounts | 19 |
| SECTION 3.12 | Letter-of-Credit Rights | 19 |
| SECTION 3.13 | Government Contracts | 19 |
| SECTION 3.14 | Equipment and Inventory | 19 |
| ARTICLE IV COVENANTS | 19 | |
| SECTION 4.01 | [Reserved] | 19 |
| SECTION 4.02 | Delivery of Instruments, Certificated Securities and Chattel Paper | 20 |
| SECTION 4.03 | Maintenance of Perfected Security Interest; Further Documentation | 20 |
| SECTION 4.04 | Investment Property | 21 |
| SECTION 4.05 | Receivables | 24 |
| SECTION 4.06 | Intellectual Property | 24 |
| SECTION 4.07 | Intellectual Property Filing | 27 |
| SECTION 4.08 | Commercial Tort Claims | 27 |
| Annex B-i |
| SECTION 4.09 | Electronic Chattel Paper | 28 |
| SECTION 4.10 | Letter-of-Credit Rights | 28 |
| SECTION 4.11 | Preservation of Collateral; Compliance with Laws | 28 |
| SECTION 4.12 | Equipment and Inventory | 29 |
| SECTION 4.13 | Further Assurances; Pledge of Instruments | 29 |
| ARTICLE V REMEDIAL PROVISIONS | 30 | |
| SECTION 5.01 | Certain Matters Relating to Receivables | 30 |
| SECTION 5.02 | Communications with Obligors; Grantors Remain Liable | 30 |
| SECTION 5.03 | Pledged Stock | 31 |
| SECTION 5.04 | Proceeds to be Turned Over to Collateral Agent | 32 |
| SECTION 5.05 | Application of Proceeds | 32 |
| SECTION 5.06 | UCC and Other Remedies | 33 |
| SECTION 5.07 | Sales of Collateral | 34 |
| SECTION 5.08 | Waiver; Deficiency | 35 |
| SECTION 5.09 | Approvals | 35 |
| SECTION 5.10 | Grant of Nonexclusive License | 35 |
| ARTICLE VI THE COLLATERAL AGENT | 36 | |
| SECTION 6.01 | Collateral Agent’s Appointment as Attorney-in-Fact, etc. | 36 |
| SECTION 6.02 | Duty of Agent | 38 |
| SECTION 6.03 | Financing Statements | 38 |
| SECTION 6.04 | Authority of Agent | 38 |
| ARTICLE VII MISCELLANEOUS | 39 | |
| SECTION 7.01 | Amendments in Writing | 39 |
| SECTION 7.02 | Notices | 39 |
| SECTION 7.03 | Successors and Assigns | 39 |
| SECTION 7.04 | Set-Off | 39 |
| SECTION 7.05 | Counterparts | 40 |
| SECTION 7.06 | Severability | 40 |
| SECTION 7.07 | Section Headings | 40 |
| SECTION 7.08 | GOVERNING LAW | 40 |
| SECTION 7.09 | Submission to Jurisdiction. | 40 |
| Annex B-ii |
| SECTION 7.10 | Rights and Remedies; Indemnification; Amendments; Waivers; Integration; Etc | 41 |
| SECTION 7.11 | Additional Grantors | 41 |
| SECTION 7.12 | Releases of Guarantees and Liens | 41 |
| SECTION 7.13 | Reinstatement | 42 |
| SECTION 7.14 | Grantors Formed or Collateral Located in a Jurisdiction other than in a State of the United States or the District of Columbia | 42 |
| SECTION 7.15 | Collateral and Guarantee Requirements | 42 |
| SECTION 7.16 | WAIVER OF JURY TRIAL | 42 |
| SECTION 7.17 | Effect of Amendment and Restatement | 43 |
| SECTION 7.18 | Intercreditor Agreement | 43 |
| Annex B-iii |
| SCHEDULES | ||
| Schedule 1 | Investment Property | |
| Schedule 2 | Filings Required to Perfect Security Interests | |
| Schedule 3 | Intellectual Property and Licenses | |
| Schedule 4 | Commercial Tort Claims | |
| Schedule 5 | Securities, Commodity and Deposit Accounts | |
| Schedule 6 | Letter-Of-Credit Rights | |
| Schedule 7 | Government Contracts | |
| Schedule 8 | Equipment and Inventory | |
| EXHIBITS | ||
| Exhibit A | Form of Copyright Security Agreement | |
| Exhibit B | Form of Patent Security Agreement | |
| Exhibit C | Form of Trademark Security Agreement | |
| ANNEXES | ||
| Annex I | Form of Security Agreement Supplement |
| Annex B-iv |
AMENDED AND RESTATED SECURITY AGREEMENT
This AMENDED AND RESTATED SECURITY AGREEMENT, dated as of August 13, 2021 (as the same may be amended, restated, amended and restated, supplemented, modified or replaced from time to time, this “Agreement”), is made by and among AIRSPAN NETWORKS INC., a Delaware corporation (“Airspan”), AIRSPAN NETWORKS HOLDINGS INC., a Delaware corporation (formerly known as New Beginnings Acquisition Corp. and the parent of Airspan after giving effect to the Merger (as referred to below) occurring on the Restatement Effective Date (as defined in the Credit Agreement referred to below)) (“Holdings”), Airspan IP Holdco, LLC, a Delaware limited liability company (“Airspan IP Holdco”), Airspan Networks (SG) Inc., a Delaware corporation (“Airspan (SG)”), Mimosa Networks, Inc., a Delaware corporation (“Mimosa”), Mimosa Networks International, LLC, a Delaware limited liability company (“Mimosa International” and together with Airspan, Holdings, Airspan IP Holdco, Airspan (SG), Mimosa, and Mimosa International, collectively, the “Initial Grantors” and together with any other entity that may become a party hereto from time to time as a grantor as provided herein, collectively referred to herein as the “Grantors” and each, a “Grantor”), in favor of DBFIP ANI LLC, a Delaware limited liability company (“Fortress”) (i) as administrative agent, collateral agent and trustee for itself and the other Secured Parties under the Credit Agreement and the Loan Documents (Fortress, in such capacities, together with its successors and assigns in such capacities, the “Term Loan Collateral Agent”) and such Secured Parties (the “Term Loan Secured Parties”) and (ii) as administrative agent, collateral agent and trustee for itself and the other Secured Parties under the Note Purchase Agreement referred to below and the Note Documents (Fortress, in such capacities, together with its successors and assigns in such capacities, the “Note Collateral Agent” and together with the Term Loan Collateral Agent, collectively referred to herein as, the “Collateral Agent”) and such Secured Parties (the “Note Secured Parties” and together with the Term Loan Secured Parties, collectively referred to herein as, the “Secured Parties”). Capitalized terms used herein shall have the meanings given such terms in the Credit Agreement or, as the context may require, the Note Purchase Agreement.
RECITALS
WHEREAS, Airspan, as borrower (in such capacity, the “Borrower”), certain Guarantors (as defined therein), the lenders from time to time party thereto (the “Lenders”) and the Term Loan Collateral Agent are parties to that certain Credit Agreement, dated as of December 30, 2020 (as the same has been amended, restated, amended and restated, supplemented or otherwise modified prior to the date hereof, the “Existing Credit Agreement”);
WHEREAS, in connection with the Existing Credit Agreement, the Borrower, the Guarantors (as defined therein) (together with the Borrower, collectively, the “Loan Parties” and each a “Loan Party”) and the Term Loan Collateral Agent entered into that certain Security Agreement, dated as of December 30, 2020, (as the same has been amended, restated, amended and restated, supplemented or otherwise modified prior to the date hereof, the “Existing Security Agreement”) whereby the Loan Parties granted a security interest in and Lien on substantially all of their assets as collateral security for the Obligations under the Existing Credit Agreement;
| Annex B-1 |
WHEREAS, the Term Loan Collateral Agent and the Lenders consented to (i) the execution of that certain Business Combination Agreement, dated as of March 8, 2021 (including all schedules and exhibits thereto, the “Acquisition Agreement”), by and among others, Airspan, as company, Holdings, as parent, and Artemis Merger Sub Corp., a Delaware corporation, as merger sub (“Merger Sub”) and (ii) the consummation of the De-SPAC Transactions (as defined in the Limited Consent), in each case, on the terms and conditions set forth in the Limited Consent (as defined in the Acquisition Agreement), including that Holdings would become a party to the Credit Agreement as a Loan Party and asset security provider substantially concurrently with the consummation of the Merger (as defined in the Limited Consent) (the “Merger Transaction”);
WHEREAS, in connection with the Merger Transaction, (i) Holdings, Merger Sub, together with any other Subsidiaries of Holdings that become guarantors from time to time pursuant to the terms thereof, the purchasers from time to time party thereto (the “Purchasers”) and the Note Collateral Agent entered into that certain Senior Secured Convertible Note Purchase Agreement, dated July 30, 2021 (as the same may be amended, restated, amended and restated, supplemented, modified or replaced, extended or refinanced from time to time, the “Note Purchase Agreement”), whereby Holdings will issue certain senior secured convertible notes, dated as of the date hereof (the “Convertible Notes”) to the Purchasers on the terms set forth in the Note Purchase Agreement and (ii) Merger Sub (and Airspan as successor by merger to Merger Sub) will be a Guarantor (as defined in the Note Purchase Agreement), and (iii) certain Subsidiaries of Airspan will become parties to the Note Purchase Agreement by joinder as Guarantors (as defined therein) (the “Note Transactions”);
WHEREAS, in connection with the Note Transactions, the parties to the Existing Credit Agreement have agreed to amend and restate the Existing Credit Agreement pursuant to the terms of that certain Amended and Restated Credit Agreement, dated as of date hereof (as the same may be amended, restated, amended and restated, supplemented, replaced, extended or refinanced or otherwise modified from time to time, the “Credit Agreement”), by and among, among others, Holdings as a joining Guarantor (as defined therein), the Borrower, the other Initial Grantors, the Lenders and the Term Loan Collateral Agent;
WHEREAS, pursuant to the terms of the Credit Agreement, the Grantors are primary obligors under or have guaranteed the payment and performance of the Obligations (as defined in the Credit Agreement and the Note Purchase Agreement) in respect of both the Loan Documents and the Note Documents secured by the grant of a security interest and Lien on substantially all the assets of the Grantors, as more fully set forth therein and in the other Transaction Documents (as defined in the Credit Agreement) with such security interests and Liens to rank, at all times, pari passu in the manner more fully described in the Intercreditor Agreement;
WHEREAS, it is the intent of the parties hereto that this Agreement, except as expressly amended and restated, is a reaffirmation and continuation of the Existing Security Agreement and the Liens and grant evidenced thereby and shall not constitute a novation of rights, obligations and liabilities of the respective parties (including the Obligations) existing under the Existing Security Agreement;
| Annex B-2 |
WHEREAS, Airspan, Holdings and the other Grantors are engaged in related businesses, and each Grantor will derive substantial direct and indirect benefit from (i) the amendment and restatement of the Credit Agreement and (ii) the purchase of the Convertible Notes by the Purchasers pursuant to the terms of the Note Purchase Agreement and other Note Documents; and
WHEREAS, it is a condition precedent to the obligation of (i) the Lenders to amend and restate the terms of the Existing Credit Agreement and (ii) the Purchasers to purchase the Notes from Holdings under the Note Purchase Agreement, that the Grantors shall have executed and delivered this Agreement to the Collateral Agent for the benefit of the Secured Parties.
NOW, THEREFORE, in consideration of the premises and to induce (i) the Collateral Agent and the Lenders to amend and restate the terms of the Existing Credit Agreement and (ii) to induce the Purchasers to purchase the Convertible Notes pursuant to the terms of the Note Documents, each Grantor hereby agrees with the Collateral Agent, for the benefit of the Secured Parties, as follows:
ARTICLE I
DEFINED TERMS
SECTION 1.01 Definitions. Unless otherwise defined herein, the following terms which are defined in the UCC are used herein as so defined: Account, Certificated Security, Chattel Paper, Commercial Tort Claim, Commodity Account, Document, Equipment, Farm Product, Financial Asset, Fixture, General Intangible, Goods, Instrument, Inventory, Letter of Credit, Letter-of-Credit Right, Payment Intangible, Proceeds, Securities Account, Securities Intermediary, Supporting Obligation and Uncertificated Securities. All other terms used herein without definition which are not defined in the Credit Agreement or the Note Purchase Agreement, as the context may require, shall have the definitions given therefor in the UCC. The following terms shall have the following meanings:
“Assigned Agreements” shall have the meaning set forth in Section 2.01.
“Collateral” shall have the meaning set forth in Section 2.01.
“Collateral Access Agreement” means any landlord waiver or other agreement, in form and substance reasonably satisfactory to the Collateral Agent, between the Collateral Agent and any third party (including any bailee, consignee, customs broker, or other similar Person) in possession of any Collateral or any landlord of any real property where any Collateral is located, as such landlord waiver or other agreement may be amended, restated, amended and restated, supplemented or otherwise modified from time to time.
“Collateral Account” shall mean any collateral account established by the Collateral Agent as provided in Sections 5.01 or 5.04.
“Collateral Agent” shall have the meaning set forth in the recitals hereto.
“Contract” shall have the meaning given such term in the UCC, excluding Intellectual Property, Copyright Licenses, Trademark Licenses, and Patent Licenses.
| Annex B-3 |
“Contract Rights” shall mean all of the rights of any Grantor under any Contract (including, without limitation, (i) all rights of such Grantor to receive moneys due and to become due under or pursuant to any agreement, (ii) all rights of such Grantor to receive proceeds of any insurance, indemnity, warranty or guaranty with respect to any agreements, (iii) claims of such Grantor for damages arising out of or for breach of or default under any agreement and (iv) the right of such Grantor to terminate any agreement, to perform thereunder and to compel performance and otherwise exercise all remedies thereunder).
“Convertible Note” shall have the meaning set forth in the recitals hereto.
“Copyright Licenses” shall mean any written agreement naming any Grantor as licensor or licensee (including, without limitation, those listed in Schedule 3(b)), granting any right under any Copyright, including, without limitation, the grant of rights to manufacture, distribute, exploit and sell materials derived from any Copyright.
“Copyright Security Agreement” shall mean a copyright security agreement substantially in the form of Exhibit A hereto, or otherwise in form and substance reasonably acceptable to the Collateral Agent, as the same may be amended, restated, amended and restated, supplemented, or modified from time to time.
“Credit Agreement” shall have the meaning set forth in the recitals hereto.
“Credit Documents” means (i) “Loan Documents” as defined in the Credit Agreement and (ii) “Note Documents” as defined in the Note Purchase Agreement.
“Default” means a “Default” (or a similar event, however denominated) as defined in either the Credit Agreement or the Note Purchase Agreement, as the context may require.
“Deposit Account” shall have the meaning set forth in the UCC and, in any event, include, without limitation, any demand, time, savings, passbook or like account maintained with a depositary institution.
“Domain Names” means all Internet domain names, URLs, social media sites and accounts, and all content and information contained within or associated therewith listed on Schedule 3(a).
“Event of Default” means an “Event of Default” as defined in either the Credit Agreement or the Note Purchase Agreement, as the context may require.
“Government Contract” means any contract or subcontract to which a Grantor or any of its Subsidiaries is a party and a counterparty is a Governmental Authority and such contract involves in part the performance of services or the delivery of goods by or on behalf of a Grantor or any of its Subsidiaries.
“Grantor” shall have the meaning set forth in the recitals hereto.
“Grantor Confidential Information” shall have the meaning set forth in Section 3.09(g).
| Annex B-4 |
“Grantor IP Agreements” shall have the meaning set forth in Section 3.09(a).
“Grantor Material IP” shall have the meaning set forth in Section 3.09(a).
“Guarantors” shall mean, collectively, each Grantor other than the Borrower.
“Intellectual Property” means all intellectual property, in any medium, of any kind or nature whatsoever, now or hereafter owned or acquired or received by any Grantor or in which any Grantor now holds or hereafter acquires or receives any right or interest, and shall include, in any event, any Copyright, Trademark, Patent, License, Trade Secret, customer list, marketing plan, Domain Name (including any right related to the registration thereof), proprietary or confidential information, mask work, source, object or other programming code, invention (whether or not patented or patentable), technical information, procedure, design, knowledge, know-how, software, data base, data, skill, expertise, recipe, experience, process, model, drawing, material or record.
“Intellectual Property Security Agreement” shall mean a Copyright Security Agreement, Patent Security Agreement or Trademark Security Agreement, as applicable.
“Intercompany Note” shall mean any promissory note evidencing loans or other extensions of credit made by any Grantor to Holdings, Borrower, or any other Grantor or any Subsidiary or parent of any Grantor.
“Intercreditor Agreement” shall mean that certain Intercreditor Agreement dated as of August 13, 2021, by, among others, the Grantors, the Term Loan Collateral Agent and the Note Collateral Agent, as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time.
“Investment Property” shall mean, collectively, (a) all “investment property” as such term is defined in Section 9-102(a)(49) of the UCC and (b) whether or not constituting “investment property” as so defined, all Pledged Debt and all Pledged Stock.
“Issuers” shall mean, collectively, each issuer of any Investment Property.
“IT Systems” shall have the meaning set forth in Section 3.09(l).
“Local Law Perfected Assets” shall have the meaning set forth in Section 7.14.
“Local Law Security Document” shall have the meaning set forth in Section 7.14.
“Local Law” shall have the meaning set forth in Section 7.14.
“Material IT Breach” shall have the meaning set forth in Section 4.06(l).
“Merger Sub” shall have the meaning set forth in the recitals hereto.
“Note Purchase Agreement” shall have the meaning set forth in the recitals hereto.
| Annex B-5 |
“Patent Licenses” shall mean all agreements, whether written or oral, providing for the grant by or to any Grantor of any right to manufacture, use or sell any invention covered in whole or in part by a Patent, including, without limitation, any of the foregoing referred to in Schedule 3(b).
“Patent Security Agreement” shall mean (a) each patent security agreement executed by a Grantor in favor of the Collateral Agent prior to the date hereof, and (b) any other patent security agreement executed on or after the Restatement Effective Date in substantially the form of Exhibit B hereto, or otherwise in form and substance reasonably acceptable to the Collateral Agent, in each case as amended, restated, amended and restated, supplemented, or modified from time to time.
“Perfection Requirement” shall have the meaning set forth in Section 3.03(a).
“Pledged Account Bank” shall have the meaning set forth in Section 4.03(c).
“Pledged Debt” shall mean all Indebtedness (including the promissory notes listed on Schedule 1, all Intercompany Notes at any time issued to any Grantor and all other promissory notes issued to or held by any Grantor) from time to time owed to any Grantor by any obligor, and all interest, cash, instruments and other property, assets or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such Indebtedness and all certificates, instruments or agreements evidencing such Indebtedness, and all assignments, amendments, restatements, supplements, extensions, renewals, replacements or modifications thereof.
“Pledged Entity” shall mean each now existing or hereafter acquired Subsidiary, the Equity Interests of which are required under the Collateral and Guarantee Requirements and the other provisions of the Credit Documents to be pledged hereunder.
“Pledged Interests” shall mean, collectively, Pledged Debt, Pledged Stock, all other “Securities” (as defined in Article 8 of the UCC) and security entitlements in respect of any of the foregoing.
“Pledged Partnership/LLC Agreement” shall have the meaning given in Section 4.04(d)(i).
“Pledged Stock” shall mean all shares of Equity Interests, including those in each Pledged Entity, together with any other shares, stock certificates, options, interests or rights of any nature whatsoever in respect of the Equity Interests of any Person that may be issued or granted to, or held by, any Grantor while this Agreement is in effect; provided that Pledged Stock shall not include any Equity Interests that are Excluded Assets for so long as such Equity Interests remain Excluded Assets.
“Proceeds” shall mean all “proceeds” as such term is defined in Section 9-102(a)(64) of the UCC and, in any event, shall include, without limitation, all dividends or other income from the Investment Property, collections thereon or distributions or payments with respect thereto.
| Annex B-6 |
“Receivable” shall mean any right to payment for goods sold or leased or for services rendered, whether or not such right is evidenced by an Instrument or Chattel Paper and whether or not it has been earned by performance (including, without limitation, any Account).
“Secured Obligations” shall mean “Obligations” as defined in the Credit Agreement and the “Obligations” as defined in the Note Purchase Agreement.
“Secured Parties” shall have the meaning set forth in the recitals hereto.
“Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Termination Date” shall mean the date on which (a) the Loans, the Convertible Notes, and the other Secured Obligations shall have been finally and irrevocably paid in full in cash (or cash collateralized in a manner satisfactory to the Collateral Agent or, with respect to the Convertible Notes, converted into Equity Interests issued by Holdings) and (b) the Term Loan Commitments have been terminated.
“Third Party Confidential Information” shall have the meaning set forth in Section 3.09(g).
“Trademark Licenses” shall mean all agreements, whether written or oral, providing for the grant by or to any Grantor of any right to use any Trademark, including, without limitation, any of the foregoing referred to in Schedule 3(b).
“Trademark Security Agreement” shall mean (a) each trademark security agreement executed by a Grantor in favor of the Collateral Agent prior to the date hereof, and (b) any other trademark security agreement executed on or after the Restatement Effective Date in substantially the form of Exhibit C hereto, or otherwise in form and substance reasonably acceptable to the Collateral Agent, in each case as amended, restated, amended and restated, supplemented, or modified from time to time.
SECTION 1.02 Other Definitional Provisions. The provisions of Section 1.01 and 1.02 of the Credit Agreement and Section 14.28 of the Note Purchase Agreement, as the context may require, shall be incorporated by reference herein mutatis mutandis.
ARTICLE II
GRANT OF SECURITY INTEREST
SECTION 2.01 Collateral. Each Grantor hereby pledges, collaterally assigns and transfers to the Collateral Agent, and hereby grants to the Collateral Agent, for the benefit of the Secured Parties, a security interest in, all of the following, whether now owned or at any time hereafter acquired by such Grantor or in which such Grantor now has or at any time in the future may acquire any right, title or interest, wherever located (collectively, the “Collateral”), as collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of all the Secured Obligations:
(a) all Accounts and accounts receivable;
(b) all Chattel Paper;
| Annex B-7 |
(c) all Commercial Tort Claims, including without limitation those listed on Schedule 4 or described in any notice sent pursuant to Section 4.08;
(d) all Commodity Accounts, Deposit Accounts and Securities Accounts;
(e) all Contracts, including, but not limited to each swap contract to which such Grantor is now or may hereafter become a party, in each case as such agreements may be amended, amended and restated, supplemented or otherwise modified from time to time (collectively, the “Assigned Agreements”) and Contract Rights;
(f) all Documents;
(g) all Equipment;
(h) all Financial Assets;
(i) all Fixtures;
(j) all General Intangibles (including franchise rights);
(k) all Goods;
(l) all Instruments;
(m) all Intellectual Property, Copyright Licenses, Patent Licenses and Trademark Licenses;
(n) all Inventory;
(o) all Investment Property (including, for the avoidance of doubt, all Equity Interests, interest in the limited liability company, or membership interests of each Issuer owned by such Grantor, all of such Grantor’s right to participate in the management of the business and affairs of each such Issuer or otherwise control each such Issuer, and all of such Grantor’s rights as a shareholder or member of each such Issuer);
(p) all Letters of Credit, Letter-of-Credit Rights and Payment Intangibles;
(q) all money, cash and Cash Equivalents;
| Annex B-8 |
(r) all distributions, monies, fees, payments, compensations and proceeds now or hereafter becoming due and payable with respect to the Pledged Stock and the Pledged Debt, whether payable as profits, distributions, asset distributions, repayment of loans or capital or otherwise;
(s) all other property not otherwise described above (except for any property specifically excluded from any other clause in this section, and any property specifically excluded from any defined term used in any clause of this section);
(t) all insurance payments, proceeds, refunds, and premium rebates (including, without limitation, with respect to fire and credit insurance), whether or not any of such payments, proceeds, refunds, and premium rebates arise out of any of the foregoing and whether or not the Collateral Agent is the lender loss payee or loss payee thereof, and all other payments, proceeds, refunds and premium rebates with respect to any indemnity, warranty or guaranty by reason of loss or damage to or otherwise with respect to the Collateral;
(u) all books, records, and information pertaining to the Collateral and/or to the operation of any Grantor’s business, and all rights of access to such books, records, and information; and
(v) to the extent not otherwise included, all Proceeds, Supporting Obligations and products of, and all income, royalties and other payments now or hereafter due and payable with respect to, any and all of the foregoing and all collateral security, liens, guarantees, rights, remedies and privileges given by any Person with respect to any of the foregoing.
The Collateral Agent is further authorized, and each Grantor hereby grants the Collateral Agent with all rights, to file with the United States Patent and Trademark Office, the United States Copyright Office, and any applicable foreign intellectual property office (subject to the limitations set forth in Section 6.12 of the Credit Agreement and Section 4.1(l) of the Note Purchase Agreement), Copyright Security Agreements, Patent Security Agreements, and Trademark Security Agreements, substantially in the forms attached hereto as Exhibit A, Exhibit B, and Exhibit C, respectively, and such other documents as may reasonably be necessary or advisable for the purpose of perfecting, confirming, continuing, enforcing or protecting the security interest granted by each Grantor in such Grantor’s Patents, Trademarks and Copyrights, and naming such Grantor or the Grantors as debtors and the Collateral Agent as secured party, and, where required, executed by such Grantor or Grantors.
Notwithstanding any of the foregoing, no Lien or security interest is hereby granted on any Excluded Asset; provided, further, that if and when any property shall cease to be an Excluded Asset, a Lien on and security interest in such property shall be deemed granted therein to the Collateral Agent, for the benefit of the Secured Parties. Each of the Grantors agree to cooperate in execution of applicable Security Agreements for any property that ceases to be an Excluded Asset.
| Annex B-9 |
ARTICLE III
REPRESENTATIONS AND WARRANTIES
To induce (i) the Collateral Agent and the Lenders to amend the terms of the Credit Agreement and (ii) the Purchasers to purchase the Convertible Notes pursuant to the terms of the Note Documents, each Grantor hereby represents and warrants to each Secured Party that:
SECTION 3.01 [Reserved].
SECTION 3.02 Title; No Other Liens; Binding Obligation. Each Grantor has good and valid rights in, and the power to transfer, the Collateral and title to the Collateral with respect to which it has purported to grant a security interest hereunder, free and clear of all Liens except for Liens granted to the Collateral Agent and Permitted Liens. No financing statement or other public notice or record of a Lien with respect to all or any part of the Collateral is on file or of record in any public office, except (a) such as have been filed in favor of the Collateral Agent, for the benefit of the Secured Parties, pursuant to this Agreement and, (b) Liens that are expressly permitted by the terms of the Credit Documents. This Agreement is, and when executed and delivered will be, the legal, valid and binding obligation of each Grantor, enforceable against such Grantor in accordance with its terms.
SECTION 3.03 Perfected Priority Liens.
(a) Except as will be taken on or before the Restatement Effective Date, no other authorization or approval or other action by, and no notice to or filing with, any Governmental Authority or any other Person, is required for (i) the due execution, delivery and performance by any Grantor of this Agreement, (ii) the grant by any Grantor of the security interest purported to be created hereby in the Collateral under the terms of this Agreement or (iii) the exercise by the Collateral Agent of any of its rights and remedies hereunder, except, in the case of this clause (iii), as may be required in connection with any sale of any Pledged Interests by laws affecting the offering and sale of securities generally. No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority or any other Person, is required for the perfection of the security interest purported to be created hereby in the Collateral under the terms of this Agreement but subject to the limitations on perfection contained in the Credit Documents, except (A) for the filing under the Uniform Commercial Code as in effect in the applicable jurisdiction of the financing statements described in Schedule 2 hereto, all of which financing statements, upon the due filing thereof, will be in full force and effect, (B) with respect to the perfection of the security interest created hereby in the United States, Intellectual Property and Licenses, for the recording of the Copyright Security Agreement, the Trademark Security Agreement and/or Patent Security Agreement, substantially in the form of in the form of Exhibits A, B and C, as applicable, in the United States Patent and Trademark Office or the United States Copyright Office, as applicable, as described on Schedule 2, (C) with respect to the perfection of the security interest created hereby in foreign Intellectual Property and Licenses, for registrations and filings in jurisdictions located outside of the United States and covering rights in such jurisdictions relating to such foreign Intellectual Property and Licenses described on Schedule 2 hereto, (D) with respect to any action that may be necessary to obtain control of Collateral constituting Deposit Accounts, Electronic Chattel Paper, Investment Property or Letter-of-Credit Rights, the taking of such actions, (E) the Collateral Agent's having possession of all Documents, Chattel Paper, Instruments and cash constituting Collateral and (F) the delivery and recordation of each document or other record included in the Collateral and Guarantee Requirements in the Credit Agreement or the Note Purchase Agreement with respect to the Real Estate Assets (subclauses (A) - (F), each a “Perfection Requirement” and collectively, the “Perfection Requirements”).
| Annex B-10 |
(b) This Agreement, upon execution and delivery, creates a legal, valid and enforceable security interest in favor of the Collateral Agent, for the benefit of the Secured Parties, in the Collateral, as security for the Secured Obligations. The Perfection Requirements result in the perfection of such security interests in the Collateral to the extent such Perfection Requirements are required by the terms of this Agreement and the other Credit Documents. To the extent required by the Collateral and Guarantee Requirements, such security interests are, or in the case of Collateral in which any Grantor obtains rights after the date hereof, will be, perfected, first priority security interests, subject in priority only to the Permitted Liens, and the recording of such instruments of assignment and other Perfection Requirements described above. Subject to Section 6.26 of the Credit Agreement, Section 4.1(aa) of the Note Purchase Agreement and the limitations set forth in this Agreement, such Perfection Requirements and such other actions necessary or desirable to perfect and protect such security interests in the Collateral have been made or taken to the extent reasonably requested or required by the Collateral Agent and in the manner contemplated by and subject to the limitations contained in the Collateral and Guarantee Requirements.
SECTION 3.04 Perfection Certificate; Jurisdiction of Organization; Chief Executive Office. Each Grantor has previously delivered to the Collateral Agent a Perfection Certificate. Each Grantor represents and warrants to the Secured Parties as follows: (a) such Grantor’s exact legal name is that indicated on the Perfection Certificate and on the signature page hereof, (b) such Grantor is an organization of the type, and is organized in the jurisdiction, set forth in the Perfection Certificate, (c) the Perfection Certificate accurately sets forth such Grantor’s organizational identification number or accurately states that such Grantor has none, (d) the Perfection Certificate accurately sets forth such Grantor’s place of business or, if more than one, its chief executive office, as well as such Grantor’s mailing address, if different, and (e) all other information set forth on the Perfection Certificate pertaining to such Grantor is accurate and complete in all material respects. Each Grantor represents and warrants that the Intellectual Property Security Agreements executed by the applicable Grantors containing descriptions of all Collateral that consists of material United States federally issued Patents (and material Patents for which United States federal registration applications are pending), material United States federally registered Trademarks (and material Trademarks for which United States federal registration applications are pending) and material United States federally registered Copyrights (and material Copyrights for which United States federal registration applications are pending) have been delivered to the Collateral Agent for recording with the United States Patent and Trademark Office and the United States Copyright Office pursuant to 35 U.S.C. § 261, 15 U.S.C. § 1060 or 17 U.S.C. § 205 and the regulations thereunder, as applicable, and reasonably requested by the Collateral Agent, to protect the validity of and to establish a legal, valid and perfected security interest (or, in the case of Patents and Trademarks, notice thereof) in favor of the Collateral Agent, for the benefit of the Secured Parties, in respect of all Collateral consisting of such Intellectual Property as of the Restatement Effective Date in which a security interest may be perfected and notice thereof given by recording with the United States Patent and Trademark Office and the United States Copyright Office, and no further or subsequent filing, refiling, recording, rerecording, registration or reregistration is necessary (other than such actions as are necessary to perfect the security interest with respect to any Collateral consisting of material United States federally issued, registered or pending Patents, Trademarks and Copyrights acquired or developed after the Restatement Effective Date). The security interest against Intellectual Property herein constitutes (i) a legal and valid security interest in all such Intellectual Property securing the payment and performance of the Secured Obligations, as applicable, (ii) subject to the filings described in Schedule II, as of the Restatement Effective Date a perfected security interest in all Collateral in which a security interest may be perfected by filing, recording or registering a financing statement or analogous document in the United States (or any political subdivision thereof) pursuant to the Uniform Commercial Code or other applicable Law in such jurisdictions and (iii) a security interest that shall be perfected in all Collateral in which a security interest may be perfected upon the receipt and recording of the Intellectual Property Security Agreements with the United States Patent and Trademark Office, the United States Copyright Office, and to the extent required by the terms of the Credit Agreement or the Note Purchase Agreement, such other equivalent Governmental Authorities in such other jurisdictions outside of the United States required by the terms of the Credit Agreement, as applicable.
| Annex B-11 |
SECTION 3.05 Farm Products. None of the Collateral constitutes, or is the Proceeds of, Farm Products.
SECTION 3.06 Investment Property.
(a) Schedule 1 sets forth a complete and accurate list of all Pledged Stock pledged by each Grantor hereunder for which the Grantors are required to take perfection steps in accordance with the Collateral and Guarantee Requirements. The Pledged Stock constitutes all issued and outstanding shares of all classes of the Equity Interests of each Issuer owned by such Grantor which is required to be pledged pursuant to the terms of the Credit Agreement or Note Purchase Agreement and perfected pursuant to the Collateral and Guarantee Requirements; it being understood that any ongoing requirement to take perfection steps with respect to such Equity Interests shall be subject to and limited by the terms of the Collateral and Guarantee Requirements. Each Grantor has delivered or shall deliver within ten (10) Business Days after the Restatement Effective Date (or such longer period as the Collateral Agent shall agree in its sole discretion) (or within five (5) Business Days after the date such Grantor becomes a party to this Agreement, as applicable, or such longer period as the Administrative Agent shall agree in its sole discretion) all Certificated Securities constituting Collateral held by such Grantor in a Subsidiary on the Restatement Effective Date (or the date such Grantor becomes a party to this Agreement, as applicable) to the Collateral Agent, together with duly executed undated blank stock powers, or other equivalent instruments of transfer acceptable to the Collateral Agent in accordance with Section 4.04 below and (assuming possession by the Collateral Agent) the Collateral Agent acting on behalf of the Secured Parties has a first-priority Lien in such Pledged Stock, subject in each case to the Collateral and Guarantee Requirements.
(b) With respect to any Subsidiary of any Grantor that is
(i) a corporation, business trust, joint stock company or similar Person, all Pledged Stock issued by such Subsidiary is duly authorized and validly issued, fully paid and non-assessable, and, with respect to each Domestic Subsidiary, represented by a certificate or certificates; and
(ii) a partnership or limited liability company, no Equity Interests issued by such Subsidiary (A) are dealt in or traded on securities exchanges or in securities markets, (B) with respect to any Domestic Subsidiary, expressly provide that such Equity Interests are securities governed by Article 8 of the UCC or (C) are held in a Securities Account, except, with respect to this Section 3.06(b)(ii), Equity Interests (x) for which the Collateral Agent is the registered owner or (y) with respect to which the Issuer has agreed in an authenticated record with such Grantor and the Collateral Agent to comply with any instructions of the Collateral Agent without the consent of such Grantor following the occurrence of an Event of Default.
(c) With respect to Certificated Securities received after the Restatement Effective Date, the applicable Grantor has and shall deliver all such Certificated Securities within five (5) Business Days after the date such Subsidiary becomes a Grantor or, as the context may require, within five (5) Business Days after the date which such Person becomes a party to this Agreement as an additional Grantor as and when required by Section 6.12 of the Credit Agreement and Section 4.1(l) of the Note Purchase Agreement (or, in each case, such longer period as the Collateral Agent may permit in its sole discretion), together with duly executed undated blank stock powers, or other equivalent instruments of transfer acceptable to the Collateral Agent.
| Annex B-12 |
(d) With respect to Uncertificated Securities constituting Collateral owned by any Grantor in a Subsidiary on the Restatement Effective Date (or the date such Grantor becomes a party to this Security Agreement, as applicable), such Grantor has and shall cause the Issuer thereof either to (i) register the Collateral Agent as the registered owner of such security or (ii) agree in an authenticated record with such Grantor and the Collateral Agent that such Issuer will comply with instructions with respect to such security originated by the Collateral Agent without further notice to or consent of such Grantor following the occurrence of an Event of Default.
(e) With respect to any Collateral that constitutes a security entitlement as to which the financial institution acting as Collateral Agent hereunder is not the securities intermediary, the relevant Grantor will use its commercially reasonable efforts to cause the securities intermediary with respect to such security entitlement either (i) to identify in its records the Collateral Agent as the entitlement holder thereof or (ii) to agree with such Grantor and the Collateral Agent that such securities intermediary will comply with entitlement orders originated by the Collateral Agent without further notice to or consent of such Grantor upon the occurrence and during the continuance of an Event of Default, such agreement to be in form and substance reasonably satisfactory to the Collateral Agent. The Collateral Agent shall have the right, effective immediately upon the occurrence and during the continuance of an Event of Default, without notice to any Grantor or any further consent of the Grantors, to endorse, assign or otherwise transfer to or to register in the name of the Collateral Agent or any of its nominees or endorse for negotiation any or all of the Collateral consisting of Securities (the “Security Collateral”), without any indication that such Security Collateral is subject to the security interest hereunder, subject only to the revocable rights specified herein. Upon the request of the Collateral Agent, each Grantor will notify each issuer of Security Collateral granted by it hereunder that such Security Collateral is subject to the security interest granted hereunder.
(f) The percentage of the issued and outstanding Pledged Stock of each Subsidiary pledged on the Restatement Effective Date by each Grantor hereunder and subject to perfection requirements pursuant to the Collateral and Guarantee Requirements is as set forth on Schedule 1 (and each delivery of Pledged Stock after the Restatement Effective Date shall be accompanied by a schedule describing such Pledged Stock, which schedule shall be attached hereto as Schedule 1 and made a part hereof and thereof and shall supplement any such prior Schedule 1 so delivered; provided that failure to attach any such schedule hereto shall not affect the validity of such pledge of such Pledged Stock).
(g) Schedule 1 sets forth a complete and accurate list of all Pledged Debt of the Grantors with an individual aggregate principal amount in excess of $1,000,000 (excluding any intercompany indebtedness) pledged by each Grantor hereunder as of the Restatement Effective Date (and each delivery of Pledged Debt after the Restatement Effective Date shall be accompanied by a schedule describing such Pledged Debt, which schedule shall be attached hereto as a supplement to Schedule 1 and made a part hereof and thereof and shall supplement any such prior Schedule 1 so delivered; provided that failure to attach any such schedule hereto shall not affect the validity of such pledge of such Pledged Debt). Any Pledged Debt issued by any Subsidiary of any Grantor constitutes the legal, valid and binding obligation of the obligor with respect thereto, enforceable in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. All certificates, agreements or instruments evidencing the Pledged Debt have been delivered (or will be delivered upon giving effect to the Restatement Effective Date) to the Collateral Agent with allonges or transfer powers in blank or other instruments and documents as may be necessary or desirable or that the Collateral Agent may reasonably request (and assuming possession by the Collateral Agent) the Collateral Agent acting on behalf of the Secured Parties has a perfected first-priority security interest therein, to the extent required by this Agreement (provided, however, that prior to the occurrence of an Event of Default, the Grantors shall not be required to deliver any individual instrument evidencing Pledged Debt in an amount less than $1,000,000 and after an Event of Default any and all instruments evidencing any Pledged Debt together with instruments and documents of transfer relating thereto shall be required to be delivered without further request of the Collateral Agent).
| Annex B-13 |
SECTION 3.07 Receivables. No Receivable of the Grantors is evidenced by promissory notes, letter-of-credit rights or other instruments for the Grantors that has not been endorsed, assigned or delivered to the Collateral Agent that is required to be delivered pursuant to the terms of this Agreement; it being agreed and understood that prior to an Event of Default the Grantors shall only be required to deliver such notes and other instruments and endorsements to the extent that such note, instrument and/or endorsement evidencing such Receivable (or Receivables) is for an aggregate principal amount in excess of $1,000,000 individually.
SECTION 3.08 Contracts. No Contract of the Grantors is evidenced by promissory notes, letter-of-credit rights or other instruments that has not been endorsed, assigned or delivered to the Collateral Agent that is required to be delivered pursuant to the terms of this Agreement; it being understood, that prior to an Event of Default the Grantors shall only be required to deliver notes, instruments or endorsements to the extent that such note, instrument or endorsement evidencing such Contract (or Contracts) is for an aggregate principal amount in excess of $1,000,000 individually.
SECTION 3.09 Intellectual Property
(a) Schedule 3(a) sets forth a complete and correct list of all Intellectual Property that is registered or subject of an application for registration with the U.S. Copyright Office, the U.S. Patent and Trademark Office or equivalent Governmental Authority in any other jurisdiction outside of the United States, in each case owned or purported by a Grantor to be owned by such Grantor in its own name as of the date hereof (collectively, the Intellectual Property scheduled on Schedule 3(a) and all material unregistered Intellectual Property (including Domain Names, proprietary software, and proprietary databases, datasets and data), the “Grantor Material IP”). Each Grantor owns all right, title and interests in all Intellectual Property required to be scheduled on Schedule 3(a) free and clear of all Liens except Permitted Liens, and all such Intellectual Property is valid and subsisting. Schedule 3(b) sets forth a complete and correct list of all agreements under which: (i) a Grantor uses or has the right to use any Intellectual Property owned by a third party (other than commercially available off-the-shelf software); (ii) a Grantor has granted a license or sublicense to any third party to use any Intellectual Property (excluding any agreements under which a Grantor or a Subsidiary of a Grantor has licensed its products to customers, distributors, contract manufacturers, consultants or development partners in the ordinary course of business); and (iii) any material Intellectual Property is or has been developed for Grantor or assigned to Grantor (other than agreements with consultants, employees or any individual contractors engaged in connection with the development of Intellectual Property) (the agreements listed in subsections (i) through (iii) above, together with any agreements by which any material Intellectual Property is or has been developed by Grantor, collectively, the “Grantor IP Agreements”). No Grantor and, to each Grantor’s knowledge, no third party is in violation of any Grantor IP Agreement required to be listed in Schedule 3(b), and no Grantor has received any written notice of termination or cancellation under any Grantor IP Agreement.
| Annex B-14 |
(b) Except as set forth on Schedule 3(a), there are no pending proceedings or notice by any third party of any information challenging the validity or ownership of, and no holding, decision or judgment that has been rendered by any Governmental Authority exists which invalidates (in whole or in part) or diminishes any Grantor’s rights in, any registered Intellectual Property material to the conduct of the Grantors’ businesses.
(c) Grantor has made or performed all commercially reasonable acts, including without limitation filings, recordings and payment of all required fees and taxes, required to maintain and protect its interest in each and every item of Grantor Material IP in full force and effect.
(d) The Grantors have sufficient rights in all of the Intellectual Property used in, held for use in, or necessary (A) to provide, sell and/or license the products and/or services currently provided, sold and/or licensed by the business of the Grantors, and (B) to otherwise conduct the business of the Grantors as it is presently conducted and as presently contemplated to be conducted. The consummation of the transactions contemplated hereby will not alter or impair any such Intellectual Property rights, including any right of any Grantor to use or license any Intellectual Property owned by third parties.
(e) To the knowledge of each Grantor, the conduct or operation of the business of each Grantor or its products or services do not (A) infringe, misappropriate, interfere with, or otherwise violate the intellectual property of any third party or (B) constitute unfair competition or violate any trade practices under the laws of any jurisdiction, and except as set forth in Schedule 3(a), no third party has made any claims asserting any of the foregoing within the last three (3) years prior to the date of this Agreement. To the knowledge of the Grantors, there are no facts or circumstances that could reasonably give rise to any claim that the Grantors do not have the exclusive, legal right to own, enforce, sell, encumber, license, sublicense, lease or otherwise use or transfer any Grantors Material IP, nor has any third party made any claim asserting any of the foregoing within the six (6) years prior to the date of this Agreement. Except as set forth in Schedule 3(a), the Grantors have not in the past two (2) years prior to the date of this Agreement sent or otherwise communicated to any third party any (I) claim of infringement, misappropriation, misuse, interference with, or violation of, and there is not any, present, impending or threatened infringement, misappropriation, misuse, interference with, or other violation of, any Grantor Material IP by any third party, or (II) assertion of unfair competition or violation of trade practices under the laws of any jurisdiction by any third party that relates to the business of the Grantors.
| Annex B-15 |
(f) No Grantor Material IP was developed, created, or modified with any funding from any governmental entity or any academic institution. No person who was involved in, or who contributed to, the creation or development of any Grantor Material IP, has performed services for the government, university, college, or other educational institution or research center in a manner that would affect any Grantor’s rights any Grantor Material IP or restrict the manner in which rights are currently used or contemplated to be used in the operation of the any Grantor’s business.
(g) The Grantors have taken all commercially reasonable measures and have reasonable policies and internal procedures (as necessary and/or as required by applicable law), to maintain and protect the confidentiality of all proprietary and/or confidential information and trade secrets, including all proprietary algorithms, databases, datasets, and other data, proprietary software source code (if any), and all other material proprietary and confidential information of any Grantor, including personally identifiable information maintained by of for the Grantors (collectively, the “Grantor Confidential Information”). The Grantors have not made any Grantor Confidential Information available to any third party except with proper authorization and pursuant to written confidentiality agreements or where the recipient of such information effectively obligated themselves with respect to non-disclosure and non-use; all use, disclosure or appropriation of any proprietary and/or confidential information and trade secrets, including all proprietary algorithms, databases, datasets, and other data, proprietary software source code (if any) not owned by the Grantors (“Third Party Confidential Information”) that had been provided to the Grantors in relation to the business of the Grantors has been used pursuant to the terms of a written agreement between one or more Grantor and the owner of such Third Party Confidential Information, or is otherwise lawful. No Grantor has received in the past three (3) years before the date of this Agreement any notice from any third party that there has been an unauthorized use or disclosure of any Third Party Confidential Information in relation to the business of the Grantors.
(h) Except as set forth in Schedule 3(a), no former or current employee, consultant or independent contractor of the business of the Grantors has asserted in writing against the Grantors at any time in the past three (3) years before the date of this Agreement any claim or right to any of the Grantor Intellectual Property; and the Grantors have not hired or engaged any former or current employee, consultant or independent contractor of the business of the Grantors, which to the knowledge of the Grantors is in violation of any third party’s proprietary rights, and no third party has made any claim in writing against the Grantors or has filed any suit or action asserting any of the foregoing. Each current and former employee, consultant and independent contractor of the business of the Grantors that has participated in or been involved in the development of any Grantor Material IP has entered into a valid and enforceable written agreement with the Grantors validly and presently assigning to the Grantors all such Intellectual Property created, developed, modified or enhanced by such person for the Grantors and prohibiting such person from using or disclosing any Grantor Confidential Information in any manner. To the knowledge of each Grantor, no current or former employee, consultant or independent contractor is in violation of any term of any such agreement, including any Intellectual Property disclosure or assignment agreement or any other contract or agreement relating to the relationship of any such current or former employee, consultant or independent contractor with the business of the Grantors.
| Annex B-16 |
(i) Each of the Grantor IP Agreements is valid and binding on the applicable Grantor and the respective other party thereto in accordance with its terms and is in full force and effect. No breach or default (or event which with notice or lapse of time or both would result in a breach or default) by such Grantor or, to the knowledge of such Grantor, the other party exists or has occurred in the past six (6) years prior to the date of this Agreement under any Grantor IP Agreement or other agreement pursuant to which such Grantor uses or has rights to Intellectual Property, and such Grantor is not in receipt of any communication regarding the same nor has such Grantor provided any communication regarding the same which is pending at the date of this Agreement to any other party. The consummation of this Agreement will not violate or conflict with or constitute a breach or default (or an event which, with notice or lapse of time or both, would constitute a breach or default) or result in a payment due any party or forfeiture under any such Grantor IP Agreement or other agreement or other rights to any Intellectual Property. The Grantors are not using any Intellectual Property supplied by any governmental entity or any other third party for any purpose or in any manner that is outside the scope of the rights provided in the applicable Contract with such governmental entity or any other third party.
(j) The Grantors do not distribute to their customers or otherwise use any software associated with any open source software licenses that require any Grantor, under the terms of such open source software license, (i) to make available to the customer or any other third party any proprietary source code of the Grantor; or (ii) to grant permission to such customer or any other third party for creating modifications to or derivative works of any Grantor proprietary source code. Other than to authorized employees and contractors, or to customers (pursuant to obligations to deposit source code into escrow for the benefit of customers) no event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time) will, or could reasonably be expected to, result in the disclosure or delivery to any third party of any proprietary software source code owned or exclusively licensed by the Grantors. No product, system, program or software module associated with any software owned by the Grantors that was distributed, licensed, or otherwise made available by, the Grantors to any third party, contains any “back door,” “time bomb,” “Trojan horse,” “worm,” “drop dead device,” “virus” or other software routines or hardware components designed to permit unauthorized access or to disable or erase software, hardware or data without the consent of an authorized representative of the business of the Grantors or at the request of a customer to which any proprietary software owned by the Grantors was licensed.
(k) Each Grantor is in actual possession of and has sufficient control and rights over, and has complete, valid and enforceable rights to use without restriction, a complete and correct copy of all proprietary source code, netlists, mask works, algorithms, data, data sets and databases used in, held for use in, or necessary for the conduct of the business of the Grantors including, in each case, that of its employees and customers.
(l) All information technology systems (“IT Systems”) owned or used by the Grantors are sufficient for the needs of each location of the business of the Grantors as currently conducted and as contemplated to be conducted, in sufficiently good working condition to effectively perform all information technology operations and include a sufficient number of license seats for all software, and are fully functional and operate and run in a reasonable and efficient business manner, and, to the knowledge of the Grantors, free from any material defect, bug, virus or programming, design or documentation error or corruptant or other software routines or hardware components that permit unauthorized access or the unauthorized disablement or erasure of such. There has been, in the past two (2) years before the date of this Agreement: (A) no material disruption, interruption, breakdown, failure, continued substandard performance, outage, or other adverse events affecting the IT Systems that have caused a material disruption to the operation of the business of the Grantors, (B) no material part of the IT Systems has been prone to repeated material malfunction or error, and (C) no unauthorized intrusions or breaches of security of the IT Systems. Each Grantor has implemented and maintained its IT Systems with adequate information security controls, regularly tested and fully encrypted backup systems, and disaster recovery and business continuity practices.
| Annex B-17 |
(m) Each Grantor has complied in all material respects with applicable laws and their respective internal privacy policies relating to the use, collection, storage, disclosure and transfer of any personally identifiable information collected, accessed or obtained by such Grantor or by third parties having authorized access to the records of the Grantor. Each such Grantor is in material compliance with all of the terms of all Contracts to which the Grantor is a party relating to the use, collection, storage, disclosure and transfer of any personally identifiable information collected, accessed or obtained by the Grantor or by third parties having authorized access to the records of the Grantor. Each of the Domain Names and other Internet websites, accounts and pages owned or operated by such Grantor has in the past six (6) years maintained a publicly posted privacy policy that describes the Grantor’s practices with respect to the collection, use and disclosure of personally identifiable information and that complies in all material respects with all applicable laws. The execution, delivery and performance of this Agreement will comply with all applicable laws relating to privacy, security and data protection and with such Grantor’s privacy policies. Such Grantor has not in the past six (6) years received a written complaint regarding the Grantor’s use, collection, storage, disclosure or transfer of personally identifiable information. Each Grantor has implemented and maintains a security plan that is customary and reasonable for their industry that (i) identifies internal and external risks to the security of any personally identifiable information, in the Grantor’s possession, custody or control, (ii) implements, monitors and improves administrative, electronic and physical safeguards to control those risks, (iii) maintains notification procedures in material compliance with applicable laws in the case of any breach of security compromising data containing personally identifiable information and (iv) complies in all material respects with the obligations of the Grantor in any Contracts to which the Grantor is a party regarding the security of personally identifiable information in the Grantor’s possession, custody or control. No Grantor has experienced any breach of security or otherwise unauthorized access by third parties to any personally identifiable information in the Grantor’s possession, custody or control.
SECTION 3.10 Commercial Tort Claims
(a) No Grantor has rights in any Commercial Tort Claim with a value in excess of $250,000, except as set forth on Schedule 4.
(b) Upon the granting to Collateral Agent of a security interest in any Commercial Tort Claim to the extent required pursuant to Section 4.08, such security interest will constitute a valid perfected first-priority security interest in favor of the Collateral Agent, for the benefit of the Secured Parties, as Collateral for the Secured Obligations, enforceable in accordance with the terms hereof against all creditors of such Grantor and any Persons purporting to purchase such Collateral from Grantor, which security interest shall be prior to all other Liens on such Collateral except for Permitted Liens, subject to the Intercreditor Agreement.
| Annex B-18 |
SECTION 3.11 Securities Accounts; Commodity Accounts; Deposit Accounts. Schedule 5 sets forth under the headings “Securities Accounts” and “Commodity Accounts”, respectively, all of the Securities Accounts and Commodity Accounts in which such Grantor has an interest. Such Grantor is the sole entitlement holder of each such Securities Account and Commodity Account, and no Person (other than the Collateral Agent acting on behalf of the Secured Parties) has “control” (within the meanings of Sections 8-106 and 9-106 of the UCC) over, or any other interest in, any such Securities Account or Commodity Account or any securities or other property credited thereto. No Grantor holds, owns or has any interest in any certificated securities or uncertificated securities other than those constituting Pledged Stock and those maintained in Securities Accounts or Commodity Accounts listed in Schedule 5 hereof. Schedule 5 sets forth under the heading “Deposit Accounts” all of the Deposit Accounts (other than Excluded Accounts) in which such Grantor has an interest. Such Grantor is the sole account holder of such Deposit Account and no Person (other than the Collateral Agent acting on behalf of the Secured Parties) has either sole dominion or control (within the meaning of the common law) or “control” (within the meaning of Section 9-104 of the UCC) over, or any other interest in, any such Deposit Account or any money or other property deposited therein.
SECTION 3.12 Letter-of-Credit Rights. Except as set forth on Schedule 6, no Grantor has any Letter-of-Credit Rights having a potential value in an amount in excess of $250,000 in any one instance or in the aggregate.
SECTION 3.13 Government Contracts. Except as set forth on Schedule 7, there are no Government Contracts involving aggregate consideration payable to any Grantor of more than $250,000 in any fiscal year.
SECTION 3.14 Equipment and Inventory. All of the Equipment and Inventory of such Grantor are located at the places specified therefor in Schedule 8 hereto or at another location as to which such Grantor has complied with the requirements of Section 4.12(a). Such Grantor has exclusive possession and control of its Equipment and Inventory, other than Inventory stored at any leased premises or warehouse or in transit in the ordinary course of business. Each Grantor agrees that, upon the request of the Collateral Agent, it will use commercially reasonable efforts to obtain a landlord’s or warehouseman’s agreement, in form and substance satisfactory to the Collateral Agent with respect to any leased premises or warehouse in which Equipment or Inventory with a value of $750,000 or more is held, stored or located at such location.
ARTICLE IV
COVENANTS
Each Grantor covenants and agrees with the Secured Parties that, from and after the date of this Agreement until the Termination Date:
SECTION 4.01 [Reserved].
| Annex B-19 |
SECTION 4.02 Delivery of Instruments, Certificated Securities and Chattel Paper. Without limiting Section 4.04, each Grantor will (subject to the terms of the Credit Documents) (a) deliver to the Collateral Agent all Collateral that is Investment Property, or Payment Intangibles to the extent that such Investment Property or Payment Intangibles are evidenced by a Document, certificate, Instrument, Promissory Note or Chattel Paper (other than, prior to an Event of Default, any Documents, Instruments, Promissory Notes or Chattel Paper in an aggregate principal amount not exceeding $1,000,000 individually), and (b) at all times keep pledged to the Collateral Agent acting on behalf of the Secured Parties pursuant hereto, on a first-priority, perfected basis (subject only to Permitted Liens), a security interest therein and in all interest and principal with respect to such Payment Intangibles, and all Proceeds and rights from time to time received by or distributable to such Grantor in respect of any of the foregoing Collateral. Each Grantor agrees that it will, subject to the terms of the Guarantee and Collateral Requirements, promptly following receipt thereof, deliver to the Collateral Agent possession of all Collateral consisting of originals of Certificated Securities, negotiable Documents, Instruments, Promissory Notes and Chattel Paper that it acquires on or following the Restatement Effective Date (other than, prior to a Default, any Documents, Instruments, Promissory Notes or Chattel Paper in an aggregate principal amount not exceeding $1,000,000 individually). Any such delivery of Instruments, Certificated Securities or Chattel Paper to the Collateral Agent shall be accompanied by a supplement to Schedule 1 describing such instruments, which schedule shall be attached hereto as a supplement to Schedule 1 and made a part hereof; provided, that failure to attach any such schedule hereto shall not affect the validity of such pledge of such instruments. Each schedule so delivered shall supplement any prior schedules so delivered.
SECTION 4.03 Maintenance of Perfected Security Interest; Further Documentation.
(a) Such Grantor shall take all actions necessary or desirable to maintain the security interest created by this Agreement as a perfected security interest having at least the priority required by this Agreement and described in Section 3.03 and shall defend the right, title and interest of the Collateral Agent and the Secured Parties in and to the Collateral against the claims and demands of all Persons whomsoever. The inclusion of Proceeds in the Collateral shall not be deemed to constitute the Collateral Agent’s or any Secured Party’s consent to any sale or other disposition of any of the Collateral in contravention of the Credit Agreement or Note Purchase Agreement. No Grantor shall execute, authorize consent to or otherwise permit to the filing in any recording office of any financing statement or other instrument similar in effect covering all or any part of the Collateral or listing such Grantor as debtor with respect to all or any part of the Collateral, except financing statements and other instruments filed in respect of Permitted Liens.
(b) From time to time, upon the written request of the Collateral Agent, and at the sole expense of such Grantor, such Grantor will promptly, and in any event within five (5) Business Days, duly execute and deliver, and have recorded, such further instruments and documents and take such further actions as the Collateral Agent may reasonably request that are necessary or desirable in order to obtain and/or preserve the full benefits of this Agreement and of the rights and powers herein granted to the Collateral Agent, including, without limitation, the (i) filing of any financing or continuation statements under the UCC (or other similar laws) in effect in any jurisdiction with respect to the security interests created hereby acting on behalf of the Secured Parties and (ii) taking such actions reasonably necessary or desirable to enable the Collateral Agent to obtain “control” (within the meaning of the UCC) with respect thereto, in each case subject to the Collateral and Guarantee Requirements.
| Annex B-20 |
(c) Without limiting the generality of the foregoing, and subject to Section 6.15 of the Credit Agreement and Section 4.1(o) of the Note Purchase Agreement and, in each case (other than Excluded Accounts and De Minimis Accounts), each Grantor will maintain each of its Deposit Accounts only with banks (each a “Pledged Account Bank”) that have entered into Control Agreements pursuant to which such Pledged Account Bank has agreed with such Grantor and the Collateral Agent to comply after the occurrence of an Event of Default, with instructions originated by the Collateral Agent directing the disposition of funds in such Deposit Account without the further consent of such Grantor (provided, however, with respect to Deposit Accounts acquired after the Restatement Effective Date, the Grantors shall have the time periods described in the Collateral and Guarantee Requirements to enter into such Control Agreements).
(d) After the occurrence and during the continuance of an Event of Default, the Collateral Agent acting on behalf of the Secured Parties may, at any time and without notice to, or consent from, the Grantor, transfer, or direct the transfer of, funds from the Deposit Account(s) which are Collateral, to satisfy the Grantor’s obligations under the Credit Documents.
SECTION 4.04 Investment Property
(a) No Grantor will allow any of its Subsidiaries: (i) that is a Domestic Subsidiary that is a corporation, business trust, joint stock company or similar Person, to issue Uncertificated Securities; (ii) that is a partnership or limited liability company, to (A) issue Equity Interests consisting of Securities that are to be dealt in or traded on securities exchanges or in securities markets, (B) expressly provide in its Organization Documents that its Equity Interests are securities governed by Article 8 of the UCC without notifying the Collateral Agent (and delivering such Certificated Securities together with related transfer powers in blank to the Collateral Agent), or (C) place such Subsidiary’s Equity Interests consisting of Securities in a Securities Account unless such account is subject to a Control Agreement; or (iii) to issue Equity Interests in addition to or in substitution for the Equity Interests pledged hereunder, except to such Grantor. Each Grantor agrees that any Uncertificated Securities shall be treated as General Intangibles.
(b) If such Grantor shall become entitled to receive or shall receive any certificate in respect of any Pledged Stock (including, without limitation, any certificate representing a stock dividend or a distribution in connection with any reclassification, increase or reduction of capital or any certificate issued in connection with any reorganization of such Pledged Stock), option or rights in respect of any Pledged Stock, whether in addition to, in substitution of, as a conversion of, or in exchange for, any shares of the Pledged Stock, or otherwise in respect thereof, such Grantor shall accept the same as the agent of the Secured Parties, hold the same for the benefit of the Secured Parties and promptly and in any case within five (5) Business Days (or such longer period as the Collateral Agent may agree to in its sole discretion), of such receipt, deliver the same forthwith to the Collateral Agent in the exact form received, duly endorsed by such Grantor to the Collateral Agent, if required, together with an undated stock transfer power covering such certificate duly executed in blank by such Grantor and otherwise in form and substance satisfactory to Collateral Agent, to be held by the Collateral Agent as additional Collateral for the Secured Obligations. In case any distribution shall be made on or in respect of any Collateral consisting of Investment Property or any property shall be distributed upon or with respect to any Investment Property, the property so distributed shall be delivered to the Collateral Agent promptly after the receipt thereof (and in no case later than the fifth (5th) Business Day after receipt or such later date as agreed by the Collateral Agent in its sole discretion) by or on behalf of such Grantor, to be held by the Collateral Agent as additional Collateral for the Secured Obligations.
| Annex B-21 |
(c) In the case of each Grantor which is an Issuer, such Issuer agrees that (i) it will be bound by the terms of this Agreement relating to the Investment Property issued by it and will comply with such terms insofar as such terms are applicable to it and (ii) the terms of Sections 5.03(c) and 5.07 shall apply to it, mutatis mutandis, with respect to all actions that may be required of it pursuant to Section 5.03(c) with respect to the Investment Property issued by it.
(d) If at any time and from time to time any Pledged Stock consists of an Uncertificated Security or a security in book entry form, then the applicable Grantor shall promptly take such actions as the Collateral Agent may request to cause the Collateral Agent’s Lien in such Pledged Stock to be perfected in accordance with applicable Law and subject to the Collateral and Guarantee Requirements, including (x) causing to be filed in any applicable jurisdiction one or more Uniform Commercial Code financing statements (or equivalent), and continuation statements and amendments thereto, relative to all or any part of the Pledged Stock, and naming the applicable Grantor as a debtor, (y) causing such Lien in such Pledged Stock to be registered or entered, as the case may be, in the name of the Collateral Agent with the Issuer thereof or (z) entering into an agreement, in form and substance reasonably satisfactory to Collateral Agent pursuant to which the Issuer agrees, effective upon the occurrence and during the continuance of an Event of Default; (i) to comply with instructions from the Collateral Agent as to such securities, without further consent of any Grantor or nominee or (ii) for the Collateral Agent to become the registered owner of such securities. If any securities, certificated or uncertificated, or other Investment Property now or hereafter acquired by any Grantor (other than Excluded Assets and De Minimis Accounts) are held by such Grantor or its nominee through a securities intermediary or commodity intermediary, such Grantor shall within thirty (30) days after acquiring such Investment Property (or such later period as agreed by the Collateral Agent, in its sole discretion) notify the Collateral Agent thereof and, pursuant to an agreement in form and substance reasonably acceptable to the Collateral Agent, promptly (i) cause such securities intermediary or (as the case may be) commodity intermediary to agree to comply with the entitlement orders or other instructions from the Collateral Agent to such securities intermediary as to such security entitlements, or (as the case may be) to apply any value distributed on account of any commodity contract as directed by the Collateral Agent to such commodity intermediary, in each case without further consent from any Grantor or such nominee or (ii) in the case of Financial Assets or other Investment Property held through a securities intermediary, arrange for the Collateral Agent to become the entitlement holder with respect to such Investment Property with the Grantor being permitted, only with the consent of the Collateral Agent, to exercise rights to withdraw or otherwise deal with such Investment Property.
| Annex B-22 |
(i) Each Grantor covenants and agrees that each Organization Document to which a Grantor is a party and relating to any Pledged Stock issued by a Domestic Subsidiary (as amended, restated, supplemented or otherwise modified from time to time, each a “Pledged Partnership/LLC Agreement”) is hereby amended by this Section 4.04(d)(i) (A) to permit each member, manager and partner that is a Grantor (1) to pledge all of the Pledged Stock in which such Grantor has rights, (2) to grant and collaterally assign to the Collateral Agent, acting on behalf of the Secured Parties,, a Lien on and security interest in such Pledged Stock, and (3) to, upon any foreclosure by the Collateral Agent on such Pledged Stock (or any other sale or transfer of such Pledged Stock in lieu of such foreclosure), transfer to the Collateral Agent (or to the purchaser or other transferee of such Pledged Stock in lieu of such foreclosure) its rights and powers to manage and control the affairs of the applicable Pledged Entity, in each case, without any further consent, approval or action by any other party, including, without limitation, any other party to any Pledged Partnership/LLC Agreement or otherwise and (B) to provide that (1) the bankruptcy or insolvency of such Grantor shall not cause such Grantor to cease to be a holder of such Pledged Stock, (2) upon the occurrence of such an event, the applicable Pledged Entity shall continue without dissolution and (3) such Grantor waives any right it might have to agree in writing to dissolve the applicable Pledged Entity upon the bankruptcy or insolvency of such Grantor, or the occurrence of an event that causes such Grantor to cease to be a be a holder of such Pledged Stock.
(ii) Upon the occurrence and during the continuance of an Event of Default, the Collateral Agent or its designee shall have the right (but not the obligation) to be substituted for the applicable Grantor as a member, manager or partner under the applicable Pledged Partnership/LLC Agreement, and the Collateral Agent or its designee shall have all rights, powers and benefits of such Grantor as a member, manager or partner, as applicable, under such Pledged Partnership/LLC Agreement in accordance with the terms of this Section 4.04(d). For avoidance of doubt, such rights, powers and benefits of a substituted member, manager or partner shall include all voting and other rights and not merely the rights of an economic interest holder.
(iii) No further consent, approval or action by any other party, including, without limitation, any other party to the applicable Pledged Partnership/LLC Agreement or otherwise shall be necessary to permit the Collateral Agent or its designee to be substituted as a member, manager or partner pursuant to this Section 4.04(d). The rights, powers and benefits granted pursuant to this paragraph shall inure to the benefit of the Collateral Agent, on its own behalf and on behalf of each other Secured Party, and each of their respective successors, assigns and designees, as intended third party beneficiaries.
(iv) Each Grantor and each applicable Pledged Entity agrees, unless expressly permitted by the terms of the Credit Documents, no Pledged Partnership/LLC Agreement shall be amended to be inconsistent with the provisions of this Section 4.04(d) without the prior written consent of the Collateral Agent.
(e) Each Grantor will furnish or cause to be furnished to the Collateral Agent statements and schedules further identifying and describing the Pledged Stock and such other reports in connection with the Pledged Stock as the Collateral Agent may reasonably request from time to time, all in reasonable detail.
(f) Each Grantor shall pay or cause to be paid, and save the Collateral Agent and the Secured Parties harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be payable with respect to any of the Collateral in connection with any of the transactions contemplated by this Agreement.
| Annex B-23 |
(g) In order to permit the Collateral Agent to exercise the voting and consensual rights to which it may be entitled hereunder and under the Intercreditor Agreement and Credit Documents and to receive all dividends and other distributions to which it may be entitled to receive hereunder, without limiting any other right or remedy available to the Collateral Agent hereunder or under any other Credit Document, each Grantor shall promptly execute and deliver to the Collateral Agent all such proxies, dividend payment orders and other instruments as the Collateral Agent may from time to time reasonably request in order to protect, perfect, evidence and effectuate the Lien granted hereunder and the Collateral Agent’s rights and remedies with respect thereto.
SECTION 4.05 Receivables
(a) Each Grantor shall keep and maintain at its own cost and expense records that are complete records in all material respects of each Receivable, including records of all payments received, all credits granted thereon, all merchandise returned and all other documentation relating thereto. Upon the occurrence and during the continuance of an Event of Default, each Grantor shall, at such Grantor’s sole cost and expense, following the Collateral Agent’s reasonable request, deliver copies of all tangible evidence of Receivables, including copies of all documents evidencing Receivables and any books and records relating thereto to the Collateral Agent or to its representatives. Following the occurrence and during the continuation of an Event of Default, at the reasonable request of the Collateral Agent each Grantor shall legend, in form and manner reasonably satisfactory to the Collateral Agent, the Receivables and the other books, records and documents of such Grantor evidencing or pertaining to the Receivables with an appropriate reference to the fact that the Receivables have been assigned to the Collateral Agent for the ratable benefit of the Secured Parties and that the Collateral Agent has a security interest therein.
(b) Other than in the ordinary course of business or consistent with past practices, no Grantor will (a) grant any extension of the time of payment of any Receivable, (b) compromise or settle any Receivable for less than the full amount thereof, (c) release, wholly or partially, any Person liable for the payment of any Receivable, (d) allow any credit or discount whatsoever on any Receivable, or (e) amend, supplement or modify any Receivable in any manner that could adversely affect the value thereof.
SECTION 4.06 Intellectual Property
(a) Each Grantor agrees that it will not, and will not knowingly permit any of its licensees to, do any act, or omit to do any act, whereby any Patent of such Grantor and its Subsidiaries may become invalidated or dedicated to the public and agrees that it shall mark all Products in any manner acceptable under the Law covered by an Assigned Patent with the relevant patent number.
(b) Each Grantor (either itself or through its licensees or its sublicensees) will, for each Trademark material to the conduct of the business of such Grantor and its Subsidiaries, (i) maintain such Trademark in full force free from any claim of abandonment as long as such registration is required and material for the Grantor’s business, (ii) maintain the general level of quality of products and services offered under such Trademark, (iii) display such Trademark on product information sheets and similar documents relating to Products with notice of Federal or foreign registration to the extent reasonably necessary and sufficient to establish and preserve its maximum rights under applicable Laws, and (iv) not knowingly use or knowingly permit the use of such Trademark in violation of any third party rights.
| Annex B-24 |
(c) Reserved.
(d) Each Grantor agrees to execute or otherwise authenticate the Intellectual Property Security Agreements, as applicable, in substantially the form set forth in Exhibit A, Exhibit B and Exhibit C hereto, for recording the security interest granted hereunder to the Collateral Agent in such Intellectual Property with the U.S. Patent and Trademark Office, the U.S. Copyright Office, the UK Intellectual Property Office and the Israeli Patent Office necessary to perfect the security interest in such Intellectual Property in the United States, the United Kingdom and Israel, and shall provide whatever additional assistance necessary to ensure the adequate and proper recordation of such Intellectual Property Security Agreements and any other documents necessary to perfect the security interest hereunder in such jurisdictions.
(e) Except for Intellectual Property reaching its natural expiration date (including Patents expiring after a maximum enforcement period), each Grantor shall notify the Collateral Agent promptly if any Patent, Trademark or Copyright that is material to the conduct of the business of such Grantor and its Subsidiaries may become abandoned, lost or dedicated to the public, or of any adverse determination (including the institution of, or any such determination in, any proceeding in the United States Patent and Trademark Office, United States Copyright Office or any court or similar office of any country) regarding such Grantor’s ownership, validity or enforceability, of any such Patent, Trademark or Copyright, its right to register the same, or its right to keep and maintain the same.
(f) Each Grantor shall take commercially reasonable steps that are consistent with the prudent business practice in any proceeding before the United States Patent and Trademark Office, United States Copyright Office or any office or agency in any political subdivision of the United States or in any other country or any political subdivision thereof, to maintain and pursue each material application relating to the Patents, Trademarks and/or Copyrights (and to obtain the relevant grant or registration) and to maintain each issued Patent and each registration of the Trademarks and Copyrights that is material to the conduct of the business of the Grantors and their Subsidiaries, including for Trademarks timely filings of applications for renewal, affidavits of use, affidavits of incontestability and for Patents payment of maintenance fees, and, if consistent with commercially reasonable business judgment, to initiate opposition, interference and cancellation proceedings against the intellectual property of third parties.
(g) In the event that a Grantor knows that any Collateral consisting of a Patent, Trademark or Copyright that is material to the conduct of the Grantors and their Subsidiaries has been or is being infringed, misappropriated or diluted by a third person, such Grantor shall promptly notify the Collateral Agent and shall, if consistent with good business judgment, promptly take corrective action, including, if appropriate under the circumstances, sue for infringement, misappropriation or dilution to recover any and all damages for such infringement, misappropriation or dilution, and take such other actions as are appropriate under the circumstances to protect such Collateral.
| Annex B-25 |
(h) Upon the occurrence of an Event of Default, each Grantor shall, at the request of the Collateral Agent, use commercially reasonable efforts to obtain all requisite consents or approvals by the licensor of each Copyright License, Patent License or Trademark License to effect the assignment of all such Grantor’s right, title and interest thereunder to the Collateral Agent, for the ratable benefit of the Secured Parties, or their designee.
(i) Solely for the purpose of enabling the Collateral Agent to exercise the rights and remedies provided for under this Agreement at such time as the Collateral Agent shall be lawfully entitled to exercise such rights and remedies (but not as an independent remedy) each Grantor hereby grants, effective upon the occurrence and during the continuation of an Event of Default, to the Collateral Agent an irrevocable, nonexclusive license (exercisable without payment of royalty or other compensation to the Grantors), to use, license or sublicense any Collateral consisting of Intellectual Property now owned or hereafter acquired by such Grantor, and wherever the same may be located, and including in such license access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof. The use of such license by the Collateral Agent may be exercised, at the option of the Collateral Agent, only upon the occurrence and during the continuation of an Event of Default; provided, however, that any license, sublicense or other transaction entered into by the Collateral Agent in accordance herewith shall be binding upon each Grantor notwithstanding any subsequent cure of an Event of Default.
(j) Each Grantor shall use commercially reasonable efforts to protect the confidentiality of the Intellectual Property and such Grantor’s rights therein, including protecting the secrecy and confidentiality of its proprietary and/or confidential information and trade secrets, including all proprietary algorithms, databases, datasets, and other data, by (i) having and enforcing a policy requiring all current employees, consultants, licensees, vendors and contractors to execute appropriate confidentiality agreements, to the extent it is expected that such parties will obtain, receive or otherwise be directly exposed to such Grantor Confidential Information and trade secrets, (ii) taking actions necessary to ensure that no trade secret falls or has fallen into the public domain, and (iii) protecting the secrecy and confidentiality of the source code of all computer software programs and applications of which it is the owner or licensee by having and enforcing a policy requiring any licensees (or sublicensees) of such source code to enter into license agreements with appropriate use and non-disclosure restrictions.
(k) Each Grantor shall remain in material compliance with its obligations under all Grantor IP Agreements to which it is a party and shall not perform or fail to perform any of its obligations thereunder or otherwise breach any such agreements.
(l) Each Grantor shall use commercially reasonable efforts in accordance with reasonable business practices to maintain the IT Systems for each site on which it performs business with adequate information security controls, engage in regular testing (including where appropriate penetration testing) and maintain encrypted backup systems, and disaster recovery and business continuity practices and systems. Each Grantor shall notify the Collateral Agent promptly if any problem with the IT Systems having a Material Adverse Effect (“Material IT Breach”) is discovered and shall take all actions necessary to remedy each such material problem. Each Grantor shall notify the Collateral Agent promptly if any breach of the IT Systems is discovered that results in the destruction, corruption and/or theft of any proprietary information of either a Grantor or any customer or vendor of a Grantor (for avoidance of doubt, all such breaches shall be considered to be a Material IT Breach), and shall take all necessary actions to remedy each situation and provide any required notices to any affected parties and/or Governmental Authorities, and Grantor shall keep Collateral Agent updated regarding the status of and actions relating to each such Material IT Breach.
| Annex B-26 |
(m) In connection with its collection, storage, transfer (including, without limitation, any transfer across national borders), manipulation and/or use of any proprietary or confidential information, including personally identifiable information, each Grantor shall maintain compliance with all applicable laws and material compliance with all industry standards in all relevant jurisdictions, each Grantor’s privacy policies and the requirements of any contract or codes of conduct to which each Grantor is a party. Each Grantor shall maintain commercially reasonable physical, technical, organizational and administrative security measures and policies in place to protect all personally identifiable information collected by it or on its behalf from and against unauthorized access, use and/or disclosure. To the extent any Grantor collects, stores, transfers (including, without limitation, any transfer across national borders), manipulates and/or uses protected health information, as defined under 45 C.F.R. § 160.103, each such Grantor shall do so in compliance with the applicable requirements of all applicable laws and regulations.
SECTION 4.07 Intellectual Property Filing. Grantor, either by itself or through any agent, employee, licensee or designee, upon the filing of any application for registration of any Intellectual Property with the United States Patent and Trademark Office, the United States Copyright Office, or any applicable foreign office, in each case which is material to the conduct of the business of a Grantor and its Subsidiaries shall promptly notify the Collateral Agent of such filing(s) (it being understood that prior to an Event of Default for purposes of this Section such notice shall not be required more than once per fiscal quarter and shall be considered promptly delivered if such notice of filing is provided to the Collateral Agent with the delivery of the next quarterly Compliance Certificate (or at such later date and time agreed by the Agents in accordance with the terms of the Credit Agreement and the Note Purchase Agreement)) and, upon request of the Collateral Agent, execute and deliver (within five (5) Business Days of such request) any and all agreements, instruments, documents and papers as the Collateral Agent may request to evidence the security interest granted by such Grantor to the Collateral Agent hereunder in such Intellectual Property, including without limitation any Intellectual Property Security Agreements, and each Grantor hereby appoints the Collateral Agent as its attorney-in-fact to execute and file such writings for the foregoing purposes, which power shall be irrevocable from the execution date of this Agreement until the Termination Date, all such lawful acts of such attorney in accordance with this agreement being hereby ratified and confirmed.
SECTION 4.08 Commercial Tort Claims. Each Grantor will promptly give notice to the Collateral Agent of any Commercial Tort Claim with value in excess of $250,000 that may arise after the date hereof (it being understood that for purposes of this Section prior to an Event of Default such notice shall not be required more than once per fiscal quarter and a notice shall be considered promptly delivered if it is provided to the Collateral Agent together with the delivery of the next quarterly Compliance Certificate (or at such later date and time agreed by the Agents in accordance with the terms of the Credit Agreement and the Note Purchase Agreement)) and will thereafter promptly execute or otherwise authenticate a supplement to this Agreement to update Schedule 4 hereto identifying the new Commercial Tort Claim, and otherwise take all necessary or desirable actions, to subject such Commercial Tort Claim to the security interest required to be created under this Agreement.
| Annex B-27 |
SECTION 4.09 Electronic Chattel Paper. If any Grantor, now or at any time hereafter, holds or acquires an interest in any Collateral consisting of any electronic chattel paper, any electronic document or any “transferable record”, as that term is defined in Section 201 of the federal Electronic Signatures in Global and National Commerce Act, or in Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction, shall promptly notify the Collateral Agent (provided that prior to an Event of Default, any such notice shall not be required hereunder more than once per fiscal quarter and only be required if the value of such electronic chattel paper, electronic document or transferrable record is in an individual amount in excess of $250,000 and shall be considered timely delivered if such notice is provided to the Collateral Agent at the time of the delivery of the next quarterly Compliance Certificate (or such later date and time agreed with the Agents pursuant to the terms of the Credit Agreement and the Note Purchase Agreement) and upon the request of the Collateral Agent (or automatically during the occurrence and continuance of an Event of Default), promptly take such actions as necessary (or as required by the Collateral Agent) to vest in the Collateral Agent control, under Section 9-105 of the UCC or the Uniform Commercial Code of any other relevant jurisdiction, of such electronic chattel paper, control, under Section 7-106 of the UCC or the Uniform Commercial Code of any other relevant jurisdiction, of such electronic document or control, under Section 201 of the federal Electronic Signatures in Global and National Commerce Act or, as the case may be, Section 16 of the Uniform Electronic Transactions Act, as so in effect in such jurisdiction, of such transferable record. The Collateral Agent agrees with each Grantor that the Collateral Agent will arrange, pursuant to procedures satisfactory to the Collateral Agent and so long as such procedures will not result in the Collateral Agent’s loss of control, for such Grantor to make alterations to the electronic chattel paper, electronic document or transferable record permitted under UCC Section 9-105, UCC Section 7-106, or, as the case may be, Section 201 of the federal Electronic Signatures in Global and National Commerce Act or Section 16 of the Uniform Electronic Transactions Act for a party in control to make without loss of control, unless an Event of Default has occurred and is continuing or would occur after taking into account any action by such Grantor with respect to such electronic chattel paper, electronic document or transferable record. The provisions of this Section 4.09 relating to electronic documents and “control” under UCC Section 7-106 apply in the event that the 2003 revisions to Article 7, with amendments to Article 9, of the Uniform Commercial Code, in substantially the form approved by the American Law Institute and the National Conference of Commissioners on Uniform State Laws, are now or hereafter adopted and become effective in New York or in any other relevant jurisdiction.
SECTION 4.10 Letter-of-Credit Rights. Each Grantor, by granting a security interest in its Letter-of-Credit Rights to the Collateral Agent, intends to (and hereby does) collaterally assign to the Collateral Agent its rights (including its contingent rights) to the Proceeds of all Letter-of-Credit Rights of which it is or hereafter becomes a beneficiary or assignee. Each Grantor will promptly notify the Collateral Agent if it now or in the future becomes a beneficiary under letters of credit having an aggregate face amount in excess of $250,000 (it being understood that for purposes of this Section prior to an Event of Default such notice shall be considered promptly delivered if it is provided to the Collateral Agent together with the delivery of the next quarterly Compliance Certificate (or at such later date and time agreed by the Agents in accordance with the terms of the Credit Agreement and the Note Purchase Agreement)). Each Grantor will, at such times as required under the Credit Agreement and the Note Purchase Agreement (and immediately following the occurrence and during the continuance of an Event of Default), (i) notify (and such Grantor hereby authorizes the Collateral Agent to notify) the issuer and each nominated person with respect to each of the Letters of Credit that the Proceeds thereof have been assigned to the Collateral Agent hereunder and any payments due or to become due in respect thereof are to be made directly to the Collateral Agent and (ii) arrange for the Collateral Agent to become the transferee beneficiary of such Letter of Credit.
SECTION 4.11 Preservation of Collateral; Compliance with Laws. Each Grantor will do and perform all reasonable acts that may be necessary or appropriate to maintain, preserve and protect the Collateral in all material respects to the extent required hereunder and/or under the Credit Agreement or the Note Purchase Agreement. Each Grantor will maintain or cause to be maintained with financially sound and reputable insurers such insurance policies as required in accordance with Section 6.13 of the Credit Agreement and Section 4.1(m) of the Note Purchase Agreement.
| Annex B-28 |
SECTION 4.12 Equipment and Inventory.
(a) Each Grantor has exclusive possession and control of its Equipment and Inventory, other than Inventory stored at any leased premises or warehouse or in transit in the ordinary course of business.
(b) Each Grantor will keep its Collateral (other than rolling stock or Inventory or Equipment in transit) at the locations specified in Section 3.14, hereof and, with respect to locations in the United States, subject to a Collateral Access Agreement, or, upon not less than ten (10) days’ prior written notice (or such shorter time as the Collateral Agent may agree in its sole discretion) at another location in the continental United States as designated by such Grantor in its notice; provided that either (x) the Collateral Agent has agreed to such location and Collateral at such location has a value less than Seven Hundred Fifty Thousand ($750,000) in the aggregate or (y) all commercially reasonable actions have been taken to obtain a fully-executed Collateral Access Agreement and grant to the Collateral Agent acting on behalf of the Secured Party a perfected Lien in such Collateral senior in priority to all Liens (other than Permitted Liens), (provided further, that the Grantor shall provide the Collateral Agent with written notice if such efforts do not result in the delivery of a fully-executed Collateral Access Agreement, with reasonable detail of such efforts, and the Collateral Agent, in its sole and reasonable discretion, may agree to extend the time period for obtaining a Collateral Access Agreement or to waive such requirement); and the Collateral Agent’s rights in such Equipment and Inventory, including the existence, perfection and priority of the security interest created hereby in such Collateral, are not adversely affected thereby.
(c) [Reserved].
(d) Each Grantor will pay promptly when due all property and other taxes, assessments and governmental charges or levies imposed upon, and all claims (including, without limitation, claims for labor, materials and supplies) against, its Equipment and Inventory, except to the extent payment thereof is not required by the Credit Agreement or Note Purchase Agreement. In producing its Inventory, each Grantor will comply, in all material respects, with all requirements of applicable Law, including, without limitation, the Fair Labor Standards Act.
SECTION 4.13 Further Assurances; Pledge of Instruments. At the sole expense of such Grantor, each Grantor shall promptly and duly execute and deliver any and all such further instruments and documents and take such further action as the Collateral Agent may reasonably request to obtain the full benefits of this Agreement and of the rights and powers herein granted, which shall in any case include, but shall not be limited to: (a) authorizing the filing of and delivering and causing to be filed any financing or continuation statements under the UCC with respect to the security interests granted hereby, (b) filing or cooperating with the Collateral Agent in filing any forms or other documents required to be recorded with the United States Patent and Trademark Office, the United States Copyright Office to secure or protect the Collateral Agent’s interest in such Grantor’s Collateral, (c) at the Collateral Agent’s reasonable request, transferring such Grantor’s Collateral to the Collateral Agent’s possession, or otherwise taking such other actions reasonably necessary or desirable to enable the Collateral Agent to obtain “control” (within the meaning of the UCC) with respect thereto (if a security interest in such Collateral can be perfected by possession and if such transfer is required under the other provisions of this Agreement), and (d) at the Collateral Agent’s reasonable request, promptly execute and deliver such documents as may be required to have the Collateral Agent’s security interest properly noted on a certificate of title of any vehicle, watercraft or other Equipment constituting Collateral owned by such Grantor which is covered by a certificate of title (or similar evidence of ownership) and which has a book value of Two Hundred and Fifty Thousand Dollars ($250,000) or more, in any one instance or in the aggregate for all such Equipment, and (e) upon the Collateral Agent’s reasonable request, executing and delivering or causing to be delivered written notice to insurers of the Collateral Agent’s security interest in, or claim in or under, any policy of insurance (including unearned premiums), in each case subject to the Collateral and Guarantee Requirements. Each Grantor also hereby authorizes the Collateral Agent to file any such financing or continuation statement without the signature of such Grantor.
| Annex B-29 |
ARTICLE V
REMEDIAL PROVISIONS
SECTION 5.01 Certain Matters Relating to Receivables.
(a) (x) After the occurrence and during the continuance of an Event of Default, at any time or (y) prior to an Event of Default, at such times agreed in the Credit Documents or as otherwise agreed with the Grantor, the Collateral Agent shall have the right to (i) make test verifications of the Receivables in any manner and through any medium that it considers advisable, and each Grantor shall furnish all such assistance and information as the Collateral Agent may require in connection with such test verifications, and (ii) request that the Grantors use commercially reasonable efforts to promptly cause the Grantors’ independent public accountants (or other Persons requested by or satisfactory to the Collateral Agent) to provide the Collateral Agent with reports showing reconciliations, aging and test verifications of, and trial balances for, the Receivables.
(b) The Collateral Agent hereby authorizes each Grantor to collect such Grantor’s Receivables, and the Collateral Agent may curtail or terminate said authority at any time by written notice after the occurrence of an Event of Default. Any payments of Receivables, when collected by any Grantor after the occurrence and during the continuance of an Event of Default, (i) shall be promptly (and during the existence of an Event of Default, not later than the next Business Day) after receipt thereof deposited by such Grantor in the exact form received (but duly endorsed by such Grantor to the Collateral Agent if required) in a Collateral Account subject to a Control Agreement in favor of the Collateral Agent, subject to withdrawal by the Collateral Agent for the account of the Secured Parties only as provided in Section 5.05, and (ii) until so turned over, any such Collateral shall be held by such Grantor for the benefit of the Secured Parties, segregated from other funds of such Grantor.
(c) At the Collateral Agent’s written request after the occurrence of an Event of Default, each Grantor shall promptly deliver to the Collateral Agent copies of all documents evidencing, and relating to, the agreements and transactions which gave rise to the Receivables, including, without limitation, all orders, invoices and shipping receipts.
SECTION 5.02 Communications with Obligors; Grantors Remain Liable.
(a) The Collateral Agent, in its own name or in the name of others, may, at any time after the occurrence of an Event of Default, communicate with obligors under the Receivables and parties to the Contracts and the Assigned Agreements to verify with them to the Collateral Agent’s satisfaction the existence, amount and terms of any Receivables or Contracts or Assigned Agreement.
(b) After the occurrence and during the continuance of an Event of Default, within five (5) Business Days after the request of the Collateral Agent, each Grantor shall notify obligors on the Receivables and parties to the Contracts and the Assigned Agreement that the Receivables and the Contracts and the Assigned Agreements have been assigned to the Collateral Agent for the benefit of the Secured Parties and that payments in respect thereof shall be made directly to the Collateral Agent.
| Annex B-30 |
(c) Anything herein to the contrary notwithstanding, each Grantor shall remain liable for all obligations under each of the Receivables and Contracts and Assigned Agreements to observe and perform all the conditions and obligations to be observed and performed by it thereunder, all in accordance with the terms of any agreement giving rise thereto. No Secured Party shall have any obligation or liability under any Receivable (or any agreement giving rise thereto) or Contract or Assigned Agreements by reason of or arising out of this Agreement or the receipt by any Secured Party of any payment relating thereto, nor shall any Secured Party be obligated in any manner to perform any of the obligations of any Grantor under or pursuant to any Receivable (or any agreement giving rise thereto) or Contract or Assigned Agreements, to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by it or as to the sufficiency of any performance by any party thereunder, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times.
SECTION 5.03 Pledged Stock
(a) Unless an Event of Default shall have occurred and be continuing, each Grantor shall be permitted to receive dividends and other distributions in respect of the Pledged Stock and all payments made in respect of the Pledged Debt, in each case paid in the normal course of business or otherwise as a result of the exercise of reasonable business judgment of the relevant Issuer, to the extent permitted by the Credit Documents, and to exercise all voting and corporate rights with respect to the Investment Property; provided, that no vote shall be cast or corporate or other organizational right exercised or other action taken which would be inconsistent with or result in any violation of any provision this Agreement and the Intercreditor Agreement or any other Credit Document or which could reasonably be expected to materially impair the Collateral or the Secured Parties’ rights and/or remedies with respect to the Credit Documents or which would otherwise be adverse to the Secured Parties in any material respect.
(b) If an Event of Default shall have occurred and be continuing (i) the Collateral Agent shall have the right to receive any and all dividends, payments or other Proceeds paid in respect of the Pledged Stock and other Investment Property granted hereunder and make application thereof to the Secured Obligations in the order set forth in the Intercreditor Agreement and thereafter in Section 2.07 of the of the Credit Agreement and/or in Section 4.1(e) of the Note Purchase Agreement, as applicable, (ii) any or all of such Pledged Stock and/or other Investment Property shall be registered in the name of the Collateral Agent or its nominee upon the request of the Collateral Agent, and (iii) the Collateral Agent or its nominee may exercise (x) all voting, corporate and other rights pertaining to such Pledged Stock and/or other Investment Property at any meeting of shareholders of the relevant Issuer or Issuers or otherwise and (y) any and all rights of conversion, exchange and subscription and any other rights, privileges or options pertaining to such Pledged Stock and/or other Investment Property as if it were the absolute owner thereof (including, without limitation, the right to exchange, at its discretion, any and all of the Investment Property upon the merger, consolidation, reorganization, recapitalization or other fundamental change in the corporate structure of any Issuer, or upon the exercise by any Grantor or the Collateral Agent of any right, privilege or option pertaining to the Pledged Stock and other Investment Property, and in connection therewith, the right to deposit and deliver any and all of the Pledged Stock and other Investment Property with any committee, depositary, transfer agent, registrar or other designated agency upon such terms and conditions as the Collateral Agent may determine), all without liability except to account for property actually received by it, but the Collateral Agent shall have no duty to any Grantor to exercise any such right, privilege or option and shall not be responsible for any failure to do so or delay in so doing. Upon the Collateral Agent’s request, each Grantor shall, at its sole cost and expense, execute and deliver to the Collateral Agent any and all reasonable or appropriate documents and instruments as the Collateral Agent may request in order to permit the Collateral Agent to exercise the voting and other rights which it may be entitled to exercise hereunder and to receive all distributions which it may be entitled to receive hereunder.
| Annex B-31 |
(c) Each Grantor hereby authorizes and instructs each Issuer of any Investment Property pledged by such Grantor hereunder to (i) comply with any instruction received by it from the Collateral Agent that in accordance with the terms of this Agreement, without any other or further instructions from such Grantor, and each Grantor agrees that each Issuer shall be fully protected in so complying and shall have no duty or right to inquire as to the Collateral Agent’s authority to give such instruction, and (ii) when required hereby, pay any dividends or other payments with respect to the Investment Property directly to the Collateral Agent.
(d) In furtherance and not in limitation of the foregoing rights of the Collateral Agent pursuant to this Section 5.03, each Grantor hereby, (i) appoints the Collateral Agent as its true and lawful attorney-in-fact to, and (ii) grants to Collateral Agent an irrevocable proxy with full power of substitution and resubstitution (and which is coupled with an interest) to, vote the Equity Interests owned by such Grantor and to execute such other proxies as the Collateral Agent may reasonably request (provided, however, that the Collateral Agent shall not exercise such power of attorney unless an Event of Default then exists).
(e) In furtherance of the proxy set forth in Section 5.03(d), upon the exercise of such proxy, all prior proxies given by any Grantor with respect to the applicable Equity Interests are hereby revoked, and no subsequent proxies (other than to the Collateral Agent) will be given with respect to any such Equity Interests, (i) the Collateral Agent will be empowered and may exercise such proxy at any and all times, including but not limited to, at any meeting of shareholders, partners or members, as the case may be, however called, and at adjournment thereof, or in any action by written consent, and may waive any notice otherwise required in connection therewith, (ii) to the fullest extent permitted by applicable Law, the Collateral Agent shall have no agency, fiduciary or other implied duties to any Grantor or any other Person when acting with respect to such proxy, and (iii) each Grantor waives and releases any claim that it may have against the Collateral Agent with respect to any breach or alleged breach of any such agency, fiduciary or other duty.
SECTION 5.04 Proceeds to be Turned Over to Collateral Agent. All Collateral consisting of Proceeds received by the Collateral Agent hereunder shall be held by the Collateral Agent in a Collateral Account maintained under its sole dominion and control. All such Proceeds, while held by the Collateral Agent in a Collateral Account (or by such Grantor for the benefit of the Secured Parties), shall continue to be held as Collateral for all the Secured Obligations and shall not constitute payment thereof until applied as provided in Section 5.05.
SECTION 5.05 Application of Proceeds. If an Event of Default shall have occurred and be continuing, the Collateral Agent may, at any such time, apply all or any part of the Proceeds of Collateral, whether or not held in any Collateral Account, in payment of the Secured Obligations in the order set forth in the Intercreditor Agreement and thereafter in Section 2.07 of the Credit Agreement and/or in Section 4.1(e) of the Note Purchase Agreement, as applicable.
| Annex B-32 |
SECTION 5.06 UCC and Other Remedies. If an Event of Default shall have occurred and be continuing, the Collateral Agent, on behalf of the Secured Parties, may exercise, in addition to all other rights and remedies provided for herein or in any other Credit Document or in any other instrument or agreement securing, evidencing or relating to the Secured Obligations, all rights and remedies of a secured party under the UCC (whether or not the UCC applies to the affected Collateral) or any other applicable Laws. Without limiting the generality of the foregoing, the Collateral Agent, without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by applicable Laws referred to below or expressly required under this Agreement) to or upon any Grantor or any other Person (all and each of which demands, defenses, advertisements and notices are hereby waived), may in such circumstances forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give option or options to purchase, or otherwise dispose of and deliver the Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker’s board or office of any Secured Party or elsewhere upon such commercially reasonable terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit, or for future delivery, without assumption of any credit risk. Any Secured Party shall have the right upon any such public sale or sales, and, to the extent permitted by applicable Laws, upon any such private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption in any Grantor, which right or equity is hereby waived and released. Each Grantor further agrees, at the Collateral Agent’s request and at such Grantor’s sole risk and expense, to assemble the Collateral and make it available to the Collateral Agent at places which the Collateral Agent shall select in its reasonable discretion, whether at such Grantor’s premises or elsewhere. The Collateral Agent may occupy any premises owned or leased by any of the Grantors where the Collateral or any part thereof is assembled or located for a reasonable period in order to effectuate its rights and remedies hereunder or under law, without obligation to such Grantor in respect of such occupation. The Collateral Agent shall apply the net proceeds of any action taken by it pursuant to this Section 5.06, after deducting all reasonable costs and expenses of every kind incurred in connection therewith or incidental to the care or safekeeping of any of the Collateral or in any way relating to the Collateral or the rights of the Secured Parties hereunder, including, without limitation, reasonable attorneys’ fees and disbursements, to the payment in whole or in part of the Secured Obligations in accordance with Section 5.05, and only after such application and after the payment by the Collateral Agent of any other amount required by any provision of applicable Laws, including, without limitation, Section 9-615(a)(3) of the UCC, need the Collateral Agent account for the surplus, if any, to any Grantor. Each Grantor hereby acknowledges that the Secured Obligations arose out of a commercial transaction, and agrees that if an Event of Default shall have occurred and be continuing, the Collateral Agent shall have the right to an immediate writ of possession without notice of a hearing. The Collateral Agent shall have the right to the appointment of a receiver for the properties and assets of each Grantor on and after the occurrence of an Event of Default, and each Grantor hereby consents, to such rights and such appointment and hereby waives any objection such Grantor may have thereto or the right to have a bond or other security posted by Collateral Agent. To the extent permitted by applicable Laws, each Grantor waives all claims, damages and demands it may acquire against any Secured Party arising out of the exercise by any Secured Party of any rights hereunder. If any notice of a proposed sale or other disposition of Collateral shall be required by applicable Laws, such notice shall be deemed reasonable and proper if given at least ten (10) days before such sale or other disposition.
| Annex B-33 |
SECTION 5.07 Sales of Collateral
(a) Each Grantor recognizes that the Collateral Agent may be unable to effect a public sale of any or all the Pledged Stock, by reason of certain prohibitions contained in the Securities Act and applicable state securities laws or otherwise, and may be compelled to resort to one or more private sales thereof to a restricted group of purchasers which will be obliged to agree, among other things, to acquire such securities for their own account for investment and not with a view to the distribution or resale thereof. Each Grantor acknowledges and agrees that any such private sale may result in prices and other terms less favorable than if such sale were a public sale and, notwithstanding such circumstances, agrees that selling collateral in a private sale as opposed to a public sale shall not be deemed to make such sale commercially unreasonable. The Collateral Agent shall be under no obligation to delay a sale of any of the Pledged Stock for the period of time necessary to permit the Issuer thereof to register such securities for public sale under the Securities Act, or under applicable state securities laws, even if such Issuer would agree to do so.
(b) Each Grantor agrees to use its best efforts to promptly do or cause to be done all such other acts as may be necessary to make such sale or sales of all or any portion of the Pledged Stock pursuant to this Section 5.07 valid and binding and in compliance with any and all other applicable Laws. Each Grantor further agrees that a breach of any of the covenants contained in this Section 5.07 will cause irreparable injury to the Collateral Agent and the Secured Parties, that the Collateral Agent and the Secured Parties have no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this Section 5.07 shall be specifically enforceable against each Grantor, and each Grantor hereby waives, to the extent permitted by law, and agrees not to assert any defenses against an action for specific performance of such covenants. Each Grantor hereby waives any requirement to post a bond in connection with any legal proceeding brought by any Secured Party for or involving the right of specific performance or other injunctive relief. Each Grantor further agrees to provide the Collateral Agent with such information and projections as may be necessary or, in the opinion of the Collateral Agent, advisable to enable the Collateral Agent to effect the sale of the Pledged Stock. The Collateral Agent is authorized, in connection with any sale of the Pledged Stock, to deliver or otherwise disclose to any prospective purchaser of the Pledged Stock, any registration statement or prospectus, and all supplements and amendments thereto and any other information in its possession relating to such Pledged Stock.
(c) Neither the Collateral Agent nor the Secured Parties shall incur any liability as a result of the sale of any Collateral, or any part thereof, at any private sale conducted in a commercially reasonable manner, it being agreed that some or all of the Collateral is or may be of one or more types that threaten to decline speedily in value and that are not customarily sold in a recognized market. Each Grantor hereby waives, to the fullest extent permitted by applicable Laws, any claims against the Collateral Agent and the Secured Parties arising by reason of the fact that the price at which any of the Collateral may have been sold at such a private sale was less than the price which might have been obtained at a public sale or was less than the aggregate amount of the Secured Obligations, even if the Collateral Agent or the Secured Parties accept the first offer received and do not offer any Collateral to more than one offeree.
| Annex B-34 |
SECTION 5.08 Waiver; Deficiency. Each Grantor shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to pay the Secured Obligations and the fees and disbursements of any attorneys employed by any Secured Party to collect such deficiency. To the extent permitted by applicable Law, each Grantor hereby unconditionally and irrevocably waives and agrees not to assert any claim, defense, setoff or counterclaim based on any valuation, stay, appraisement, extension, redemption or similar laws and any and all rights or defenses it may have as a surety, now or hereafter existing, arising out of the exercise by them of any rights hereunder, diligence, promptness, presentment, requirements for any demand or notice hereunder including any of the following: (a) any demand for payment or performance and protest and notice of protest; (b) any notice of acceptance; (c) any presentment, demand, protest or further notice or other requirements of any kind with respect to any Secured Obligation (including any accrued but unpaid interest thereon) becoming immediately due and payable; and (d) any other notice in respect of any Secured Obligation or any part thereof, and any defense arising by reason of any disability or other similar defense of any Grantor. Each Grantor further unconditionally and irrevocably agrees not to (i) enforce or otherwise exercise any right of subrogation or any right of reimbursement or contribution or similar right against any other Grantor by reason of any Credit Document or any payment made thereunder or (ii) assert any claim, defense, setoff or counterclaim it may have against any other Grantor or set off any of its obligations to such other Grantor against obligations of such other Grantor to such Grantor, in each case, prior to the Termination Date. If any amount shall be paid to any Grantor on account of such contribution or subrogation rights at any time prior to the Termination Date, such amount shall be held by such Grantor on behalf of and for the benefit of the Collateral Agent and the other Secured Parties, segregated from other funds of such Grantor, and shall, promptly upon receipt by such Grantor, be turned over to the Collateral Agent in the exact form received by such Grantor (duly indorsed by such Grantor to the Collateral Agent to the extent necessary), to be held as collateral security for all of the Secured Obligations until applied as provided in Section 5.05.
SECTION 5.09 Approvals. In the event that the Collateral Agent desires to exercise any remedies, voting or consensual rights or attorney-in-fact powers set forth in this Agreement and determines it necessary to obtain any approvals or consents of any Governmental Authority or any other Person, then, upon the request of the Collateral Agent, such Grantor agrees to assist the Collateral Agent in obtaining as soon as practicable any necessary approvals or consents for the exercise of any such remedies, rights and powers.
SECTION 5.10 Grant of Nonexclusive License. Solely for the purpose of enabling the Collateral Agent to exercise rights and remedies under this Section 5 and upon the occurrence and during the continuance of an Event of Default, each Grantor hereby grants to the Collateral Agent a royalty free, nonexclusive, irrevocable license (which license shall terminate after giving effect to the Termination Date) to use, apply, and affix any trademark, trade name, logo, or the like in which such Grantor now or hereafter has any rights, such license being with respect to the Collateral Agent’s exercise of the rights hereunder, including, without limitation, in connection with any completion of the manufacture of Inventory or sale or other disposition of Inventory.
| Annex B-35 |
ARTICLE VI
THE COLLATERAL AGENT
SECTION 6.01 Collateral Agent’s Appointment as Attorney-in-Fact, etc.
(a) Until the Termination Date, each Grantor hereby irrevocably appoints the Collateral Agent and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of such Grantor and in the name of such Grantor or in its own name, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Agreement, and, without limiting the generality of the foregoing, each Grantor hereby gives the Collateral Agent the power and right, on behalf of such Grantor, without notice to or assent by such Grantor, to do any or all of the following in each case at the Collateral Agent’s sole option:
(i) in the name of such Grantor or its own name, or otherwise, take possession of and endorse and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due under any Receivable or Contract or with respect to any other Collateral and file any claim or take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by the Collateral Agent for the purpose of collecting any and all such moneys due under any Receivable or Contract or with respect to any other Collateral whenever payable;
(ii) in the case of any Intellectual Property, execute and deliver, and have recorded, any and all agreements, instruments, documents and papers as the Collateral Agent may request to evidence the Secured Parties’ security interest in such Intellectual Property and the goodwill and general intangibles of such Grantor relating thereto or represented thereby;
(iii) pay or discharge taxes and Liens levied or placed on or threatened against the Collateral, effect any repairs to the Collateral and obtain any insurance called for by the terms of this Agreement and pay all or any part of the premiums therefor and the costs thereof, which amounts shall constitute Secured Obligations;
(iv) execute, in connection with any sale provided for in Sections 5.06 or 5.07, any endorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral; and
| Annex B-36 |
(v) (1) direct any party liable for any payment under any of the Collateral to make payment of any and all moneys due or to become due thereunder directly to the Collateral Agent or as the Collateral Agent shall direct; (2) ask or demand for, collect, and receive payment of and receipt for, any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Collateral; (3) sign and endorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications, notices and other documents in connection with any of the Collateral; (4) commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or any portion thereof and to enforce any other right in respect of any Collateral; (5) defend any suit, action or proceeding brought against such Grantor with respect to any Collateral; (6) settle, compromise or adjust any such suit, action or proceeding and, in connection therewith, give such discharges or releases as the Collateral Agent may deem appropriate; (7) assign any Copyright, Patent or Trademark (along with the goodwill of the business to which any such Copyright, Patent or Trademark pertains) throughout the world for such term or terms, on such conditions, and in such manner, as the Collateral Agent shall in its sole discretion determine; (8) perform any obligations of any Grantor under any Contract, and (9) generally, sell, transfer, pledge and make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though the Collateral Agent were the absolute owner thereof for all purposes, and do, at the Collateral Agent’s option and such Grantor’s sole expense, at any time, or from time to time, all acts and things which the Collateral Agent reasonably deems necessary or desirable to protect, preserve or realize upon the Collateral and the Secured Parties’ security interests therein and to effect the intent of this Agreement and the Collateral and Guarantee Requirements of the Credit Agreement and Note Purchase Agreement, all as fully and effectively as such Grantor might do.
Anything in this Section 6.01(a) to the contrary notwithstanding, the Collateral Agent agrees that it will not exercise any rights under the power of attorney provided for in this Section 6.01(a) unless an Event of Default shall have occurred and be continuing.
(b) If any Grantor fails to perform or comply with any of its agreements contained herein or in any other Credit Document, the Collateral Agent, at its option, but without any obligation so to do, may perform or comply, or otherwise cause performance or compliance, with such agreement.
(c) The expenses of the Collateral Agent incurred in connection with actions undertaken as provided in this Section 6.01, together with (i) interest thereon at a rate per annum equal to the highest interest rate applicable under the Credit Agreement (including, for the avoidance of doubt, any additional interest pursuant to Section 2.02(a) of the Credit Agreement) in respect of the Loan Obligations and (ii) interest thereon at a rate per annum equal to the highest interest rate applicable under the Note Documents in respect of the Note Obligations, in each case, from the date of payment by the Collateral Agent to the date reimbursed by the relevant Grantor, shall be payable by such Grantor to the Collateral Agent on demand.
| Annex B-37 |
(d) Each Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. All powers, authorizations and agencies contained in this Agreement are coupled with an interest and are irrevocable until this Agreement is terminated and the security interests created hereby are released.
SECTION 6.02 Duty of Agent. The Collateral Agent’s sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession, under Section 9-207 of the UCC or otherwise, shall be to deal with it in the same manner as the Collateral Agent deals with similar property for its own account. No Secured Party nor any of their respective officers, directors, employees or agents shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of any Grantor or any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof. The powers conferred on the Secured Parties hereunder are solely to protect the Secured Parties’ interests in the Collateral and shall not impose any duty upon any Secured Party to exercise any such powers. The Secured Parties shall be accountable only for amounts that they actually receive as a result of the exercise of such powers, and neither they nor any of their officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for their own gross negligence or willful misconduct as determined by a final, non-appealable judgment of a court of competent jurisdiction.
SECTION 6.03 Financing Statements. Each Grantor authorizes the Collateral Agent (and its counsel and agents) to file or record, at any time and from time to time, financing statements and other filing or recording documents or instruments, and any amendments, continuations or terminations thereof, with respect to the Collateral, without notice to any Grantor and without the signature of such Grantor (unless such signature is required by applicable Law), in such form and in such offices as the Collateral Agent determines necessary or appropriate to perfect or protect, or continue to perfect or protect, the security interests of the Collateral Agent created under this Agreement to the fullest extent required by this Agreement, but at all times subject to the Collateral and Guarantee Requirements of the Credit Agreement and the Note Purchase Agreement. Each Grantor authorizes the Collateral Agent to use the collateral description “all personal property”, “all assets”, “all assets of the debtor, whether now owned or hereafter acquired or coming into existence, and wherever located, including any proceeds thereof” or words of similar effect, or as being of an equal or lesser scope, or with greater detail, all in the Collateral Agent’s discretion, regardless of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the UCC or the Uniform Commercial Code of any other applicable jurisdiction, in any such financing statements. Each Grantor hereby ratifies and authorizes the filing by the Collateral Agent (and its counsel and agents) of any financing statement with respect to the Collateral made prior to the date hereof.
SECTION 6.04 Authority of Agent. Each Grantor acknowledges that the rights and responsibilities of the Collateral Agent under this Agreement with respect to any action taken by the Collateral Agent or the exercise or non-exercise by the Collateral Agent of any option, voting right, request, judgment or other right or remedy provided for herein or resulting or arising out of this Agreement shall, as between the Secured Parties, be governed by the Credit Documents, the Intercreditor Agreement, and by such other agreements with respect thereto as may exist from time to time among them, but, as between the Collateral Agent and the Grantors, the Collateral Agent shall be conclusively presumed to be acting as agent for the Secured Parties with full and valid authority so to act or refrain from acting, and no Grantor shall be under any obligation, or entitlement, to make any inquiry respecting such authority.
| Annex B-38 |
ARTICLE VII
MISCELLANEOUS
SECTION 7.01 Amendments in Writing. None of the terms or provisions of this Agreement may be waived, amended, supplemented or otherwise modified except in accordance with Section 13.05 of the Credit Agreement.
SECTION 7.02 Notices. All notices, requests and demands to or upon the Collateral Agent or any Grantor hereunder shall be effected in the manner provided for in Section 12.01 of the Credit Agreement at the address set forth in Section 5.01 of the Intercreditor Agreement and thereafter, at the address set forth in Section 12.01 of the Credit Agreement or Section 12.01 Note Purchase Agreement, as applicable.
SECTION 7.03 Successors and Assigns. This Agreement shall be binding upon the successors and assigns of each Grantor and shall inure to the benefit of the Collateral Agent and the other Secured Parties and their successors and assigns; provided, that, no Grantor may assign or otherwise transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of each Lender and each Purchaser (and any attempted assignment or transfer by any Grantor without such consent shall be null and void).
SECTION 7.04 Set-Off. Each Grantor hereby irrevocably authorizes the Collateral Agent and each Secured Party at any time and from time to time after the occurrence of an Event of Default, without prior notice to such Grantor or any other Loan Party or Note Party, any such notice being expressly waived by the Grantors, the Loan Parties and the Note Parties to the extent permitted under applicable Law, upon any amount becoming due and payable by such Grantor hereunder (whether at the stated maturity, by acceleration or otherwise), to set-off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Secured Party to or for the credit or the account of such Grantor, or any part thereof in such amounts as such Collateral Agent or such Secured Party may elect, against and on account of the obligations and liabilities of such Grantor to such Collateral Agent or such Secured Party hereunder and claims of every nature and description of such Collateral Agent or such Secured Party against such Grantor, in any currency, whether arising hereunder, under the Credit Agreement, the Note Purchase Agreement, any other Credit Document or otherwise, as such Collateral Agent or such Secured Party may elect, whether or not any Secured Party has made any demand for payment and although such obligations, liabilities and claims may be contingent or unmatured. Each Secured Party, or the Collateral Agent on their behalf, shall notify such Grantor promptly after any such set-off and the application made by such Secured Party of the proceeds thereof in accordance with Section 5.05; provided, that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Secured Party under this Section 7.04 are in addition to other rights and remedies (including, without limitation, other rights of set-off) which such Secured Party may have and are subject to any applicable limitations set forth in the Credit Agreement and Note Purchase Agreement.
| Annex B-39 |
SECTION 7.05 Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by telecopy, email, facsimile or other electronic transmission), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. The effectiveness of this Agreement, the counterparts hereof and the signatures hereto shall have the same force and effect as manually signed originals and shall be binding on all parties hereto.
SECTION 7.06 Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
SECTION 7.07 Section Headings. The Section headings used in this Agreement are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof.
SECTION 7.08 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO CONFLICTS OF LAW PROVISIONS except Section 5-1401 of the New York General Obligations Law.
SECTION 7.09 Submission to Jurisdiction. Each Grantor and the Collateral Agent hereby irrevocably submits to the exclusive jurisdiction of any New York State or Federal court sitting in the County of New York over any suit, action or proceeding arising out of or relating to this Agreement or any Credit Document, and each Grantor and the Collateral Agent hereby agrees and consents that, in addition to any methods of service of process provided for under applicable Law, all service of process in any such suit, action or proceeding in any New York State or Federal court sitting in the County of New York may be made by certified or registered mail, return receipt requested, or overnight mail with a reputable national carrier, directed to the Grantors at the address indicated above, and service so made shall be complete five (5) days after the same shall have been so mailed (one (1) day in the case of an overnight mail service).
| Annex B-40 |
SECTION 7.10 Rights and Remedies. The Collateral Agent may exercise all rights and remedies available to the Collateral Agent under the Credit Documents or at Law or equity, including all remedies provided under the UCC, all of which rights and remedies shall be cumulative and nonexclusive to the extent permitted by law. The Collateral Agent’s and Secured Parties’ failure, at any time or times, to require strict performance by the Grantors of any provision of this Agreement or any other Credit Document shall not waive, affect, or diminish any right of the Collateral Agent or Secured Parties thereafter to demand strict performance and compliance herewith or therewith. No waiver hereunder shall be effective unless signed by the party granting the waiver and then is only effective for the specific instance and purpose for which it is given. The Collateral Agent’s and Secured Parties’ rights and remedies under this Agreement and the other Credit Documents are cumulative. The Collateral Agent and Secured Parties have all rights and remedies provided under the UCC, by Law, or in equity. The Collateral Agent’s and Secured Parties’ exercise of one (1) right or remedy is not an election and shall not preclude the Collateral Agent or Secured Parties from exercising any other remedy under this Agreement or other remedy available at Law or in equity, and the Collateral Agent or Secured Parties’ waiver of any Event of Default is not a continuing waiver. The Collateral Agent’s or Secured Parties’ delay in exercising any remedy is not a waiver, election, or acquiescence.
SECTION 7.11 Additional Grantors. Upon the execution and delivery by any Person of a Security Agreement Supplement in substantially the form of Annex I hereto, such Person shall be and shall become a Grantor hereunder, and each reference in this Agreement and the other Credit Documents to “Grantor” shall also mean and be a reference to such Person, each reference in this Agreement and the other Credit Documents to the “Collateral” shall also mean and be a reference to the Collateral granted by such Person and each reference in this Agreement to a Schedule shall also mean and be a reference to the schedules attached to such Security Agreement Supplement.
SECTION 7.12 Releases of Guarantees and Liens
(a) Notwithstanding anything to the contrary contained herein or in any other Credit Document, the Collateral Agent is hereby irrevocably authorized by each Secured Party (without requirement of notice to or consent of any Secured Party except as expressly required by Section 13.05 of the Credit Agreement and Section 14.9 of the Note Purchase Agreement) to take any action requested by the Grantor to release any Collateral (i) to the extent necessary to permit the consummation of any transaction permitted by the Credit Documents or that has been consented to in accordance with Section 13.05 of the Credit Agreement and Section 14.9 of the Note Purchase Agreement, or (ii) under the circumstances described in Section 7.12(b) below.
(b) On the Termination Date, the Collateral shall be released from the Liens created by this Agreement and the other Collateral Documents, and this Agreement and the other Collateral Documents and all obligations (other than those expressly stated to survive such termination) of the Collateral Agent and each Grantor under this Agreement and the other Collateral Documents shall automatically terminate, all without delivery of any instrument or performance of any act by any Person.
| Annex B-41 |
(c) Pursuant to the terms of Section 2.06 of the Intercreditor Agreement, the Controlling Secured Party (as defined therein) shall have the authority to make decisions regarding any release of any Liens granted under this Agreement in accordance with the terms of the Intercreditor Agreement. In each case as specified in this Section 7.12, the Collateral Agent will (and each Lender irrevocably authorizes the Collateral Agent to), at the Grantors’ expense, execute and deliver to the applicable Grantor such documents as such Grantor may reasonably request to evidence the release of such item of Collateral from the security interest granted under this Agreement and the other Collateral Documents, in each case in accordance with the terms of the Credit Documents and this Section 7.12.
SECTION 7.13 Reinstatement. This Agreement shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Secured Obligations is rescinded or must otherwise be restored or returned by any Secured Party upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of any Grantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the any Grantor or any substantial part of its property, or otherwise, all as though such payments had not been made.
SECTION 7.14 Grantors Formed or Collateral Located in a Jurisdiction other than in a State of the United States or the District of Columbia. Notwithstanding anything to the contrary herein, nothing contained herein shall apply to any Collateral of a Grantor which consists of real estate, possessory collateral, accounts, cash and other such Collateral located in a jurisdiction other than a state of the United States or the District of Columbia (“Local Law Perfected Assets”), if such Grantor is party to a local law Security Document or mortgage or other instrument having like effect (each a “Local Law Security Document”) and pursuant to such Local Law Security Document such Grantors granted security interests in and Liens on substantially all of their assets including the Collateral, and, to the extent Liens on such Collateral are both granted and perfected pursuant to local law in such jurisdiction and such Collateral would not require additional perfection steps under the UCC or U.S. Federal law pursuant to the express terms of such Local Law Security Documents or local law in the applicable jurisdiction (the “Local Law”), the terms, conditions, representations and warranties, undertakings or events of default contained herein with respect to such Collateral, shall expressly not apply. To the extent there is a conflict between the terms of this Security Agreement and the applicable Local Law Security Document with respect to the method of granting or perfecting a security interest in or a Lien on any Collateral which is both the subject of this Agreement and the local law Security Document relating to the such Non-US Obligors and Collateral or such Obligor’s jurisdiction of formation or organization or such US Obligor’s Local Law Perfected Assets, the terms of the Local Law Security Documents and, the terms of the Local Law Security Document and the Local Law shall prevail.
SECTION 7.15 Collateral and Guarantee Requirements. Notwithstanding anything to the contrary in this Agreement, all requirements and obligations of the Grantors hereunder are subject to and limited by the Collateral and Guarantee Requirements, including such provisions that do not explicitly reference the Collateral and Guarantee Requirements. To the extent any representation or covenant hereunder requires disclosure or compliance therewith by a Grantor, each such representation and covenant shall be interpreted in accordance with the Collateral and Guarantee Requirements. To the extent there is any inconsistency between the terms of this Agreement and the Collateral and Guarantee Requirements, the Collateral and Guarantee Requirements shall control.
SECTION 7.16 WAIVER OF JURY TRIAL. EACH GRANTOR, THE COLLATERAL AGENT, THE LENDERS, THE PURCHASERS, AND EACH OTHER SECURED PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
| Annex B-42 |
SECTION 7.17 Effect of Amendment and Restatement. Upon this Agreement becoming effective as of the Restatement Effective Date: (a) the terms and conditions of the Existing Security Agreement shall be deemed to be amended and restated by this Agreement; and (b) the grant of the security interests under the Existing Security Agreement and the obligations related thereto shall continue, and shall in no event be deemed released, terminated, extinguished, discharged or otherwise satisfied hereby (other than pursuant to the terms hereof), and under no circumstances constitutes a substitution or novation but rather an amendment and restatement thereof, but such grant and the obligations related thereto shall hereafter be governed by the terms of this Agreement.
SECTION 7.18 Intercreditor Agreement. Notwithstanding anything herein to the contrary, the Liens and security interests granted to the Collateral Agent pursuant to this Agreement and the exercise of any right or remedy by the Collateral Agent hereunder are subject to the provisions of the Intercreditor Agreement. In the event of any conflict between the terms of the Intercreditor Agreement and the terms of this Agreement, the terms of the Intercreditor Agreement shall govern.
SECTION 7.19 Amendments in Writing; Waiver; Integration.
(a) No waiver of any provision of this Agreement, and no consent to any departure by any Grantor therefrom, shall in any event be effective unless the same shall be in writing and signed by the Collateral Agent, and no amendment of any provision of this Agreement shall in any event be effective unless the same shall be in writing and signed by the Collateral Agent and the Grantors.
(b) The Credit Documents represent the entire agreement about this subject matter and supersede prior negotiations or agreements. All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of the Credit Documents merge into the Credit Documents.
[Signature Pages Follow]
| Annex B-43 |
[All Schedules, Exhibits and Annexes are omitted from this filing pursuant to Item 601(a)(5) of Regulation S-K]
Exhibit 10.48
Execution Version
THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT CERTAIN INFORMATION HAS BEEN OMITTED PURSUANT TO ITEM 601(a)(6) OF REGULATION S-K: [***]
JOINDER AGREEMENT
This JOINDER AGREEMENT (“Joinder Agreement”), dated as of August 13, 2021 is made by AIRSPAN NETWORKS HOLDINGS INC. (formerly known as New Beginnings Acquisition Corp.), a Delaware corporation (the “Issuer”) and the undersigned persons that are signatories hereto as “Guarantors” (the “Joining Guarantors” and each, a “Joining Guarantor”) and delivered to DBFIP ANI LLC, a Delaware limited liability company, in its capacities administrative agent, collateral agent and trustee for the Holders of the Convertible Notes (in such capacity, together with its successors and assigns in such capacity, the “Collateral Agent”). Capitalized terms used but not otherwise defined herein shall have the meaning given to such terms in that certain Senior Secured Convertible Note Purchase and Guarantee Agreement dated as of July 30, 2021 (as the same may be amended, amended and restated, restated, supplemented or otherwise modified from time to time, the “Purchase Agreement”) entered into by, among others, the Issuer, the Collateral Agent, AIRSPAN NETWORKS INC. (successor by merger to Artemis Merger Sub Corp.), a Delaware corporation (the “Target”), as a Guarantor, and Purchasers from time to time party thereto.
WHEREAS, the Issuer, the Collateral Agent, certain Subsidiaries of the Issuer and the initial Purchaser named therein heretofore executed and delivered the Purchase Agreement providing for the issuance and sale of the Convertible Notes; and
WHEREAS, as a condition to the consummation of the offering of the Convertible Notes, each Joining Guarantor, has agreed to join in the Purchase Agreement on the date of the Closing;
WHEREAS, this Joinder Agreement supplements the Purchase Agreement; and
WHEREAS, each Joining Guarantor has determined that the execution, delivery and performance of this Agreement and the assumption of the Guaranteed Obligations as a Guarantor under the Purchase Agreement and other Note Documents will materially benefit directly and indirectly, and are within the corporate purposes and best interests of, each Joining Guarantor; and
NOW THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt of which is hereby acknowledged, the Issuer, the Target and each other Guarantor and Joining Guarantor agrees for the benefit of the Collateral Agent and the Holders as follows:
1. Joinder. Each of the undersigned hereby acknowledges that it has received and reviewed a copy of the Purchase Agreement, the Note Documents and all other documents it deems fit to enter into this Joinder Agreement, and acknowledges and agrees to: (i) join and become a party to the Purchase Agreement as a Guarantor as indicated by its signature below; (ii) be bound by the Guaranteed Obligations including all covenants, agreements, representations, warranties, obligations, liabilities, undertakings and acknowledgments attributed to such party in the Purchase Agreement; and (iii) perform all obligations and duties required of it pursuant to the Purchase Agreement, all with the same force and effect as if such Joining Guarantor were a signatory to the Purchase Agreement as a Guarantor as of the Closing.
2. Affirmations; Representations and Warranties and Agreements. Each of the Issuer, the Target and each other undersigned Joining Guarantor hereby represents and warrants to, and agrees with, the Collateral Agent and the Holders that it has all the requisite corporate power and authority to execute, deliver and perform its obligations under this Joinder Agreement and the consummation of the transaction contemplated hereby has been duly and validly taken and that when this Joinder Agreement is executed and delivered, it will constitute a valid and legally binding agreement enforceable against each of the undersigned in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by general equitable principles and will be entitled to the benefits of the Purchase Agreement and the other Note Documents. Each Joining Guarantor acknowledges that it has received a copy of the Purchase Agreement and each other Note Document and that it has read and understands the terms thereof. Each of the Issuer, the Target and each other undersigned Guarantor and Joining Guarantor hereby makes each of the representations and warranties contained in Section 3 of the Purchase Agreement and each other Note Document, certificate or other writing delivered to the Collateral Agent and/or the Holders pursuant hereto or thereto on or prior to the date hereof are true and correct on and as of the date hereof as if made on and as of such date (except to the extent that any such representation or warranty expressly relates solely to an earlier date (in which case such representation or warranty shall be true and correct on and as of such earlier date)) and agrees to each of the covenants applicable to the Issuer and the Guarantors contained in the Purchase Agreement and the other Note Documents.
3. Schedule Supplements. Attached hereto are supplements to each Schedule to the Purchase Agreement revised to include all information required to be provided therein with respect to, and only with respect to, the Joining Guarantors. The Schedules to the Purchase Agreement shall, without further action, be amended to include the information contained in each such supplement.
4. Effectiveness. This Agreement shall become effective upon its execution by the Joining Guarantor(s), the Target, the Issuer and the Collateral Agent and receipt by the Collateral Agent on behalf of the Holders of a duly executed copy of this Joinder Agreement together with all other agreements, instruments, certificates, opinions or other documents reasonably requested by the Collateral Agent in order to create, perfect, establish the first priority (subject to Permitted Liens) of or otherwise protect any Lien purported to be covered by the Collateral Documents described above or otherwise to effect the intent that the Joining Guarantor shall become bound by all of the terms, covenants and agreements contained in the Purchase Agreement and other Note Documents and that such property and assets of such Subsidiary shall become Collateral for the Obligations free and clear of all Liens other than Permitted Liens.
| 2 |
5. Severability. The provisions of this Joinder Agreement are independent of and separable from each other. If any provision hereof shall for any reason be held invalid or unenforceable, such invalidity or unenforceability shall not affect the validity or enforceability of any other provision hereof, but this Joinder Agreement shall be construed as if such invalid or unenforceable provision had never been contained herein.
6. Counterparts. This Joinder Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page to this Joinder Agreement by facsimile or in electronic (i.e., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Joinder Agreement.
7. Delivery. Each Joining Guarantor hereby irrevocably waives notice of acceptance of this Joinder Agreement and acknowledges that the Obligations and Guaranteed Obligations are incurred, and issuances of notes and related credit extensions under the Convertible Notes and the other Note Documents made and maintained, in reliance on this Joinder Agreement and such Joining Guarantor's joinder as a party to the Purchase Agreement as herein provided.
8. Governing Law; Venue; Waiver of Jury Trial. The provisions of Section 12 (including the appointment of the Issuer as Process Agent) of the Purchase Agreement are hereby incorporated by reference herein, mutatis mutandis, as to apply to this Joinder Agreement.
9. Entire Agreement. This Agreement, together with the Purchase Agreement and the other Note Documents, reflects the entire understanding of the parties with respect to the transactions contemplated hereby and thereby and shall not be contradicted or qualified by any other agreement, oral or written, before the date hereof.
[signature page follows]
| 3 |
IN WITNESS WHEREOF, the parties hereto have caused this Joinder Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.
| AIRSPAN NETWORKS INC. (successor by merger to Artemis Merger Sub Corp.), as Target and Joining Guarantor | ||
| By: | /s/ David Brant | |
| Name: | David Brant | |
| Title: | Senior Vice President and Chief Financial Officer | |
| Airspan IP Holdco LLC, as Joining Guarantor | ||
| By: | /s/ David Brant | |
| Name: | David Brant | |
| Title: | Senior Vice President and Chief Financial Officer | |
| Airspan Networks (SG) Inc., as Joining Guarantor | ||
| By: | /s/ David Brant | |
| Name: | David Brant | |
| Title: | Senior Vice President and Chief Financial Officer | |
| Mimosa Networks, Inc., as Joining Guarantor | ||
| By: | /s/ David Brant | |
| Name: | David Brant | |
| Title: | Senior Vice President and Secretary | |
[Signature Page to Joinder Agreement]
| Mimosa Networks International, LLC, as Joining Guarantor | ||
| By: | /s/ David Brant | |
| Name: | David Brant | |
| Title: | Senior Vice President and Chief Financial Officer | |
| Airspan Communications Limited, as Joining Guarantor | ||
| By: | /s/ David Brant | |
| Name: | David Brant | |
| Title: | Director | |
| Airspan Networks Limited, as Joining Guarantor | ||
| By: | /s/ David Brant | |
| Name: | David Brant | |
| Title: | Director | |
| Airspan Japan KK, as Joining Guarantor | ||
| By: | /s/ Steven P. Shipley | |
| Name: | Steven P. Shipley | |
| Title: | Representative Director | |
[Signature Page to Joinder Agreement]
| Address for Notices for all Joining Guarantors: | |
| Airspan Networks Inc. | |
| Capital Point | |
| 33 Bath Road | |
| Slough, Berkshire SL1 3UF | |
| United Kingdom | |
| Attention: David Brant, Chief Financial Officer | |
| Email: [***] | |
| With a copy (which shall not constitute notice) to: | |
| Dorsey & Whitney LLP | |
| 50 South Sixth Street – Suite 1500 | |
| Minneapolis, MN 55402-1498 | |
| USA | |
| Attention: Betsy Sanders Parker | |
| Email: [***] | |
| and | |
| Dorsey & Whitney LLP | |
| 51 West 52nd Street 10th Floor | |
| New York, New York 10019-6119 | |
| USA | |
| Attention: Ted Farris | |
| Email: [***] |
[Signature Page to Joinder Agreement]
| Acknowledged and accepted: | DBFIP ANI LLC, in its capacity as Collateral Agent on behalf of itself and the Holders | |
| By: | /s/ Daniel N. Bass | |
| Name: | Daniel N. Bass | |
| Title: | Authorized Signatory | |
[Acknowledgment to Joinder Agreement]
|
|
AIRSPAN NETWORKS HOLDINGS INC. (formerly known as New Beginnings Acquisition Corp.), as Issuer | |
| By: | /s/ David Brant | |
| Name: | David Brant | |
| Title: | Senior Vice President and Chief Financial Officer | |
| AIRSPAN NETWORKS Inc., as Target | ||
| By: | /s/ David Brant | |
| Name: | David Brant | |
| Title: | Senior Vice President and Chief Financial Officer | |
[Acknowledgment to Joinder Agreement]
[Schedules omitted from this filing pursuant to Item 601(a)(5) of Regulation S-K.]
Exhibit 16.1
August 19, 2021
Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Commissioners:
We have read the statements made by Airspan Networks Holdings Inc. (formerly knows as New Beginnings Acquisition Corp.) under Item 4.01 of its Form 8-K dated August 13, 2021. We agree with the statements concerning our Firm in such Form 8-K; we are not in a position to agree or disagree with other statements of Airspan Networks Holdings Inc. contained therein.
Regarding the registrant’s statement related to material weakness in the registrant’s internal control over financial reporting as of December 31, 2020, we had considered such matter in determining the nature, timing and extent of procedures performed in our audit of the registrant’s financial statements as of December 31, 2020 and for the period from August 20, 2020 (inception) through December 31, 2020.
Very truly yours,
/s/ Marcum llp
Marcum llp
Exhibit 21.1
Subsidiaries of the Registrant
Name of Subsidiary |
Jurisdiction of Incorporation | |
| Airspan Networks Inc. | Delaware | |
| Airspan IP Holdco LLC | Delaware | |
| Airspan Networks (SG) Inc. | Delaware | |
| Mimosa Networks, Inc. | Delaware | |
| Airspan Communications Limited | United Kingdom | |
| Airspan Networks (Beijing) Co Ltd | China | |
| P.T. Airspan Networks Indonesia | Indonesia | |
| Airspan Japan K.K. | Japan | |
| Airspan Networks Pty Limited | Australia | |
| Airspan Networks (India) Private Limited | India | |
| Airspan Networks Ltd | Israel | |
| Airspan Communications Ltd | Nepal | |
| Airspan Networks (Poland) Sp z.o.o. | Poland | |
| Airspan Networks (Finland) OY | Finland | |
| Airspan Solutions Limited | Israel | |
| Mimosa Networks Bilisim Teknolojileri Limited Sirketi | Turkey | |
| Mimosa Networks International, LLC | Delaware | |
| Dense Air Limited | United Kingdom | |
| Dense Air Czech s.r.o. | Czech Republic | |
| Dense Air Ireland Limited | Ireland | |
| Dense Air UK Limited | United Kingdom | |
| Dense Air Belgium BVBA | Belgium | |
| Dense Air Portugal Unipessoal Lda | Portugal | |
| Servicios Escrow Software | Mexico | |
| Dense Air Networks Australia Pty Ltd | Australia |
Exhibit 99.1
Airspan
Networks Inc. and New Beginnings Acquisition Corp. Complete Business
Combination; Commences Trading Today on NYSE American Under Ticker
“MIMO”
| ● | Transaction approved by NBA shareholders on August 11, 2021 |
| ● | Business combination expected to advance Airspan’s growth strategy, including 5G revenue growth and expansion of its innovative 5G product portfolio |
| ● | Airspan CEO Eric Stonestrom to ring The Opening Bell® this morning to mark Airspan Networks Holdings Inc.’s trading debut |
BOCA RATON, FL – August 16, 2021 – Airspan Networks Inc., which provides ground-breaking, disruptive software and hardware for 5G network solutions, and New Beginnings Acquisition Corp. (“NBA”) (NYSE American: NBA), a special purpose acquisition company, or SPAC, today announced the completion of their previously announced business combination (the “Business Combination”). NBA shareholders approved the transaction at a special meeting held on August 11, 2021. The combined company has been renamed Airspan Networks Holdings Inc. (“Airspan”) and will begin trading on the NYSE American today, under the ticker symbol “MIMO” for Airspan common stock and “MIMO WS,” “MIMO WSA,” “MIMO WSB” and “MIMO WSC” for Airspan’s classes of outstanding warrants.
Airspan President and CEO Eric Stonestrom said, “This is a huge milestone for our company, employees and customers, and a logical next step as we execute our growth strategy. We believe we are well-positioned for long-term, sustainable growth in 5G based on the largest anticipated capex supercycle I have seen in my more than 30-year career in telecommunications. We look forward to continuing our industry leadership in both 5G and Open RAN, working with strategic partners and customers to accelerate the adoption of Open RAN and enhancing the ecosystem for the benefit of all.”
“Airspan’s leadership position in 5G and Open RAN and innovative 5G software and hardware portfolio provide significant potential for customer, revenue and market share growth. I look forward to continuing to work with Eric and the Airspan leadership team as they execute on their vision and growth strategy,” said Michael Liebowitz, CEO and Director of New Beginnings Acquisition Corp.
Immediately prior to the closing of the Business Combination, NBA closed the previously announced offering of 7,500,000 shares of NBA common stock at a price of $10.00 per share (the “PIPE”).
In addition, immediately prior to the closing of the Business Combination, NBA issued $50.0 million aggregate principal amount of senior secured convertible notes in a private placement to certain funds affiliated with Fortress Investment Group, on terms previously disclosed, primarily in order to meet the minimum cash requirements provided in the business combination agreement.
Airspan Networks Inc. common stock was previously traded on OTC Markets - Pink under the symbol “AIRO.” The AIRO symbol was removed from OTC Markets – Pink effective August 13, 2021.
Transaction Expected to Accelerate 5G Revenue Growth, Expand 5G Product Portfolio
The Business Combination is expected to accelerate Airspan’s 5G revenue growth, to expand its product portfolio, and provide working capital to fund increasing demand for 5G, Open RAN, private networks, citizens broadband radio service (“CBRS”) and fixed wireless access (“FWA”) solutions.
NBA CEO Michael Liebowitz will continue on the Board of Directors of Airspan Networks Holdings Inc. Additional information about the completed Business Combination will be provided in a Current Report on Form 8-K to be filed by Airspan with the Securities and Exchange Commission and available at www.sec.gov.
Advisors
J.P. Morgan Securities LLC served as exclusive financial advisor to Airspan Networks Inc. and Dorsey & Whitney LLP served as Airspan Networks Inc.’s legal counsel. J.P. Morgan Securities LLC acted as sole placement agent to New Beginnings Acquisition Corp. on the PIPE. Jefferies LLC acted as capital markets advisor to Airspan Networks Inc. Ladenburg Thalmann & Co. Inc. acted as capital markets advisor to New Beginnings Acquisition Corp. Mayer Brown served as J.P. Morgan Securities LLC’s legal counsel. Greenberg Traurig, P.A. served as New Beginnings Acquisition Corp.’s legal counsel. Reed Smith LLP served as Fortress Investment Group’s legal counsel.
About Airspan
Airspan Networks Holdings Inc. (NYSE American: MIMO) is a U.S.-based provider of groundbreaking, disruptive software and hardware for 5G networks, and a pioneer in end-to-end Open RAN solutions that provide interoperability with other vendors. As a result of innovative technology and significant R&D investments to build and expand 5G solutions, Airspan believes it is well-positioned with 5G indoor and outdoor, Open RAN, private networks for enterprise customers and industrial use applications, fixed wireless access (FWA), and CBRS solutions to help mobile network operators of all sizes deploy their networks of the future, today. With over one million cells shipped to 1,000 customers in more than 100 countries, Airspan has global scale. For more information, visit www.airspan.com.
Cautionary Statement Regarding Forward-Looking Statements
This news release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about future financial and operating results, NBA’s plans, objectives, expectations and intentions with respect to future operations, products and services; and other statements identified by words such as "will likely result," "are expected to," "will continue," "is anticipated," "estimated," "believe," "intend," "plan," "projection," "outlook" or words of similar meaning. These forward-looking statements include, but are not limited to, statements regarding the listing of Airspan securities on the NYSE American and the timing thereof and the benefits of the business combination, including, among other things, acceleration of Airspan’s revenue growth and expansion of its product portfolio. Such forward-looking statements are based upon the current beliefs and expectations of NBA’s management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and generally beyond NBA’s control. Actual results and the timing of events may differ materially from the results anticipated in these forward-looking statements.
| 2 |
In addition to factors previously disclosed in NBA’s reports filed with the SEC and those identified elsewhere in this communication, the following factors, among others, could cause actual results and the timing of events to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: (i) the impact of COVID-19 on Airspan’s business; (ii) the effect of the announcement or pendency of the transaction on Airspan’s business relationships, performance and business generally; (iii) the ability to maintain the listing of Airspan’s securities on the NYSE American; (iv) the price of Airspan’s securities may be volatile due to a variety of factors, including changes in the competitive and regulated industries in which Airspan operates, variations in performance across competitors, changes in laws and regulations affecting Airspan’s business and changes in the combined capital structure; (v) the ability to implement business plans, forecasts, and other expectations after the completion of the Business Combination, and identify and realize additional opportunities; (vi) the risk of downturns and the possibility of rapid change in the highly competitive industry in which Airspan operates; (vii) the risk that Airspan and its current and future collaborators are unable to successfully develop and commercialize Airspan’s products or services, or experience significant delays in doing so; (viii) the risk that Airspan may not achieve or sustain profitability; (ix) the risk that Airspan will need to raise additional capital to execute its business plan, which may not be available on acceptable terms or at all; (x) the risk that Airspan experiences difficulties in managing its growth and expanding operations; (xi) the risk that third-party suppliers and manufacturers are not able to fully and timely meet their obligations; (xii) the risk that the rollout and utilization of 5G technology will not provide the expected benefits; and (xiii) the risk that Airspan is unable to secure or protect its intellectual property.
Actual results, performance or achievements may differ materially, and potentially adversely, from any projections and forward-looking statements and the assumptions on which those forward-looking statements are based. There can be no assurance that the data contained herein is reflective of future performance to any degree. You are cautioned not to place undue reliance on forward-looking statements as a predictor of future performance as projected financial information and other information are based on estimates and assumptions that are inherently subject to various significant risks, uncertainties and other factors, many of which are beyond Airspan’s control. All information set forth herein speaks only as of the date hereof in the case of information about Airspan or the date of such information in the case of information from persons other than Airspan, and we disclaim any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this communication. Forecasts and estimates regarding Airspan’s industry and end markets are based on sources we believe to be reliable, however there can be no assurance these forecasts and estimates will prove accurate in whole or in part.
Investor Relations and Media Relations Contact:
Howard Waterman
hwaterman@airspan.com
917-359-5505
| 3 |
Exhibit 99.2
Airspan Networks Inc. Announces Strong Second Quarter 2021 Revenue Growth and 5G Business Update
| · | Pre-Business Combination Quarterly Revenue of $42.0 million, up 51% Q2 21 vs. Q2 20 |
| · | First Half Revenue of $88.0 million, increasing 59% 1H 21 vs. 1H 20 |
| · | First half 2021 growth driven by contributions from 5G, Open RAN, and Fixed Wireless Access (“FWA”) solutions |
| · | Business combination with New Beginnings Acquisition Corp. closed August 13, 2021, after the close of Q2 |
Boca Raton, FL – August 19, 2021 – Airspan Networks Inc. (“Airspan”), which provides a groundbreaking next-generation 5G platform, today announced results for the quarter and six months ended June 30, 2021. On August 13, 2021, Airspan Networks Inc. became a subsidiary of Airspan Networks Holdings Inc. following closing of a previously announced business combination with New Beginnings Acquisition Corp.
2021 Second Quarter Highlights:
| · | Revenue of $42.0 million, up 51% from $27.8 million in Q2 2020 |
| · | Gross profit of $19.2 million, up 31% from $14.7 million in Q2 2020 |
| · | Second quarter net loss of $10.4 million, decreased from $11.1 million in Q2 2020 |
| · | Adjusted EBITDA (non-GAAP measure) $5.4M Q2 2021 loss improved 25% from $7.1M loss in Q2 2020 |
First Half 2021 Highlights:
| · | Revenue of $88.0 million, increased 59% from $55.4 million in 1H 2020 |
| · | Gross profit of $40.2 million, increased 36% from $29.4 million in 1H 2020 |
| · | First half net loss of $24.0 million, is unchanged from 1H 2020 |
| · | Adjusted EBITDA (non-GAAP measure) $10.7 million loss in the first half improved by 34% from $16.3 million loss in 1H 2020 |
Airspan President and CEO Eric Stonestrom said, “We are delighted to have completed our business combination on August 13th. Our strong pre-combination second quarter 2021 results, when taken together with our first quarter performance, demonstrate we have excellent momentum as we continue to execute our growth strategy. We generated strong revenue from existing customers, expanded revenue from Fixed Wireless Access (FWA) and continued to diversify our customer base. We launched new 5G products filling out our solutions portfolio as we pursue the growing 5G addressable market.”
“Airspan Networks Inc.’s second quarter performance was led by strong revenue growth, with an increase of 51% in the second quarter and 59% over the first six months of the year compared with the respective 2020 periods, while gross profit was up 31% and adjusted EBITDA improved by 25% in Q2 21 vs Q2 20,” said David Brant, Airspan SVP and Chief Financial Officer.
Airspan Networks Holdings Inc.’s first earnings call will be scheduled following the close of the September 30 quarter.
1
About Airspan
Airspan Networks Holdings Inc. (NYSE American: MIMO) is a U.S.-based provider of groundbreaking, disruptive software and hardware for 5G networks, and a pioneer in end-to-end Open RAN solutions that provide interoperability with other vendors. As a result of innovative technology and significant R&D investments to build and expand 5G solutions, Airspan believes it is well-positioned with 5G indoor and outdoor, Open RAN, private networks for enterprise customers and industrial use applications, fixed wireless access (FWA), and CBRS solutions to help mobile network operators of all sizes deploy their networks of the future, today. With over one million cells shipped to 1,000 customers in more than 100 countries, Airspan has global scale. For more information, visit www.airspan.com.
On August 13, 2021, Airspan closed its business combination agreement with New Beginnings Acquisition Corp. (“NBA”), pursuant to which Airspan became a wholly-owned subsidiary of NBA. At closing, NBA was renamed “Airspan Networks Holdings Inc.” and its common stock was listed on the NYSE American under the ticker symbol “MIMO.”
Cautionary Statement Regarding Forward-Looking Statements
This news release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about future financial and operating results, Airspan Networks Inc.’s plans, objectives, expectations and intentions with respect to future operations, products and services; and other statements identified by words such as “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimated,” “believe,” “intend,” “plan,” “projection,” “outlook” or words of similar meaning. Any such forward-looking statements are based upon the current beliefs and expectations of Airspan’s management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and generally beyond Airspan’s control. Actual results and the timing of events may differ materially from the results anticipated in these forward-looking statements.
Actual results, performance or achievements may differ materially, and potentially adversely, from any forward-looking statements and the assumptions on which those forward-looking statements are based. There can be no assurance that the data contained herein is reflective of future performance to any degree. You are cautioned not to place undue reliance on forward-looking statements as a predictor of future performance as projected financial information and other information are based on estimates and assumptions that are inherently subject to various significant risks, uncertainties and other factors, many of which are beyond Airspan’s control. All information set forth herein speaks only as of the date hereof in the case of information about Airspan or the date of such information in the case of information from persons other than Airspan, and we disclaim any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this communication. Forecasts and estimates regarding Airspan’s industry and end markets are based on sources we believe to be reliable, however there can be no assurance these forecasts and estimates will prove accurate in whole or in part.
Investor Relations and Media Contact:
Howie Waterman
917-359-5505
hwaterman@airspan.com
2
AIRSPAN NETWORKS INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except for share data)
| June 30, 2021 | December 31, 2020 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 12,208 | $ | 18,196 | ||||
| Restricted cash | 187 | 422 | ||||||
| Accounts receivable, net of allowance of $256 and $374 at June 30, 2021 and December 31, 2020, respectively | 40,671 | 71,621 | ||||||
| Inventory | 13,048 | 12,019 | ||||||
| Prepaid expenses and other current assets | 9,062 | 7,602 | ||||||
| Total current assets | 75,176 | 109,860 | ||||||
| Property, plant and equipment, net | 6,425 | 4,833 | ||||||
| Goodwill | 13,641 | 13,641 | ||||||
| Intangible assets, net | 7,031 | 7,629 | ||||||
| Right-of-use assets, net | 7,750 | 7,882 | ||||||
| Other non-current assets | 3,781 | 3,837 | ||||||
| Total assets | $ | 113,804 | $ | 147,682 | ||||
| LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 17,890 | $ | 36,849 | ||||
| Deferred revenue | 4,729 | 7,521 | ||||||
| Other accrued expenses | 26,251 | 22,538 | ||||||
| Subordinated debt | 10,316 | 10,065 | ||||||
| Current portion of long-term debt | 288 | 298 | ||||||
| Total current liabilities | 59,474 | 77,271 | ||||||
| Long-term debt | - | 2,087 | ||||||
| Subordinated term loan - related party | 36,325 | 34,756 | ||||||
| Senior term loan | 38,895 | 36,834 | ||||||
| Other long-term liabilities | 21,285 | 17,147 | ||||||
| Total liabilities | 155,979 | 168,095 | ||||||
| Commitments and contingencies | ||||||||
| Mezzanine equity: | ||||||||
| Convertible preferred stock, $0.0001 par value; 9,293,156 shares authorized at June 30, 2021 and December 31, 2020; 4,594,410 and 4,581,404 shares issued and outstanding at June 30, 2021 and December 31, 2020 | 364,128 | 363,481 | ||||||
| Stockholders’ deficit: | ||||||||
| Common stock, $0.0003 par value; 10,000,000 shares authorized; 205,057 and 202,705 shares issued at June 30, 2021 and December 31, 2020, and 205,057 and 202,582 shares outstanding at June 30, 2021 and December 31, 2020 | - | - | ||||||
| Class B Common stock, $0.0003 par value; 482,838 shares authorized; 466,952 shares issued and outstanding at June 30, 2021 and December 31, 2020 | - | - | ||||||
| Class C Common stock, $0.0003 par value; 2,630,840 shares authorized; no shares issued and outstanding at June 30, 2021 and December 31, 2020 | - | - | ||||||
| Additional paid-in capital | 312,989 | 311,431 | ||||||
| Accumulated deficit | (719,292 | ) | (695,325 | ) | ||||
| Total stockholders’ deficit | (406,303 | ) | (383,894 | ) | ||||
| Total liabilities, mezzanine equity and stockholders’ deficit | $ | 113,804 | $ | 147,682 | ||||
3
AIRSPAN NETWORKS INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and for share data)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Revenues: | ||||||||||||||||
| Products and software licenses | $ | 35,041 | $ | 16,565 | $ | 74,040 | $ | 35,293 | ||||||||
| Maintenance, warranty and services | 7,007 | 11,228 | 13,943 | 20,078 | ||||||||||||
| Total revenues | 42,048 | 27,793 | 87,983 | 55,371 | ||||||||||||
| Cost of revenues: | ||||||||||||||||
| Products and software licenses | 21,727 | 11,846 | 45,615 | 23,835 | ||||||||||||
| Maintenance, warranty and services | 1,093 | 1,240 | 2,196 | 2,097 | ||||||||||||
| Total cost of revenues | 22,820 | 13,086 | 47,811 | 25,932 | ||||||||||||
| Gross profit | 19,228 | 14,707 | 40,172 | 29,439 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | 15,524 | 12,497 | 29,898 | 25,713 | ||||||||||||
| Sales and marketing | 7,482 | 6,490 | 14,842 | 14,413 | ||||||||||||
| General and administrative | 4,445 | 3,915 | 8,900 | 7,947 | ||||||||||||
| Amortization of intangibles | 299 | 389 | 598 | 778 | ||||||||||||
| Loss on sale of assets | - | - | - | 22 | ||||||||||||
| Total operating expenses | 27,750 | 23,291 | 54,238 | 48,873 | ||||||||||||
| Loss from operations | (8,522 | ) | (8,584 | ) | (14,066 | ) | (19,434 | ) | ||||||||
| Interest expense, net | (2,512 | ) | (1,606 | ) | (4,950 | ) | (3,196 | ) | ||||||||
| Gain on extinguishment of debt | 2,096 | - | 2,096 | - | ||||||||||||
| Other expense, net | (1,388 | ) | (770 | ) | (6,880 | ) | (1,240 | ) | ||||||||
| Loss before income taxes | (10,326 | ) | (10,960 | ) | (23,800 | ) | (23,870 | ) | ||||||||
| Income tax expense | (92 | ) | (93 | ) | (167 | ) | (198 | ) | ||||||||
| Net loss | $ | (10,418 | ) | $ | (11,053 | ) | $ | (23,967 | ) | $ | (24,068 | ) | ||||
| Loss per share - basic and diluted | $ | (15.55 | ) | $ | (16.51 | ) | $ | (35.78 | ) | $ | (35.95 | ) | ||||
| Weighted average shares outstanding - basic and diluted | 670,043 | 669,534 | 669,839 | 669,534 | ||||||||||||
4
AIRSPAN NETWORKS INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| Six Months Ended June 30, | ||||||||
| 2021 | 2020 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (23,967 | ) | $ | (24,068 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 2,129 | 2,436 | ||||||
| Foreign exchange gain on long-term debt | (1 | ) | (12 | ) | ||||
| Bad debt expense | 138 | - | ||||||
| Gain on extinguishment of debt | (2,096 | ) | - | |||||
| Share-based compensation | 1,489 | 987 | ||||||
| Total adjustments | 1,659 | 3,321 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Decrease in accounts receivable | 30,812 | 3,016 | ||||||
| (Increase) decrease in inventory | (1,029 | ) | 2,886 | |||||
| (Increase) decrease in prepaid expenses and other current assets | (1,460 | ) | 977 | |||||
| Decrease (increase) in other operating assets | 56 | (15 | ) | |||||
| (Decrease) in accounts payable | (18,959 | ) | (5,566 | ) | ||||
| (Decrease) increase in deferred revenue | (2,792 | ) | 391 | |||||
| Increase (decrease) in other accrued expenses | 3,713 | (368 | ) | |||||
| Increase in other long-term liabilities | 4,270 | 1,797 | ||||||
| Increase in accrued interest on long-term debt | 3,881 | 1,800 | ||||||
| Net cash used in operating activities | (3,816 | ) | (15,829 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of property, plant and equipment | (3,123 | ) | (404 | ) | ||||
| Net cash used in investing activities | (3,123 | ) | (404 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Borrowings under line of credit, net | - | 1,790 | ||||||
| Borrowings under other long-term debt | - | 2,073 | ||||||
| Proceeds from the exercise of stock options | 69 | - | ||||||
| Proceeds from the sale of Series G stock, net | - | 11,913 | ||||||
| Proceeds from the sale of Series H stock, net | 505 | - | ||||||
| Proceeds from the issuance of Series H warrants | 142 | - | ||||||
| Net cash provided by financing activities | 716 | 15,776 | ||||||
| Net decrease in cash, cash equivalents and restricted cash | (6,223 | ) | (457 | ) | ||||
| Cash, cash equivalents and restricted cash, beginning of year | 18,618 | 3,013 | ||||||
| Cash, cash equivalents and restricted cash, end of year | $ | 12,395 | $ | 2,556 | ||||
5
AIRSPAN NETWORKS INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(in thousands)
| Six Months Ended June 30, | ||||||||
| 2021 | 2020 | |||||||
| Supplemental disclosures of cash flow information | ||||||||
| Cash paid for interest | $ | 4,938 | $ | 3,144 | ||||
| Cash paid for income taxes | $ | 976 | $ | 448 | ||||
| Supplemental disclosure of non-cash financing activities: | ||||||||
| Issuance of preferred stock upon conversion of debt | $ | - | $ | 23,571 | ||||
| Conversion of debt to preferred stock | $ | - | $ | (23,571 | ) | |||
6
AIRSPAN NETWORKS INC.
UNAUDITED NON-GAAP DATA
(in thousands)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Net Loss | $ | (10,418 | ) | $ | (11,053 | ) | $ | (23,967 | ) | $ | (24,068 | ) | ||||
| Adjusted for: | ||||||||||||||||
| Interest expense, net | 2,512 | 1,606 | 4,950 | 3,196 | ||||||||||||
| Income tax expense | 92 | 93 | 167 | 198 | ||||||||||||
| Depreciation and amortization | 1,076 | 1,204 | 2,129 | 2,346 | ||||||||||||
| EBITDA | (6,738 | ) | (8,150 | ) | (16,721 | ) | (18,328 | ) | ||||||||
| Share-based compensation expense | 828 | 495 | 1,489 | 987 | ||||||||||||
| Warrant fair value change | 545 | 534 | 4,517 | 1,064 | ||||||||||||
| Adjusted EBITDA | $ | (5,365 | ) | $ | (7,121 | ) | $ | (10,715 | ) | $ | (16,277 | ) | ||||
7
Exhibit 99.3
AIRSPAN NETWORKS INC.
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
TABLE OF CONTENTS
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except for share data)
| June 30, 2021 | December 31, 2020 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 12,208 | $ | 18,196 | ||||
| Restricted cash | 187 | 422 | ||||||
| Accounts receivable, net of allowance of $256 and $374 at June 30, 2021 and December 31, 2020, respectively | 40,671 | 71,621 | ||||||
| Inventory | 13,048 | 12,019 | ||||||
| Prepaid expenses and other current assets | 9,062 | 7,602 | ||||||
| Total current assets | 75,176 | 109,860 | ||||||
| Property, plant and equipment, net | 6,425 | 4,833 | ||||||
| Goodwill | 13,641 | 13,641 | ||||||
| Intangible assets, net | 7,031 | 7,629 | ||||||
| Right-of-use assets, net | 7,750 | 7,882 | ||||||
| Other non-current assets | 3,781 | 3,837 | ||||||
| Total assets | $ | 113,804 | $ | 147,682 | ||||
| LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 17,890 | $ | 36,849 | ||||
| Deferred revenue | 4,729 | 7,521 | ||||||
| Other accrued expenses | 26,251 | 22,538 | ||||||
| Subordinated debt | 10,316 | 10,065 | ||||||
| Current portion of long-term debt | 288 | 298 | ||||||
| Total current liabilities | 59,474 | 77,271 | ||||||
| Long-term debt | – | 2,087 | ||||||
| Subordinated term loan - related party | 36,325 | 34,756 | ||||||
| Senior term loan | 38,895 | 36,834 | ||||||
| Other long-term liabilities | 21,285 | 17,147 | ||||||
| Total liabilities | 155,979 | 168,095 | ||||||
| Commitments and contingencies (Note 11) | ||||||||
| Mezzanine equity: | ||||||||
| Convertible preferred stock, $0.0001 par value; 9,293,156 shares authorized at June 30, 2021 and December 31, 2020; 4,594,410 and 4,581,404 shares issued and outstanding at June 30, 2021 and December 31, 2020 | 364,128 | 363,481 | ||||||
| Stockholders’ deficit: | ||||||||
| Common stock, $0.0003 par value; 10,000,000 shares authorized; 205,057 and 202,705 shares issued at June 30, 2021 and December 31, 2020, and 205,057 and 202,582 shares outstanding at June 30, 2021 and December 31, 2020 | - | - | ||||||
| Class B Common stock, $0.0003 par value; 482,838 shares authorized; 466,952 shares issued and outstanding at June 30, 2021 and December 31, 2020 | - | - | ||||||
| Class C Common stock, $0.0003 par value; 2,630,840 shares authorized; no shares issued and outstanding at June 30, 2021 and December 31, 2020 | - | - | ||||||
| Additional paid-in capital | 312,989 | 311,431 | ||||||
| Accumulated deficit | (719,292 | ) | (695,325 | ) | ||||
| Total stockholders’ deficit | (406,303 | ) | (383,894 | ) | ||||
| Total liabilities, mezzanine equity and stockholders’ deficit | $ | 113,804 | $ | 147,682 | ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and for share data)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Revenues: | ||||||||||||||||
| Products and software licenses | $ | 35,041 | $ | 16,565 | $ | 74,040 | $ | 35,293 | ||||||||
| Maintenance, warranty and services | 7,007 | 11,228 | 13,943 | 20,078 | ||||||||||||
| Total revenues | 42,048 | 27,793 | 87,983 | 55,371 | ||||||||||||
| Cost of revenues: | ||||||||||||||||
| Products and software licenses | 21,727 | 11,846 | 45,615 | 23,835 | ||||||||||||
| Maintenance, warranty and services | 1,093 | 1,240 | 2,196 | 2,097 | ||||||||||||
| Total cost of revenues | 22,820 | 13,086 | 47,811 | 25,932 | ||||||||||||
| Gross profit | 19,228 | 14,707 | 40,172 | 29,439 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | 15,524 | 12,497 | 29,898 | 25,713 | ||||||||||||
| Sales and marketing | 7,482 | 6,490 | 14,842 | 14,413 | ||||||||||||
| General and administrative | 4,445 | 3,915 | 8,900 | 7,947 | ||||||||||||
| Amortization of intangibles | 299 | 389 | 598 | 778 | ||||||||||||
| Loss on sale of assets | – | – | – | 22 | ||||||||||||
| Total operating expenses | 27,750 | 23,291 | 54,238 | 48,873 | ||||||||||||
| Loss from operations | (8,522 | ) | (8,584 | ) | (14,066 | ) | (19,434 | ) | ||||||||
| Interest expense, net | (2,512 | ) | (1,606 | ) | (4,950 | ) | (3,196 | ) | ||||||||
| Gain on extinguishment of debt | 2,096 | - | 2,096 | - | ||||||||||||
| Other expense, net | (1,388 | ) | (770 | ) | (6,880 | ) | (1,240 | ) | ||||||||
| Loss before income taxes | (10,326 | ) | (10,960 | ) | (23,800 | ) | (23,870 | ) | ||||||||
| Income tax expense | (92 | ) | (93 | ) | (167 | ) | (198 | ) | ||||||||
| Net loss | $ | (10,418 | ) | $ | (11,053 | ) | $ | (23,967 | ) | $ | (24,068 | ) | ||||
| Loss per share - basic and diluted | $ | (15.55 | ) | $ | (16.51 | ) | $ | (35.78 | ) | $ | (35.95 | ) | ||||
| Weighted average shares outstanding - basic and diluted | 670,043 | 669,534 | 669,839 | 669,534 | ||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT
(in thousands, except for share data)
| Three Months Ended June 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Convertible Preferred Stock | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Series B Shares | Series B-1 Shares | Series C Shares | Series C-1 Shares | Series D Shares | Series D-1 Shares | Series D-2 Shares | Series E Shares | Series E-1 Shares | Series F Shares | Series F-1 Shares | Series G Shares | Series H Shares | Total Shares | Total Mezzanine Equity | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2021 | - | 72,123 | - | 416,667 | 1,080,993 | 325,203 | 370,000 | 615,231 | 393,511 | 352,076 | 46,325 | 740,987 | 181,294 | 4,594,410 | $ | 364,128 | ||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Conversion of debt to preferred stock | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
Issuance of preferred stock, net of issuance costs | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation expense | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2021 | - | 72,123 | - | 416,667 | 1,080,993 | 325,203 | 370,000 | 615,231 | 393,511 | 352,076 | 46,325 | 740,987 | 181,294 | 4,594,410 | $ | 364,128 | ||||||||||||||||||||||||||||||||||||||||||||
| Six Months Ended June 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Convertible Preferred Stock | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Series B Shares | Series B-1 Shares | Series C Shares | Series C-1 Shares | Series D Shares | Series D-1 Shares | Series D-2 Shares | Series E Shares | Series E-1 Shares | Series F Shares | Series F-1 Shares | Series G Shares | Series H Shares | Total Shares | Total Mezzanine Equity | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2020 | - | 72,123 | - | 416,667 | 1,080,993 | 325,203 | 370,000 | 615,231 | 393,511 | 352,076 | 46,325 | 740,987 | 168,288 | 4,581,404 | $ | 363,481 | ||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Conversion of debt to preferred stock | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
Issuance of preferred stock, net of issuance costs | - | - | - | - | - | - | - | - | - | - | - | - | 13,006 | 13,006 | 647 | |||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation expense | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2021 | - | 72,123 | - | 416,667 | 1,080,993 | 325,203 | 370,000 | 615,231 | 393,511 | 352,076 | 46,325 | 740,987 | 181,294 | 4,594,410 | $ | 364,128 | ||||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
AIRSPAN NETWORKS INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT (CONTINUED)
(in thousands, except for share data)
| Three Months Ended June 30, 2021 | ||||||||||||||||||||||||
| Common Stock | Additional | |||||||||||||||||||||||
| Common Shares | Common B Shares | Par Value | Paid-In Capital | Accumulated Deficit | Total | |||||||||||||||||||
| Balance at March 31, 2021 | 202,582 | 466,952 | $ | - | $ | 312,092 | $ | (708,874 | ) | $ | (396,782 | ) | ||||||||||||
| Net loss | - | - | - | - | (10,418 | ) | (10,418 | ) | ||||||||||||||||
| Conversion of debt to preferred stock | - | - | - | - | - | - | ||||||||||||||||||
| Issuance of preferred stock, net of issuance costs | - | - | - | - | - | - | ||||||||||||||||||
| Exercise of common stock options | 2,475 | - | - | 69 | - | 69 | ||||||||||||||||||
| Share-based compensation expense | - | - | - | 828 | - | 828 | ||||||||||||||||||
| Balance at June 30, 2021 | 205,057 | 466,952 | $ | - | $ | 312,989 | $ | (719,292 | ) | $ | (406,303 | ) | ||||||||||||
| Six Months Ended June 30, 2021 | ||||||||||||||||||||||||
| Common Stock | Additional | |||||||||||||||||||||||
| Common Shares | Common B Shares | Par Value | Paid-In Capital | Accumulated Deficit | Total | |||||||||||||||||||
| Balance at December 31, 2020 | 202,680 | 466,952 | $ | - | $ | 311,431 | $ | (695,325 | ) | $ | (383,894 | ) | ||||||||||||
| Net loss | - | - | - | - | (23,967 | ) | (23,967 | ) | ||||||||||||||||
| Conversion of debt to preferred stock | - | - | - | - | - | - | ||||||||||||||||||
| Issuance of preferred stock, net of issuance costs | - | - | - | - | - | - | ||||||||||||||||||
| Exercise of common stock options | 2,475 | - | - | 69 | - | 69 | ||||||||||||||||||
| Share-based compensation expense | - | - | - | 1,489 | - | 1,489 | ||||||||||||||||||
| Balance at June 30, 2021 | 205,057 | 466,952 | $ | - | $ | 312,919 | $ | (719,292 | ) | $ | (406,303 | ) | ||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
AIRSPAN NETWORKS INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT
(in thousands, except for share data)
| Three Months Ended June 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Convertible Preferred Stock | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Series B Shares | Series B-1 Shares | Series C Shares | Series C-1 Shares | Series D Shares | Series D-1 Shares | Series D-2 Shares | Series E Shares | Series E-1 Shares | Series F Shares | Series F-1 Shares | Series G Shares | Series H Shares | Total Shares | Total Mezzanine Equity | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2020 | 72,123 | - | 416,667 | - | 1,450,993 | 325,203 | - | 615,231 | 393,511 | 352,076 | 46,325 | 464,566 | - | 4,136,695 | $ | 338,431 | ||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Conversion of debt to preferred stock | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Issuance
of preferred stock, net of issuance costs | - | - | - | - | - | - | - | - | - | - | - | 113,281 | - | 113,281 | 6,975 | |||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation expense | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2020 | 72,123 | - | 416,667 | - | 1,450,993 | 325,203 | - | 615,231 | 393,511 | 352,076 | 46,325 | 578,387 | - | 4,250,516 | $ | 345,406 | ||||||||||||||||||||||||||||||||||||||||||||
| Six Months Ended June 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Convertible Preferred Stock | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Series B Shares | Series B-1 Shares | Series C Shares | Series C-1 Shares | Series D Shares | Series D-1 Shares | Series D-2 Shares | Series E Shares | Series E-1 Shares | Series F Shares | Series F-1 Shares | Series G Shares | Series H Shares | Total Shares | Total Mezzanine Equity | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2019 | 72,123 | - | 416,667 | - | 1,450,993 | 325,203 | - | 615,231 | 393,511 | 352,076 | 46,325 | - | - | 3,672,129 | $ | 309,923 | ||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Conversion of debt to preferred stock | - | - | - | - | - | - | - | - | - | - | - | 383,266 | - | 383,266 | 23,517 | |||||||||||||||||||||||||||||||||||||||||||||
| Issuance
of preferred stock, net of issuance Costs | - | - | - | - | - | - | - | - | - | - | - | 195,121 | - | 195,121 | 11,966 | |||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation expense | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2020 | 72,123 | - | 416,667 | - | 1,450,993 | 325,203 | - | 615,231 | 393,511 | 352,076 | 46,325 | 578,387 | - | 4,250,516 | $ | 345,406 | ||||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6
AIRSPAN NETWORKS INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT (CONTINUED)
(in thousands, except for share data)
| Three Months Ended June 30, 2020 | ||||||||||||||||||||||||
| Common Stock | Additional | |||||||||||||||||||||||
| Common Shares | Common B Shares | Par Value | Paid-In Capital | Accumulated Deficit | Total | |||||||||||||||||||
| Balance at March 31, 2020 | 202,582 | 466,952 | $ | - | $ | 309,280 | $ | (682,697 | ) | $ | (373,417 | ) | ||||||||||||
| Net loss | - | - | - | - | (11,053 | ) | (11,053 | ) | ||||||||||||||||
| Conversion of debt to preferred stock | - | - | - | - | - | - | ||||||||||||||||||
| Issuance of preferred stock, net of issuance costs | - | - | - | - | - | - | ||||||||||||||||||
| Share-based compensation expense | - | - | - | 495 | - | 495 | ||||||||||||||||||
| Balance at June 30, 2020 | 202,582 | 466,952 | $ | - | $ | 309,775 | $ | (693,750 | ) | $ | (383,975 | ) | ||||||||||||
| Six Months Ended June 30, 2020 | ||||||||||||||||||||||||
| Common Stock | Additional | |||||||||||||||||||||||
| Common Shares | Common B Shares | Par Value | Paid-In Capital | Accumulated Deficit | Total | |||||||||||||||||||
| Balance at December 31, 2019 | 202,582 | 466,952 | $ | - | $ | 308,788 | $ | (669,682 | ) | $ | (360,894 | ) | ||||||||||||
| Net loss | - | - | - | - | (24,068 | ) | (24,068 | ) | ||||||||||||||||
| Conversion of debt to preferred stock | - | - | - | - | - | - | ||||||||||||||||||
| Issuance of preferred stock, net of issuance costs | - | - | - | - | - | - | ||||||||||||||||||
| Share-based compensation expense | - | - | - | 987 | - | 987 | ||||||||||||||||||
| Balance at June 30, 2020 | 202,582 | 466,952 | $ | - | $ | 309,775 | $ | (693,750 | ) | $ | (383,975 | ) | ||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| Six Months Ended June 30, | ||||||||
| 2021 | 2020 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (23,967 | ) | $ | (24,068 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 2,129 | 2,346 | ||||||
| Foreign exchange gain on long-term debt | (1 | ) | (12 | ) | ||||
| Bad debt expense | 138 | – | ||||||
| Gain on extinguishment of debt | (2,096 | ) | - | |||||
| Share-based compensation | 1,489 | 987 | ||||||
| Total adjustments | 1,659 | 3,321 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Decrease in accounts receivable | 30,812 | 3,016 | ||||||
| (Increase) decrease in inventory | (1,029 | ) | 2,886 | |||||
| (Increase) decrease in prepaid expenses and other current assets | (1,460 | ) | 977 | |||||
| Decrease (increase) in other operating assets | 56 | (15 | ) | |||||
| (Decrease) in accounts payable | (18,959 | ) | (5,566 | ) | ||||
| (Decrease) increase in deferred revenue | (2,792 | ) | 391 | |||||
| Increase (decrease) in other accrued expenses | 3,713 | (368 | ) | |||||
| Increase in other long-term liabilities | 4,270 | 1,797 | ||||||
| Increase in accrued interest on long-term debt | 3,881 | 1,800 | ||||||
| Net cash used in operating activities | (3,816 | ) | (15,829 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of property, plant and equipment | (3,123 | ) | (404 | ) | ||||
| Net cash used in investing activities | (3,123 | ) | (404 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Borrowings under line of credit, net | – | 1,790 | ||||||
| Borrowings under other long-term debt | – | 2,073 | ||||||
| Proceeds from the exercise of stock options | 69 | – | ||||||
| Proceeds from the sale of Series G stock, net | – | 11,913 | ||||||
| Proceeds from the sale of Series H stock, net | 505 | – | ||||||
| Proceeds from the issuance of Series H warrants | 142 | – | ||||||
| Net cash provided by financing activities | 716 | 15,776 | ||||||
| Net decrease in cash, cash equivalents and restricted cash | (6,223 | ) | (457 | ) | ||||
| Cash, cash equivalents and restricted cash, beginning of year | 18,618 | 3,013 | ||||||
| Cash, cash equivalents and restricted cash, end of period | $ | 12,395 | $ | 2,556 | ||||
8
AIRSPAN NETWORKS INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(in thousands)
| Six Months Ended June 30, | ||||||||
| 2021 | 2020 | |||||||
| Supplemental disclosures of cash flow information | ||||||||
| Cash paid for interest | $ | 4,938 | $ | 3,144 | ||||
| Cash paid for income taxes | $ | 976 | $ | 448 | ||||
| Supplemental disclosure of non-cash financing activities: | ||||||||
| Issuance of preferred stock upon conversion of debt | $ | - | $ | 23,571 | ||||
| Conversion of debt to preferred stock | $ | - | $ | (23,571 | ) | |||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
9
| 1. | BUSINESS AND BASIS OF PRESENTATION |
Business
Airspan Networks Inc. (“Airspan” or the “Company”) designs and produces wireless network equipment for 4G and 5G networks for both mainstream public telecommunications service providers and private network implementations. Airspan provides Radio Access Network (“RAN”) products based on Open Virtualized Cloud Native Architectures that support technologies including 5G new radio (“5G NR”) Long Term Evolution (“LTE”) and Fixed Wireless standards operating in licensed, lightly-licensed and unlicensed frequencies.
The market for the Company’s wireless systems includes mobile carriers, other public network operators and private and government network operators for command and control in industrial and public safety applications such as smart utilities, defense, transportation, mining and oil and gas. The Company’s strategy applies the same network technology across all addressable sectors.
The Company’s main operations are in Slough, United Kingdom (“U.K.”); Mumbai, India; Tokyo, Japan; Airport City, Israel; Santa Clara, California; and with corporate headquarters in the United States (“U.S.”) in Boca Raton, Florida.
Basis of Presentation and Principles of Consolidation
The accompanying condensed financial statements include the accounts of the Company, its wholly-owned subsidiaries and Airspan IP Holdco LLC (“Holdco”) – 99.8% owned by Airspan. Non-controlling interest in the results of operations of consolidated subsidiaries represents the minority stockholders’ share of the profit or loss of Holdco. The non-controlling interest in net assets of this subsidiary, and the net income or loss attributable to the non-controlling interest, were not recorded by the Company as they are considered immaterial. All significant inter-company balances and transactions have been eliminated in consolidation. The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).
The Company’s interim condensed consolidated financial statements and related notes are unaudited. In the opinion of management, all adjustments (including normal recurring adjustments) and disclosures necessary for a fair presentation of these interim financial statements have been included. The results reported in these interim financial statements are not necessarily indicative of the results that may be reported for the entire year. Certain information and footnote disclosures required by GAAP have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s financial statements as of and for the year ended December 31, 2020, included in New Beginnings Acquisition Corporation’s (“NBA”) S-4 registration statement (File No. 333-256137) (“NBA’s S-4”). The Edgar file can be found at: https://www.sec.gov/Archives/edgar/data/1823882/000182912621006591/newbeginnings_s4a.htm.
Liquidity
The Company has historically incurred losses from operations. In the past, these losses have been financed through cash on hand or capital raising activities including borrowings or the sale of newly issued shares.
The Company had $75.2 million of current assets and $59.5 million of current liabilities at June 30, 2021. During the six months ended June 30, 2021, the Company used $3.8 million in cash flow from operating activities. The Company is investing heavily in 5G research and development and the Company expects to continue to use cash from operations during 2021 and through the first half of 2022. Cash on hand and borrowing capacity under the Fortress Credit Agreement (see Note [8]) may not allow the Company to reasonably expect to meet its forecasted cash requirements.
Going concern
The accompanying condensed consolidated financial statements have been prepared and are presented assuming the Company’s ability to continue as a going concern. As discussed in Note 8 to the financial statements, the Company’s Senior Term Loan requires certain prospective financial covenants to be met. The Company’s business plan for 2021 and first half of 2022 contemplates increased revenue and reduced operating losses to achieve satisfaction of the financial covenants. Given the continued uncertainty in the global markets, in the event that the Company was unable to achieve these prospective covenants, the Company’s Senior Term Loan (see Note 8) and the Subordinated Loan (see Note 7) could become due prior to the maturity date.
10
AIRSPAN NETWORKS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
In order to address the need to satisfy the Company’s continuing obligations and realize its long-term strategy, management has taken several steps and is considering additional actions to improve its operating and financial results, which the Company expects will be sufficient to meet the prospective covenants of the Company’s Senior Term Loan and provide the ability to continue as a going concern, including the following:
| · | focusing the Company’s efforts to increase sales in additional geographic markets; |
| · | continuing to develop 5G product offerings that will expand the market for the Company’s products; |
| · | continuing to evaluate and implement cost reduction initiatives to reduce non-strategic costs in operations and expand the Company’s labor force in lower cost geographies; and |
| · | renegotiating and replacing debt facilities and raising additional funds for operations. |
On March 8, 2021, the Company announced that it entered into a definitive business combination agreement with NBA (NYSE American: NBA), a special purpose acquisition company (“SPAC”). Upon closing of the transactions contemplated by this agreement (“SPAC Transaction”), expected in the third quarter of 2021, the post-combination Company’s common stock will continue to be listed on the NYSE American and trade under the ticker symbol “MIMO.” The Company expects that the SPAC Transaction will provide additional access to capital and new funding sources that were not available previously to the Company.
There can be no assurance that the above actions will be successful. If the Company is unable to successfully complete the SPAC Transaction, the Company’s current cash balance will be insufficient to satisfy repayment demands from its lenders if the Company does not meet the prospective financial covenants of the Senior Term Loan and the Senior Term Loan becomes due prior to maturity. There is no assurance that the SPAC Transaction will be completed, or that new or renegotiated financing will be available or that if available, will be on satisfactory terms. These conditions raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that these financial statements are issued. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty.
COVID-19 Update
The spread of COVID-19, a novel strain of coronavirus, has and continues to alter the behavior of business and people in a manner that is having negative effects on local, regional and global economies. The COVID-19 pandemic continues to have an impact with short-term disruptions on our supply chains, as governments take robust actions to minimize the spread of localized COVID-19 outbreaks. As a further consequence of the COVID-19 pandemic, component lead times have extended as demand outstrips supply on certain components, including semiconductors. These extended lead times have caused us to extend our forecast horizon with our contract manufacturing partners and has increased the risk of supply delays. The Company cannot at this time accurately predict what effects, or their extent, the coronavirus outbreak will have on the remainder of its 2021 operating results, due to uncertainties relating to the ultimate geographic spread of the virus, the severity of the disease, the duration of the outbreak, the length of voluntary business closures and governmental actions taken in response to the outbreak. More generally, a widespread health crisis could adversely affect the global economy, resulting in an economic downturn that could affect demand for its products and therefore impact the Company’s results.
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
There have been no changes to the Company’s significant accounting policies described in our audited consolidated financial statements as of and for the year ended December 31, 2020 that have had a material impact on our condensed consolidated financial statements and related notes.
Significant Concentrations
Financial instruments, which potentially subject the Company to concentration of credit risk, consist primarily of cash and cash equivalents, restricted cash and accounts receivable. The Company places its cash and cash equivalents in highly rated financial instruments. The Company maintains certain of its cash balances in various U.S. banks, which at times, may exceed federally insured limits. The Company has not experienced any losses on such accounts.
11
AIRSPAN NETWORKS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The Company’s accounts receivable are derived from sales of its products and approximately and 58.1% and 60.4% of product sales were to non-U.S. customers for the three months ended June 30, 2021 and 2020, respectively and approximately and 63.3% and 62.7% of product sales were to non-U.S. customers for the six months ended June 30, 2021 and 2020, respectively. Three customers accounted for $23.7 million or 58.2% of the net accounts receivable balance at June 30, 2021 and two customers accounted for $52.6 million or 73% of the net accounts receivable balance at December 31, 2020. The Company requires payment in advance or payment security in the form of a letter of credit to be in place at the time of shipment, except in cases where credit risk is considered to be acceptable. The Company’s top 3 customers accounted for 59.0% and 68.8% of revenue for the three months ended June 30, 2021 and 2020, respectively, and 59.3% and 64.1% of revenue for the six months ended June 30, 2021 and 2020, respectively. For the three and six months ended June 30, 2021, the Company had two customers whose revenue was greater than 10% of the three and six month period’s total revenue. For the three and six months ended June 30, 2020, the Company had three customers whose revenue was greater than 10% of the three and six month period’s total revenue.
The Company received 89.8% and 83.4% of goods for resale from five suppliers in the three months ended June 30, 2021 and 2020, respectively. The Company received 92.5% and 78.1% of goods for resale from five suppliers in the six months ended June 30, 2021 and 2020, respectively. The Company outsources the manufacturing of its base station products to contract manufacturers and obtains subscriber terminals from vendors in the Asia Pacific region. In the event of a disruption to supply, the Company would be able to transfer the manufacturing of base stations to alternate contract manufacturers and has alternate suppliers for the majority of subscriber terminals.
Recent Accounting Pronouncements
In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-04 (amended by ASU 2019-10), “Intangibles – Goodwill and other (Topic 350): Simplifying the Test for Goodwill Impairment.” which simplifies the test for goodwill impairment by removing the second step of the test. There is a one-step qualitative test and does not amend the optional qualitative assessment of goodwill impairment. The new standard was adopted by the Company on January 1, 2021, and it did not have a material impact on the Company’s consolidated financial statements.
In August 2018, the FASB issued ASU No. 2018-15, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” which requires implementation costs incurred by customers in cloud computing arrangements to be deferred and recognized over the term of the arrangement, if those costs would be capitalized by the customers in a software licensing arrangement. The new standard was adopted by the Company on January 1, 2021, and it did not have a material impact on the Company’s consolidated financial statements.
In December 2019, the FASB issued ASU No. 2019-12, “Income taxes (Topic 740): Simplifying the Accounting for Income Taxes.” which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and clarifies and amends the existing guidance. The new standard was adopted by the Company on January 1, 2021, and it did not have a material impact on the Company’s consolidated financial statements.
In August 2020, the FASB issued ASU 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)”. The ASU simplifies the accounting for certain financial instruments with characteristics of liabilities and equity. The FASB reduced the number of accounting models for convertible debt and convertible preferred stock instruments and made certain disclosure amendments to improve the information provided to users. The new standard will be adopted by the Company on January 1, 2022. The new standard is not expected to have a material impact on the Company’s consolidated financial statements.
In August 2020, the FASB issued ASU 2020-06, “Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options”. This ASU provides guidance for a modification or an exchange of a freestanding equity-classified written call option that is not within the scope of another Topic The new standard will be adopted by the Company on January 1, 2022. The new standard is not expected to have a material impact on the Company’s consolidated financial statements.
In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” which provides optional expedient and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In response to the concerns about structural risks of interbank offered rates (“IBORs”) and, particularly, the risk of cessation of the LIBOR, regulators in several jurisdictions around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction based and less susceptible to manipulation. This accounting standards update provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. This new guidance may be adopted by the Company no later than December 1, 2022, with early adoption permitted. The potential adoption of this guidance is not expected to have a material impact on the consolidated financial statements.
12
AIRSPAN NETWORKS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
In June 2016, the FASB issued ASU No. 2016-13 (amended by ASU 2019-10), “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, regarding the measurement of credit losses for certain financial instruments.” which replaces the incurred loss model with a current expected credit loss (“CECL”) model. The CECL model is based on historical experience, adjusted for current conditions and reasonable and supportable forecasts. The Company is required to adopt the new guidance on January 1, 2023. The Company is currently evaluating the impact this guidance will have on the consolidated financial statements.
| 3. | REVENUE RECOGNITION |
The following is a summary of revenue by category (in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Products sales | $ | 34,458 | $ | 15,633 | $ | 72,512 | $ | 33,892 | ||||||||
| Non-recurring engineering (“NRE”) | 4,771 | 5,387 | 6,896 | 8,652 | ||||||||||||
| Product maintenance contracts | 327 | 2,901 | 3,252 | 5,797 | ||||||||||||
| Professional service contracts | 1,909 | 2,940 | 3,795 | 5,629 | ||||||||||||
| Software licenses | 527 | 728 | 1,114 | 949 | ||||||||||||
| Other | 56 | 204 | 414 | 452 | ||||||||||||
| Total revenue | $ | 42,048 | $ | 27,793 | $ | 87,983 | $ | 55,371 | ||||||||
For all of the Company’s product sales, revenue is recognized when control of the product is transferred to the customer (i.e., when the Company’s performance obligation is satisfied), which typically occurs at shipment of the product. For product sales, the Company generally does not grant return privileges, except for defective products during the warranty period. Sales taxes collected from customers are excluded from revenues.
Revenue from non-recurring engineering is recognized at a point in time or over-time depending on if the customer controls the asset being created or enhanced. For new product design or software development services, the customer does not control the asset being created, the customer is not simultaneously receiving or consuming the benefits from the work performed and the work performed has alternative use to the Company. Therefore, revenue related to these projects is recognized at a point in time which is when the specified developed technology has been delivered and accepted by the customer. Revenue recognized at a point in time for these services amounted to $1.4 million and $3.2 million for the three months ended June 30, 2021 and 2020, respectively and $3.5 million and $4.6 million for the six months ended June 30, 2021 and 2020, respectively. For services performed on a customer’s owned asset, since the customer controls the asset being enhanced, revenue is recognized over time as services are rendered. Revenue recognized over time for these services using a cost-based input method amounted to $3.4 million and $2.2 million for the three months ended June 30, 2021 and 2020, respectively, and $3.4 million and $4.0 million for the six months ended June 30, 2021 and 2020, respectively. The Company is allowed to bill for services performed under the contract in the event the contract is terminated.
Revenue from professional service contracts primarily relates to training and other consulting arrangements performed by the Company for its customers. Revenues from professional services contracts provided on a time and materials basis are recognized when the Company has the right to invoice under the practical expedient as amounts correspond directly with the value of the services rendered to date.
Revenue from product maintenance contracts is recognized over time as the Company’s performance obligations are satisfied. This is typically the contractual service period, which is generally one year. Maintenance and support services are a distinct performance obligation that includes the stand-ready obligation to provide telephone support, bug fixes and unspecified software upgrades and updates provided on a when-and-if-available basis and/or extended hardware warranty, which is considered a service type warranty.
Revenue from software licenses is primarily related to the sale of perpetual licenses to customers. The software delivered to the customer has stand-alone functionality and the customer can use the intellectual property as it exists at any time. Therefore, the Company recognizes revenue when the software license is delivered to the customer. There are no further performance obligations once the software license is delivered to the customer.
13
AIRSPAN NETWORKS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Payment terms to customers generally range from net 30 to 120 days from invoice, which are considered to be standard payment terms. The Company assesses its ability to collect from its customers based primarily on the creditworthiness and past payment history of the customer. The Company has elected to apply the practical expedient that allows an entity to not adjust the promised amount of consideration in customer contracts for the effect of a significant financing component when the period between the transfer of product and services and payment of the related consideration is less than one year. The estimated cost of any post-sale obligations, including basic product warranties, is accrued at the time revenue is recognized based on a number of factors, which include historical experience and known conditions that may impact future warranty costs.
The Company accounts for shipping and handling activities as a fulfilment cost rather than an additional promised service. Therefore, revenue related to shipping and handling activities is included in product revenues. Shipping and handling costs are accrued and recorded as cost of revenue when the related revenue is recognized. Billings to customers for reimbursement of out-of-pocket expenses, including travel, lodging and meals, are recorded as revenue, and the associated costs incurred by the Company for those items are recorded as cost of revenue. Revenue related to the reimbursement of out-of-pocket costs are accounted for as variable consideration.
Contract Balances
A contract asset is recorded when revenue is recognized in advance of our right to receive consideration (i.e., we must perform additional services in order to receive consideration). Amounts are recorded as receivables when our right to consideration is unconditional. When consideration is received, or we have an unconditional right to consideration in advance of delivery of goods or services, a contract liability is recorded. The transaction price can include non-refundable upfront fees, which are allocated to the identifiable performance obligations.
Contract assets are included within accounts receivables and contract liabilities are included in deferred revenue in our condensed consolidated balance sheets. The opening and closing balances of our contract asset and liability balances from contracts with customers as of December 31, 2020 and June 30, 2021 were as follows:
| Contracts Assets | Contracts Liabilities | |||||||
| Balance as of December 31, 2020 | $ | 5,361 | $ | 7,521 | ||||
| Balance as of June 30, 2021 | 11,917 | 4,729 | ||||||
| Change | $ | 6,556 | $ | (2,792 | ) | |||
Revenues for the three and six months ended June 30, 2021 and 2020, include the following:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Amounts included in the beginning of year contract liability balance | $ | 877 | $ | 422 | $ | 4,427 | $ | 1,814 | ||||||||
Costs to Obtain or Fulfill a Contract
The Company capitalizes commission expenses paid to internal sales personnel and sales agent commissions that are incremental to obtaining customer contracts, for which the related revenue is recognized over a future period. These costs are incurred on initial sales of product, maintenance and professional services and maintenance and support contract renewals. The Company defers these costs and amortizes them over the period of benefit, which the Company generally considers to be the contract term or length of the longest delivery period as contract capitalization costs in the condensed consolidated balance sheets. Commissions paid relating to contract renewals are deferred and amortized on a straight-line basis over the related renewal period as commissions paid on renewals are commensurate with commissions paid on initial sales transactions. Costs to obtain or fulfil contracts were not significant for the three months ended June 30, 2021 and 2020. Costs to obtain a contract for development and engineering service contracts are expensed as incurred in accordance with the practical expedient as the contractual period of these contracts are generally one year or less.
14
AIRSPAN NETWORKS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Warranty Liabilities
The Company provides a limited warranty for periods, usually ranging from 12 to 24 months, to all purchasers of its new products. Warranty expense is accrued on the sale of products and is recognized as a cost of revenue. The expense is estimated based on analysis of historic costs and other relevant factors.
Information regarding the changes in the Company’s product warranty liabilities for the three and six months ended June 30, 2021 and 2020 is as follows (in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Balance, beginning of period | $ | 1,019 | $ | 986 | $ | 1,019 | $ | 981 | ||||||||
| Accruals | 168 | 150 | 260 | 181 | ||||||||||||
| Settlements | (88 | ) | (169 | ) | (180 | ) | (195 | ) | ||||||||
| Balance, end of period | $ | 1,099 | $ | 967 | $ | 1,099 | $ | 967 | ||||||||
| 4. | GOODWILL AND INTANGIBLE ASSETS, NET |
The Company has goodwill of $13.6 million at June 30, 2021 and December 31, 2020 resulting from a prior acquisition.
Intangible assets, net consists of the following (in thousands):
| Weighted | June 30, 2021 | |||||||||||||
| Average Useful Life (in years) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||
| Internally developed technology | 10 | $ | 7,810 | $ | (2,017 | ) | $ | 5,793 | ||||||
| Customer relationships | 6 | 2,130 | (917 | ) | 1,213 | |||||||||
| Trademarks | 2 | 720 | (720 | ) | - | |||||||||
| Non-compete | 3 | 180 | (155 | ) | 25 | |||||||||
| Total acquired intangible assets | $ | 10,840 | $ | (3,809 | ) | $ | 7,031 | |||||||
| Weighted | December 31, 2020 | |||||||||||||
| Average Useful Life (in years) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||
| Internally developed technology | 10 | $ | 7,810 | $ | (1,627 | ) | $ | 6,183 | ||||||
| Customer relationships | 6 | 2,130 | (739 | ) | 1,391 | |||||||||
| Trademarks | 2 | 720 | (720 | ) | - | |||||||||
| Non-compete | 3 | 180 | (125 | ) | 55 | |||||||||
| Total acquired intangible assets | $ | 10,840 | $ | (3,211 | ) | $ | 7,629 | |||||||
15
AIRSPAN NETWORKS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Amortization expense related to the Company’s intangible assets amounted to $0.3 million and $0.4 million for the three months ended June 30, 2021 and 2020, respectively, and $0.6 million and $0.8 million for the six months ended June 30, 2021 and 2020, respectively.
Estimated amortization expense for the remainder of 2021 and thereafter related to the Company’s intangible assets is as follows (in thousands):
| 2021 | $ | 593 | ||
| 2022 | 1,136 | |||
| 2023 | 1,136 | |||
| 2024 | 1,107 | |||
| 2025 | 781 | |||
| Thereafter | 2,278 | |||
| $ | 7,031 |
| 5. | OTHER ACCRUED EXPENSES |
Other accrued expenses consist of the following (in thousands):
| June 30, 2021 | December 31, 2020 | |||||||
| Accrued payroll and related benefits and taxes | $ | 6,875 | $ | 6,812 | ||||
| Accrued royalties | 4,350 | 3,401 | ||||||
| Agent and sales commissions | 3,659 | 2,501 | ||||||
| Right-of-use lease liability, current portion | 2,945 | 2,671 | ||||||
| Tax liabilities | 613 | 1,967 | ||||||
| Product warranty liabilities | 1,099 | 1,019 | ||||||
| Marketing accruals | 1,092 | 869 | ||||||
| Manufacturing accruals | 2,592 | 1,243 | ||||||
| Other | 3,026 | 2,055 | ||||||
| $ | 26,251 | $ | 22,538 | |||||
| 6. | SUBORDINATED DEBT |
On August 6, 2015, the Company issued Golden Wayford Limited a $10.0 million subordinated Convertible Note Promissory Note (the “Golden Wayford Note”) pursuant to the subordinated Convertible Purchase Agreement dated such date. The Golden Wayford Note was amended and restated on November 28, 2017, to reduce the interest rate thereon and to reflect the application of the payment of $1.0 million of principal on such note. The Golden Wayford Note had an original maturity date of February 16, 2016, which through subsequent amendments was extended to June 30, 2020. The conversion rights related to this agreement expired on its maturity date, June 30, 2020, and on this date the loan was reclassified from Subordinated Convertible Debt to Subordinated Debt.
The principal and accrued interest under the Golden Wayford Note would have been automatically converted into common shares at the time of the next equity financing and consummated prior to, on or after the maturity date (June 30, 2020). Such conversion right expired in accordance with its term. Interest accrues at 5.0% per annum and is payable quarterly, however, because such payment is prohibited by the terms of the subordination, interest is (in accordance with the terms of the related promissory note) paid in kind.
On December 30, 2020, Pacific Western Bank (“PWB”) and Ally Bank (“Ally”) assigned their interests in a loan facility under the Second Amended and Restated Loan and Security Agreement (the “PWB Facility”) to certain new lenders pursuant to an assignment agreement (the “Assignment Agreement”) and PWB entered into a resignation and assignment agreement (the “Agent Resignation Agreement”) pursuant to which PWB resigned in its capacity as agent under all of the transaction documents and DBFIP ANI LLC (“Fortress”) became the successor agent (as defined in the Agent Resignation Agreement), replacing PWB in such capacity under the PWB Facility.
16
AIRSPAN NETWORKS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The Golden Wayford Note was subordinate to the PWB Facility and, after giving effect to the Assignment Agreement, the Resignation Agreement and the Reaffirmation and Omnibus Amendment, is now subordinate to the obligations under the Fortress Credit Agreement (see Note 8). A limited waiver under the Fortress Credit Agreement waives each actual and prospective default and event of default existing under the Fortress Credit Agreement directly as a result of the non-payment of the Golden Wayford Note.
The Company had subordinated debt outstanding of $9.0 million, plus $1.3 million and $1.1 million of accrued interest as of June 30, 2021 and December 31, 2020, respectively.
| 7. | SUBORDINATED TERM LOAN – RELATED PARTY |
On February 9, 2016, the Company entered into a $15.0 million subordinated term loan agreement with a related party (the “Subordinated Loan Agreement”) that was due to mature on February 9, 2018. On July 12, 2016, the Company entered into an additional $15.0 million Amendment No. 1 to Subordinated Term Loan Agreement that was due to mature on February 9, 2018. On July 3, 2017, the Company entered into Amendment No. 2 to the Subordinated Term Loan Agreement that extended the maturity date to June 30, 2019. On May 23, 2019, the Company entered into Amendment No. 3 to the Subordinated Term Loan Agreement that extended the maturity date to December 31, 2020. On March 30, 2020, the Company entered into Amendment No. 4 to the Subordinated Term Loan Agreement that extended the maturity date to December 31, 2021. On December 30, 2020, the Company entered into Amendment No. 5 to the Subordinated Term Loan Agreement that extended the maturity date of the later of (a) December 30, 2024 and (b) 365 days after the maturity date of the Fortress Credit Agreement (as in effect on December 30, 2020) (see Note 8). The note was subordinate to the PWB Facility and on December 30, 2020, the interests of PWB and Ally in the PWB Facility were assigned to new lenders pursuant to an Assignment Agreement (the “Assignment Agreement”) and PWB entered into a Resignation and Assignment Agreement (the “Agent Resignation Agreement”) pursuant to which PWB resigned in its capacity as agent under all of the transaction documents and Fortress became the successor agent (as defined in the Agent Resignation Agreement), replacing PWB in such capacity under the PWB Facility.
Prior to May 23, 2019, interest accrued at 2.475% per annum and was payable quarterly. In accordance with the amendments below, the interest rate changed as follows:
| (a) | Amendment Number 3, on May 23, 2019, the interest rate changed to 9.0% per annum to be accrued; |
| (b) | Amendment Number 4, on March 30, 2020, the interest rate changed to 9.0% per annum through December 31, 2020 and from and after January 1, 2021, at a rate of 12.0% per annum to be accrued; and |
| (c) | Amendment Number 5, on December 30, 2020, the interest rate from January 1, 2021 and thereafter changed to 9.0% per annum to be accrued, subject to reversion to 12.0% if a condition subsequent is not satisfied. The subsequent condition was satisfied. |
The principal and accrued interest may be repaid early without penalty.
The Company had a subordinated term loan outstanding of $30.0 million, plus $6.3 million and $4.8 million of accrued interest as of June 30, 2021 and December 31, 2020, respectively.
| 8. | SENIOR TERM LOAN |
On December 30, 2020, the Company, together with Airspan IP Holdco LLC, Airspan Networks (SG) Inc., Mimosa Networks, Inc., Mimosa Networks International, LLC, Airspan Communications Limited, Airspan Networks LTD, and Airspan Japan K.K. as guarantors, (collectively the “Loan Parties”), together with the other parties thereto, entered into the Assignment Agreement, the Resignation and Assignment Agreement, and the Reaffirmation and Omnibus Amendment, the result of which was the amendment and restatement of the terms of the PWB Facility under the Fortress Credit Agreement with the new lenders as the lenders thereunder. Fortress in its capacity became the administrative agent, collateral agent and trustee for the lenders and other secured parties.
The Fortress Credit Agreement initial term loan total commitment of $34.0 million and a term loan commitment of $10.0 million were both funded to the Company on December 30, 2020. Pursuant to the Fortress Credit Agreement, the Company may expand the term loan commitment by $20.0 million subject to the terms and conditions of the agreement. The maturity date of the total loan commitment is December 30, 2024. The Fortress Credit Agreement contains a prepayment premium of 5.0% if the prepayment occurs during the period from December 30, 2021 through December 29, 2022, and 3.0% if the prepayment occurs during the period from December 30, 2022 through December 29, 2023. The Fortress Credit Agreement also contains a prohibition on prepayment during the period from December 30, 2020 through December 29, 2021. Subsequent to December 29, 2021, the Company may prepay this loan but will incur a related fee in the amount of a make-whole amount of interest that would have been payable had such prepayment not been made.
17
AIRSPAN NETWORKS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
As of June 30, 2021, the Company was in compliance with all applicable covenants under the Fortress Credit Agreement.
The Company had a senior term loan outstanding of $44.0 million, plus $1.2 million and $25.0 thousand of accrued interest as of June 30, 2021 and December 31, 2020, respectively.
| 9. | LONG-TERM DEBT |
Long-term debt consists of:
| June 30, 2021 | December 31, 2020 | |||||||
| PPP Loan | $ | - | $ | 2,087 | ||||
| Finnish Funding Agency for Technology and Innovation (“Tekes”) | 443 | 458 | ||||||
| 443 | 2,545 | |||||||
| Less current portion – product development loan | (288 | ) | (298 | ) | ||||
| Less accrued interest on product development loan – current | (155 | ) | (160 | ) | ||||
| Total long-term debt | $ | - | $ | 2,087 | ||||
On April 27, 2020, under the Paycheck Protection Program (“PPP”) established by the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, administered by the Small Business Administration (“SBA”), the Company entered into a promissory note of approximately $2.1 million with First Home Bank (“PPP Loan”). The promissory note bears interest at a rate of 1% and is payable in monthly installments of principal and interest over 18 months beginning seven months from the date of this promissory note and continuing on the 5th day of each month thereafter. A final payment of the entire unpaid balance of principal and interest will be due on April 27, 2022, the maturity date. On March 8, 2021, the Company applied for the promissory note to be forgiven by the SBA in whole or in part and was notified on June 10, 2021 that the SBA has approved our application to forgive the entire loan and accrued interest. For the three and six months ended June 30, 2021, the Company recorded a gain on extinguishment of debt for the PPP Loan of $2.1 million and the accrued interest of $23 thousand, respectively for the PPP Loan.
At both June 30, 2021 and December 31, 2020, there were two capital loans amounting to $0.3 million with Tekes, the main public funding organization for research and development in Finland.
| 10. | FAIR VALUE MEASUREMENTS |
The Company’s assets and liabilities recorded at fair value are categorized based upon a fair value hierarchy that ranks the quality and reliability of the information used to determine fair value.
The Company has certain non-financial assets that are measured at fair value on a non-recurring basis when there is an indicator of impairment, and they are recorded at fair value only when impairment is recognized. These assets include property, plant and equipment, goodwill and intangible assets, net. The Company did not record impairment to any non-financial assets in the three months ended June 30, 2021 and 2020. The Company does not have any non-financial liabilities measured and recorded at fair value on a non-recurring basis.
18
AIRSPAN NETWORKS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Financial Disclosures about Fair Value of Financial Instruments
The tables below set forth information related to the Company’s condensed consolidated financial instruments (in thousands):
| Level in | June 30, 2021 | December 31, 2020 | |||||||||||||||||
| Fair Value | Carrying | Fair | Carrying | Fair | |||||||||||||||
| Hierarchy | Amount | Value | Amount | Value | |||||||||||||||
| Assets: | |||||||||||||||||||
| Cash and cash equivalents | 1 | 12,208 | 12,208 | 18,196 | 18,196 | ||||||||||||||
| Restricted cash | 1 | 187 | 187 | 422 | 422 | ||||||||||||||
| Cash and investment in severance benefit accounts | 1 | 3,516 | 3,516 | 3,567 | 3,567 | ||||||||||||||
| Liabilities: | |||||||||||||||||||
| Subordinated term loan | 2 | 36,325 | 34,756 | 24,327 | |||||||||||||||
| Subordinated debt | 2 | 10,316 | 10,065 | 6,624 | |||||||||||||||
| Senior term loan | 2 | 38,895 | 36,834 | 37,948 | |||||||||||||||
| Long-term debt | 2 | - | - | 2,087 | 2,087 | ||||||||||||||
| Warrants (a) | 3 | 12,291 | 12,291 | 7,632 | 7,632 | ||||||||||||||
| (a) | As of June 30, 2021 and December 31, 2020, the fair value of warrants outstanding that are classified as liabilities are included in other long-term liabilities in the Company’s condensed consolidated balance sheets. |
The fair value of the Company’s cash and cash equivalents and restricted cash approximate the carrying value because of their short-term nature of these accounts.
As of June 30, 2021, the fair value of the subordinated term loan, subordinated debt and senior term loan considered the senior status of the senior term loan (Fortress Credit Agreement), followed by the junior status of the subordinated term loan and subordinated debt. The implied yields of the senior term loan, subordinated term loan and subordinated debt were 10.92%, 15.51% and 14.62%, respectively.
As of December 31, 2020, the fair value of the subordinated term loan, subordinated debt and senior term loan considered the senior status of the senior term loan (Fortress Credit Agreement), followed by the junior status of the subordinated term loan and subordinated debt. The senior term loan face value was adjusted for $4.7 million of original issue discounts and $1.4 million of fair value of Series H warrants issued to lenders pursuant to the Fortress Credit Agreement, resulting in the fair value of the senior term loan totaling $37.9 million, with a 12.80% implied yield. The implied yields of the subordinated term loan and subordinated debt were 17.05% and 16.57%, respectively.
The estimated fair value of long-term debt approximated its carrying amount because based on the arrangement of the financing of the debt and pursuant to the terms of the CARES ACT, the Company applied for this debt to be forgiven by the SBA in whole or in part.
| 11. | COMMITMENTS AND CONTINGENCIES |
The Company had commitments with its main subcontract manufacturers under various purchase orders and forecast arrangements of $76.6 million at June 30, 2021, the majority of which have expected delivery dates during the year ended December 31, 2021.
Certain officers of the Company have change in control payments that they would be entitled to receive in the event of a change in control.
Contingencies and Legal Proceedings
From time to time, the Company receives and reviews correspondence from third parties with respect to licensing their patents and other intellectual property in connection with the sale of the Company’s products. Disputes may arise with such third parties if an agreement cannot be reached regarding the licensing of such patents or intellectual property.
19
AIRSPAN NETWORKS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
On October 14, 2019, Barkan Wireless IP Holdings, L.P. (“Barkan”) filed a suit against Sprint Corporation and related entities (“Sprint”) alleging patent infringement based in part on two of the Company’s products, Airave 4 and Magic Box Gold. See Barkan Wireless IP Holdings, L.P. v. Sprint Corporation et al, Case No. 2:19-cv-00336-JRG (E.D. Tex.). On March 26, 2021, after a settlement between Barkan and Sprint, the Court granted an agreed motion to dismiss and the case was closed. Sprint has demanded that the Company indemnify Sprint $3,870,000 for a portion of the amounts Sprint paid to defend and settle the case. On April 27, 2021, Sprint gave notice that it intends to set-off amounts it owes the Company until Sprint’s indemnity demand is satisfied. The Company is currently evaluating Sprint’s indemnity demand and the extent of the Company’s indemnity obligation, if any. On July 6, 2021 Airspan invoked its rights under the dispute resolution clause in its agreement with Sprint to call for a meeting with Sprint to discuss the unresolved dispute. The parties are in negotiations on the matter in question.
On April 27, 2021, Magnacross LLC filed a complaint for patent infringement against the Company in the United States District Court for the District of Delaware. The Complaint alleges infringement of United States Patent No. 6,917,304 (“the ‘304 Patent”). The ‘304 Patent is titled “Wireless Multiplex [sic] Data Transmission System.” On June 16, 2021 plaintiff filed a Notice of Voluntary Dismissal Without Prejudice, which the District Court approved by Order dated June 16, 2021.
Except as set forth above, the Company is not currently subject to any other material legal proceedings. The Company may from time to time become a party to various other legal proceedings arising in the ordinary course of its business. While the results of such claims and litigation cannot be predicted with certainty, the Company currently believes that it is not a party to any litigation the final outcome of which is likely to have a material adverse effect on the Company’s condensed consolidated financial position, results of operations or cash flows.
| 12. | COMMON STOCK AND CONVERTIBLE PREFERRED STOCK |
Convertible preferred stock consists of the following shares at $0.0001 par value:
| Series | Shares Authorized 6/30/2021 | Shares issued and outstanding 6/30/2021 | Shares issued and outstanding 12/31/2020 | |||||||||
| Convertible Preferred Stock | ||||||||||||
| Series B | 72,123 | - | - | |||||||||
| Series B-1 | 72,123 | 72,123 | 72,123 | |||||||||
| Series C | 416,667 | - | - | |||||||||
| Series C-1 | 416,667 | 416,667 | 416,667 | |||||||||
| Series D | 2,142,050 | 1,080,993 | 1,080,993 | |||||||||
| Series D-1 | 487,805 | 325,203 | 325,203 | |||||||||
| Series D-2 | 2,142,050 | 370,000 | 370,000 | |||||||||
| Senior Convertible Preferred Stock | ||||||||||||
| Series E | 1,008,742 | 615,231 | 615,231 | |||||||||
| Series E-1 | 659,310 | 393,511 | 393,511 | |||||||||
| Series F | 398,401 | 352,076 | 352,076 | |||||||||
| Series F-1 | 46,325 | 46,325 | 46,325 | |||||||||
| Series G | 740,987 | 740,987 | 740,987 | |||||||||
| Series G-1 | 202,100 | - | - | |||||||||
| Series H | 487,806 | 181,294 | 168,288 | |||||||||
| 9,293,156 | 4,594,410 | 4,581,404 | ||||||||||
20
AIRSPAN NETWORKS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Issuances of Convertible Preferred Stock as of June 30, 2021:
| Description | Shares Issued | Issuance Price per share | Conversion Rate | Voting Rate | Liquidation Preference (in thousands) | |||||||||||||||
| Convertible Preferred Stock | ||||||||||||||||||||
| Series B-1 | 72,123 | $ | 807.00 | 1.0 | - | $ | 58,203 | |||||||||||||
| Series C-1 | 416,667 | $ | 24.00 | 1.0 | - | $ | 10,000 | |||||||||||||
| Series D | 1,080,993 | $ | 61.50 | 1.0 | 1.00 | $ | 66,481 | |||||||||||||
| Series D-1 | 325,203 | $ | 61.50 | 1.0 | - | $ | 20,000 | |||||||||||||
| Series D-2 | 370,000 | $ | 61.50 | 1.0 | - | $ | 22,755 | |||||||||||||
| Senior Convertible Preferred Stock | ||||||||||||||||||||
| Series E | 615,231 | $ | 91.00 | 1.04 | 1.04 | $ | 55,989 | |||||||||||||
| Series E-1 | 393,511 | $ | 91.00 | 1.04 | - | $ | 35,811 | |||||||||||||
| Series F | 352,076 | $ | 107.93 | 1.755 | 1.755 | $ | 38,000 | |||||||||||||
| Series F-1 | 46,325 | $ | 107.93 | 1.755 | - | $ | 5,000 | |||||||||||||
| Series G | 740,987 | $ | 61.50 | 1.0 | * | 1.00 | $ | 113,927 | ||||||||||||
| Series H | 181,294 | $ | 61.50 | 1.0 | 1.00 | $ | 11,150 | |||||||||||||
| * | The Series G and G-1 Convertible Preferred Stock have special conversion rights in connection with an initial public offering or a SPAC merger whereby the Series G Convertible Preferred Stock shall receive shares to at least 2.5 times the amount paid for each preferred share. |
Voting and Control
At June 30, 2021, Series B, B-1, C, C-1, D, D-1 and D-2 Convertible Preferred Stock and E, E-1, F, F-1, G, G-1 and H Senior Convertible Preferred Stock combined would convert into a total of approximately 94.5% of the Company’s outstanding common stock, Class B common stock and Class C common stock and represents approximately 92.2% of the Company’s outstanding voting power. At June 30, 2021, Oak Investment Partners held all of the Series B-1, C-1 and D-2 Convertible Preferred Stock, 66.8% of the Series D Convertible Preferred Stock, 52.6% of the Series F Senior Convertible Preferred Stock, 56.7% of the Series G Senior Convertible Preferred Stock and 31.4% of the Series H Senior Convertible Preferred Stock.
Dividends
At June 30, 2021 and December 31, 2020, the Company has no accumulated or accrued and unpaid dividends on the convertible preferred stock. There are no established dividends on any convertible preferred stock.
Warrants
The Company accounts for outstanding convertible preferred stock warrants that have been earned and are exercisable into shares of the Company’s convertible preferred stock as liabilities pursuant to Accounting Standards Codification 480, “Distinguishing Liabilities from Equity” as the warrants are exercisable into shares of convertible preferred stock that are contingently redeemable upon events outside the control of the Company. The warrant liability is included in Other Long-term Liabilities on the accompanying condensed consolidated balance sheets. The warrants are remeasured and recognized at fair value at each balance sheet date. At the end of each reporting period, changes in fair value during the period are recognized as a component of Other expense, net on the accompanying condensed consolidated statements of operations.
In January 2021 and February 2021, the Company issued warrants for the purchase of 6,097 and 406, respectively, shares of Series H Convertible Preferred Stock to certain holders of its Series H Senior Convertible Preferred Stock (one warrant for every two shares of Series H Senior Convertible Preferred Stock purchased in January and February 2021, respectively) with an exercise price of $61.50 per share and a 5-year term (“Series H warrants”). The Company accounted for the initial fair value of the Series H warrants as a discount on the Series H Senior Convertible Preferred Stock issuance and recorded a corresponding warrant liability.
In June 2014, the Company issued warrants to purchase 203,252 shares of Series D Convertible Preferred Stock (originally 12,500 taking effect for 16.26 to 1 stock split) to holders of its Series D Convertible Preferred Stock with an exercise price of $61.50 per share, subject to certain performance requirements (the “D Warrants”). These warrants were unvested at December 31, 2020 and 2019 as the performance criteria had not been met and therefore, no liability has been recorded with respect to these instruments. The D warrants expired (unearned/unexercised) on January 31, 2021.
21
AIRSPAN NETWORKS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Warrants issued and outstanding as of June 30, 2021 and December 31, 2020:
| Warrants Outstanding | ||||||||||||
| Series D | Series D-1 | Series H | ||||||||||
| Outstanding as of December 31, 2020 | 203,252 | 162,601 | 139,428 | |||||||||
| Issuance of warrants | - | - | 6,503 | |||||||||
| Warrants expired | (203,252 | ) | - | - | ||||||||
| Outstanding as of June 30, 2021 | - | 162,601 | 145,931 | |||||||||
The change in fair value of the warrant liability as of June 30, 2021 and December 31, 2020 was:
| Warrant Liability | ||||||||||||
| (in thousands) | Series D-1 | Series H | Total | |||||||||
| As of December 31, 2020 | $ | 4,109 | $ | 3,523 | $ | 7,632 | ||||||
| Fair value of warrants at issuance | - | 142 | 142 | |||||||||
| Increase in fair value | 3,541 | 976 | 4,517 | |||||||||
| As of June 30, 2021 | $ | 7,650 | $ | 4,641 | $ | 12,291 | ||||||
As of June 30, 2021 and December 31, 2020, the Series D-1 and Series H warrants fair value were determined using a hybrid scenario approach, including a Monte Carlo simulation. On March 3, 2021, Airspan reduced the exercise price of the D-1 warrants to $45.9875.
| 13. | SHARE-BASED COMPENSATION |
The following table sets forth the activity for all common stock options:
| Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (Years) | ||||||||||
| Outstanding, December 31, 2020 | 958,782 | $ | 22.88 | 6.79 | ||||||||
| Granted (a) | 77,256 | 36.30 | - | |||||||||
| Exercised | (2,200 | ) | (31.26 | ) | - | |||||||
| Forfeited | (15,713 | ) | (20.67 | ) | - | |||||||
| Outstanding, June 30, 2021 (b) | 1,018,125 | $ | 23.91 | 6.52 | ||||||||
| Exercisable, June 30, 2021 (c) | 680,409 | $ | 21.17 | 5.62 | ||||||||
| (a) | The weighted average grant-date fair value of options granted during the six months ending June 30, 2021 was $24.27 per share. |
| (b) | The aggregate intrinsic value of all options outstanding as of June 30, 2021 was $14.3 million. |
| (c) | The aggregate intrinsic value of all vested/exercisable options as of June 30, 2021 was $11.5 million. |
Because the Company maintained a full valuation allowance on its U.S. deferred tax assets, it did not recognize any tax benefit related to share-based compensation expense for the three and six months ended June 30, 2021 and 2020. As of June 30, 2021, there was $4.8 million of unrecognized compensation expense related to stock options to be recognized over a weighted average period of 2.42 years and $1.1 million of unrecognized compensation expense related to restricted stock awards to be recognized over a weighted average period of 7.39 years.
22
AIRSPAN NETWORKS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The following table summarizes the number of authorized, unissued shares of common stock, under all employee stock plans, to be issued upon exercise as of June 30, 2021:
| Plans | Number of Shares | |||
| Total options available to be granted | 221,323 | |||
| Total options outstanding | 1,018,125 | |||
| Total common stock reserved for future issuance under employee stock plans | 1,239,448 | |||
The following table summarizes share-based compensation expense for the three and six months ended June 30, 2021 and 2020 (in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Research and development | $ | 254 | $ | 200 | $ | 468 | $ | 399 | ||||||||
| Sales and marketing | 196 | 104 | 336 | 206 | ||||||||||||
| General and administrative | 363 | 179 | 656 | 358 | ||||||||||||
| Cost of sales | 14 | 12 | 28 | 24 | ||||||||||||
| Total share-based compensation | $ | 827 | $ | 495 | $ | 1,488 | $ | 987 | ||||||||
| 14. | NET LOSS PER SHARE |
Net loss per share is computed using the weighted average number of shares of common stock outstanding less the number of shares subject to repurchase.
The following table sets forth the computation of basic and diluted net loss per share for the periods indicated (in thousands, except share data):
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Numerator: | ||||||||||||||||
| Net loss | $ | (10,418 | ) | $ | (11,053 | ) | $ | (23,967 | ) | $ | (24,068 | ) | ||||
| Denominator - basic and diluted: | ||||||||||||||||
| Weighted average common shares outstanding | 670,043 | 669,534 | 669,839 | 669,534 | ||||||||||||
| Net loss per share - basic and diluted | $ | (15.55 | ) | $ | (16.51 | ) | $ | (35.78 | ) | $ | (35.95 | ) | ||||
23
AIRSPAN NETWORKS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The following table sets forth the amounts excluded from the computation of diluted net loss per share as their effect was anti-dilutive:
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Stock options outstanding (a) | 1,018,125 | 980,946 | 1,018,125 | 980,946 | ||||||||||||
| Non-vested shares of restricted stock | 72,989 | 68,557 | 72,989 | 68,557 | ||||||||||||
| Preferred stock and warrants (b): | ||||||||||||||||
| Convertible Preferred Stock | ||||||||||||||||
| Series B | — | 72,123 | — | 72,123 | ||||||||||||
| Series B-1 | 72,123 | — | 72,123 | — | ||||||||||||
| Series C | — | 416,667 | — | 416,667 | ||||||||||||
| Series C-1 | 416,667 | — | 416,667 | — | ||||||||||||
| Series D | 1,080,993 | 1,450,993 | 1,080,993 | 1,450,993 | ||||||||||||
| Series D-1 | 325,203 | 325,203 | 325,203 | 325,203 | ||||||||||||
| Series D-2 | 370,000 | — | 370,000 | — | ||||||||||||
| Senior Convertible Preferred Stock | ||||||||||||||||
| Series E | 615,231 | 615,231 | 615,231 | 615,231 | ||||||||||||
| Series E-1 | 393,511 | 393,511 | 393,511 | 393,511 | ||||||||||||
| Series F | 352,076 | 352,076 | 352,076 | 352,076 | ||||||||||||
| Series F-1 | 46,325 | 46,325 | 46,325 | 46,325 | ||||||||||||
| Series G | 740,987 | 464,566 | 740,987 | 464,566 | ||||||||||||
| Series H | 181,294 | — | 181,294 | — | ||||||||||||
| Warrants | ||||||||||||||||
| Series D and D-1 warrants | 162,602 | 585,624 | 162,602 | 585,624 | ||||||||||||
| Series H warrants | 145,931 | — | 145,931 | — | ||||||||||||
| (a) | If the Company had reported net income, the calculation of these per share amounts would have included the dilutive effect of these common stock equivalents using the treasury stock method for stock options. |
| (b) | The convertible preferred stock and warrants referred to in Note [11] were also excluded on an as converted basis because their effect would have been anti-dilutive. |
| 15. | RELATED PARTY TRANSACTIONS |
As of both June 30, 2021 and December 31, 2020, there was an outstanding note receivable amounting to $87 thousand due from the Company’s President and Chief Executive Officer in connection with the purchase of 500,000 shares of the Company’s common stock. The note was originally entered into in 1999 in the amount of $130 thousand of which $43 thousand had been repaid at June 30, 2021. No interest is due on the debt. The debt is collateralized by Airspan stock.
As disclosed in Note [7], as of June 30, 2021 and December 31, 2020, the Company has a Subordinated Term Loan with a related party.
| 16. | EQUITY METHOD INVESTMENT |
The Company accounts for its investment in a wholly-owned subsidiary, Dense Air, as an equity method investment. Dense Air has been funded by its sole lender through convertible debt with various restrictions and requirements including a conversion option on substantially all of the ownership interest in Dense Air. Dense Air was designed to acquire and hold specific assets and the fixed price conversion option is economically similar to a call option on the assets of Dense Air. Therefore, the Company concluded consolidation is not required. The Company did determine it has significant influence in the operations of Dense Air and therefore, has applied the equity method of accounting. Given Dense Air has operated at a loss since its inception, and the Company has not guaranteed the obligations of Dense Air or otherwise committed to provide further financial support, equity method accounting has been discontinued. The equity method investment has no value at June 30, 2021 and December 31, 2020.
There have been no dividends received from Dense Air for the three and six months ended June 30, 2021 and 2020.
On March 22, 2021, an investor acquired the sole lender to Dense Air’s rights and obligations under a convertible loan agreement. Concurrently, the Company received a notice of conversion from the investor to convert the outstanding amount of the loan into shares equating to 95% of the share capital of Dense Air. The conversion is contingent on regulatory consent in Australia, which is expected in the third quarter of 2021.
The Company receives reimbursement of its expenses for providing certain management support functions to Dense Air, a related party, which are not material.
| 17. | SUBSEQUENT EVENTS |
The Company has evaluated events and transactions that occurred during the period from the balance sheet date through August 19, 2021, the date these consolidated financial statements were issued. Except as disclosed below, the Company is not aware of any other subsequent events which would require adjustment or disclosure in the consolidated financial statements.
On August 13, 2021, the Company consummated the previously announced SPAC Transaction with NBA, following which the Company became a wholly owned subsidiary of NBA (which subsequently changed its name to Airspan Networks Holdings Inc.). Airspan Networks Holdings Inc.’s common stock is listed on the NYSE American and trades under the ticker symbol “MIMO.”
24
Exhibit 99.4
AIRSPAN NETWORKS INC.’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
| Percentage of Revenue | ||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| Geographic Area | 2021 | 2020 | 2021 | 2020 | ||||||||||||
| United States | 31.4 | % | 31.8 | % | 30.0 | % | 31.9 | % | ||||||||
| Other North America and Canada | -% | 1.8 | % | 0.2 | % | 1.2 | % | |||||||||
| North America | 31.4 | % | 33.6 | % | 30.2 | % | 33.1 | % | ||||||||
| India | 21.1 | % | 19.2 | % | 15.0 | % | 24.2 | % | ||||||||
| Japan | 30.5 | % | 37.3 | % | 39.1 | % | 27.8 | % | ||||||||
| Other Asia | 3.5 | % | 0.6 | % | 2.5 | % | 0.8 | % | ||||||||
| Asia | 55.1 | % | 57.1 | % | 56.6 | % | 52.8 | % | ||||||||
| Europe | 6.7 | % | 4.6 | % | 4.8 | % | 5.7 | % | ||||||||
| Africa and the Middle East | 5.0 | % | 4.0 | % | 3.5 | % | 5.3 | % | ||||||||
| Latin America and the Caribbean | 1.8 | % | 0.7 | % | 4.9 | % | 3.1 | % | ||||||||
| Total revenue | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||
Results of Operations
The following table summarizes key components of our results of operations for the periods indicated:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| (in thousands) | ||||||||||||||||
| Revenues | $ | 42,048 | $ | 27,793 | $ | 87,983 | $ | 55,371 | ||||||||
| Cost of revenues | 22,820 | 13,086 | 47,811 | 25,932 | ||||||||||||
| Gross profit | 19,228 | 14,707 | 40,172 | 29,439 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | 15,524 | 12,497 | 29,898 | 25,713 | ||||||||||||
| Sales and marketing | 7,482 | 6,490 | 14,842 | 14,413 | ||||||||||||
| General and administrative | 4,445 | 3,915 | 8,900 | 7,947 | ||||||||||||
| Amortization of intangibles | 299 | 389 | 598 | 778 | ||||||||||||
| Loss on sale of assets | – | - | – | 22 | ||||||||||||
| Total operating expenses | 27,750 | 23,291 | 54,238 | 48,873 | ||||||||||||
| Loss from operations | (8,522 | ) | (8,584 | ) | (14,066 | ) | (19,434 | ) | ||||||||
| Interest expense, net | (2,512 | ) | (1,606 | ) | (4,950 | ) | (3,196 | ) | ||||||||
| Gain on extinguishment of debt | 2,096 | - | 2,096 | - | ||||||||||||
| Other expense, net | (1,388 | ) | (770 | ) | (6,880 | ) | (1,240 | ) | ||||||||
| Loss before income taxes | (10,326 | ) | (10,960 | ) | (23,800 | ) | (23,870 | ) | ||||||||
| Income tax expense | (92 | ) | (93 | ) | (167 | ) | (198 | ) | ||||||||
| Net loss | $ | (10,418 | ) | $ | (11,053 | ) | $ | (23,967 | ) | $ | (24,068 | ) | ||||
Three Months Ended June 30, 2021 Compared to the Three Months Ended June 30, 2020
Revenues
Revenues for the above periods are presented below:
| Three Months Ended June 30, | ||||||||||||||||
| ($ in thousands) | 2021 | % of Revenue | 2020 | % of Revenue | ||||||||||||
| Revenues: | ||||||||||||||||
| Products and software licenses | $ | 35,041 | 83.3 | % | $ | 16,565 | 59.6 | % | ||||||||
| Maintenance, warranty and services | 7,007 | 16.7 | % | 11,228 | 40.4 | % | ||||||||||
| Total revenues | $ | 42,048 | 100 | % | $ | 27,793 | 100 | % | ||||||||
Revenue from products and software licenses of $35.0 million for the three months ended June 30, 2021 increased by $18.4 million from $16.6 million for the three months ended June 30, 2020. This increase was primarily due to an increase in sales of products to one customer in Asia Pacific of $14.0 million and an increase in sales of fixed wireless access and citizens broadband radio service (“CBRS”) products of $6.8 million, offset by slightly reduced revenue to other customers of $2.0 million.
Revenue from maintenance, warranty and services of $7.0 million for the three months ended June 30, 2021 decreased by $4.2 million from $11.2 million for the three months ended June 30, 2020. This decrease was primarily due to the termination of a maintenance agreement with a North American customer at the end of Q1 2021 which generated revenue of $2.8 million in the three months ended June 30, 2020. Asia Pacific services decreased by $0.7 million and the rest of the world decreased by $0.7 million.
Cost of Revenues
Cost of revenues for the above periods are presented below:
| Three Months Ended June 30, | ||||||||||||||||
| ($ in thousands) | 2021 | % of Revenue | 2020 | % of Revenue | ||||||||||||
| Cost of Revenues: | ||||||||||||||||
| Products and software licenses | $ | 21,727 | 51.7 | % | $ | 11,846 | 42.6 | % | ||||||||
| Maintenance, warranty and services | 1,093 | 2.6 | % | 1,240 | 4.5 | % | ||||||||||
| Total cost of revenues | $ | 22,820 | 54.3 | % | $ | 13,086 | 47.1 | % | ||||||||
Cost of revenues from products and software licenses of $21.7 million for the three months ended June 30, 2021 increased by $9.9 million from $11.8 million for the three months ended June 30, 2020. This increase was primarily due to revenue growth offset by indirect costs remaining flat for the three months ended June 30, 2021.
Cost of revenues from maintenance, warranty and services of $1.1 million for the three months ended June 30, 2021 decreased marginally by $0.1 million from $1.2 million for the three months ended June 30, 2020.
2
Operating Expenses
Operating expenses for the above periods are presented below:
| Three Months Ended June 30, | ||||||||||||||||
| ($ in thousands) | 2021 | % of Revenue | 2020 | % of Revenue | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | $ | 15,524 | 36.9 | % | $ | 12,497 | 45.0 | % | ||||||||
| Sales and marketing | 7,482 | 17.8 | % | 6,490 | 23.4 | % | ||||||||||
| General and administrative | 4,445 | 10.6 | % | 3,915 | 14.1 | % | ||||||||||
| Amortization of intangibles | 299 | 0.7 | % | 389 | 1.4 | % | ||||||||||
| Total operating expenses | $ | 27,750 | 66.0 | % | $ | 23,291 | 83.8 | % | ||||||||
Research and development— Research and development expenses were $15.5 million for the three months ended June 30, 2021, an increase of $3.0 million from $12.5 million for the three months ended June 30, 2020. The increase was primarily due to increased headcount spend for additional employees primarily located in India of $2.1 million, and increased sub-contract development costs of $0.9 million.
Sales and marketing— Sales and marketing expenses were $7.5 million for the three months ended June 30, 2021, an increase of $1.0 million from $6.5 million for the three months ended June 30, 2020. The increase was the result of:
| · | $1.1 million due to increased sales and marketing headcount; and |
| · | $0.1 million of increased travel expense |
These decreases were offset by:
| · | $0.1 million decrease in facility costs; and |
| · | $0.1 million decrease in agent commissions |
General and administrative— General and administrative expenses of $4.4 million for the three months ended June 30, 2021 increased by $0.5 million from $3.9 million for the three months ended June 30, 2020. The increase was primarily due to an increase in other professional support services of $0.5 million, an increase in non-cash share-based compensation expense of $0.2 million, an increase in headcount costs of $0.1 million, offset by a decrease of $0.3 million in professional fees.
Amortization of intangibles— Amortization of intangibles of $0.3 million for the three months ended June 30, 2021 decreased marginally by $0.1 million from $0.4 million for the three months ended June 30, 2020.
Non-Operating Expenses
Interest expense, net— Interest expense, net was $2.5 million for the three months ended June 30, 2021, an increase of $0.9 million from $1.6 million for the three months ended June 30, 2020. The increase was primarily due to higher interest rates on the amended and restated credit agreement between Airspan Networks Inc., as borrower, Airspan Networks Holdings Inc. and certain of its subsidiaries, as guarantors, DBFIP ANI LLC, as administrative agent and collateral agent, and the lenders from time to time party thereto (the “Fortress Credit Agreement”) entered into on December 30, 2020, compared to the PWB Facility in place for the three months ended June 30, 2020.
Gain on extinguishment of debt – Gain on extinguishment of debt was $2.1 million for the three months ended June 30, 2021, an increase of $2.1 million from nil for the three months ended June 30, 2020. For the three and six months ended June 30, 2021, the Company recorded a gain on extinguishment of debt for a loan received under the Paycheck Protection Program (the “PPP Loan”) of $2.1 million and the accrued interest of $23 thousand, respectively for the PPP Loan.
Other expense, net— Other expense, net was $1.4 million for the three months ended June 30, 2021, an increase of $0.6 million from $0.8 million for the three months ended June 30, 2020. The increase was primarily due to the $0.6 million revaluation related to Japanese Yen volatility against the U.S. dollar, resulting in a loss on revaluation of Japanese Yen denominated balances during the three months of June 30, 2021.
Income tax expense— Income tax expense remained consistent at $0.1 million for the three months ended June 30, 2021 and 2020.
3
Net Loss
We had a net loss of $10.4 million for the three months ended June 30, 2021 compared to a net loss of $11.1 million for the three months ended June 30, 2020, a decrease of $0.7 million due to:
| · | Increase in gross profit of $4.5 million |
| · | Increase in gain on extinguishment of debt of $2.1 million |
This increase was offset by:
| · | Increase in operating expenses of $4.4 million |
| · | Increase in interest costs of $0.9 million |
| · | Increase in other expense of $0.6 million |
Non-GAAP Financial Measures
Adjusted EBITDA
Adjusted EBITDA for the three months ended June 30, 2021 was a loss of $5.4 million, representing an improvement of $1.7 million from a loss of $7.1 million for the three months ended June 30, 2020.
The following table presents the reconciliation of Net Loss, the most directly comparable GAAP measure, to Adjusted EBITDA:
| Three Months Ended June 30, | ||||||||
| ($ in thousands) | 2021 | 2020 | ||||||
| Net Loss | $ | (10,418 | ) | $ | (11,053 | ) | ||
| Adjusted for: | ||||||||
| Interest expense, net | 2,512 | 1,606 | ||||||
| Income tax (benefit) expense | 92 | 93 | ||||||
| Depreciation and amortization | 1,076 | 1,204 | ||||||
| EBITDA | (6,738 | ) | (8,150 | ) | ||||
| Share-based compensation expense | 828 | 495 | ||||||
| Change in fair value of warrant liability | 545 | 534 | ||||||
| Adjusted EBITDA | $ | (5,365 | ) | $ | (7,121 | ) | ||
Six Months Ended June 30, 2021 Compared to the Six Months Ended June 30, 2020
Revenues
Revenues for the above periods are presented below:
| Six Months Ended June 30, | ||||||||||||||||
| ($ in thousands) | 2021 | % of Revenue | 2020 | % of Revenue | ||||||||||||
| Revenues: | ||||||||||||||||
| Products and software licenses | $ | 74,040 | 84.2 | % | $ | 35,293 | 63.7 | % | ||||||||
| Maintenance, warranty and services | 13,943 | 15.8 | % | 20,078 | 36.3 | % | ||||||||||
| Total revenues | $ | 87,983 | 100 | % | $ | 55,371 | 100 | % | ||||||||
4
Revenue from products and software licenses of $74.0 million for the six months ended June 30, 2021 increased by $38.7 million from $35.3 million for the six months ended June 30, 2020. This increase was primarily due to an increase in sales of products to two customers in Asia Pacific of $22.1 million and an increase in sales of fixed wireless access and CBRS products of $16.6 million.
Revenue from maintenance, warranty and services of $13.9 million for the six months ended June 30, 2021 decreased by $6.2 million from $20.1 million for the six months ended June 30, 2020. This decrease was primarily due to a software feature delivered to a U.S. customer in 2020 that did not reoccur in 2021 amounting to $1.9 million and the termination of a maintenance agreement with a North American customer at the end of Q1 2021 that generated revenue of $2.8 million in the six months ended June 30, 2021. Asia Pacific services decreased by $0.7 million and the rest of the world decreased by $0.8 million.
Cost of Revenues
Cost of revenues for the above periods are presented below:
| Six Months Ended June 30, | ||||||||||||||||
| ($ in thousands) | 2021 | % of Revenue | 2020 | % of Revenue | ||||||||||||
| Cost of Revenues: | ||||||||||||||||
| Products and software licenses | $ | 45,615 | 51.8 | % | $ | 23,835 | 43.0 | % | ||||||||
| Maintenance, warranty and services | 2,196 | 2.5 | % | 2,097 | 3.8 | % | ||||||||||
| Total cost of revenues | $ | 47,811 | 54.3 | % | $ | 25,932 | 46.8 | % | ||||||||
Cost of revenues from products and software licenses of $45.6 million for the six months ended June 30, 2021 increased by $21.8 million from $23.8 million for the six months ended June 30, 2020. This increase was primarily due to revenue growth and, to a lesser extent, lower indirect costs in the six months ended June 30, 2021.
Cost of revenues from maintenance, warranty and services of $2.2 million for the six months ended June 30, 2021 increased marginally from $2.1 million by $0.1 million for the six months ended June 30, 2020.
Operating Expenses
Operating expenses for the above periods are presented below:
| Six Months Ended June 30, | ||||||||||||||||
| ($ in thousands) | 2021 | % of Revenue | 2020 | % of Revenue | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | $ | 29,898 | 34.0 | % | $ | 25,713 | 46.4 | % | ||||||||
| Sales and marketing | 14,842 | 16.9 | % | 14,413 | 26.0 | % | ||||||||||
| General and administrative | 8,900 | 10.1 | % | 7,947 | 14.4 | % | ||||||||||
| Amortization of intangibles | 598 | 0.7 | % | 778 | 1.4 | % | ||||||||||
| Loss on sale of assets | – | –% | 22 | 0.0 | % | |||||||||||
| Total operating expenses | $ | 54,238 | 61.6 | % | $ | 48,873 | 88.3 | % | ||||||||
Research and development— Research and development expenses were $29.9 million for the six months ended June 30, 2021, an increase of $4.2 million from $25.7 million for the six months ended June 30, 2020. The increase was primarily due to increased headcount spend for additional employees primarily located in India of $3.5 million, an increase in sub-contract development costs of $0.5 million and an increase in other outside services and material and supplies of $0.4 million, offset by a reduction in travel costs of $0.2 million as a result of the pandemic.
5
Sales and marketing— Sales and marketing expenses were $14.8 million for the six months ended June 30, 2021, an increase of $0.4 million from $14.4 million for the six months ended June 30, 2020. The increase was the result of:
| · | $0.2 million due to increased sales and marketing headcount |
| · | $0.6 million increase in agent commissions on increased revenue; |
These increases were offset by:
| · | $0.3 million of reduced travel expense due to the pandemic; and |
| · | $0.1 million decrease in product advertising and promotions |
General and administrative— General and administrative expenses of $8.9 million for the six months ended June 30, 2021 increased by $1.0 million from $7.9 million for the six months ended June 30, 2020. The increase was primarily due to an increase in other professional support services of $0.7 million, an increase in non-cash share-based compensation expense of $0.3 million and an increase in headcount costs of $0.2 million, offset by a decrease in facility costs of $0.2 million.
Amortization of intangibles— Amortization of intangibles of $0.6 million for the six months ended June 30, 2021 decreased marginally by $0.2 million from $0.8 million for the six months ended June 30, 2020.
Non-Operating Expenses
Interest expense, net— Interest expense, net was $4.9 million for the six months ended June 30, 2021, an increase of $1.7 million from $3.2 million for the six months ended June 30, 2020. The increase was primarily due to higher interest rates on the Fortress Credit Agreement entered into on December 30, 2020, compared to the PWB Facility in place for the six months ended June 30, 2020.
Gain on extinguishment of debt – Gain on extinguishment of debt was $2.1 million for the six months ended June 30, 2021, an increase of $2.1 million from nil for the six months ended June 30, 2020. For the three and six months ended June 30, 2021, the Company recorded a gain on extinguishment of debt for the PPP Loan of $2.1 million and the accrued interest of $23 thousand, respectively for the PPP Loan.
Operating expense, net— Other expense, net was $6.9 million for the six months ended June 30, 2021, an increase of $5.7 million from $1.2 million for the six months ended June 30, 2020. The increase was primarily due to the non-cash fair value adjustment of our warrant liabilities of $3.5 million and $2.2 million related to Japanese Yen volatility against the U.S. dollar, resulting in a loss on revaluation of Japanese Yen denominated balances during the six months ended June 30, 2020.
Income tax expense— Income tax expense remained consistent at $0.2 million for the six months ended June 30, 2021 and 2020.
6
Net Loss
We had a net loss of $24.0 million for the six months ended June 30, 2021 compared to a net loss of $24.1 million for the six months ended June 30, 2020, a decrease of $0.1 million due to:
| · | Increase in gross profit of $10.7 million |
| · | Increase in gain on extinguishment of debt of $2.1million |
This increase was offset by:
| · | Increase in operating expenses of $5.4 million |
| · | Increase in interest costs of $1.8 million |
| · | Increase in other expense of $5.7 million |
Non-GAAP Financial Measures
Adjusted EBITDA
Adjusted EBITDA for the six months ended June 30, 2021 was a loss of $10.7 million, representing an improvement of $5.6 million from a loss of $16.3 million for the six months ended June 30, 2020. The increase in Adjusted EBITDA was primarily due to an increase in revenues of $32.6 million, as well as increases in cost of revenue of $21.9 million and operating expenses of $5.4 million primarily due to the factors described above.
The following table presents the reconciliation of Net Loss, the most directly comparable GAAP measure, to Adjusted EBITDA:
| Six Months Ended June 30, | ||||||||
| ($ in thousands) | 2021 | 2020 | ||||||
| Net Loss | $ | (23,967 | ) | $ | (24,068 | ) | ||
| Adjusted for: | ||||||||
| Interest expense, net | 4,950 | 3,196 | ||||||
| Income tax (benefit) expense | 167 | 198 | ||||||
| Depreciation and amortization | 2,129 | 2,346 | ||||||
| EBITDA | (16,721 | ) | (18,328 | ) | ||||
| Share-based compensation expense | 1,489 | 987 | ||||||
| Change in fair value of warrant liability | 4,517 | 1,064 | ||||||
| Adjusted EBITDA | $ | (10,715 | ) | $ | (16,277 | ) | ||
Liquidity and Capital Resources
We had $75.2 million of current assets and $59.5 million of current liabilities at June 30, 2021. During the six months ended June 30, 2021, we used $3.8 million in cash flows from operating activities, primarily from the collection of our outstanding accounts receivables. We are investing heavily in 5G research and development and expect to use cash from operations during the remainder of 2021 to fund research and development activities. Cash on hand and the available borrowing capacity under the Fortress Credit Agreement may not allow us to meet our forecasted cash requirements.
Days sales outstanding (“DSO”) is a measurement of the time it takes to collect receivables. DSO is calculated by dividing accounts receivable, net as of the end of the quarter by the average daily revenue for the quarter. Average daily revenue for the quarter is calculated by dividing the quarterly revenue by ninety days. All customer accounts are actively managed, and no losses in excess of amounts reserved are currently expected. We are also actively evaluating the potential negative impact of COVID-19 on our customers’ ability to pay our accounts receivable. DSO can fluctuate due to the timing and nature of contracts, as well as the payment terms of individual customers. DSO was 87 days and 121 days at June 30, 2021 and 2020, respectively.
7
Cash Flows – Six Months Ended June 30, 2021 compared to Six Months Ended June 30, 2020
The following table summarizes the changes to our cash flows for the periods presented:
| Six Months Ended June 30, | ||||||||
| (in thousands) | 2021 | 2020 | ||||||
| Statement of Cash Flows Data: | ||||||||
| Net cash used in operating activities | $ | (3,816 | ) | $ | (15,829 | ) | ||
| Net cash used in investing activities | (3,123 | ) | (404 | ) | ||||
| Net cash provided by financing activities | 716 | 15,776 | ||||||
| Decrease in cash and cash equivalents | (6,223 | ) | (457 | ) | ||||
| Cash, cash equivalents and restricted cash, beginning of period | 18,618 | 3,013 | ||||||
| Cash, cash equivalents and restricted cash, end of period | $ | 12,395 | $ | 2,556 | ||||
Operating Activities
Net cash used in operating activities was $3.8 million for the six months ended June 30, 2021, a decrease of $12.0 million from net cash used in operating activities of $15.8 million for the six months ended June 30, 2020. The decrease is a result of $15.8 million generated from working capital and a $0.3 million increase in non-cash adjustments, offset by $2.0 million from results of our operations.
Investing Activities
Net cash used in investing activities was $3.1 million for the six months ended June 30, 2021, an increase of $2.7 million from $0.4 million for the six months ended June 30, 2020 due to higher purchases of property and equipment.
Financing Activities
Net cash provided by financing activities was $0.7 million for the six months ended June 30, 2021. This included $0.5 million of net proceeds from the sale of Series H senior preferred stock, $0.1 million of proceeds from the issuance of Series H warrants and $0.1 of proceeds from the exercise of stock options.
Net cash provided by financing activities was $15.8 million for the six months ended June 30, 2020. This included $1.8 million of net borrowings under the line of credit, $2.1 million from borrowings under long-term debt and $11.9 million of net proceeds from the sale of Series G senior preferred stock.
8
Exhibit 99.5
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Defined terms included below have the same meaning as terms defined and included elsewhere in the Current Report on Form 8-K of which this exhibit forms a part (the “Report”).
Introduction
The following unaudited pro forma condensed combined financial information will aid you in your analysis of the financial aspects of Airspan becoming a wholly-owned subsidiary of New Beginnings as a result of Merger Sub, a wholly-owned subsidiary of New Beginnings, merging with and into Airspan, and Airspan surviving the merger as a wholly-owned subsidiary of New Beginnings. The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses” to depict the accounting for the transaction (“Transaction Accounting Adjustments”) and present the reasonably estimable synergies and other transaction effects that have occurred or are reasonably expected to occur (“Management’s Adjustments”). New Beginnings has elected not to present Management’s Adjustments and will only be presenting Transaction Accounting Adjustments in the unaudited pro forma condensed combined financial information.
New Beginnings is a blank check company that was incorporated in Delaware on August 20, 2020, formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.
On November 3, 2020, New Beginnings consummated its IPO of 10,000,000 New Beginnings Units at an offering price of $10.00 per unit, with each New Beginnings Unit consisting of one share of New Beginnings Common Stock and one New Beginnings Warrant, resulting in gross proceeds of $100.0 million (before underwriting discounts and commissions and offering expenses).
Prior to the consummation of the IPO, the Sponsor subscribed for 2,156,250 Founder Shares for an aggregate purchase price of $25,000, or approximately $0.012 per share. On October 20, 2020, New Beginnings effected a stock dividend resulting in the Sponsor holding an aggregate of 2,875,000 Founder Shares, representing an adjusted purchase price of approximately $0.009 per share. Simultaneously with the consummation of the IPO, New Beginnings sold 500,000 Placement Units in a private placement transaction at a purchase price of $10.00 per unit to the Sponsor. As a result of this transaction and after giving effect to the exercise of the underwriters’ over-allotment option discussed below, New Beginnings sold a total of 545,000 Placement Units to the Sponsor, resulting in gross proceeds to New Beginnings of approximately $5,450,000. Each Placement Unit sold in the private placement is identical to the New Beginnings Units sold in the IPO, except that the New Beginnings Warrants included in the Placement Units: (i) are not redeemable by New Beginnings and (ii) may be exercised for cash or on a cashless basis, so long as they are held by the initial purchasers or any of their permitted transferees.
On November 9, 2020, the underwriters partially exercised the over-allotment option to purchase 1,000,000 additional New Beginnings Units, and on November 12, 2020, the underwriters fully exercised the over-allotment option to purchase an additional 500,000 New Beginnings Units, generating an aggregate of gross proceeds of $15,000,000.
Airspan is a U.S.-based 5G end-to-end, 4G, Open RAN and fixed wireless access hardware and software provider with a product portfolio spanning 150 patents granted and 94 patents pending.
Airspan’s predecessor, Airspan Communications Corporation, was incorporated as a Delaware corporation on January 30, 1998. Airspan Networks Inc. was incorporated in 1999 as a Washington corporation and at that time acquired Airspan Communications Corporation by merger. In August 2010, Airspan reincorporated in Delaware.
The following unaudited pro forma condensed combined balance sheet as of June 30, 2021 assumes that the Business Combination occurred on June 30, 2021. The unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2021 and the year ended December 31, 2020 present pro forma effect to the Business Combination as if it had been completed on January 1, 2020.
1
The unaudited pro forma condensed combined financial statements have been presented for illustrative purposes only and do not necessarily reflect what the Post-Combination Company’s financial condition or results of operations would have been had the acquisition occurred on the dates indicated. Further, the pro forma condensed combined financial information also may not be useful in predicting the future financial condition and results of operations of the Post-Combination Company. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors.
The historical financial information of New Beginnings was derived from the unaudited and audited financial statements of New Beginnings as of and for the six months ended June 30, 2021 and for the period from August 20, 2020 (inception) to December 31, 2020 (as restated), included elsewhere in this proxy statement/prospectus/consent solicitation statement. The historical financial information of Airspan was derived from the unaudited and audited financial statements of Airspan as of and for the six months ended June 30, 2021 and of the year ended December 31, 2020, which are included elsewhere in, or incorporated by reference into, this Report. This information should be read together with New Beginnings’ and Airspan’s unaudited and audited financial statements and related notes which are included elsewhere in, or incorporated by reference into, this Report, as well as the sections titled “New Beginnings Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Airspan Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Proxy Statement/Prospectus/Consent Solicitation Statement and Exhibit 99.4 hereto, all of which are incorporated by reference into this Report.
The Business Combination will be accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, although New Beginnings will acquire all of the outstanding equity interests of Airspan in the Business Combination, New Beginnings will be treated as the “acquired” company and Airspan will be treated as the accounting acquirer for financial statement reporting purposes. Accordingly, the Business Combination will be treated as the equivalent of Airspan issuing stock for the net assets of New Beginnings, accompanied by a recapitalization. The net assets of New Beginnings will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination will be those of Airspan.
Airspan has been determined to be the accounting acquirer based on evaluation of the following facts and circumstances:
| ● | Airspan’s existing stockholders will have the greatest voting interest in the Post-Combination Company; |
| ● | directors designated by Airspan will initially represent seven of the eight board seats for the Post-Combination Board; |
| ● | Airspan’s existing stockholders will have the ability to control decisions regarding election and removal of directors and officers of the Post-Combination Company; |
| ● | Airspan will comprise the ongoing operations of the Post-Combination Company; |
| ● | Airspan’s relevant measures, such as assets, revenues, cash flows and earnings, are higher than New Beginnings’; |
| ● | Airspan’s existing senior management will be the senior management of the Post-Combination Company; and |
| ● | the Post-Combination Company will assume a substantially similar name to Airspan and Airspan’s headquarters. |
The unaudited pro forma condensed combined financial information has been prepared to give effect to the redemption for cash of 9,997,049 shares of New Beginnings Common Stock for an aggregate redemption payment of $100.97 million.
2
Description of the Business Combination
Consideration
The aggregate consideration for the Business Combination will be payable in the form of cash, shares of Post-Combination Company common stock, Post-Combination Company Warrants, restricted shares of Post-Combination Company common stock, restricted stock units underlying Post-Combination Company common stock and options to purchase Post-Combination Company common stock.
The following summarizes the aggregated value of the consideration:
| Common stock, restricted stock, warrants and stock options at Closing(1) | 77,250,000 | |||
| Post-Combination Company Warrants | (9,000,000 | ) | ||
| Exchanged Options | (7,135,353 | ) | ||
| Management Incentive Plan RSUs | (1,750,000 | ) | ||
| Shares of common stock transferred at Closing | 59,364,647 | |||
| Value per share(2) | $ | 10.00 | ||
| Total share consideration | $ | 593,646,470 | ||
| Total cash consideration | $ | 17,500,000 |
| (1) | The number in the table above includes approximately 17,885,353 shares of Post-Combination Company common stock underlying Post-Combination Company Warrants, MIP RSUs and Exchanged Options that do not represent legally outstanding shares of Post-Combination Company common stock at Closing. |
| (2) | Share consideration is calculated using a $10.00 reference price. Actual total share consideration will be dependent on the value of Post-Combination Company common stock at Closing. |
Ownership
The following summarizes the pro forma Post-Combination Company common stock outstanding:
| Shares | % | |||||||
| Airspan Capital Stock | 77,250,000 | |||||||
| Post-Combination Company Warrants | (9,000,000 | ) | ||||||
| Exchanged Options | (7,135,353 | ) | ||||||
| Management Incentive Plan RSUs | (1,750,000 | ) | ||||||
| Airspan – shares of common stock transferred at Closing(1) | 59,364,647 | 82.8 | % | |||||
| New Beginnings existing shares | 1,502,951 | 2.1 | % | |||||
| Shares held by Sponsor | 3,295,000 | 4.6 | % | |||||
| PIPE | 7,500,000 | 10.5 | % | |||||
| Pro Forma common stock outstanding at June 30, 2021 | 71,662,598 | 100 | % | |||||
| (1) | The number of outstanding shares in the table above excludes approximately 17,885,353 shares of Post-Combination Company common stock underlying Post-Combination Company Warrants, MIP RSUs and Exchanged Options that do not represent legally outstanding shares of Post-Combination Company common stock at Closing. |
The following unaudited pro forma condensed combined balance sheet as of June 30, 2021 and the unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2021 and the year ended December 31, 2020 are based on the historical financial statements of New Beginnings (as restated) and Airspan. The unaudited pro forma adjustments are based on information currently available, and assumptions and estimates underlying the unaudited pro forma adjustments are described in the accompanying notes. Actual results may differ materially from the assumptions used to present the accompanying unaudited pro forma condensed combined financial information.
3
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF JUNE 30, 2021
(in thousands)
| As of June 30, 2021 |
||||||||||||||||||
| Airspan (Historical) |
New Beginnings (Historical) |
Transaction Adjustments |
Pro Forma Combined |
|||||||||||||||
| ASSETS | ||||||||||||||||||
| Cash and cash equivalents | $ | 12,208 | $ | 68 | $ | 75,000 | (A) | $ | 99,019 | |||||||||
| $ | 116,182 | (B) | ||||||||||||||||
| $ | (5,626 | ) | (C) | |||||||||||||||
| $ | (27,830 | ) | (F) | |||||||||||||||
| $ | (18,513 | ) | (G) | |||||||||||||||
| $ | (100,970 | ) | (H) | |||||||||||||||
| $ | 48,500 | (J) | ||||||||||||||||
| Prepaid assets | — | $ | 283 | $ | 283 | |||||||||||||
| Restricted cash | $ | 187 | — | $ | 187 | |||||||||||||
| Accounts receivable | $ | 40,671 | — | $ | 40,671 | |||||||||||||
| Inventory | $ | 13,048 | — | $ | 13,048 | |||||||||||||
| Prepaid expenses and other current assets | $ | 9,062 | — | $ | 9,062 | |||||||||||||
| Total current assets | $ | 75,176 | $ | 351 | $ | 86,743 | $ | 162,270 | ||||||||||
| Cash and securities held in Trust Account | — | $ | 116,182 | $ | (116,182 | ) | (B) | — | ||||||||||
| Property, plant and equipment, net | $ | 6,425 | — | $ | 6,425 | |||||||||||||
| Goodwill | $ | 13,641 | — | $ | 13,641 | |||||||||||||
| Intangible assets, net | $ | 7,031 | — | $ | 7,031 | |||||||||||||
| Right-of-use lease assets, net | $ | 7,750 | — | $ | 7,750 | |||||||||||||
| Other non-current assets | $ | 3,781 | — | $ | 3,781 | |||||||||||||
| TOTAL ASSETS | $ | 113,804 | $ | 116,533 | $ | (29,439 | ) | $ | 200,898 | |||||||||
| LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||
| Accounts payable | $ | 17,890 | $ | 1,591 | $ | (1,591 | ) | (C) | $ | 17,890 | ||||||||
| Due to related party | — | $ | 10 | $ | (10 | ) | (C) | — | ||||||||||
| Deferred revenue | $ | 4,729 | — | $ | 4,729 | |||||||||||||
| Other accrued expenses | $ | 26,251 | — | $ | 26,251 | |||||||||||||
| Subordinated debt | $ | 10,316 | — | $ | 10,316 | |||||||||||||
| Current portion of long-term debt | $ | 288 | — | $ | 288 | |||||||||||||
| Total current liabilities | $ | 59,474 | $ | 1,601 | $ | (1,601 | ) | $ | 59,474 | |||||||||
| Warrant liability` | — | $ | 14,401 | $ | 14,401 | |||||||||||||
| Deferred underwriting discount | — | $ | 4,025 | $ | (4,025 | ) | (C) | — | ||||||||||
| Subordinated term loan, long-term – related party | $ | 36,325 | — | $ | 36,325 | |||||||||||||
| Senior term loan, long-term | $ | 38,895 | — | $ | 38,895 | |||||||||||||
| Other long-term liabilities | $ | 21,285 | — | $ | (12,292 | ) | (E) | $ | 8,993 | |||||||||
| Convertible notes | — | — | $ | 48,500 | (J) | $ | 48,500 | |||||||||||
| Warrant liability | — | — | $ | 4,531 | (E) | $ | 4,531 | |||||||||||
| Total liabilities | $ | 155,979 | 20,027 | $ | 35,113 | $ | 211,119 | |||||||||||
4
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET — Continued
AS OF JUNE 30, 2021
(in thousands)
| As of June 30, 2021 |
||||||||||||||||||
| Airspan (Historical) |
New Beginnings (Historical) |
Transaction Adjustments |
Pro Forma Combined |
|||||||||||||||
| Mezzanine equity | ||||||||||||||||||
| Convertible preferred stock | $ | 364,128 | — | $ | (364,128 | ) | (E) | — | ||||||||||
| Common stock subject to possible redemption | — | $ | 91,506 | $ | (91,506 | ) | (D) | — | ||||||||||
| Stockholders’ equity (deficit) | ||||||||||||||||||
| Common stock | — | $ | 1 | $ | 1 | (A) | $ | 8 | ||||||||||
| $ | 1 | (D) | ||||||||||||||||
| $ | 6 | (E) | ||||||||||||||||
| $ | (1 | ) | (H) | |||||||||||||||
| Additional paid-in capital | $ | 312,989 | $ | 5,569 | $ | 74,999 | (A) | $ | 733,412 | |||||||||
| $ | 91,505 | (D) | ||||||||||||||||
| $ | 376,415 | (E) | ||||||||||||||||
| $ | (21,994 | ) | (F) | |||||||||||||||
| $ | (570 | ) | (I) | |||||||||||||||
| $ | (4,532 | ) | (E) | |||||||||||||||
| $ | (100,969 | ) | (H) | |||||||||||||||
| Accumulated deficit | $ | (719,292 | ) | $ | (570 | ) | $ | (18,513 | ) | (G) | $ | (743,641 | ) | |||||
| $ | 570 | (I) | ||||||||||||||||
| $ | (5,836 | ) | (F) | |||||||||||||||
| Total stockholders’ equity (deficit) | $ | (406,303 | ) | $ | 5,000 | $ | 391,082 | $ | (10,221 | ) | ||||||||
| TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY (DEFICIT) | $ | 113,804 | $ | 116,533 | $ | (29,439 | ) | $ | 200,898 | |||||||||
5
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR SIX MONTHS ENDED JUNE 30, 2021
(in thousands, except share and per share data)
| For the Six Months Ended June 30, 2021 | Transaction | For the Six Months Ended June 30, 2021 | |||||||||||||||
| Airspan (Historical) | New Beginnings (Historical) | Accounting Adjustments | Pro Forma Combined | ||||||||||||||
| Products and software licenses | $ | 74,040 | $ | — | $ | — | $ | 74,040 | |||||||||
| Maintenance, warranty and services | $ | 13,943 | — | — | $ | 13,943 | |||||||||||
| Revenue | $ | 87,983 | — | — | $ | 87,983 | |||||||||||
| Products and software licenses | $ | 45,615 | — | — | $ | 45,615 | |||||||||||
| Maintenance, warranty and services | $ | 2,196 | — | — | $ | 2,196 | |||||||||||
| Total cost of revenue | $ | 47,811 | — | — | $ | 47,811 | |||||||||||
| Gross profit | $ | 40,172 | — | — | $ | 40,172 | |||||||||||
| Operating expenses: | |||||||||||||||||
| Research and development | $ | 29,898 | — | — | $ | 29,898 | |||||||||||
| Sales and marketing | $ | 14,842 | — | — | $ | 14,842 | |||||||||||
| General and administrative | $ | 8,900 | — | — | $ | 8,900 | |||||||||||
| Amortization of intangibles | $ | 598 | — | — | $ | 598 | |||||||||||
| Formation and operating costs | — | $ | 2,653 | — | $ | 2,653 | |||||||||||
| Total operation expenses | $ | 54,238 | $ | 2,653 | — | $ | 56,891 | ||||||||||
| Loss from operations | $ | (14,066 | ) | $ | (2,653 | ) | — | $ | (16,719 | ) | |||||||
| Interest expense, net | $ | (4,950 | ) | $ | 19 | $ | (19 | ) | (BB) | $ | (4,950 | ) | |||||
| Gain on extinguishment of debt | $ | 2,096 | — | $ | 2,096 | ||||||||||||
| Other income (expense), net | $ | (6,880 | ) | $ | (2,029 | ) | $ | 4,517 | (AA) | $ | (6,270 | ) | |||||
| $ | (1,878 | ) | (CC) | ||||||||||||||
| Income (Loss) before income taxes | $ | (23,800 | ) | $ | (4,663 | ) | $ | 2,620 | $ | (25,843 | ) | ||||||
| Income tax benefit (expense) | $ | (167 | ) | — | — | $ | (167 | ) | |||||||||
| Net (loss) income | $ | (23,967 | ) | $ | (4,663 | ) | $ | 2,620 | $ | (26,010 | ) | ||||||
| Pro Forma Combined | |||||||||||||||||
| Weighted average shares outstanding – common stock | 669,839 | 5,246,865 | 71,662,598 | ||||||||||||||
| Net loss per share – basic and diluted | $ | (35.78 | ) | (0.89 | ) | $ | $ | (0.36 | ) | ||||||||
6
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR YEAR ENDED DECEMBER 31, 2020
(in thousands, except share and per share data)
| For the Year Ended December 31, 2020 |
Transaction | For the Year Ended December 31, 2020 |
|||||||||||||||
| Airspan (Historical) |
New Beginnings (Historical, as restated) |
Accounting Adjustments |
Pro Forma Combined |
||||||||||||||
| Products and software licenses | $ | 134,338 | — | — | $ | 134,338 | |||||||||||
| Maintenance, warranty and services | $ | 38,617 | — | — | $ | 38,617 | |||||||||||
| Revenue | $ | 172,955 | — | — | $ | 172,955 | |||||||||||
| Products and software licenses | $ | 84,375 | — | — | $ | 84,375 | |||||||||||
| Maintenance, warranty and services | $ | 4,477 | — | — | $ | 4,477 | |||||||||||
| Total cost of revenue | $ | 88,852 | — | — | $ | 88,852 | |||||||||||
| Gross profit | $ | 84,103 | — | — | $ | 84,103 | |||||||||||
| Operating expenses: | |||||||||||||||||
| Research and development | $ | 52,858 | — | — | $ | 52,858 | |||||||||||
| Sales and marketing | $ | 28,738 | — | — | $ | 28,738 | |||||||||||
| General and administrative | $ | 16,555 | $ | 1,188 | $ | 37,026 | (DD) | $ | 60,605 | ||||||||
| $ | 5,836 | (EE) | |||||||||||||||
| Amortization of intangibles | $ | 1,733 | — | — | $ | 1,733 | |||||||||||
| Loss on sale of assets | $ | 22 | — | — | $ | 22 | |||||||||||
| Total operation expenses | $ | 99,906 | $ | 1,188 | $ | 42,862 | $ | 138,120 | |||||||||
| Loss from operations | $ | (15,803 | ) | $ | (1,188 | ) | $ | (42,862 | ) | $ | (59,853 | ) | |||||
| Interest expense, net | $ | (6,422 | ) | — | — | $ | (6,422 | ) | |||||||||
| Other income (expense), net | $ | (4,200 | ) | $ | 12 | $ | (12 | ) | (BB) | $ | (4,635 | ) | |||||
| $ | 3,322 | (AA) | |||||||||||||||
| $ | (3,757 | ) | (CC) | ||||||||||||||
| Unrealized gain on change in fair value of warrants | — | 5,268 | — | 5,268 | |||||||||||||
| Income (Loss) before income taxes | (26,425 | ) | 4,092 | (43,309 | ) | (65,652 | ) | ||||||||||
| Income tax benefit (expense) | 782 | — | — | 782 | |||||||||||||
| Net (loss) income | $ | (25,643 | ) | $ | 4,092 | $ | (43,309 | ) | $ | (64,859 | ) | ||||||
| Pro
Forma Combined |
|||||||||||||||||
| Weighted average shares outstanding – common stock | 669,534 | 4,646,706 | 71,662,598 | ||||||||||||||
| Net loss per share – basic and diluted | $ | (38.30 | ) | $ | 0.88 | $ | (0.82 | ) | |||||||||
7
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
1. Basis of Presentation
The Business Combination will be accounted for as a reverse recapitalization in accordance with GAAP as Airspan has been determined to be the accounting acquirer, primarily due to the fact that Airspan Stockholders will continue to control the Post-Combination Company. Under this method of accounting, although New Beginnings will acquire all of the outstanding equity interests of Airspan in the Business Combination, New Beginnings will be treated as the “acquired” company for financial reporting purposes. Accordingly, the Business Combination will be treated as the equivalent of Airspan issuing stock for the net assets of New Beginnings, accompanied by a recapitalization. The net assets of New Beginnings will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination will be those of Airspan.
The unaudited pro forma condensed combined balance sheet as of June 30, 2021 assumes that the Business Combination and PIPE financing occurred on June 30, 2021. The unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2021 and for the year ended December 31, 2020 presents pro forma effect to the Business Combination and PIPE financing as if it had been completed on January 1, 2020.
The unaudited pro forma condensed combined balance sheet as of June 30, 2021 has been prepared using, and should be read in conjunction with, the following:
| ● | New Beginnings’ unaudited balance sheet as of June 30, 2021 and the related notes for the period ended June 30, 2021, incorporated by reference into this Report; and |
| ● | Airspan’s unaudited balance sheet as of June 30, 2021 and the related notes for the period ended June 30, 2021, included as Exhibit 99.3 to this Report. |
The unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2021 has been prepared using, and should be read in conjunction with, the following:
| ● | New Beginnings’ unaudited statement of operations for the six months ended June 30, 2021 and the related notes, incorporated by reference into this Report; and |
| ● | Airspan’s unaudited statement of operations for the six months ended June 30, 2021 and the related notes, included as Exhibit 99.3 to this Report. |
The unaudited pro forma condensed combined financial information has been prepared to give effect to the redemption for cash of 9,997,049 shares of New Beginnings Common Stock for an aggregate redemption payment of $100.97 million.
Management has made significant estimates and assumptions in its determination of the pro forma adjustments. As the unaudited pro forma condensed combined financial information has been prepared based on these preliminary estimates, the final amounts recorded may differ materially from the information presented.
The unaudited pro forma condensed combined financial information does not give effect to any anticipated synergies, operating efficiencies, tax savings or cost savings that may be associated with the Business Combination.
The pro forma adjustments reflecting the consummation of the Business Combination are based on certain currently available information and certain assumptions and methodologies that New Beginnings believes are reasonable under the circumstances. The unaudited condensed pro forma adjustments, which are described in the accompanying notes, may be revised as additional information becomes available and is evaluated. Therefore, it is likely that the actual adjustments will differ from the pro forma adjustments and it is possible the difference may be material. New Beginnings believes that its assumptions and methodologies provide a reasonable basis for presenting all of the significant effects of the Business Combination based on information available to management at this time and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma condensed combined financial information.
The unaudited pro forma condensed combined financial information is not necessarily indicative of what the actual results of operations and financial position would have been had the Business Combination taken place on the dates indicated, nor are they indicative of the future consolidated results of operations or financial position of the Post-Combination Company. They should be read in conjunction with the historical financial statements and notes thereto of New Beginnings (as restated) and Airspan.
8
2. Accounting Policies
Upon consummation of the Business Combination, management will perform a comprehensive review of the two entities’ accounting policies. As a result of the review, management may identify differences between the accounting policies of the two entities which, when conformed, could have a material impact on the financial statements of the Post-Combination Company. Based on its initial analysis, management did not identify any differences that would have a material impact on the unaudited pro forma condensed combined financial information. As a result, the unaudited pro forma condensed combined financial information does not assume any differences in accounting policies.
3. Adjustments to Unaudited Pro Forma Condensed Combined Financial Information
The unaudited pro forma condensed combined financial information has been prepared to illustrate the effect of the Business Combination and has been prepared for informational purposes only. The historical financial statements have been adjusted in the unaudited pro forma condensed combined financial information to give pro forma effect to events that are expected to have a continuing impact on the results of the Post-Combination Company.
The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses” to depict the accounting for the transaction (“Transaction Accounting Adjustments”) and present the reasonably estimable synergies and other transaction effects that have occurred or are reasonably expected to occur (“Management’s Adjustments”). New Beginnings has elected not to present Management’s Adjustments and is only be presenting Transaction Accounting Adjustments in the unaudited pro forma condensed combined financial information.
The historical financial statements have been adjusted in the unaudited pro forma condensed combined financial information to give pro forma effect to transaction accounting adjustments that reflect the accounting for the transaction under GAAP. Airspan and New Beginnings have not had any historical relationship prior to the Business Combination. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.
The pro forma combined provision for income taxes does not necessarily reflect the amounts that would have resulted had the Post-Combination Company filed consolidated income tax returns during the periods presented.
The pro forma basic and diluted earnings per share amounts presented in the unaudited pro forma condensed combined statement of operations are based upon the number of the Post-Combination Company’s shares outstanding, assuming the Business Combination occurred on January 1, 2020.
In addition, New Beginnings raised $50.0 million in additional funds through the issuance of one or more senior secured convertible notes issued in a private placement to a limited number of third-party institutional investors substantially concurrent with the Closing. The purpose of the sale of the Convertible Notes was to raise additional capital for use in connection with the Transactions and to meet the minimum cash requirements provided in the Business Combination Agreement. The Convertible Notes bear interest at a rate equal to 7.0% per annum (the "Base Rate"), payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year, beginning on September 30, 2021. Under certain circumstances, a default interest is expected to apply following an event of default under the Convertible Notes at a per annum rate equal to the lower of (i) the Base Rate plus 3.75% and (ii) the maximum amount permitted by law. The Convertible Notes mature on December 31, 2024, unless earlier accelerated, converted, redeemed or repurchased. The Company is currently finalizing its accounting analysis of the Convertible Note, and more specifically the analysis of the potential existence of embedded derivatives that should be bifurcated from the convertible debt. The potential effect of additional impacts, if any, aside from the interest, have currently been excluded from these unaudited proforma condensed combined financial information. The Company expects to finalize its analysis and the accounting treatment of the Convertible Note by the issuance of the Company's Quarterly Report on Form 10-Q.
9
Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet
The adjustments included in the unaudited pro forma condensed combined balance sheet as of June 30, 2021 are as follows:
| (A) | Represents the gross proceeds from the private placement of 7,500,000 shares of New Beginnings Common Stock at $10.00 per share pursuant to the PIPE. |
| (B) | Reflects the reclassification of $116.2 million of cash and cash equivalents held in New Beginnings’ Trust Account at the balance sheet date that becomes available to fund the Business Combination. |
| (C) | Reflects the settlement of New Beginnings’ historical accrued liabilities that will be settled at the Closing of the Business Combination. |
| (D) | Reflects the reclassification of approximately $91.5 million of New Beginnings Common Stock subject to possible redemption to permanent equity. |
| (E) | Reflects the reclassification of Airspan Preferred Stock, warrants exercisable for Airspan Preferred Stock that convert into New Beginnings Common Stock, and Warrants exercisable for New Beginnings Common Stock at the Closing of the Business Combination. |
| (F) | Represents preliminary estimated transaction costs incurred as part of the Business Combination totaling $27.8 million, out of which approximately $5.836 million were not capitalized as of June 30, 2021. The $27.8 million preliminary estimated transaction costs consisting of (i) approximately $2.68 million of placement agent fees and related expenses payable to the placement agent upon the closing of the PIPE transaction, (ii) financial and transaction advisory fees of approximately $16.8 million payable upon consummation of the Business Combination and (iii) printing, legal, accounting and other fees of $8.26 million. |
| (G) | Represents the $17,500,000 of MIP Aggregate Cash Consideration to be paid to the MIP Participants upon the Closing of the Business Combination and $1.013 million of related employer costs. |
| (H) | Reflects the actual redemption of 9,997,049 Public Shares for aggregate redemption payments of $100.97 million allocated to New Beginnings Common Stock and additional paid-in capital using the par value $0.0001 per share and a redemption price of $10.10 per share. |
| (I) | Reclassification of New Beginnings retained earnings. |
| (J) | Represent the aggregate cash consideration, net of transaction costs to be paid upon the issuance of the Convertible Notes. |
Adjustments to Unaudited Pro Forma Condensed Combined Statements of Operations
The pro forma adjustments included in the unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2021 and the year ended December 31, 2020 are as follows:
| (AA) | Reflects the adjustments relating to the fair value measurement of warrants exercisable for Airspan Preferred Stock classified as a liability |
| (BB) | Reflects elimination of interest income on the Trust Account. |
| (CC) | Reflects the adjustments relating to interest expenses with respect to the Convertible Notes |
| (DD) | Represents expense related to the $17,500,000 of MIP Aggregate Cash Consideration and MIP RSUs with respect to 1,750,000 shares of New Beginnings Common Stock paid to the MIP Participants upon the Closing of the Business Combination and total of $2.026 million of related employer costs |
| (EE) | Represents preliminary estimated transaction costs recognized as an expense as part of the Business Combination totaling $5.836 million. |
10
4. Loss per Share
Represents the net loss per share calculated using the historical weighted average shares outstanding and the issuance of additional shares in connection with the Business Combination, assuming the shares were outstanding since January 1, 2020. As the Business Combination and related proposed equity transactions are being reflected as if they had occurred at the beginning of the periods presented, the calculation of weighted average shares outstanding for basic and diluted net loss per share assumes that the shares issuable relating to the Business Combination have been outstanding for the entire period presented. As 9,997,049 shares has been redeemed, this calculation is retroactively adjusted to eliminate the 9,997,049 redeemed shares for the entire period.
The unaudited pro forma condensed combined financial information has been prepared to give effect to the redemption for cash of 9,997,049 shares of New Beginnings Common Stock for the six months ended June 30, 2021 and the year ended December 31, 2020:
| (in thousands, except share and per share data) | For six months ended June 30, 2021 | |||
| Pro forma net loss | (26,010 | ) | ||
| Weighted average shares outstanding of common stock | 71,662,598 | |||
| Net loss per share (basic and diluted)(1) | $ | (0.36 | ) | |
| (in thousands, except share and per share data) | For the year ended December 31, 2020 |
|||
| Pro forma net loss | (64,859 | ) | ||
| Weighted average shares outstanding of common stock | 71,662,598 | |||
| Net loss per share (basic and diluted)(1) | $ | (0.91 | ) | |
| (1) | For the purposes of calculating diluted earnings per share, it was assumed that all outstanding Post-Combination Company Warrants and warrants sold in the IPO and the private placement are exercised for common stock. However, since this results in anti-dilution, the effect of such exercise was not included in calculation of diluted loss per share. |
COMPARATIVE SHARE INFORMATION
The following table sets forth summary historical comparative share information for New Beginnings and Airspan and unaudited pro forma condensed combined per share information after giving effect to the Business Combination, and the redemption of 9,997,049 shares of New Beginnings Common Stock:
The pro forma book value information reflects the Business Combination as if it had occurred on June 30, 2021. The weighted average shares outstanding and net loss per share information reflect the Business Combination as if it had occurred on January 1, 2020.
This information is only a summary and should be read together with the summary historical financial information summary included elsewhere in this proxy statement/prospectus/consent solicitation statement, and the historical financial statements of New Beginnings (as restated) and Airspan and related notes. The unaudited pro forma combined per share information of New Beginnings and Airspan is derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial statements and related notes included elsewhere in this proxy statement/prospectus/consent solicitation statement.
11
The unaudited pro forma combined earnings per share information below does not purport to represent the earnings per share that would have occurred had the companies been combined during the periods presented, nor earnings per share for any future date or period. The unaudited pro forma combined book value per share information below does not purport to represent what the value of New Beginnings and Airspan would have been had the companies been combined during the periods presented.
| Airspan
(Historical) |
New
Beginnings (Historical) |
Combined
Pro Forma |
Airspan Equivalent Per Share Pro Forma(2) |
|||||||||||||
| As of and for the six months ended June 30, 2021(3) | ||||||||||||||||
| Book Value per share(1) | $ | (606.57 | ) | $ | 0.95 | $ | (0.14 | ) | $ | (0.82 | ) | |||||
| Weighted average shares outstanding – basic and diluted | 669,839 | |||||||||||||||
| Net loss per share – basic and diluted | $ | (35.78 | ) | |||||||||||||
| Weighted average shares outstanding of common stock – basic and diluted | 5,246,865 | 71,662,598 | ||||||||||||||
| Net loss per share of common stock – basic and diluted | $ | (0.89 | ) | $ | (0.36 | ) | $ | (2.09 | ) | |||||||
| (1) | Book value per share means total shareholders’ equity divided by weighted average common shares outstanding. For purposes of this calculation, the combined pro forma total shareholders’ equity was $10,221,000, and the numbers of weighted average shares outstanding were as presented in this table. |
| (2) | The equivalent pro forma basic and diluted per share data for Airspan is calculated by multiplying the combined pro forma per share data by an exchange ratio of 5.7683. For an explanation of the calculation of the exchange ratio, see “The Business Combination Agreement — Conversion of Securities.” |
| (3) | No cash dividends were declared during the period presented. |
| Airspan (Historical) | New Beginnings (Historical, as restated) | Combined Pro Forma | Airspan Equivalent Per Share Pro Forma(2) | |||||||||||||
| As of and for the year ended December 31, 2020(2) | ||||||||||||||||
| Weighted average shares outstanding – basic and diluted | (669,534 | ) | ||||||||||||||
| Net income (loss) per share – basic and diluted | $ | (38.30 | ) | |||||||||||||
| Weighted average shares outstanding of common stock – basic and diluted | 4,646,706 | 71,662,598 | ||||||||||||||
| Net income (loss) per share of common stock – basic and diluted | $ | 0.88 | $ | (0.82 | ) | $ | (4.75 | ) | ||||||||
| (1) | The equivalent pro forma basic and diluted per share data for Airspan is calculated by multiplying the combined pro forma per share data by an exchange ratio of 5.7683. For an explanation of the calculation of the exchange ratio, see “The Business Combination Agreement — Conversion of Securities.” |
| (2) | No cash dividends were declared during the period presented. |
12