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Exhibit 10.4
SUBSCRIPTION AGREEMENT
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This Subscription Agreement (this "Agreement") is made as of March 31,
1998, by and among Aironet Wireless Communications, Inc., a Delaware corporation
with its principal place of business at 367 Ghent Road, Fairlawn, Ohio 44333
(the "Company"), and the parties identified in EXHIBIT A (each an "Investor" and
collectively the "Investors") whose states of organization and principal places
of business are identified opposite their names in EXHIBIT A.
BACKGROUND
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WHEREAS, on August 25, 1993, the Certificate of Incorporation of the
Company was filed by the Secretary of State for the State of Delaware (as
amended through the date of this Agreement, the "Certificate");
WHEREAS, under the Certificate, the authorized capital stock of the
Company consists solely of fifteen million (15,000,000) shares of Common Stock,
$.01 par value (the "Common"); and
WHEREAS, the Board of Directors of the Company has determined it to be
in the best interests of the Company and its stockholders for the Company to
sell, in a private placement, up to One Million Eight Hundred Forty One Thousand
Two Hundred Seventy (1,841,270) newly issued shares of the Common to the
Investors for an aggregate sale price of up to Six Million Four Hundred Forty
Four Thousand Four Hundred Forty Four Dollars ($6,444,444), with warrants to
purchase up to an aggregate of Five Hundred Fifty Two Thousand Three Hundred
Eighty One (552,381) shares of the Common, and the Investors desire to purchase
the shares and warrants on the terms and conditions set forth herein.
AGREEMENT
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NOW, THEREFORE, in consideration of the foregoing premises, the
agreements made herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company, on the
one hand, and each of the Investors, severally and not jointly, on the other
hand, agree as follows:
I. PURCHASE AND SALE OF SHARES.
1.1. PURCHASE AND SALE. Subject to the terms and conditions, and in
reliance on the representations, warranties and covenants, set forth herein, at
the Closing (defined herein) the Company shall issue and sell to each of the
Investors, and each Investor shall purchase from the Company, the number of
shares of the Common set forth opposite the Investor's name in EXHIBIT A (each a
"Purchased Share" and collectively the "Purchased Shares") for the purchase
price of Three and 50/100 Dollars ($3.50) per Purchased Share.
1.2. WARRANTS. At Closing, in addition to the Purchased Shares, the
Company shall deliver to each Investor warrants to purchase shares of the Common
in the amount set forth opposite the Investors name in EXHIBIT A, on the terms
and conditions set forth in the form of warrant certificate
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attached as EXHIBIT B (each a "Warrant" and collectively the "Warrants") (all
subsequent references in this Agreement to the Purchased Shares shall include
the associated Warrants ).
1.3. CLOSING. The sale, delivery and the purchase of the Purchased
Shares (the "Closing") shall take place at the offices of Telxon Corporation,
Akron, Ohio on March 31, 1998 at 10:00 A.M.(the "Closing Date"), subject to the
satisfaction or waiver of all of the conditions to Closing set forth herein. At
the Closing the purchase price for its Purchased Shares shall be paid by each
Investor, in the amount set forth opposite the Investor's name in EXHIBIT A, to
the Company by wire transfer in immediately available funds pursuant to the wire
instructions set forth in EXHIBIT C, and against such payment the Company shall
deliver to each Investor a certificate evidencing the Purchased Shares being
acquired by it.
II. REPRESENTATION AND WARRANTIES OF THE COMPANY.
2.1. REPRESENTATIONS AND WARRANTIES; QUALIFICATIONS. The Company makes
to the Investors the representations and warranties set forth in this Article
II. Each such representation and warranty is subject to and qualified by the
exceptions set forth (with reference to a specific Section of this Article II)
in the Company's disclosure schedule attached hereto (the "Company Disclosure
Schedule").
2.2. ORGANIZATION. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the state of Delaware and is
duly qualified or registered to do business as a foreign corporation in each
jurisdiction in which the failure to be so qualified or registered would have a
Material Adverse Effect. As used in this Agreement, the term "Material Adverse
Effect" means any change or effect that is or could reasonably be expected to be
materially adverse to the properties, assets, business, prospects, financial or
other condition or results of operations of the Company and its subsidiaries
taken as a whole or that could reasonably be expected to impair the Company's
ability to perform its obligations hereunder.
2.3. CORPORATE POWER. The Company has all required corporate power and
authority to carry on its business as presently conducted, to enter into and
perform this Agreement and the agreements contemplated hereby to which it is a
party and to carry out the transactions contemplated hereby and thereby,
including the issuance of the Purchased Shares and the shares of the Common
issuable upon exercise of the Warrants (the "Warrant Shares"). The Company is
not in violation of any term of: (i) the Certificate; (ii) its bylaws (as
amended through the date of this Agreement, "Bylaws") or (iii) any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to the Company or to which the Company is a party or by which it is
bound, which, in the case of this clause (iii), could reasonably be expected to
have a Material Adverse Effect.
2.4. CORPORATE RECORDS. The corporate record books of the Company, as
made available for inspection by the Investors, accurately record all corporate
actions taken by its stockholders, board of directors and committees of its
board of directors. The Company has provided to the Investors true and correct
copies of the Certificate and Bylaws.
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2.5. INTER-COMPANY AGREEMENTS. The Company and its parent corporation,
Telxon Corporation ("Telxon"), are parties to a: License, Rights, and Supply
Agreement; Tax Benefit and Indemnification Agreement; and Services Agreement
("Inter-Company Agreements"), true and complete copies of which have been made
available for inspection by the Investors. Each of the Inter-Company Agreements
has been duly authorized by the Company and Telxon, has been duly executed by
each of them, and is the legal, valid, and binding obligation of each of them,
enforceable in accordance with its terms, and of which no defaults exist as of
the date hereof.
2.6. ENFORCEABLE AGREEMENT. This Agreement and all other documents
executed by the Company pursuant hereto are valid and binding obligations of the
Company, enforceable in accordance with their terms, except as limited by the
laws of general application relating to bankruptcy, insolvency and the relief of
debtors and rules and laws governing specific performance, injunctive relief and
other equitable remedies.
2.7. AUTHORIZATION. The execution, delivery and performance of this
Agreement, all agreements, documents and instruments contemplated hereby and the
issuance of the Purchased Shares and the Warrant Shares have been duly
authorized by all necessary action of the Company.
2.8. NON-CONTRAVENTION. The execution of this Agreement, the issuance
and delivery of the Purchased Shares and Warrant Shares and the performance of
the transactions contemplated hereby will not: (i) violate, conflict with or
result in a default under any material contract or obligation to which the
Company is a party or by which it or its assets are bound, or any provision of
the Certificate or its Bylaws, or cause the creation of any encumbrance upon any
of the material assets of the Company; (ii) violate or result in a violation of,
or constitute a material default (whether after the giving of notice, lapse of
time or both) under, any provision of any law, regulation or rule, or any order
of, or any restriction imposed by any court or other governmental agency
applicable to the Company; (iii) require from the Company any notice to,
declaration or filing with, or consent or approval of any governmental
authority; (iv) require from the Company any notice to, declaration or filing
with any third party, other than any governmental authority, if the failure to
provide such item could reasonably be expected to have a Material Adverse
Effect; or (v) accelerate any material obligation under, or give rise to a right
of termination of, any material agreement, permit, license or authorization to
which the Company is a party or by which the Company or its assets are bound.
2.9. CAPITALIZATION. The Company's authorized, issued and outstanding
securities consist solely of the amounts set forth in SECTION 2.9 OF THE COMPANY
DISCLOSURE SCHEDULE. SECTION 2.9 OF THE COMPANY DISCLOSURE SCHEDULE identifies
each of the Company's stockholders, option holders and warrant holders, as well
as the holders of any other outstanding securities of the Company, and sets
forth the type and amount of the securities owned by each holder, after giving
effect to the transactions contemplated herein. All outstanding securities of
the Company have been issued in compliance with applicable securities laws and
are fully paid, validly issued, and non-assessable.
2.10. OTHER SECURITIES. The Company has not issued or agreed to issue
any warrants, options or other rights to purchase or acquire any shares of its
capital stock, and there are no outstanding securities convertible into shares
of its capital stock, there are no preemptive rights,
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rights of first refusal, or to the Company's knowledge, any put or call rights
or obligations, subscriptions, arrangements or anti-dilution rights with
respect to the issuance, sale or redemption of shares of its capital stock,
other than the amounts set forth in SECTION 2.9 OF THE COMPANY DISCLOSURE
SCHEDULE, and the agreement between the Company and Telantis Venture Partners
IV, Inc. ("TVP") (fka Telantis Capital, Inc.) pursuant to which TVP has the
right to purchase shares of the Common sufficient to maintain a ten percent
(10%) ownership in the Company prior to an initial public offering of the stock
of the Company, and the rights set forth herein or in the Stockholders
Agreement (defined herein).
2.11. DUE ISSUANCE. At Closing and when paid for, the Purchased Shares
will be duly and validly issued, fully paid and nonassessable and will have been
offered, issued, sold and delivered in compliance with applicable federal and
state securities laws, and the Purchased Shares shall be transferred to the
Investors free and clear of any and all claims, liens or other encumbrances.
2.12. REGISTRATION RIGHTS. The Company has granted no rights to have
shares of its capital stock registered for sale to the public under the laws of
any jurisdiction, other than the rights set forth in the Registration Rights
Agreement (defined herein).
2.13. VOTING AGREEMENTS AND RESTRICTIONS ON TRANSFER. To the Company's
knowledge there are no agreements relating to the voting of the Company's voting
securities or restrictions on the transfer of the Company's capital stock, other
than this Agreement and the Stockholders Agreement.
2.14. SUBSIDIARIES; INVESTMENTS. The Company does not own or have any
direct or indirect interest in or control over any corporation, partnership,
joint venture or other entity of any kind. The term "control" shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of an entity, whether through the
ownership of voting securities or by contract.
2.15. MERGERS. The Company is not party to any agreement regarding its
acquisition in whole or in part, whether by merger, consolidation, asset sale,
or otherwise, other than this Agreement.
2.16. FINANCIAL STATEMENTS. The Company has provided to the Investors
the Company's: (i) audited balance sheets as at March 31, 1996 and March 31,
1997, and the related statements of operations, changes in stockholders' equity,
and cash flows for the fiscal years ended March 31, 1995, March 31, 1996 and
March 31, 1997, certified by the independent certified public accountants of the
Company (the "Base Financial Statements") (the audited balance sheet is referred
to as the "Base Balance Sheet"); (ii) unaudited balance sheet (the "Most Recent
Balance Sheet") and related statements of operations, changes in stockholders'
equity, and cash flows for the period ended February 28, 1998, certified by the
Company's Chief Financial Officer (the "Most Recent Financial Statements"); and
(c) a complete and correct copy of the Report of Independent Accountant
addressed to the Company dated March 30, 1998. The Base Financial Statements and
the Most Recent Financial Statements were prepared in accordance with generally
accepted accounting principles (except that the Most Recent Financial Statements
do not include all of the information and notes required for complete financial
statements) consistently applied during the periods covered
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thereby and fairly present in all material respects the financial condition of
the Company on the dates of such statements and the results of its operations
and its cash flows for the periods covered thereby. Nothing has come to the
attention of the Company's management since such respective dates which would
indicate that such financial statements were not true and correct in all
material respects as of the date thereof.
2.17. PROJECTIONS. Projections for the Company's fiscal years ended
1999 and 2000 (the "Projections") have been made available for inspection by the
Investors. The Projections represent management's good faith estimates of the
future performance of the Company based upon assumptions which are set forth
therein and which, in the reasonable judgment of management, were reasonable
when made and continue to be reasonable as of the date hereof; PROVIDED,
HOWEVER, THAT THERE IS NO ASSURANCE THAT THE PROJECTED RESULTS WILL ACTUALLY BE
ACHIEVED. IN THAT REGARD, PROJECTIONS INVOLVE KNOWN AND UNKNOWN RISKS,
UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE
OR ACHIEVEMENTS OF THE COMPANY, OR INDUSTRY RESULTS, TO BE MATERIALLY DIFFERENT
FROM ANY FUTURE RESULTS, PERFORMANCE, OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY
SUCH FORWARD-LOOKING STATEMENTS. SUCH FACTORS INCLUDE, AMONG OTHERS: GENERAL
ECONOMIC AND BUSINESS CONDITIONS; INDUSTRY CAPACITY; DEMOGRAPHIC CHANGES;
COMPETITION; RAW MATERIAL COSTS AND AVAILABILITY; IMPORT PROTECTION AND
REGULATION; THE LOSS OF ANY SIGNIFICANT CUSTOMERS; CHANGES IN BUSINESS STRATEGY
OR DEVELOPMENT PLANS; QUALITY OF MANAGEMENT; AVAILABILITY, TERMS AND DEPLOYMENT
OF CAPITAL; BUSINESS ABILITIES AND JUDGMENT OF PERSONNEL; AVAILABILITY OF
QUALIFIED PERSONNEL; AND CHANGES IN OR THE FAILURE TO COMPLY WITH GOVERNMENT
REGULATIONS.
2.18. ABSENCE OF UNDISCLOSED LIABILITIES. As of the date of the Most
Recent Balance Sheet: (i) the Company did not have any material liabilities; and
(ii) the Company had no indebtedness, in either case, whether accrued, absolute
or contingent, asserted or unasserted, including without limitation, liabilities
as guarantor or otherwise with respect to obligations of others, or liabilities
for taxes due or then accrued or to become due, or contingent or potential
liabilities relating to activities of the Company or the conduct of its business
prior to the date of the Most Recent Balance Sheet, which were required to be
disclosed in the Most Recent Balance Sheet in accordance with generally accepted
accounting principles, except liabilities stated or adequately reserved against
or disclosed on the Most Recent Balance Sheet or the notes thereto.
2.19. ABSENCE OF CHANGES. Since the date of the Most Recent Balance
Sheet, except for entering into the Inter-Company Agreements, the Company has
conducted its business only in the ordinary course consistent with past
practice, and to the Company's knowledge there has not been:
(a) any material change in the financial or other condition,
properties, assets, liabilities, business, prospects or operations of
the Company, which change by itself or in conjunction with all other
such changes, whether or not arising in the ordinary course of
business, has had or could reasonably be expected to have a Material
Adverse Effect;
(b) any material contingent liability incurred by the Company
as guarantor or otherwise with respect to the obligations of others or
any cancellation of any debt or claim owing to, or waiver of any
material right of, the Company;
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(c) any material mortgage, encumbrance or lien placed on any
of the properties of the Company which remains in existence on the date
hereof or will remain on the Closing Date;
(d) any obligation or liability of any nature, whether
accrued, absolute or contingent, incurred by the Company other than
obligations and liabilities incurred in the ordinary course of business
or incurred as a result of or arising out of the transactions
contemplated by this Agreement;
(e) any purchase, sale or other disposition, or any agreement
or other arrangement for the purchase, sale or other disposition, of
any properties or assets of the Company other than in the ordinary
course of business;
(f) any damage, destruction or loss, whether or not covered by
insurance, which has had or could reasonably expected to have a
Material Adverse Effect;
(g) any declaration, setting aside or payment of any dividend
by the Company, or the making of any other distribution in respect of
the capital stock of the Company, or any direct or indirect redemption,
purchase or other acquisition by the Company of its own capital stock;
(h) any labor trouble or claim of unfair labor practices
involving the Company; any material change in the compensation payable
or to become payable by the Company to any of its officers, employees,
agents or independent contractors; or any bonus payment or arrangement
made to or with any of such officers, employees, agents or independent
contractors, other than normal merit increases in accordance with its
usual practices;
(i) any material change in the officers or management of the
Company;
(j) any payment or discharge of any lien or liability of the
Company which was not shown on the Base Balance Sheet or incurred in
the ordinary course of business thereafter;
(k) any obligation or liability incurred by the Company to any
of its officers, directors, stockholders or employees, or any loans or
advances made by the Company to any of its officers, directors,
stockholders or employees, except normal compensation and expense
allowances payable to officers or employees;
(l) any material change in accounting methods or practices,
credit practices or collection policies of the Company;
(m) any other material transaction entered into by the Company
other than transactions in the ordinary course of business;
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(n) any event or condition of any nature, which, either
individually or in the aggregate, has had or could reasonably be
expected to have a Material Adverse Effect; or
(o) any agreement or understanding whether in writing or
otherwise, for the Company to take any of the actions specified in
paragraphs (a) through (m) of this Section 2.19.
2.20. ACCOUNTS RECEIVABLE. Except to the extent reserved against in the
Most Recent Balance Sheet, all of the accounts receivable of the Company are
valid and enforceable claims, the Company has received no notice that such
claims are subject to set-off or counterclaim, and such claims, to the knowledge
of the Company, are collectable in the normal course of business, after
deducting the allowance for doubtful accounts stated in the Most Recent Balance
Sheet and adjusted since the date thereof in accordance with generally accepted
accounting principles consistently applied.
2.21. TAX MATTERS. The Company has filed all federal, state, local and
foreign tax returns required to be filed by it through the date hereof, and has
paid or caused to be paid all federal, state, local, foreign and other taxes,
including without limitation income taxes, estimated taxes, excise taxes, sales
taxes, use taxes, gross receipts taxes, franchise taxes, employment and
payroll-related taxes, withholding taxes, stamp taxes, transfer taxes and
property taxes, whether or not measured in whole or in part by net income
(collectively, "Taxes"), required to be paid by the Company through the date
hereof, except Taxes which have been disputed or have not yet accrued or
otherwise become due and payable, for which adequate provision has been made in
the pertinent financial statements.
2.22. TITLE TO PROPERTIES. The Company has good and marketable title to
all of its properties and assets, free of all mortgages, pledges, liens,
security interests, encumbrances, and other charges. There is no material
tangible or intangible property, including, without limitation, trademarks,
service marks, styles, trade names, copyrights, licenses, patents, and trade
secrets (including applications, certificates and registrations for or of any of
the foregoing), used by the Company in its business as presently conducted by it
which is not owned, leased or licensed by the Company. The Company's property is
sufficient for the conduct of the Company's business as presently conducted. All
material contracts, agreements, leases and instruments to which the Company is a
party or by which the Company is obligated are valid and are in full force and
effect and constitute legal, valid and binding obligations of the Company, and,
are enforceable in accordance with their respective terms, and copies of all
such agreements have been provided to Shipman & Goodwin LLP, special counsel for
the Investors. The Company has no knowledge of any threat to terminate or modify
any such agreements. Neither the Company nor, to the knowledge of the Company,
any other party to any material contract, agreement or instrument of the Company
is in default in complying with any provisions thereof. There is no loan, lease,
agreement or other continuing transaction between the Company and any Related
Party (as defined in the Stockholders agreement, which is defined herein). To
the Company's knowledge, neither the Company's business nor products or services
as presently conducted or sold infringe any Intellectual Property (defined
herein) of any third parties, and there are no claims to that effect pending or
threatened against the Company.
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2.23. LITIGATION. There is no litigation or governmental or
administrative proceeding or investigation pending or, to the Company's
knowledge, threatened against the Company.
2.24. INVESTMENT BANKING; BROKERAGE FEES. The Company has not incurred
or become liable for any broker's or finder's fee, banking fees or similar
compensation, relating to or in connection with the transactions contemplated
hereby.
2.25. FRANCHISES, LICENSES, TRADEMARKS, PATENTS AND OTHER RIGHTS.
(a) The Company owns or has the right to use all (i)
franchises, permits, licenses and other similar authority, (ii)
patents, patent applications, patent rights, service marks, trademarks,
trademark applications, trademark rights, trade names, trade name
rights and copyrights (whether registered or not), and (iii) know-how,
technology and trade secrets which have been used in the conduct of the
Company's business, or are necessary for the conduct of the Company's
business as now conducted or as presently planned to be conducted (the
"Intellectual Property"). The Intellectual Property is sufficient for
the conduct of the Company's business as presently conducted.
(b) The Company has all franchises, permits, licenses and
other similar authority, necessary for the conduct of its business as
now being conducted by it and has no reason to believe it will be
unable to obtain any similar authority necessary for the conduct of its
business as presently planned to be conducted, and it is not in
violation, nor will the transactions contemplated by this Agreement
cause a violation of the terms or provisions of any such franchise,
permit, license or other similar authority.
2.26 ISSUANCE TAXES. All taxes imposed by any state or other
jurisdiction in connection with the issuance, sale and delivery of the Purchased
Shares shall have been fully paid, and all laws imposing such taxes shall have
been fully complied with, prior to each Closing Date.
2.27 OFFERING. Within the past six (6) months, the Company has not,
either directly or through any agent, offered any of the Purchased Shares or any
security or securities similar to the Purchased Shares for sale to, or solicited
any offers to buy the Purchased Shares or any part thereof or any such similar
security or securities from, or otherwise approached or negotiated in respect
thereof with, any party or parties other than the Purchasers or institutional or
other sophisticated investors, each of which was offered all or a portion of the
Shares at private sale for investment. Subject in part to the truth and accuracy
of the Purchasers' representations set forth in this Agreement, the offer, sale
and issuance of the Shares as contemplated by this Agreement are exempt from the
registration requirements of the Securities Act, and all applicable state
securities laws, and neither the Company, Telxon nor anyone acting on behalf of
either of them will take any action hereafter that would cause the loss of such
exemption.
2.28 EMPLOYEES
(a) No employee of the Company is, or is now expected to be,
in violation of any term of any employment contract, patent disclosure
agreement, non-competition agreement,
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or any other contract or agreement with any prior employer or any other
person, corporation, or other entity or any restrictive covenant in
such an agreement, or any obligation imposed by common law or
otherwise, relating to the right of any such employee to be employed by
the Company or companies similarly situated because of the nature of
the business conducted or to be conducted by the Company, or companies
similarly situated or relating to the use of trade secrets or
proprietary information of others, and the continued employment of the
Company's employees and/or does not subject the Company or any
Purchaser to any material liability for any such violation.
(b) Each of the Company's present or former employees who has
had access to proprietary information of the Company has executed a
proprietary information and inventions agreement assigning inventions,
works for hire and work product to the Company. To the best of the
Company's knowledge and belief, no employee or former employee of the
Company is, or to the best of the Company's knowledge and belief is now
expected to be, in violation of the terms of the aforesaid agreement or
of any other obligation relating to the use of confidential or
proprietary information of the Company, except for such violations as
could not reasonably be expected to have a Material Adverse Effect.
Each of such Proprietary Information Agreements remains in full force
and effect.
(c) To the best knowledge of the Company, no officer or key
employee of the Company has any present intent of terminating such
officer's or key employee's employment with the Company.
(d) The Company is in substantial compliance with all
applicable laws regarding employment, wages, hours, equal opportunity,
collective bargaining and payment of Social Security and other taxes.
The Company is in compliance with all applicable foreign, federal,
state and local laws and regulations regarding occupational safety and
health standards and has received no complaints from any foreign,
federal, state or local agency or regulatory body alleging violations
of any such laws and regulations, except where non-compliance, or such
violation, could not reasonably be expected to have a Material Adverse
Effect.
(e) The Company has not experienced, nor does it know or have
reasonable grounds to know of any basis for, any strike, labor troubles
or strife, work stoppages, slow downs, or other interference with or
impairment of its business. The Company has not experienced, nor does
it know or have reasonable grounds to know of, any union or collective
bargaining organization efforts or negotiations, or requests for
negotiations, for any representation or any labor contract relating to
any employees of the Company.
2.29 BUSINESS OF THE COMPANY. The Company has no knowledge or belief
that (i) there is pending or threatened any claim or litigation against or
affecting the Company contesting its right to manufacture, sell or use any
product or service presently manufactured, sold or used or presently planned to
be manufactured, sold or used by the Company, (ii) there exists, or there is
pending or planned, any statute, rule, law, regulation, standard or code which
could not reasonably be expected to have a Material Adverse Effect or could
reasonably be expected to have a Material Adverse Effect.
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2.30 USE OF PROCEEDS. The Company will use the proceeds of the offering
of the Company Shares for working capital purposes in the manner set forth in
the Company Disclosure Schedule, and for the costs and expenses of the
transactions contemplated hereby. The Company presently expects that it will
obtain a commercial credit facility. If obtained, the credit facility will be
utilized to repay any then unpaid balance of the funding heretofore advanced by
Telxon to the Company (the "Inter-Company Debt"). In the event that the
Company's credit facility is not established by May 18, 1998, then Telxon may
set off up to twenty five percent (25%) of the amounts payable during any month
by Telxon to the Company under the Inter-Company Agreements against the
Inter-Company Debt, on mutually agreeable terms, including reasonable
forbearances, until such time as the InterCompany Debt is repaid.
2.31 APPLICABILITY OF, AND COMPLIANCE WITH, OTHER LAWS.
(a) With respect to pension plans, defined benefit plans or
defined contribution plans which are subject to the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), in which employees
of the Company participate, the Company is in compliance with the
applicable provisions of ERISA. The Company has not incurred any
unremedied accumulated funding deficiency within the meaning of ERISA
or any unsatisfied liability to the Pension Benefit Guaranty
Corporation established under ERISA in connection with any employee
pension plan established or maintained by the Company under the
jurisdiction of ERISA. No Reportable Event or Prohibited Transaction
(as defined in Section 4043 of ERISA) has occurred with respect to any
plan administered by or on behalf of the Company.
(b) The Company's employment practices and policies are in
full compliance with (i) all applicable laws of the United States and
each applicable jurisdiction relating to equal employment opportunity,
and any rules, regulations, administrative orders and Executive Orders
relating thereto; and (ii) the applicable terms, relating to equal
opportunity, of any contract, agreement or grant the Company has with,
from or relating (by way of subcontract or otherwise) to any other
contract, agreement or grant of, any federal or state governmental
unit, except where non-compliance could not reasonably be expected to
have a Material Adverse Effect. To the Company's knowledge, the Company
has not been the subject of any charge of unfair labor practices,
employment discrimination made against it by the National Labor
Relations Board, the United States Equal Employment Opportunity
Commission or any other governmental unit, or is presently subject to
any formal or informal proceedings before, or investigations by, such
Commission or governmental unit. To the Company's knowledge, neither
the Company nor any employees of the Company, are presently under
investigation by any commission or governmental agency for purposes of
security clearance or otherwise.
(c) Neither the Company nor any property owned or occupied by
the Company is in violation of any Federal or State Environmental Law
of any sort or in violation of any Federal or State "OSHA" law,
so-called, except where such violations could not reasonably be
expected to have a Material Adverse Effect.
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2.32 CONDITION OF PROPERTIES. The facilities, machinery, equipment,
fixtures, vehicles and other properties which are used by the Company in its
business as presently conducted, are in good operating condition and repair, are
reasonably fit and usable for the purposes for which they are being used, are
adequate and sufficient for the Company's businesses and conform with all
applicable ordinances, regulations and laws, except where such failure to
conform could not reasonably be expected to have a Material Adverse Effect.
2.33 INSURANCE COVERAGE. The Company has heretofore been insured under
Telxon's insurance policies. The Company has no reason to believe that it will
be unable to obtain one or more policies of insurance issued by insurers of
recognized responsibility, to insure the Company, and its properties and
business against such losses and risks, and in such amounts, as are customary in
the case of corporations of established reputation engaged in the same or
similar business and similarly situated.
2.34 EXCEPTIONS AND QUALIFICATIONS. The exceptions and qualifications
to the representations and warranties of the Company in this Article II which
are based upon such exceptions and qualifications not being "material" or being
"in all material respects," or not having a "Material Adverse Effect" will not,
in the aggregate, have a Material Adverse Effect.
III. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
3.1. MAKING OF REPRESENTATIONS AND WARRANTIES. Each Investor, as to
itself, makes to the Company the representations and warranties set forth in
this Article III. Each such representation and warranty is subject to and
qualified by the other provisions of this Agreement, and the exceptions set
forth in each Investor's disclosure schedule attached hereto (the "Investor
Disclosure Schedule").
3.2. ORGANIZATION. The Investor is duly organized, validly existing and
in good standing under the laws of its jurisdiction of organization, and in each
jurisdiction in which the failure to be so qualified would have a material
adverse effect on the Investor. Investor has all requisite power and authority
to enter into this Agreement and to consummate the transactions contemplated
hereby.
3.3. POWER. The Investor has all required power and authority to enter
into and perform this Agreement and the agreements contemplated hereby to which
it is a party and to carry out the transactions contemplated hereby and thereby,
including the purchase of the Purchased Shares. To its knowledge, the Investor
is not in violation of any material term of: (i) its organizational instruments;
(ii) its Bylaws or similar governing regulations or (iii) any agreement,
instrument, judgment, decree, order, statute, rule or government regulation
applicable to the Investor or to which the Investor is a party, the violation of
which would have a material adverse effect on the Investors.
3.4. ENFORCEABLE AGREEMENT. This Agreement and all other documents
executed by the Investor pursuant hereto are valid and binding obligations of
the Investor, enforceable in accordance with their terms, except as limited by
the laws of general application relating to bankruptcy, insolvency and the
relief of debtors and rules and laws governing specific performance, injunctive
relief and other equitable remedies.
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3.5. AUTHORIZATION. The execution, delivery and performance of this
Agreement, all agreements, documents and instruments contemplated hereby and the
purchase of the Purchased Shares have been duly authorized by all necessary
action of the Investor.
3.6. INVESTMENT EXPERIENCE; SECURITIES LAWS. The Investor has such
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of its investment in the Purchased Shares
contemplated by this Agreement and making an informed investment decision with
respect thereto. The Investor can bear the risk of its investment in the
Purchased Shares indefinitely and can bear a total loss of such investment
without materially impairing its financial condition. The Investor is an
"accredited investor" as such term is defined in Rule 501 under the Securities
Act of 1933, as amended (the "Securities Act"). The Investor understands, agrees
and acknowledges that the Purchased Shares have not been registered under the
Securities Act or under the "blue sky" laws of any jurisdiction and, subject to
the Registration Rights Agreement, that the Company has no intention of
registering the Purchased Shares. The Company is issuing the Purchased Shares in
reliance upon exemptions from registration based on, among other things, the
representations of such Investor contained in this Article III. Investor further
understands, acknowledges and agrees that unless and until the Purchased Shares
are registered by the Company, their resale is restricted by the Securities Act
and blue sky laws, and by restrictions in the Stockholders Agreement. Investor's
address as set forth in EXHIBIT A is the address of Investor's principal place
of business.
3.7. OPPORTUNITY TO ASK QUESTIONS. The Investor has made a due
diligence investigation of the Company, including an analysis of the Company's
business, assets, financial data and other material information, and it has read
and understands the risk factors disclosed by the Company in EXHIBIT D. The
attachment of EXHIBIT D to this Agreement, and the Investor's acknowledgment
that it has read and understands the same, shall not in any way limit the
Company's representations and warranties made in Article II, and EXHIBIT D does
not qualify or limit such representations and warranties. To its satisfaction,
the Investor has had an opportunity to discuss the Company's business,
management and financial affairs, the transactions contemplated hereunder, with
directors, officers and management of the Company and has had the opportunity to
review the Company's operations, facilities and the Inter-Company Agreements.
3.8. INVESTMENT INTENT. The Investor is acquiring the Purchased Shares
for its own account, for investment, and not with a present view to, or for
resale in connection with, any "distribution" thereof within the meaning of the
Securities Act. The Investor was not formed or organized for the purpose of
acquiring the Securities.
3.9. SHARE CERTIFICATE LEGENDS. The Investor understands that transfer
of the Purchased Shares is restricted, and each certificate representing the
Purchased Shares will bear the following restrictive legends or ones
substantially similar thereto, to provide third parties with notice of these
restrictions:
OWNERSHIP, ENCUMBRANCE, PLEDGE, ASSIGNMENT,
TRANSFER, OR OTHER DISPOSITION OF THE SHARES
EVIDENCED BY THIS CERTIFICATE, AND ANY SHARES
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ISSUED IN LIEU THEREOF, ARE SUBJECT TO RESTRICTIONS
CONTAINED IN A STOCKHOLDERS AGREEMENT DATED AND EFFECTIVE AS
OF MARCH ___, 1998, BY AND AMONG THE CORPORATION AND ITS
STOCKHOLDERS A COPY OF WHICH IS ON FILE IN THE OFFICE OF THE
SECRETARY OF THE CORPORATION. A COPY OF THE STOCKHOLDERS
AGREEMENT AND THE CORPORATION'S BY-LAWS WILL BE MAILED BY THE
CORPORATION TO ANY STOCKHOLDER WITHOUT CHARGE WITHIN FIVE (5)
DAYS AFTER WRITTEN REQUEST THEREFOR.
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT") OR APPLICABLE STATE SECURITIES LAWS ("STATE LAWS") AND
HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD,
TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT REGISTERING THE SHARES UNDER
THE ACT AND STATE LAWS OR (ii) A TRANSACTION PERMITTED BY RULE
144 OR RULE 145 UNDER THE ACT OR EQUIVALENT STATE LAWS FOR
WHICH THE ISSUER HAS RECEIVED REASONABLY SATISFACTORY EVIDENCE
OF COMPLIANCE WITH THE PROVISIONS OF SUCH APPLICABLE RULE OR
(iii) AN OPINION OF COUNSEL SATISFACTORY TO ISSUER THAT SUCH
SHARES ARE EXEMPT FROM THE REGISTRATION PROVISIONS OF THE ACT
AND STATE LAWS OR (iv) A NO-ACTION LETTER FROM THE STAFF OF
THE SECURITIES AND EXCHANGE COMMISSION AND THE APPLICABLE
STATE DIVISIONS OF SECURITIES THAT REGISTRATION IS NOT
REQUIRED UNDER THE ACT OR STATE LAWS."
3.10. INVESTMENT BANKING; BROKERAGE FEES. No Investor has incurred or
become liable for any broker's or finder's fee, banking fees or similar
compensation relating to or in connection with the transactions contemplated
hereby.
IV. CONDITIONS.
4.1. CONDITIONS TO THE OBLIGATIONS OF THE INVESTORS. The obligation of
each Investor to consummate the transactions contemplated by this Agreement is
subject to the fulfillment, prior to or at the Closing, of the following
conditions precedent:
(a) REPRESENTATIONS; WARRANTIES; COVENANTS. Each of the
representations and warranties of the Company made in Article II shall
be true and correct in all respects when
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made and shall be true and correct in all respects at the Closing as if
made on the Closing Date, and the Company shall, on or before the
Closing Date, have performed and satisfied all of its covenants and
agreements set forth herein which by the terms hereof are to be
performed and satisfied on or before the Closing Date.
(b) AUTHORIZATION. The Board of Directors and the stockholders
of the Company shall have duly adopted resolutions authorizing the
Company to consummate the transactions contemplated hereby in
accordance with the terms hereof.
(c) NO ACTIONS OR PROCEEDINGS. No action or proceeding by or
before any court, administrative body or governmental agency shall have
been instituted or threatened which seeks to enjoin, restrain or
prohibit, or might result in damages in respect of, this Agreement or
the consummation of the transactions contemplated by this Agreement,
and no law or regulation shall be in effect and no court order shall
have been entered in any action or proceeding instituted by any party
which enjoins, restrains or prohibits this Agreement or the
consummation of the transactions contemplated by this Agreement.
(d) APPROVALS AND CONSENTS. The Company shall have made all
filings with and notifications of governmental authorities, regulatory
agencies and other entities then required to be made by them in
connection with the execution and delivery of this Agreement and the
performance by it of the transactions contemplated hereby.
(e) MATERIAL ADVERSE CHANGES. There shall not have been any
change or series of changes that have a Material Adverse Effect.
(f) INTER-COMPANY AGREEMENTS. The Inter-Company Agreements
shall be in full force and effect without amendment, and no default
shall exist or would result from consummation of the transactions
contemplated herein.
(g) STOCKHOLDERS AGREEMENT. The Company, the Investors and the
other stockholders of the Company shall have entered into a
Stockholders Agreement in substantially the form attached hereto as
EXHIBIT E (the "Stockholders Agreement").
(h) REGISTRATION RIGHTS AGREEMENT. The Company, the Investors
and the stockholders of the Company shall have entered into a
Registration Rights Agreement in substantially the form attached hereto
as EXHIBIT F (the "Registration Rights Agreement").
(i) BY-LAW AMENDMENTS. The By-Laws shall be amended to provide
for the rights and provisions set forth in the Stockholders Agreement.
(j) FULL EQUITY FUNDING. Each other Investor shall have paid
in full for the Purchased Shares set forth opposite to such Investor's
name on EXHIBIT A.
(k) DELIVERIES AND EXPENSES. The Company shall have made all
deliveries to the Investors required under Section 5.1, and the Company
shall have paid the reasonable
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attorneys fees of Axiom Venture Partners II Limited Partnership, an
Investor, incurred on behalf of all Investors.
4.2. CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligations of the
Company to consummate the transactions contemplated by this Agreement are
subject to the fulfillment, prior to or at the Closing, of the following
conditions precedent:
(a) REPRESENTATIONS; WARRANTIES; COVENANTS. Each of the
representations and warranties of each Investor made in Article III
shall be true and correct in all material respects at the Closing as if
made on the Closing Date, and each Investor shall, on or before the
Closing Date, have performed and satisfied all of its covenants and
agreements set forth herein which by the terms hereof are to be
performed and satisfied on or before the Closing Date.
(b) NO ACTIONS OR PROCEEDINGS. No action or proceeding by or
before any court, administrative body or governmental agency shall have
been instituted or threatened which seeks to enjoin, restrain or
prohibit, or might result in damages in respect of, this Agreement or
the consummation of the transactions contemplated by this Agreement,
and no law or regulation shall be in effect and no court order shall
have been entered in any action or proceeding instituted by any party
which enjoins, restrains or prohibits this Agreement or the
consummation of the transactions contemplated by this Agreement.
(c) STOCKHOLDERS AGREEMENT. The Company, the Investors and the
other stockholders of the Company shall have entered into the
Stockholders Agreement.
(d) REGISTRATION RIGHTS AGREEMENT. The Company, the Investors
and the stockholders of the Company shall have entered into the
Registration Rights Agreement.
(e) FULL EQUITY FUNDING. Each of the Investors shall have paid
in full for Purchased Shares set forth opposite such Investor's name on
EXHIBIT A.
V. CLOSING DELIVERIES.
5.1. COMPANY. At or before Closing, the Company shall have duly
executed and delivered, or caused the delivery, to each Investor all items
required by this Agreement, including, without limitation:
(a) Certificates evidencing the Purchased Shares and the
Warrants;
(b) Certified copies of resolutions of the Board of Directors
of the Company authorizing the execution and delivery and performance
of this Agreement, the Stockholders Agreement, the Registration Rights
Agreement, the issuance of the Purchased Shares and the other
agreements and instruments contemplated herein;
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(c) Certificates of recent date issued by (i) the Secretary of
State of the State of Delaware certifying that the Company is in good
standing; and (ii) the Secretary of State of the State of Ohio
certifying the Company has qualified to do business as a foreign
corporation and is in good standing in Ohio;
(d) A certificate of the Secretary or an Assistant Secretary
of the Company certifying the names of the officers of the Company
authorized to execute this Agreement, the certificates for the
Purchased Shares and the other documents, instruments or certificates
to be delivered pursuant to this Agreement by the Company.
(e) An opinion of counsel for the Company dated the Closing
Date, in the form attached hereto as EXHIBIT G.
(f) A certificate of an officer of the Company in the form
attached as EXHIBIT H, certifying that certain conditions to the
Investors' obligation to consummate the transactions contemplated
herein have been satisfied.
5.2. Investors. At or before Closing, each Investor shall have paid the
purchase price set forth in EXHIBIT A opposite its name, to the Company in
immediately available funds, by wire transfer pursuant to the wire instructions
set forth in EXHIBIT C.
VI. SURVIVAL; INDEMNIFICATION.
6.1. SURVIVAL. All representations and warranties made herein and in
any certificate delivered pursuant hereto, are made as of the Closing Date, and
shall survive the Closing for a period of two (2) years after the Closing Date.
6.2. INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify,
defend and hold harmless each of the Investors, their affiliates and their
respective officers, directors, partners, members, employees and agents and each
person who controls any of them within the meaning of Section 15 of the
Securities Act or Section 20 of the Securities Exchange Act of 1934, as amended
(including any successor provision, the "Exchange Act") (individually, an
"Investor Indemnified Party" and collectively the "Investor Indemnified
Parties") from and against and in respect of all losses, liabilities,
obligations, damages, deficiencies, actions, suits, proceedings, demands,
assessments, orders, judgments, fines, penalties, costs and expenses (the
Company shall be responsible for reasonable fees, disbursements and expenses of
an attorney, accountant or consultant: (i) acting for the Investor Indemnified
Parties as a group; and (ii) acting for an Indemnified Party that
has a material conflict of interest with other Indemnified Parties which
prevents its inclusion in such group representation), of any kind or nature
whatsoever (whether or not arising out of third-party claims and including all
amounts paid in investigation, defense or settlement of the foregoing)
sustained, suffered or incurred by or made against any Investor Indemnified
Party (an "Investor Loss" or "Investor Losses") arising out of, based upon or in
connection with any breach by the Company of any of its representations,
warranties or covenants under this Agreement or by reason of any claim, action
or proceeding asserted or instituted arising out of any matter or thing covered
by any such representations or warranties ("Investor Indemnifiable Claims").
Indemnification under
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this Section 6.2 shall be cumulative with other rights and remedies an Investor
may have, but no Indemnified Party shall be entitled to more than a single
recovery for the same damage, regardless of the theory under which such recovery
is made. Any action for indemnification for Investor Losses arising from
Investor Indemnifiable Claims must be commenced within the two (2) year period
commencing on the Closing Date, and any statute of limitations applicable
thereto is hereby superseded.
6.3. NOTICE; DEFENSE OF CLAIMS. Promptly after receipt by an
indemnified party of notice of any claim, liability or expense to which the
indemnification obligations set forth in Section 6.2 would apply, the
indemnified party shall give notice thereof in writing to the indemnifying
party. Such notice shall state the information then available regarding the
amount and nature of such claim, liability or expense and shall specify the
provision or provisions of this Agreement under which the liability or
obligation is asserted. If within twenty (20) days after receiving such notice
the indemnifying party gives written notice to the indemnified party stating
that (a) it would be liable under the provisions hereof for indemnity in the
amount of such claim if such claim were successful and (b) that it disputes and
intends to defend against such claim, liability or expense at its own cost and
expense, then counsel for the defense shall be selected by the indemnifying
party (subject to the consent of the indemnified party, which consent shall not
be unreasonably withheld or delayed), and the indemnified party shall not be
required to make any payment with respect to such claim, liability or expense as
long as the indemnifying party is conducting a good faith and diligent defense
at its own expense. The indemnifying party shall have the right, with the
consent of the indemnified party, which consent shall not be unreasonably
withheld or delayed, to settle all indemnifiable matters related to claims by
third parties which are susceptible to being settled, provided its obligation to
indemnify the indemnifying party therefor will be fully satisfied. The
indemnifying party shall keep the indemnified party apprized of the status of
the claim, liability or expense and any resulting suit, proceeding or
enforcement action, shall furnish the indemnified party with all documents and
information that the indemnified party shall reasonably request and shall
consult with the indemnified party prior to acting on major matters, including
settlement discussions. The indemnified party, at the indemnifying party's
expense, shall make available all information and assistance that the
indemnifying party may reasonably request and shall, at the indemnifying party's
expense, cooperate with the indemnifying party in any defense undertaken
pursuant to this Section 6.3, with any out of pocket expense incurred by the
indemnified party being born by the indemnifying party. Notwithstanding anything
herein to the contrary, the indemnified party shall at all times have the right
to fully participate in such defense at its own expense directly or through
counsel; provided, that if the named parties to the action or proceeding include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate under applicable standards of
professional conduct, the expense of separate counsel for the indemnified party
shall be paid by the indemnifying party. If no such notice of intent to dispute
and defend is given by the indemnifying party, or if such diligent good faith
defense is not being or ceases to be conducted, the indemnified party may, at
the expense of the indemnifying party, undertake the defense of (with counsel
selected by the indemnified party), and shall have the right to compromise or
settle (exercising reasonable business judgment), such claim, liability or
expense.
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VII. MISCELLANEOUS.
7.1. GOVERNING LAW; JURISDICTION. This Agreement shall be construed
under and governed by the laws of the State of Ohio, without regard to conflict
or choice of laws, statutes, regulations, rules or principles. Any action
relating to the execution or performance of this Agreement shall be brought in
the courts, state or federal, sitting in Summit County, Ohio, and each party
hereto consents to the jurisdiction and venue of such courts, and agrees not to
contest venue on the grounds of forum non conveniens or otherwise.
7.2. NOTICES. Any notice, request, demand or other communication
required or permitted hereunder shall be in writing and shall be deemed to have
been given upon receipt, or if delivered or sent by facsimile transmission, upon
confirmation of transmission, or if sent by overnight courier, the second day
after deposit, as follows:
TO THE INVESTORS: To the respective addresses on
EXHIBIT A attached hereto
TO THE COMPANY: Aironet Wireless Communications, Inc.
at the address set forth at the
beginning of this Agreement.
Attn: President
Fax Number: 330-664-7986
with a copy to: Goodman Weiss Miller LLP
100 Erieview Plaza, 27th Floor
Cleveland, Ohio 44114
Attn: Robert A. Goodman/Jay R. Faeges
Fax Number: 216-363-5835
or to such other address of which any party may notify the other parties
provided in accordance with this Section 7.2.
7.3. PRIOR AGREEMENTS SUPERSEDED. This Agreement supersedes all prior
and contemporaneous understandings and agreements, written or oral, between or
among the parties relating to the subject matter hereof.
7.4. ASSIGNABILITY. Neither this Agreement nor any right or obligation
hereunder may be assigned or delegated (i) by the Company, or (ii) by an
Investor to a direct competitor of the Company, or a direct competitor of Telxon
so long as Telxon owns twenty percent (20%) or more of the Company's issued and
outstanding capital stock (either being a "Competitor"), and any such assignment
or delegation shall be void and of no effect. The merger, consolidation, asset
sale, change of control, or any other reorganization of an Investor with or into
a Competitor, or of a Competitor with or into a party, shall be deemed an
assignment under this Section 7.4. Subject to the foregoing, this Agreement
shall be binding upon and enforceable by, and shall inure to the benefit of, the
parties hereto and their respective successors and assigns. Nothing in this
Agreement is intended to give any
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person not named herein the benefit of any legal or equitable right, remedy or
claim under this Agreement, except as expressly provided herein.
7.5. FEES AND EXPENSES. Except as expressly provided for in Section
4.1(k) of this Agreement, each party shall bear all of its fees and expenses
incurred in connection with or relating to or arising out of the negotiation and
preparation of this Agreement and the consummation of the transactions
contemplated hereby.
7.6. PUBLICITY AND DISCLOSURES. None of the parties hereto nor any of
their respective stockholders, subsidiaries, affiliates, officers, directors or
employees shall issue or cause the publication of any press release or other
announcement with respect to this Agreement or the other transactions
contemplated hereby without the prior written consent of the other parties
hereto, which consent shall not be unreasonably withheld or delayed, except to
the extent disclosure is required by any applicable law or regulation or by any
court or authorized administrative or governmental agency, and except that the
provisions of this Section 7.6 shall not prohibit any Investor from providing to
its partners or equity owners customary information with respect to the Company
and the Investor's investment in the Company.
7.7. CONFIDENTIALITY. All documents delivered by or for the Company
and/or Telxon to an Investor in connection with its investigation of the Company
and the transaction contemplated herein are privileged and confidential
information of the Company and/or Telxon ("Confidential Information"). Investors
shall not disseminate or disclose any Confidential Information, and shall use
the same degree of care to protect the Confidential Information in its
possession or control as it uses to protect its own confidential information,
but in no case less than reasonable care. Neither an Investor nor its officers,
directors, employees, attorneys, accountants, professional advisors or other
representatives may use or copy any Confidential Information for any purpose
other than for the purpose of evaluating the transactions contemplated herein.
Neither an Investor nor any of the above-described persons have any rights in
the Confidential Information, and shall not disclose, give, sell, license,
lease, or otherwise transfer or make available the Confidential Information to
any third person, organization or entity. In the event that the Closing does not
take place, all Confidential Information furnished to or for an Investor, and
any copies thereof made, and documents, analysis and other writings prepared
therefrom, by or for an Investor or any of the above-described persons shall be
returned to the Company, or destroyed at the Company's option, immediately after
receipt by the Investor of the Company's request and direction to do so.
7.8. CAPTIONS. The captions in this Agreement are for convenience only
and shall not affect the construction or interpretation of any term or provision
hereof.
7.9. NUMBER AND GENDER. The use in this Agreement of singular, plural,
masculine, feminine and neuter pronouns, shall include the others as the context
may require.
7.10. EXECUTION IN COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same document. An executed
faxed counterpart of this Agreement shall be binding on the parties and for
evidentiary purposes, shall be deemed to be an original.
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7.11. SEVERABILITY. In case any of the provisions contained in this
Agreement shall for any reason be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement, but this Agreement shall be construed as
if such invalid, illegal or unenforceable provision had been limited or modified
(consistent with its general intent) to the extent necessary to make it valid,
legal and enforceable, or if it shall not be possible to so limit or modify such
invalid, illegal or unenforceable provision or part of a provision, this
Agreement shall be construed as if such invalid, illegal or unenforceable
provision or part of a provision had never been contained in this Agreement, so
long as to do so would not materially alter the rights or obligations of the
parties considered as a whole.
7.12. AMENDMENTS; WAIVERS. Any waiver by a party of any provision,
covenant or condition intended for its benefit must be in writing and executed
by that party; provided, however, that any waiver by the Investors holding fifty
percent (50%) or more of the Purchased Shares shall be deemed to be a waiver by
all Investors, provided that if a waiver treats any Investor differently from
other Investors, it must be consented to by such Investor. No delay on the part
of any party in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any waiver on the part of any party of any such
right, power or privilege preclude any further exercise thereof or the exercise
of any other such right, power or privilege. This Agreement may not be amended
as to any Investor except in writing executed by the Company and by the Investor
affected by such amendment; provided, however, that any amendment which has been
agreed to by the Investors holding fifty percent (50%) or more of the Purchased
Shares shall be deemed to have been agreed to by all Investors, unless such
amendment treats any Investor differently from other Investors.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
INVESTORS, ENTITIES: AXIOM VENTURE PARTNERS II LIMITED
PARTNERSHIP
By: Axiom Venture Associates II Limited
Liability Company, its General Partner
By: /s/ Samuel F. McKay
_____________________________________
Its:____________________________________
HAMBRECHT & QUIST
By:
_____________________________________
Its:____________________________________
TELANTIS VENTURE PARTNERS V, INC.
By: /s/ Richard W. Dyer
_____________________________________
Richard W. Dyer, Treasurer
W, A & H INVESTMENTS LLC
By: Wessels, Arnold & Henderson Group, L.L.C.,
its managing member
By:
_____________________________________
Thomas J. Brigl, CFO/Managing Director
McDONALD & COMPANY SECURITIES, INC.
By:
_____________________________________
Its:____________________________________
CLARION CAPITAL CORPORATION
By:
_____________________________________
Its:____________________________________
22
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
INVESTORS, ENTITIES: AXIOM VENTURE PARTNERS II LIMITED
PARTNERSHIP
By: Axiom Venture Associates II Limited
Liability Company, its General Partner
By:
_____________________________________
Its:____________________________________
HAMBRECHT & QUIST
By:
_____________________________________
Its:____________________________________
TELANTIS VENTURE PARTNERS V, INC.
By: /s/ Richard W. Dyer
_____________________________________
Richard W. Dyer, Treasurer
W, A & H INVESTMENTS LLC
By: Wessels, Arnold & Henderson Group, L.L.C.,
its managing member
By:
_____________________________________
Thomas J. Brigl, CFO/Managing Director
McDONALD & COMPANY SECURITIES, INC.
By:
_____________________________________
Its:____________________________________
CLARION CAPITAL CORPORATION
By:
_____________________________________
Its:____________________________________
23
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
INVESTORS, ENTITIES: AXIOM VENTURE PARTNERS II LIMITED
PARTNERSHIP
By: Axiom Venture Associates II Limited
Liability Company, its General Partner
By:
_____________________________________
Its:____________________________________
HAMBRECHT & QUIST
By:
_____________________________________
Its:____________________________________
TELANTIS VENTURE PARTNERS V, INC.
By:
_____________________________________
Richard W. Dyer, Treasurer
W, A & H INVESTMENTS LLC
By: Wessels, Arnold & Henderson Group, L.L.C.,
its managing member
By: /s/ Ken J. Wessels
_____________________________________
Ken J. Wessels, CEO Managing Director
McDONALD & COMPANY SECURITIES, INC.
By:
_____________________________________
Its:____________________________________
CLARION CAPITAL CORPORATION
By:
_____________________________________
Its:____________________________________
24
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
INVESTORS, ENTITIES: AXIOM VENTURE PARTNERS II LIMITED
PARTNERSHIP
By: Axiom Venture Associates II Limited
Liability Company, its General Partner
By:
_____________________________________
Its:____________________________________
HAMBRECHT & QUIST
By:
_____________________________________
Its:____________________________________
TELANTIS VENTURE PARTNERS V, INC.
By:
_____________________________________
Richard W. Dyer, Treasurer
W, A & H INVESTMENTS LLC
By: Wessels, Arnold & Henderson Group, L.L.C.,
its managing member
By:
_____________________________________
Thomas J. Brigl, CFO/Managing Director
McDONALD & COMPANY SECURITIES, INC.
By:
_____________________________________
Its:____________________________________
CLARION CAPITAL CORPORATION
By: /s/ Morton Cohen
_____________________________________
Its: Chairman
____________________________________
25
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first set forth above.
COMPANY: AIRONET WIRELESS COMMUNICATIONS, INC.
By: /s/ Kenneth W. Haver
_________________________________
Kenneth W. Haver, Treasurer
INVESTORS, INDIVIDUALS: /s/ Frank B. Carr
____________________________________
FRANK B. CARR
26
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first set forth above.
COMPANY: AIRONET WIRELESS COMMUNICATIONS, INC.
By:
_________________________________
Roger J. Murphy, President
INVESTORS, INDIVIDUALS: /s/ Frank B. Carr
____________________________________
FRANK B. CARR
27
EXHIBIT A
---------
SUBSCRIPTION AGREEMENT
AIRONET WIRELESS COMMUNICATIONS, INC.
- ------------------------------------------------------------------------------------------------------------------------------------
Number
Purchased Shares
and
Number Aggregate
State and Type Principal Place Warrants Purchase
Investor of Organization of Business Price
- ------------------------------------------------------------------------------------------------------------------------------------
Axiom Venture Partners II Limited Connecticut Cityplace II, 17th Floor 714,285 shares $2,500,000.00
Partnership Limited Partnership 185 Asylum Street 214,285 warrants
Hartford, CT 06103
- ------------------------------------------------------------------------------------------------------------------------------------
Hambrecht & Quist ("H&Q") (1) One Bush Street 571,429 shares $2,000,000.00
San Francisco, CA 64104 171,429 warrants
- ------------------------------------------------------------------------------------------------------------------------------------
Telantis Venture Delaware Corporation 12501 World Plaza Lane 104,762 shares $366,667.00
Partners V, Inc. ("TVP") (2) Ft. Myers, FL 33907 31,429 warrants
- ------------------------------------------------------------------------------------------------------------------------------------
Telantis Venture Delaware Corporation 12501 World Plaza Lane 79,365 shares $277,777.50
Partners V, Inc. (3) Ft. Myers, FL 33907 23,810 warrants
- ------------------------------------------------------------------------------------------------------------------------------------
W, A & H Investments LLC Minnesota 601 Second Avenue South 142,857 shares $500,000.00
Limited Liability Company Minneapolis, MN 55402-4314 42,857 warrants
- ------------------------------------------------------------------------------------------------------------------------------------
McDonald & Company Securities, Ohio Corporation 800 Superior Avenue, Suite 2100 142,857 shares $500,000.00
Inc.("M&CS")(1) Cleveland, OH 44114-2603 42,857 warrants
- ------------------------------------------------------------------------------------------------------------------------------------
Frank B. Carr an individual, residing in 800 Superior Avenue, Suite 2100 28,571 shares $100,000.00
Ohio Cleveland, OH 44114-2603 8,571 warrants
- ------------------------------------------------------------------------------------------------------------------------------------
Clarion Capital Corporation Ohio 1801 East Ninth Street 57,143 shares $200,000.00
Corporation Cleveland, OH 44114 17,143 warrants
- ------------------------------------------------------------------------------------------------------------------------------------
(1) H&Q and M&CS will have until April 30, 1998 to execute agreements and to
purchase shares, if at all (if not then purchased Aironet may offer such shares
to the other listed investors)
(2) TVP purchased 79,365 shares with Axiom's tranche; 3,175 shares with Carr's
tranche; 15,873 shares with WA&H'S tranche; and 6,349 shares with Clarion's
tranche
(3) TVP to purchase an additional 63,492 shares if H&Q funds, and an additional
15,873 shares if M&CS funds (or a proportionate amount if Aironet offers such
shares to the other listed investors)
28
EXHIBIT B
FORM OF WARRANTS
Attached
29
EXHIBIT B
OWNERSHIP, ENCUMBRANCE, PLEDGE, ASSIGNMENT, TRANSFER, OR OTHER DISPOSITION OF
THE WARRANTS EVIDENCED BY THIS CERTIFICATE, AND ANY SHARES ISSUED UPON THE
EXERCISE HEREOF, ARE SUBJECT TO RESTRICTIONS CONTAINED IN A STOCKHOLDERS
AGREEMENT DATED AND EFFECTIVE AS OF MARCH 31, 1998, BY AND AMONG THE CORPORATION
AND ITS STOCKHOLDERS (THE "STOCKHOLDERS AGREEMENT"), A COPY OF WHICH IS ON FILE
IN THE OFFICE OF THE SECRETARY OF THE CORPORATION.
NEITHER THE WARRANTS EVIDENCED BY THIS CERTIFICATE NOR ANY SHARES ISSUABLE UPON
ITS EXERCISE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT") OR APPLICABLE STATE SECURITIES LAWS ("STATE LAWS") AND HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR
HYPOTHECATED EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT
REGISTERING THE WARRANTS AND/OR SHARES UNDER THE ACT AND STATE LAWS OR (ii) A
TRANSACTION PERMITTED BY RULE 144 OR RULE 145 UNDER THE ACT OR EQUIVALENT STATE
LAWS FOR WHICH THE ISSUER HAS RECEIVED REASONABLY SATISFACTORY EVIDENCE OF
COMPLIANCE WITH THE PROVISIONS OF SUCH APPLICABLE RULE OR (iii) AN OPINION OF
COUNSEL SATISFACTORY TO ISSUER THAT SUCH WARRANTS AND/OR SHARES ARE EXEMPT FROM
THE REGISTRATION PROVISIONS OF THE ACT AND STATE LAWS OR (iv) A NO-ACTION LETTER
FROM THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION AND THE APPLICABLE
STATE DIVISIONS OF SECURITIES THAT REGISTRATION IS NOT REQUIRED UNDER THE ACT OR
STATE LAWS.
Warrant Certificate No. __ Warrants to Purchase________ Shares of Common Stock
AIRONET WIRELESS COMMUNICATIONS, INC.
INCORPORATED UNDER THE LAWS
OF THE STATE OF DELAWARE
This certifies that for value received, __________________, or any
permitted transferee ("Holder"), is entitled to purchase from Aironet Wireless
Communications, Inc. ("Aironet") _______ shares (adjusted as provided in Exhibit
A, the "Warrant Shares") of Aironet's Common Stock, $.01 par value ("Common"),
at Three and 50/100 Dollars ($3.50) per share (adjusted as provided in Exhibit
A, the "Warrant Price"), which equals an aggregate purchase price of
___________________________ Dollars ($_________), at or after, and not before,
the consummation of the earlier of either (i) the first firm commitment
underwritten public offering of the Common (or units which include the Common as
an element) at a public offering price of not less than Eight Dollars ($8.00)
per share, pursuant to a Registration Statement, on Form S-1 or other
appropriate form, filed by Aironet under the Act, pursuant to which Aironet
receives proceeds, net of underwriting discounts, commissions and other expenses
of the offering, of not less than Eight Million Dollars ($8,000,000) ("IPO");
(ii) the sale of Aironet as an entirety, whether by merger, consolidation, stock
sale, asset sale, or otherwise, for the higher of a gross sale price of Seventy
Five Million Dollars ($75,000,000) or Eight Dollars ($8.00) per share ("Private
Sale"); (iii) a Change in Control (defined in Exhibit A); or (iv) a Spin-Off
(defined in Exhibit A) (the occurrence of an IPO, Private Sale, Change in
Control and/or Spin-Off is referred to herein as the "Exercise Event"). To the
extent remaining un-exercised, these Warrants shall terminate on March 31, 2001,
5:00 P.M., E.T., and thereafter shall entitle Holder to no rights. These
Warrants are subject to the terms and conditions set forth on the face of this
certificate and in Exhibit A attached hereto, which by this reference are
incorporated herein in their entirety.
Aironet Wireless Communications, Inc.
Date:_________________
------------------------------------
Roger J. Murphy, President
------------------------------------
Jay R. Faeges, Assistant Secretary
30
EXHIBIT A
WARRANT TERMS AND CONDITIONS
AIRONET WIRELESS COMMUNICATIONS, INC.
1. TRANSFER. Transfer of the Warrants is restricted as set forth in the
restrictive legends set forth in the Warrant certificate to which this Exhibit A
is attached.
2. EXCHANGE OF WARRANT CERTIFICATE. Upon Holder's written request,
Aironet shall exchange the Warrant certificate for one or more certificates
entitling Holder to purchase a like aggregate number of Warrant Shares. At
Holder's request and upon delivery to Aironet of a Lost Warrant Affidavit and
surety bond reasonably acceptable to Aironet, Aironet will deliver to Holder
replacement Warrant certificates for mutilated, lost, stolen or destroyed
Warrant certificates.
3. EXERCISE OF AND PAYMENT FOR WARRANTS.
a. Exercise. The Warrants shall be deemed to have been
exercised automatically upon the consummation of a Private Sale for
which Aironet has provided the Holder at least fifteen (15) days prior
written notice, and upon Aironet's receipt of a Holder's written notice
of exercise provided to Aironet in the event of an IPO, Change in
Control or Spin-Off at any time prior to their termination as provided
on the face of the Warrant certificate to which this Exhibit A is
attached.
b. Payment of Warrant Price.
i. If the applicable Exercise Event is an IPO, Change
in Control or Spin-Off, then within ten (10) days of Holder's
receipt of written notice from Aironet of the event, Holder
shall pay the aggregate Warrant Price to Aironet by wire
transfer of immediately available funds, pursuant to wire
instructions provided to Holder by Aironet. Immediately upon
Holder's surrender of the Warrant certificate evidencing the
exercised Warrants and payment of the Warrant Price, Aironet
shall issue and deliver to Holder certificates for the Warrant
Shares then purchased. The Warrant Shares when paid for and
issued shall be fully paid and non-assessable, and shall be
deemed issued as of the date of surrender of the Warrant
certificate and payment of the aggregate Warrant Price.
ii. If the applicable Exercise Event is a Private
Sale, then Aironet shall provide Holder with at least fifteen
(15) days written notice prior to consummating such
transaction, and Holder shall receive, on a cashless exercise
basis, the kind and amount of consideration it would be
entitled to receive as if the Warrants had been duly exercised
in full prior to such event and as if Holder owned the number
of Warrant Shares that could be purchased with such
consideration, less the aggregate Warrant Price.
c. Payment of Taxes. Aironet will pay all documentary stamp
taxes, if any, attributable to the initial issuance and delivery of the
Warrant Shares, and Holder will pay all other taxes, if any.
d. Change in Control. A "Change in Control" is deemed to have
occurred upon (i) any Person is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934 (as
amended, the "Exchange Act")), directly or indirectly, of fifteen
percent (15%) or more of the combined voting power of Telxon's Voting
Securities, or (ii) the holders of Telxon's securities entitled to vote
thereon approve, or there otherwise occurs or is commenced, a sale,
lease, exchange or other disposition of all or substantially all the
assets, or the dissolution or liquidation, of Telxon, or any merger,
consolidation or reorganization to which Telxon is a party and as the
result of which Telxon's stockholders prior to the transaction do not
own at least fifty percent (50%) of the voting power of the surviving
entity in the election of directors, or (iii) the Continuing Directors
cease for any reason to constitute at least a majority of the Telxon
Board of Directors, or (iv) any other event occurs which is of such a
nature that would be required to be reported as a change in control in
response to Item 1(a) of the Current Report on Form 8-K, as in effect
on the date hereof pursuant
A-1
31
to Section 13 or 15(d) of the Exchange Act, or similar successor
public filing. "Continuing Directors" means and includes the persons
constituting Telxon's Board of Directors as of the date of this
Agreement as well as each person who becomes a director of Telxon
subsequent to the date of this Agreement whose election, or nomination
for election by Telxon's stockholders, was approved by an affirmative
vote of at least a majority of the then Continuing Directors (either
by a specific vote or by approval of the proxy statement of Telxon in
which such person is named as a nominee for director or of the
inclusion of such person in such proxy statement as such a nominee, in
any such case without objection by any member of such approving
majority of the then Continuing Directors to the nomination of such
person or the naming of such person as a director nominee), for so
long as each such director shall remain in office. "Person" means and
includes any individual, corporation, partnership, group, association
or other "person", as such term is used in Section 14(d) of the
Exchange Act, but excluding Telxon or any employee benefit plan
sponsored by Telxon. "Voting Securities" means the Telxon Common
Stock, par value $0.01 per share, and any and all other then
outstanding Telxon securities ordinarily having the right to vote
generally in the election of the Telxon directors.
e. Spin-Off. "Spin-Off" shall mean any spin-off,
dividend or other distribution of Aironet Common by Telxon to its
stockholders.
4. RESERVATION OF SHARES. Aironet represents and warrants that it has
reserved, and so long as the Warrants remain outstanding it will keep reserved,
the number of shares of Common which are subject to purchase under the Warrants
from time to time. Prior to its exercise or termination, Aironet will keep a
copy of this Warrant certificate on file with its transfer agent.
5. PRESERVATION OF PURCHASE RIGHTS UPON RECLASSIFICATION,
CONSOLIDATION, ETC. At the date of this Warrant certificate, each Warrant
entitles the Holder to purchase one (1) Warrant Share for the Warrant Price.
Hereafter, until their exercise or termination, the number of Warrant Shares
that may be purchased and the Warrant Price per Warrant Share may be adjusted
upward or downward as provided in this Section 5.
a. Adjustment in the Number of Warrant Shares. The number of
Warrant Shares that each Warrant entitles the Holder to purchase shall
be proportionately adjusted upward for any increase, or downward for
any decrease, in the number of issued and outstanding shares of Common
resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification effected without receipt of
consideration by Aironet, and in no other circumstance.
b. Adjustment in the Warrant Price. The Warrant Price
per Warrant Share shall be proportionately adjusted downward for any
increase, or upward for any decrease, in the number of issued and
outstanding shares of Common resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification effected
without receipt of consideration by Aironet, and in no other
circumstance.
c. Warrant Certificates. Upon any adjustments in the number of
Warrant Shares and Warrant Price, Aironet shall record such adjustments
on its stock transfer records, and the Holder may, but need not,
surrender this certificate to Aironet for replacement with Warrant
certificates that evidence the revised number of Warrant Shares and
Warrant Price.
6. FRACTIONAL INTERESTS. Aironet shall not be required to issue
fractional Warrant Shares on the exercise of the Warrants or upon any adjustment
pursuant to Section 5 in the number of Warrant Shares that each Warrant entitles
a Holder to purchase. Any fractional Warrant Shares that would otherwise result
from any such adjustments or exercise shall be eliminated either by rounding up
to the next higher whole number of Warrant Shares for fractions of one-half
(1/2) or more, or by rounding down to the next lower whole number of Warrant
Shares for fractions of less than one-half (1/2).
7. NO RIGHTS AS STOCKHOLDER. The Warrants do not confer upon Holder any
rights as a stockholder of Aironet prior to Holder's exercise of the Warrants.
Without limiting the generality of the foregoing, the Warrants do not
entitle Holder to vote, receive dividends, consent or receive notices as a
stockholder in respect of any meeting for the election of directors or any other
matter; provided, however, that transferability of the Warrants is restricted
pursuant
A-2
32
to the terms and conditions in the Stockholders Agreement among Aironet and its
Stockholders on the same basis as the Common and any other security which is
governed thereby.
8. MISCELLANEOUS.
a. These Warrants are issued in accordance with the laws
governing corporations organized under the laws of the State of
Delaware and securities issued in the State of Ohio, and shall be
construed under and governed by such laws without regards to conflict
or choice of laws, statutes, regulations, rules or principles. Any
action relating to theses Warrants or their issuance shall be brought
in the courts, state or federal, sitting in Summit County, Ohio, and
the Holder by taking delivery of this certificate consents to the
jurisdiction and venue of such courts, and agrees not to contest venue
on the grounds of forum non conveniens or otherwise.
b. Any notice, request, demand or other communication required
or permitted hereunder shall be in writing and shall be deemed to have
been given upon receipt, or if delivered or sent by facsimile
transmission, upon confirmation of transmission, or if sent by
overnight courier for next day delivery, the next business day after
deposit, to the Holder at its address as set forth in the stock records
of Aironet, and to Aironet at its principal place of business.
c. Subject to provisions herein regarding restrictions on
transferability, these Warrants shall inure to the benefit of Holder,
and its permitted successors and assigns.
d. The captions in this certificate are for convenience only
and shall not affect the construction or interpretation of any term or
provision hereof. The use in this certificate of the masculine,
feminine or neuter pronoun, shall include the others as the context may
require.
e. Any waiver or amendment of any provision, covenant or
condition of these Warrants must be in writing and executed by Aironet
and Holder. No delay in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver on
the part of any party of any such right, power or privilege, preclude
any further exercise thereof or the exercise of any other such right,
power or privilege.
(End of Exhibit A)
A-3
33
EXHIBIT C
WIRE TRANSFER INSTRUCTIONS
Bank information:
Address:
Bank One, NA
50 South Main Street
Akron, Ohio 44308-1888
Branch #001
Aironet Account #:617704499
ABA Routing #:044000037
34
EXHIBIT D
SUBSCRIPTION AGREEMENT
AIRONET WIRELESS COMMUNICATIONS, INC.
RISK FACTORS
------------
Investment in the Common involves a high degree of risk. Investors
should consider all relevant factors, including the following and the other
information provided by the Company before making a decision to invest in the
Common and are encouraged to consult with their legal and financial advisors.
Discussions of documents herein are only summaries which are modified by, and
the Investors should read, such documents in their entirety.
FACTORS AFFECTING OPERATING RESULTS
The Company's results of operations are affected by a wide variety of
factors, including economic conditions specific to the industries in which it
competes, decreases in average selling price over the life of any particular
product, the timing and manufacturing complexity of new product introductions
(by the Company and its suppliers, as well as its competitors), the timely
implementation of new manufacturing technologies (by the Company and its
suppliers, as well as its competitors), the ability to safeguard patents and
other intellectual property in a rapidly evolving market, and the rapid increase
in demand for some products and the rapid decline in demand for others. Market
demand for the Company's products, particularly for those most recently
introduced, can be difficult to predict. This could lead to revenue volatility
if the Company were unable to provide sufficient quantities of specified
products or if demand for new products does not develop as anticipated.
The Company's shipments during any particular quarter generally
represent orders received either during that quarter or shortly before the
beginning of that quarter. Shipments of orders received in a fiscal quarter are
generally filled from products manufactured in that quarter. The Company
utilizes contractors to manufacture subassemblies used in the Company's
products; accordingly, the Company's ability to fill orders is dependent upon
the ability of its contract manufacturers to fill the orders of the Company.
There can be no assurance that, during any given quarter, the Company's contract
manufacturers will be able to accommodate any given order. Therefore, the
Company's financial performance in any given quarter is dependent to a
significant degree upon obtaining orders in that quarter which can be
manufactured and delivered to its customers in that quarter. Financial
performance for any given quarter cannot be known or fully assessed until near
the end of that quarter. Furthermore, any quarter's results are necessarily
indicative of annualized performance.
The Company has historically recognized product revenues evenly over
each quarter. A significant portion of the Company's expenses is relatively
fixed, and the timing of increases or decreases in such expenses is based in
large part on the Company's forecast of future revenues. As a result, the
Company may be unable to quickly adjust expenses to appropriate levels in the
event that the level of actual or potential business is greater or lesser than
that anticipated by the Company, which could have a material adverse affect on
the Company's results of operations.
35
DEPENDENCE ON NEW PRODUCTS
The Company's future success depends in part on its ability to develop
and introduce on a timely basis new or enhanced products which will compete
effectively on the basis of price and performance. The success of new product
introductions is dependent upon several factors, including timely completion of
new product designs, the ability of the Company and its contract manufacture's
to manufacture new products and the Company's achievement of acceptable margins
and market acceptance.
There can be no assurance that the Company's research and development
activities will lead to the identification or successful introduction of new or
enhanced products or that the Company will not encounter delays or problems in
connection therewith. Furthermore, customers may defer purchases of existing
products in anticipation of new or enhanced products. Moreover, there can be no
assurance that there will not be delays in commencing volume production of such
products or that such products will ultimately be commercially successful.
In addition, the average selling prices for wireless data products
generally decrease over the products' lives. To mitigate such decreases, the
Company seeks to reduce manufacturing costs of existing products and to
introduce new products, functions and other price/performance-enhancing
features. To the extent that such cost reductions, product enhancements and new
product introductions do not occur in a timely manner or do not achieve market
acceptance, the Company's operating results could be materially adversely
affected.
PRODUCT DEVELOPMENT AND TECHNOLOGICAL CHANGE
Markets for the Company's products are characterized by rapid changes
in technology, short product life cycles and evolving industry standards. The
Company believes that its future success will depend, in part, upon its ability
to continue to improve its product architectures and develop new technologies in
order to remain competitive.
The Company has and continues to expend substantial resources in
developing products that are designed to conform to the recently adopted IEEE
802.11 wireless LAN standard. As the standard has only recently been adopted,
there can be no assurance that it will have a meaningful commercial impact in
the Company's marketplace, or what effect any resulting product standardization
may have on the Company's competitive position or profitability. Further, in
connection with the promulgation of the IEEE 802.11 standard, each member of the
Standards Committee represented to the Committee that, to the extent compliance
with the 802.11 standard requires a license of any patents owned by such member,
it would license those patents on a fair and equitable basis. The Company is
currently negotiating a cross license with Lucent Technologies, pursuant to
which the Company would license certain patents to Lucent and Lucent would
license certain patents to the Company, relating to compliance with the 802.11
standard. The Company's ability to market products that comply with the 802.11
standard may depend upon its ability to obtain the Lucent and similar licenses
from others, however, there is no assurance that, if required, the Company will
be able to obtain such licenses, or that they can be obtained at a reasonable
cost.
Exhibit D Page 2
36
The Company's failure to obtain any required license at a commercially
reasonable cost could adversely impact the Company's profits.
The Company believes its future success is also dependent, in part,
upon its ability to continue to enhance and broaden its current line of products
through internal development and the acquisition of new technologies. There can
be no assurance that the Company will be able to identify or acquire
technologies or otherwise implement its growth strategy successfully. For the
Company to manage its growth, it must continue to improve operations and
financial and management information systems and effectively motivate and manage
employees. If the Company is unable to successfully pursue and manage such
growth, its business and results of operations could be materially adversely
affected.
INTELLECTUAL PROPERTY
The Company regards certain of its hardware and software products as
proprietary and relies on a combination of United States and foreign patent,
copyright, trademark and trade secret laws, as well as license and other
contractual confidentiality provisions, to protect its proprietary rights. There
can be no assurance that the Company's pending United States or foreign patent
applications will be approved or that its issued United States or foreign
patents or pending applications will not be challenged, invalidated or
circumvented by competitors, or that rights granted thereunder will provide
meaningful proprietary protection. Despite the Company's efforts to safeguard
and maintain its proprietary rights, there can be no assurance that the Company
will be successful in doing so or that the Company's competitors will not
independently develop, patent or license from others technologies that are
substantially equivalent or superior to the Company's technologies.
The Company's products also utilize hardware and software technologies
licensed from third parties, necessary for the Company's manufacture and sale of
certain of its products. An early termination of these license agreements could
have a material adverse affect on the Company's ability to market such products
and, hence, on its business, results of operations and financial condition.
The Company believes that its products, processes and trademarks do not
infringe the rights of third parties, but there can be no assurance that third
parties will not assert infringement or other related claims against the Company
or its licensors in the future, that any such assertions by third parties will
not result in litigation or that the Company and/or its licensors would prevail
in any such litigation or be able to license any valid and infringed patents or
other intellectual property from third parties on commercially reasonable terms.
Litigation, regardless of its outcome, could result in substantial cost to and
diversion of resources of the Company. Any infringement claim or related
litigation against the Company could materially adversely affect the Company's
ability to market its products and, hence, its business, financial condition and
results of operations.
CANADIAN CONTRACTS
From 1987 through 1992, the Company's subsidiary, Telesystems SLW Inc.
("Telesystems") (k.n.a. Aironet Canada Ltd.), acquired partial funding for the
development of early spread spectrum
Exhibit D Page 3
37
technology from the Canadian Government Industrial Research Assistance Program,
the Defense Industrial Research Program and the Industrial And Regional
Development Program (the "Funding Contracts"). The technology developed by
Telesystems under these programs has been superseded by technology developed by
the Company. The Funding Contracts contain certain restrictions on manufacturing
products that incorporate the technology developed thereunder and licensing such
technology outside of Canada without the consent of the applicable governmental
funding agency. The Company recently moved its assembly and certain development
operations from Canada to the United States and believes that it and Telesystems
are in full compliance with the terms of the Funding Contracts and that the
restructuring of the Company's operations has not resulted in a breach of the
Funding Contracts; however, there can be no assurance that the Company's
position will not be challenged, and if challenged that the Company will
ultimately prevail in its position.
DEPENDENCE UPON KEY SUPPLIERS AND MANUFACTURING CAPABILITY
Sub-assemblies for the Company's products are assembled by contract
manufacturers. The Company does not believe that the loss of any one contract
manufacturer would have a material long-term adverse affect on its business,
though there could be short term adverse affects, including set-up costs and
delays, if the Company changes any single contract manufacturer.
Other than during new product ramp up, when the Company acquires
components which are in turn provided to the Company's contract manufacturers,
Aironet's contract manufacturers acquire components for the Company's products.
Some components are acquired from single source suppliers, and others from a
limited number of suppliers. The Company has in the past encountered, and may in
the future encounter, shortages and delays in deliveries of sub-assemblies and
components. Such shortages and delays could have a material adverse affect on
the Company's ability to ship its products.
The Company's sole assembly facility is located in Summit County, Ohio.
If the Company is unable to use this facility for any reason, the Company's
operations could be materially adversely affected until the Company could obtain
other assembly capability.
Many of the Company's current contract manufacturers are located
outside of the United States. International procurement and manufacturing are
subject to the risks inherent in foreign operations, such as protective tariffs,
trade disputes, export/import controls and transportation delays and
interruptions.
RISKS OF SALES OUTSIDE OF THE UNITED STATES
The Company receives revenues from sales to customers located outside
of the United States. The Company views greater sales outside of the United
States as a source of growth for the Company. To further the Company's goal of
increasing sales outside the United States, it established a commissioned sales
subsidiary, Aironet S.A., in Brussels, Belgium. Failure of the Company, either
directly or through Aironet S.A., to successfully market its products outside
the United States could have a material adverse affect on the future growth of
the Company.
Exhibit D Page 4
38
The Company operates Aironet S.A. as a disclosed commission sales
subsidiary; however, there can be no assurance that the Belgian taxing
authorities will not seek to impose permanent establishment treatment on the
Company as a result of its Belgian subsidiary, which would result in increased
tax liabilities.
Sales outside of the United States carry a number of inherent risks,
including risks of currency exchange fluctuations, the need for export licenses,
tariffs and other potential trade barriers and regulations, transportation
delays and interruptions, reduced protection for intellectual property rights in
some countries, the impact of recessionary environments in economies outside the
United States and generally longer receivables collection periods. The Company's
business is also subject to the risks associated with changes in domestic or
foreign regulatory requirements and safety and quality standards. The Company
cannot predict whether quotas, duties, taxes or other charges or restrictions
will be imposed by the United States or other countries upon the importation or
exportation of the Company's products or supplies in the future or what, if any,
effect such actions would have on the Company's financial condition and results
of operations.
DEPENDENCE ON A LIMITED NUMBER OF OEM CUSTOMERS
Historically, a substantial portion of the Company's revenue has been
derived from a limited number of OEM customers. Sales to the Company's majority
stockholder, Telxon Corporation ("Telxon "), represented a significant
percentage of the Company's total revenue during fiscal 1998. The Company
expects that sales to a limited number of OEM customers will continue to account
for a substantial portion of its revenue during any period for the foreseeable
future. The Company also has experienced quarter to quarter variability in sales
to each of its major OEM customers and expects this pattern to continue in the
future. The loss of one or more of the Company's major OEM customers could have
a material adverse affect on the Company's results of operations.
Sales of many of the Company's wireless networking products depend in
significant part upon decisions of prospective OEM customers to develop and
market wireless solutions which incorporate the Company's wireless technology.
OEM customers' orders are affected by a variety of factors such as new product
introductions, regulatory approvals, end user demand for OEM customers' own
products, product life cycles, inventory levels, manufacturing strategy,
contract awards, competitive conditions and general economic conditions. Sales
of the Company's products generally involve a significant commitment of capital
and other resources by its customers, with the attendant delays associated with
such customers' internal procedures to approve such commitments. For these and
other reasons, the design-in cycle associated with the purchase of the Company's
wireless products by OEM customers generally ranges from 6 to 18 months, and is
subject to a number of significant risks, including customers' budgeting
constraints and internal acceptance that are beyond the Company's control. The
Company typically plans its production and inventory levels based on internal
forecasts of OEM customer demand, which is highly unpredictable and can
fluctuate substantially. In addition, the Company's agreements with OEM
customers typically do not require minimum purchase quantities, and a
significant reduction, delay
Exhibit D Page 5
39
or cancellation of orders from any of these customers could have a material
adverse affect on the Company's results of operations. If revenue forecasted
from a specific customer for a particular quarter is not realized in that
quarter, the Company's operating results for that quarter could be materially
adversely affected. In addition, there can be no assurance that the Company will
become a qualified supplier for new OEM customers or that the Company will
remain a qualified supplier for existing OEM customers.
COMPETITION
The wireless LAN and bridge markets are intensely competitive and
characterized by rapidly changing technology, short product life cycles and
evolving industry standards. The Company's ability to compete in these markets
successfully depends on a variety of factors, including the ability to develop
new products and features, support industry standards such as the IEEE 802.11
wireless LAN standard, product performance and quality, price, distribution
channels and manufacturing capacity. In the wireless LAN market, the Company
competes primarily with Proxim, Lucent Technologies, IBM and Symbol
Technologies. In the wireless bridge market, the Company competes primarily with
Cylink, Persoft and Solectek. Many of the Company's current and potential
competitors have substantially greater financial, technical, manufacturing and
marketing resources than the Company. There can be no assurance that the Company
will be able to compete successfully against these competitors or that
competitive pressures faced by the Company will not adversely affect its
business or operating results.
MANAGEMENT OF GROWTH
The Company's growth to date has placed, and will continue to place,
significant demands on its managerial, operational, financial and other
resources. The Company's ability to manage its growth effectively will require
it to improve its operational and financial systems. These demands will require
the addition of new management personnel and the development of additional
expertise by existing management. The failure of the Company's management team
to effectively manage growth, should it occur, could have a material adverse
impact on the Company's results of operations.
DEPENDENCE ON KEY PERSONNEL
The Company's future depends in large part on the continued service of
its key technical, marketing and management personnel and on its ability to
continue to attract and retain qualified employees, particularly those highly
skilled design, process and test engineers involved in the manufacture of
existing products and the development of new products and processes. The
competition for such personnel is extremely intense, and the loss of key
employees could have a material adverse affect on the Company's business,
financial condition and results of operations.
UNCERTAIN GOVERNMENT REGULATION
In the United States, the Company and its products are subject to
various FCC rules and regulations. Current FCC regulations permit license-free
operation in certain FCC-certified bands in the radio spectrum. Aironet's spread
spectrum wireless products are certified for unlicensed operation
Exhibit D Page 6
40
in the 902-928 MHz and 2.4-2.4835 GHz frequency bands. Operation in these
frequency bands is governed by rules set forth in Part 15 of the FCC
regulations. The Part 15 rules are designed to minimize the probability of
interference to the other users of those frequency bands, and, thus, accord Part
15 systems secondary status. In the event that there is interference between a
primary user and a Part 15 user, a higher priority user can require the Part 15
user to curtail transmissions that create interference.
There can be no assurance that the occurrence of regulatory changes,
including changes in the allocation of the available frequency spectrum, would
not significantly impact the Company's operations by rendering current products
obsolete, restricting the applications and markets served by the Company's
products or increasing the opportunity for additional competition.
The Company's products are also subject to regulatory requirements in
international markets. To date, Aironet has obtained certifications for the
Company's products several countries and as well as approval for use in other
countries which rely on or reference certification requirements of regulatory
bodies such as the FCC and the European Telecommunications Standards Institute
("ETSI"). Each new Aironet product or OEM customer product must be certified or
otherwise qualified for use in each country. While there can be no assurance
that the Company will be able to comply with regulations in any particular
country, the Company has designed its products to minimize the design
modifications required to meet various international regulations. Changes in, or
the failure by the Company to comply with, applicable domestic and international
regulations could have a material adverse affect on the Company's business and
operating results. In addition, with respect to those countries that do not
follow FCC regulations, Aironet may need to modify its products to meet local
rules and regulations.
HEALTH AND SAFETY RISKS
There has been publicity regarding the potentially adverse affects of
electromagnetic emissions from cellular telephones. While the Company's wireless
networking products also emit electromagnetic radiation, the Company believes
its products pose no material safety concerns because of the low power output of
the Company's products and the distance typically maintained between the
Company's products and the end user in normal operation. There can be no
assurance, however, that safety issues relating to the Company's products will
not arise in the future. Any such safety issues could have a material adverse
affect on the Company's business. Even if such safety concerns prove to be
baseless, the resultant publicity could have a material adverse affect on the
Company's value and its ability to market its products.
VALUE OF COMPANY
The Company has established the price of the Common based on arms
length negotiations with the Investors, and such price is not necessarily
related to asset value, net worth or other established criteria of value. No
outside consultant or investment banker was engaged to render an opinion on the
price for the Common or the exercise price of the Warrants, or the fairness from
a financial point of view of such prices. No assurance is or can be given that
the value ascribed to the Common could be obtained if such interests were
transferable and a market existed for such interests.
Exhibit D Page 7
41
FUNDING
If fully funded, the Company believes that the proceeds of the offering
will be sufficient for its short term working capital needs. The Company's
belief regarding adequate capitalization is based on certain assumptions
concerning revenues and working capital requirements which may not prove
accurate. If the Company does not have adequate funds to cover working capital
requirements, it will require debt and/or equity financing sources for
additional working capital. There is no assurance that a debt or equity
financing source will be available, or if available that the Company will elect
to acquire such debt or equity financing. Additional financing may be secured by
the Company's accounts receivable, inventory and other intangible and tangible
assets.
INITIAL PUBLIC OFFERING
The Company has expressed its desire to consummate an initial
underwritten public offering ("IPO") within the next eighteen (18) months. This
offering is not conditioned upon consummation of an IPO. There can be no
assurance that an IPO will take place within the eighteen (18) months, or at
all, and if an IPO does take place, there is no assurance that the Company's
underwriters will not restrict the number of shares owned by stockholders,
including the Investors, which may be included in that offering. In conjunction
with an IPO, the Company will be required to file a registration statement as
provided in the Securities Act of 1933 (the "Securities Act"). Any such
registration statement must be filed with and reviewed by the Securities and
Exchange Commission ("SEC"), and be declared effective at the time of sale of
any stock registered thereunder. There is no assurance that any registration
statement filed by the Company will be declared effective by the SEC, or if
declared effective that it will remain effective for a sufficient period of time
to allow the sale of all stock registered thereunder.
CORPORATE STRUCTURE
A portion of the operations of the Company have been and, to a lesser
extent, are currently conducted through subsidiaries which are separate and
distinct legal entities and have no obligation, contingent or otherwise, to pay
any amounts to the Company. Moreover, any right of the Company to receive assets
of its subsidiaries upon liquidation or reorganization (and the consequent right
of the holders of the Common to participate in those assets) is effectively
subordinated to the claims of that subsidiary's creditors (including trade
creditors), except to the extent that the Company is itself recognized as a
creditor of such subsidiary, in which case the claims of the Company would still
be subordinate to any security interests in the assets of such subsidiary and
any indebtedness of such subsidiary senior to that held by the Company.
ABSENCE OF PUBLIC MARKET FOR THE COMMON; RESTRICTIONS ON TRANSFER
The Common is an illiquid investment subject to various restrictions on
transfer and is not easily reduced to cash. In that regard, there is no trading
market for the Common. Without the consummation of an IPO, it is not probable
that any market for the Common will develop or, if one does develop, that it
will be maintained. Without an active market for the Common being developed
Exhibit D Page 8
42
or be sustained, with the resultant, continuing lack of liquidity, the value of
the Common could be materially adversely affected.
The Common has not been registered under any federal or state
securities laws and until and unless so registered, may not be offered or sold
except pursuant to an exemption from, or in a transaction not subject to,
registration under applicable federal or state securities laws. Additionally,
the Stockholders Agreement generally prohibits (with certain limited exceptions)
the transfer of the Common unless and until the Common has first been offered to
the Company and then to other holders of the Company's stock on the same terms
as the selling stockholder proposes to sell the Common to a third party, and
prohibits transfers of the Common to competitors of Aironet (other than Telxon
or its subsidiaries).
PROJECTIONS
Projections provided by the Company to the Investors contain certain
forward-looking statements and information relating to the Company that are
based on the beliefs of the Company's management as well as assumptions made by
and based on information currently available to the Company's management. When
used by the Company in any documents or discussions, the words "anticipate,"
"believe," "estimate" and "expect" and similar expressions, as they relate to
the Company or the Company's management, are intended to identify
forward-looking statements. Such statements reflect the current views of the
Company with respect to future events and are subject to certain risks,
uncertainties and assumptions, including these risk factors and any specific
assumptions described to Investors. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those described to Investors as
anticipated, believed, estimated or expected. The Company does not intend to
update forward-looking statements.
LACK OF INDEPENDENT OPERATING HISTORY
Since its inception until 1997, Telxon was the Company's sole
stockholder, and Telxon continues to be the Company's majority stockholder and
largest customer. In fiscal 1998, sales by the Company to Telxon accounted a
material percentage of the Company's revenue. To the extent that revenues were
insufficient to fund the Company's operations, Telxon also provided the Company
with working capital. As at March 31, 1998, the Company was indebted to Telxon
for such funding. Telxon has also provided the Company with a variety of general
and administrative services, including tax, accounting, legal, human resource,
employee benefit, and banking services. After the Closing Date, Telxon will
cease funding the Company's operating deficits and the Company will repay its
debt to Telxon, and Telxon will begin to cease providing other services.
Notwithstanding the foregoing, the Company operates as an independent
corporation, with its own board of directors and management; however, the
Company has not yet engaged in business without the support of Telxon.
Accordingly, the Company has no independent business history to consider in
making an investment decision regarding the purchase of the Common. Therefore,
prospective investors must rely upon the skill and judgement of the Company's
management to
Exhibit D Page 9
43
operate the Company without the full range of support that Telxon, as the
Company's controlling stockholder, previously provided to the Company.
POTENTIAL CONFLICTS OF INTEREST
Various conflicts of interest between the Company and Telxon could
arise during and following completion of the offering. These are discussed below
and should be carefully considered prior to making an investment in the Common.
Such discussion is qualified in its entirety by the Company's Stockholders
Agreement which should be read in its entirety.
CONSENT TO LIMITATIONS OF LIABILITY
The Stockholders Agreement provides: (i) that in the event a director,
officer or employee of the Company who is also a director, officer or employee
of Telxon or its subsidiaries acquires knowledge of a transaction or other
matter that may constitute a corporate opportunity of either or both the Company
and Telxon or its subsidiaries, such corporate opportunity may be allocated
either to the Company or Telxon or its subsidiaries as such director, officer or
employee deems appropriate under the circumstances; (ii) for regulating the
conduct of certain affairs of the Company as they may involve Telxon and its
subsidiaries, directors and officers; (iii) for limiting the liability of Telxon
and its subsidiaries for breach of fiduciary duty for actions taken or omitted
under certain intercompany agreements; and (iv) generally for eliminating the
liability of directors and officers of the Company with respect to certain
matters involving Telxon and its subsidiaries, including matters that may
constitute corporate opportunities of either or both of the Company and Telxon.
Such provisions were adopted in order to regulate the conduct and define the
obligations of the respective companies and their respective directors, officers
and employees to the extent that the Company and Telxon engage in similar lines
of business and enter into contracts and other arrangements with each other
during and after this offering. As a condition to their investment in the
Company, the Investors must agree to such provisions and, to the fullest extent
permitted under Delaware Law, must waive their rights relating to conflicts of
interest and corporate opportunities. Such agreement and waiver will restrict
such an Investor's ability to challenge transactions carried out in compliance
with such provisions.
CROSS-DIRECTORSHIPS AND STOCK OWNERSHIP
Cross-directorships, personal or business relationships, and ownership
interests of directors or officers of the Company in Common Stock of Telxon
could create or appear to create potential conflicts of interest when directors
and officers are faced with decisions that could have different implications for
the Company and Telxon. Nevertheless, the Company believes that such directors
will be able to discharge their fiduciary responsibilities.
Roger Murphy, President, Chief Executive Officer and a Director of the
Company, is the son-in-law of Robert F. Meyerson, the former Chief Executive
Officer and a former Director of Telxon; Frank E. Brick, a Director of the
Company, is also the President and Chief Executive Officer and a Director of
Telxon (under the Stockholders Agreement, Telxon may name a second director to
the Company's Board who may also be a Telxon "insider"); and James Furneaux, a
Director of the
Exhibit D Page 10
44
Company, is a financial consultant to Telxon. Each of these Person's connection
to Telxon may result in conflicts of interest for them in connection with
dealings between the Company and Telxon.
COUNSEL
Goodman Weiss Miller LLP ("GWM") is general counsel to the Company,
including in connection with this offering, and is also general counsel to
Telxon. GWM has advised the Company and Telxon that GWM's representation of both
the Company and Telxon in any given matter may create a conflict of interest for
GWM, and that if any such conflict were to arise, GWM would take appropriate
action to obviate such conflict.
COMPETITION WITH TELXON
Telxon is an investor in and a customer of several companies that are
competitors of the Company. Telxon is not restricted in any manner from
competing with the Company, and there can be no assurance that Telxon will not
expand, through development of new lines of products or businesses, acquisitions
or otherwise, its operations in a manner that might compete with the Company's
businesses.
RELATIONSHIP WITH TELXON
CONTROL BY TELXON
Telxon is currently the majority stockholder of the Company. Upon
completion of this offering, Telxon shall remain the majority stockholder of the
Company. Pursuant to the Stockholders Agreement Telxon may designate a majority
of the directors sitting on the Company's Board.
Telxon has advised the Company that its current intent is to continue
to hold all of the Common currently owned by it. However, Telxon has no
agreement with the Company not to sell or distribute such shares. There can be
no assurance concerning the period of time during which Telxon will maintain its
ownership of the Common, and subject to restrictions on re-sale in the
Stockholders Agreement, Telxon's level of ownership can be reduced through sales
of the Common by it or by sales of newly issued shares of stock by the Company.
It is anticipated that for benefit plan purposes, the Company will
continue to be part of Telxon's controlled group, which includes Telxon and its
other subsidiaries. Under the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), and federal income tax law, each member of the controlled
group is jointly and severally liable for funding and termination liabilities of
tax qualified defined benefit retirement plans as well as certain plan taxes.
Accordingly, during the period in which the Company is included in Telxon's
consolidated or controlled group, the Company could be liable under such
provisions in the event any such liability or tax is incurred, and not
discharged, by any other member of Telxon's consolidated or controlled group,
against which liability Telxon has agreed to indemnify the Company.
Exhibit D Page 11
45
INTERCOMPANY AGREEMENTS
Telxon and the Company have entered into intercompany agreements,
including agreements pursuant to which Telxon has received intellectual property
licenses, manufacturing rights, and product and service supply rights from the
Company, and will provide the Company with various services that are material to
the conduct of the Company's business. With respect to matters covered by the
Services Agreement, the relationship between Telxon and the Company is intended
to continue in a manner generally consistent with past practices. Because of
Telxon's ownership of the Company, none of these agreements have resulted from
arm's-length negotiations, and therefore, the prices charged by the Company to
Telxon, and to the Company by Telxon, may be higher or lower than prices that
may be charged to or by third parties.
PENDING LITIGATION
On or about January 6, 1995, Aironet filed Applications, Serial Nos.
630,655 and 630,657, with the United States Patent and Trade Office for
registration of the trademarks (collectively, the "Marks") titled "Hurricane"
and "Aironet and Design," respectively, based on its bona fide intent to use the
Marks in interstate commerce. The Marks were published for opposition, and
thereafter, America On Line, Inc. ("AOL") obtained extensions of time in which
to file an opposition to registration of these Marks.
AOL has raised its concern that the Marks may cause confusion with an
AOL mark. The Company and AOL, through their respective counsel, engaged in
discussions concerning resolution of this matter; however, these discussions did
not result in a resolution.
On about April 29, 1996, AOL filed a Notice of Opposition (the
"Opposition") to Aironet's "Aironet and Design" mark in the United States
Department of Commerce, Patent and Trademark Office-Trademark Trial and Appeal
Board (the "TTAB"); however, no opposition to the "Hurricane" mark was filed by
AOL. On about July 11, 1996, Aironet filed its Answer to the Opposition. The
TTAB calendar for the case has been extended numerous times, and discovery in
this case has yet to be completed.
AOL has not alleged any trademark infringement by Aironet and, to date,
there is no outstanding claim for damages, and no suit for trademark
infringement has been threatened or filed against Aironet.
The Company believes that the Opposition is without merit and will
vigorously contest it, although there can be no assurance that Aironet will be
successful. Based on its knowledge of the foregoing matter and given the present
stage of such matter, the Company does not believe that the potential loss, if
any, which might result to it if the ultimate outcome in such matter was
unfavorable is likely to have a material adverse affect on it or its financial
position.
Exhibit D Page 12
46
EXHIBIT E
FORM OF STOCKHOLDERS AGREEMENT
Attached
47
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT (this "Agreement"), is made and effective
as of March 31, 1998, by and among Aironet Wireless Communications, Inc., a
Delaware corporation (the "Corporation"), and each of the undersigned (together
with any person, partnership, association, trust, corporation, limited liability
company, or other entity acquiring any Shares (defined herein) in accordance
with the terms and conditions of this Agreement or otherwise, the
"Stockholders").
BACKGROUND
WHEREAS, on August 25, 1993, the Certificate of Incorporation of the
Corporation was filed by the Secretary of State for the State of Delaware (as
amended to date of this Agreement, the "Certificate");
WHEREAS, under the Certificate the authorized capital stock of the
Corporation consists solely of fifteen million (15,000,000) shares of Common
Stock, $.01 par value (the "Shares");
WHEREAS, as of the date hereof, the issued and outstanding Shares are
owned of record by the persons and in the amounts set forth in EXHIBIT A to this
Agreement; and
WHEREAS, this Agreement is a condition to the transactions contemplated
under the Subscription Agreement dated March 31, 1998, by and among the
Corporation and certain of the Stockholders.
AGREEMENT
NOW, THEREFORE, in consideration of these premises and the agreements
made herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally and equitably bound, agree as follows:
1. BOARD OF DIRECTORS.
(a) GENERAL. The Corporation shall have a Board of Directors comprised
of five (5) directors. Subject to applicable law governing the responsibilities
and liabilities of directors, which shall in any event take precedence, the
Board's power and authority shall be restricted such that it may take no action
which conflicts with the terms hereof or which is reserved to the Stockholders
hereunder or under applicable law. Subject to Section 1(b), each Stockholder
agrees that the Directors of the Corporation shall be the following persons (and
each Stockholder agrees to vote its Shares to effectuate the election of such
Directors) until their successors are designated in accordance with this Section
1:
Two Telxon Corporation ("Telxon") Inside Designees,
one of whom must be Telxon's Chief Executive Officer, and
who on the date hereof are Frank E. Brick and Kenneth W. Haver
One Outside Director,
48
who shall be designated by Telxon,
who on the date hereof is James H. Furneaux
One Investor (defined herein) Designee,
who on the date hereof is Samuel F. McKay
and
The Chief Executive Officer of the Corporation,
who on the date hereof is Roger J. Murphy
In addition to the Investor (defined herein) designated Director, the Investors
as a group shall be entitled to designate a single observer (the "Investor
Observer") who shall not be a Director but shall receive all notices which
Directors are entitled to receive and shall be entitled to attend all, but not
to participate in, meetings of the Directors.
(b) DESIGNATION. For the purpose of the foregoing:
(i) the Telxon inside designees and the outside Director shall
be named by Telxon in its sole discretion so long as Telxon then owns
at least fifty percent (50%) of the then issued and outstanding Shares;
the Telxon inside designees, but not the outside Director, shall be
named by Telxon in its sole discretion so long as Telxon then owns at
least twenty percent (20%), but less than fifty percent (50%), of the
then issued and outstanding Shares; and a single Telxon inside designee
shall be named by Telxon in its sole discretion so long as Telxon then
owns at least five percent (5%), but less than twenty percent (20%) of
the then issued and outstanding Shares;
(ii) Following a Hostile Change in Control at any time, and
following any Change in Control occurring after April 30, 2001, the
directors which Telxon is then entitled to designate under Section
1(b)(i) shall thereafter be made by a majority in interest of Axiom
Venture Partners II Limited Partnership ("Axiom"), Hambrecht & Quist,
Telantis Venture Partners V, Inc. W, A & H Investments LLC, McDonald &
Company Securities, Inc., Frank B. Carr and Clarion Capital
Corporation, who acquired Shares pursuant to the Subscription Agreement
of even date and for so long as any such person or entity is then a
Stockholder (the "Investors"), provided that the Investors shall then,
and for so long as they thereafter continue to, own an aggregate of at
least five (5%) of the then issued and outstanding Shares.
(A) A "Change in Control" is deemed to have occurred
upon (i) any Person is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Securities Exchange Act of
1934 (as amended, the "Exchange Act")), directly or
indirectly, of fifteen percent (15%) or more of the combined
voting power of Telxon's Voting Securities, or (ii) the
holders of Telxon's securities entitled to vote thereon
approve, or there otherwise occurs or is commenced, a sale,
lease, exchange or other disposition of all or substantially
all the assets, or the dissolution or liquidation, of Telxon,
or any merger, consolidation or reorganization to which Telxon
is a party and
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49
as the result of which Telxon's stockholders prior to the
transaction do not own at least fifty percent (50%) of the
voting power of the surviving entity in the election of
directors, or (iii) the Continuing Directors cease for any
reason to constitute at least a majority of the Telxon Board
of Directors, or (iv) any other event occurs which is of such
a nature that would be required to be reported as a change in
control in response to Item 1(a) of the Current Report on Form
8-K, as in effect on the date hereof pursuant to Section 13 or
15(d) of the Exchange Act, or similar successor public filing;
provided that any event described in the foregoing clauses
(i)-(iv) shall constitute a "Hostile Change in Control" if the
transaction causing such change in control shall not have been
approved by the affirmative vote of at least a majority of
Telxon's Board of Directors, which approving majority includes
a majority of the then Continuing Directors.
(B) "Continuing Directors" means and includes the
persons constituting Telxon's Board of Directors as of the
date of this Agreement as well as each person who becomes a
director of Telxon subsequent to the date of this Agreement
whose election, or nomination for election by Telxon's
stockholders, was approved by an affirmative vote of at least
a majority of the then Continuing Directors (either by a
specific vote or by approval of the proxy statement of Telxon
in which such person is named as a nominee for director or of
the inclusion of such person in such proxy statement as such a
nominee, in any such case without objection by any member of
such approving majority of the then Continuing Directors to
the nomination of such person or the naming of such person as
a director nominee), for so long as each such director shall
remain in office.
(C) "Person" means and includes any individual,
corporation, partnership, group, association or other
"person", as such term is used in Section 14(d) of the
Exchange Act, but excluding Telxon or any employee benefit
plan sponsored by Telxon.
(D) "Voting Securities" means the Telxon Common
Stock, par value $0.01 per share, and any and all other then
outstanding Telxon securities ordinarily having the right to
vote generally in the election of the Telxon directors.
and
(iii) the investor designee shall be named by Axiom so long as
it holds all of the Shares acquired by it pursuant to the Subscription
Agreement of even date, and otherwise by Investors holding no less than
seventy five percent (75%) of the Shares then held by the Investors (a
"Super Majority in Interest of the Investors"), so long as
any such Investor is then a Stockholder, and the observer shall be
named by a Super Majority in Interest of the Investors. The Investors
shall have the right to name the Investor Board designee so long as
they then own an aggregate of at least five (5%) of the then issued and
outstanding Shares, and the Investor Observer so long as they then own
an aggregate of at least ten percent (10%) of the then issued and
outstanding Shares. The person sitting from time to time as the Chief
Executive Officer of the Corporation shall automatically succeed as a
Director to his
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50
predecessor Chief Executive Officer (succeeding Chief
Executive Officers shall be deemed to be designees for the purposes
herein).
(c) METHOD. A designee may be named at any time, and from time to time,
by delivering written notice duly executed by the designator to the Secretary or
an Assistant Secretary of the Corporation for inclusion in the Corporation's
minute book. Upon receipt of a designation, the Secretary or an Assistant
Secretary of the Corporation shall circulate to the Stockholders an action by
written consent to effectuate the designation (and each Stockholder agrees to
vote its Shares to effectuate the designation).
(d) COMMITTEES. The Telxon designees and the Investor designee have the
right to sit on all committees established by the Board.
(e) VACANCIES. No vacancy of a Board seat designated and effectuated in
accordance with this Section 1 shall be filled other than in accordance with
this Section 1. At such time as a designator's shareholdings fall below the
percentage required to entitle it to designate Board members, that designator's
Board seat shall be deemed vacated and shall not be re-filled except by the vote
of the Stockholders in accordance with the Corporation's By-laws.
(f) BOARD EXPENSES. The Corporation agrees to reimburse each of the
directors elected to the Corporation's Board of Directors (and any Investor
Observer) for their reasonable out-of-pocket travel and lodging expenses
incurred attending Board of Directors' meetings and performing their respective
obligations and responsibilities to the Corporation.
2. GOVERNANCE.
(a) BY-LAWS. The Corporation's By-laws shall continue in full force and
effect from and after the effective date of this Agreement. To the extent that
the terms and conditions of this Agreement conflict with the Corporation's
By-laws, the terms and conditions of this Agreement shall control.
(b) BOARD MEETINGS. The Board of Directors shall conduct at least one
Board meeting during each fiscal quarter of the Corporation.
(c) STOCKHOLDER VOTES. Except as otherwise provided in this Agreement
or as required by applicable law, any vote, approval, authorization or other
action to be taken by the Stockholders shall be determined by a majority vote
based on the number of Shares then owned by them.
(d) ACTION BY WRITTEN CONSENT. Unless otherwise required by law, any
vote, approval, authorization or other action to be taken by the Stockholders or
Directors of the Corporation may be taken without a meeting, without prior
notice and without a vote, if a consent or consents in writing, setting forth
the action so taken, shall be signed by the number of Stockholders required to
pass such matter at a meeting of the Stockholders where all Stockholders
entitled to vote were present, or by all of the Directors, as the case may be.
Consents may be executed in several counterparts all of
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51
which when taken together shall constitute a single integrated consent. The
original (or copies if the originals are not available) of such consents shall
be entered in the Corporation's minute book.
(e) PUBLIC OFFERING AND SALE OF CORPORATION. During the period
commencing December 1, 1998, and ending September 30, 2000 (the "Stockholder
Approval Period"), or at any time after the occurrence of a Hostile Change in
Control, the Stockholders shall have sole authority to direct the Corporation to
take the following actions:
(i) to undertake any public offering of securities of the
Corporation; or
(ii) to sell the Corporation as an entirety, whether by
merger, consolidation, stock sale, asset sale, or otherwise.
During the Stockholder Approval Period, or at any time after the occurrence of a
Hostile Change in Control, in the event that the Investors then own ten percent
(10%) or more of the issued and outstanding Shares, and as a group they vote, by
majority vote of the Shares held by the Investors, in favor of either: (i) the
first firm commitment underwritten public offering of the Shares (or units which
include the Shares as an element) at a public offering price of not less than
Eight Dollars ($8.00) per Share, pursuant to a Registration Statement, on Form
S-1 or other appropriate form, filed by the Corporation under the Securities Act
of 1933, as amended, pursuant to which the Corporation receives proceeds, net of
underwriting discounts, commissions and other expenses of the offering, of not
less than Eight Million Dollars ($8,000,000) ("IPO"); or (ii) the sale of the
Corporation as an entirety, whether by merger, consolidation, stock sale, asset
sale, or otherwise ("Private Sale"), for the higher of a gross sale price of
Seventy Five Million Dollars ($75,000,000) or Eight Dollars ($8.00) per share,
then Telxon agrees to also vote its Shares in favor of, and to take all other
actions necessary to effectuate, such IPO or Private Sale, and agrees to cause
its Board designees to take all actions that are required by law to be taken by
a Delaware corporation's board of directors to effectuate any such transaction.
Without limiting the generality of Section 6(l), the parties hereby acknowledge
and confirm that the provisions of this Section 2(e) shall be binding upon
Telxon and any successor-in-interest thereto.
(f) NEWLY ISSUED SHARES. The Stockholders shall have sole authority to
determine whether the Corporation is permitted to issue any equity securities,
except in an IPO, or securities convertible into or exchangeable for equity
securities. Authority for the Corporation to issue such securities shall require
an affirmative vote of at least ninety two and one half percent (92.5%) of all
of the then issued and outstanding Shares.
(g) MERGERS, ASSET SALES ETC. Other than Private Sales approved
pursuant to Section 2(e), any merger, consolidation, reorganization,
reclassification or recapitalization involving the Corporation, or any sale,
lease, exchange or other disposition of all or substantially all of the assets,
or the dissolution or liquidation, of the Corporation, shall require the
affirmative vote of at least ninety two and one half percent (92.5%) of all of
the then issued and outstanding Shares.
(h) AGREEMENTS WITH TELXON CORPORATION. The Board of Directors shall
have sole authority, by the affirmative vote of Directors representing one
hundred percent (100%) of the total
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number of seats then constituting the full Board, to determine whether the
Corporation may authorize or approve any contract, agreement, arrangement or
transaction (or amendment, modification, assignment, termination or waiver
thereof) between Telxon Corporation and the Corporation, or to waive any failure
of performance by Telxon Corporation thereunder, other than any of the foregoing
which are done in the ordinary course of the Corporation's business.
3. TRANSFER OF SHARES.
(a) PROHIBITION ON TRANSFER. No Stockholder shall sell, exchange, give,
transfer, assign, pledge, encumber, hypothecate, or otherwise dispose of any
Shares, or any legal, beneficial or other interest in any Shares, whether now
owned or hereafter acquired, whether voluntarily, involuntarily, by operation of
law, or otherwise, including by way of intestacy, will, gift, bankruptcy,
execution, or seizure and sale by legal process (such events separately and
collectively are referred to as a "Transfer," and the transferee is referred to
as a "Transferee"), except as provided in this Agreement.
(b) CORPORATION RIGHT OF FIRST REFUSAL. In the event that a Stockholder
at any time desires to Transfer all or any portion of its Shares to any third
party (the "Offeror"), it must first offer to Transfer its Shares to the
Corporation. Such offer must be upon the same terms and conditions as it
proposes to Transfer such Shares to the Offeror, which terms and conditions
shall be set forth in a written notice of offer (the "Notice of Offer"). The
Notice of Offer shall state with particularity the terms upon which the Transfer
of the Shares is proposed to be made, including, without limitation, the
purchase price to be paid for the Shares, if any, the time and method of
payment, and if payment is to be made other than in cash, a description of the
non-cash consideration and the rate of interest, if any, to be paid on the
non-cash portion of said purchase price (collectively the "Offer Price and
Terms"). The Corporation shall have a period of fifteen (15) days after receipt
of the Notice of Offer within which to accept (as to all, but not less than all,
of the tendered Shares) or reject in writing the offer of Transfer. Should the
Corporation accept the offer, it shall, within ten (10) days of its acceptance,
acquire the tendered Shares at the Offer Price and Terms. Failure of the
Corporation to respond in writing to a Notice of Offer within the fifteen (15)
day period shall be deemed a rejection of said offer.
(c) STOCKHOLDER RIGHT OF FIRST REFUSAL. Should the subject Shares not
be acquired by the Corporation at the expiration of the period specified in
Section 3(b), the tendering Stockholder shall next offer to Transfer such Shares
to the Stockholders (excluding the tendering Stockholder), if any, pro-rata to
their Share interests, at the Offer Price and Terms, by providing the
Stockholders with a copy of the Notice of Offer. The Corporation shall provide
the tendering Stockholder with the then current Stockholder address list to
enable it to provide all required notices under this Section 3(c) and under
Section 3(d). The Stockholders shall have a period of fifteen (15) days after
receipt of the Notice of Offer within which to accept or reject in writing the
offer of Transfer. Should any Stockholder accept the offer, it shall, within ten
(10) days of its acceptance, acquire the tendered Shares at the Offer Price and
Terms. Failure of any Stockholder to respond in writing to a Notice of Offer
within such fifteen (15) day period shall be deemed a rejection of said offer.
In the event that Stockholder acceptances of the offer are, in the aggregate,
for fewer than all of the tendered Shares, then the tendering Stockholder shall
so notify the Stockholders who have elected to acquire tendered Shares, which
electing Stockholders shall have an additional seven (7) day period following
receipt
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of such notice to acquire the remaining Shares, pro rata to their Share
interests (as between themselves); provided that if the offer is not accepted by
Stockholders as to all of the tendered Shares, then none of the Stockholders
shall have any right to acquire any of the tendered Shares pursuant to this
Section 3(c).
(d) CO-SALE.
(i) No later than ten (10) days after the expiration of the
time periods specified in Section 3(c), the tendering Stockholder shall
notify the other Stockholders in writing whether the Corporation and
the Stockholders have failed to acquire all of the tendered Shares
pursuant to Sections 3(b) and (c) (the "Co-Sale Notice"). If all of the
tendered Shares have not been acquired pursuant to either Section 3(b)
or 3(c), then each Stockholder other than the tendering Stockholder
shall have the right to participate in the tendering Stockholder's sale
of Shares by selling a portion of its Shares on the terms set forth in
the Notice of Offer, in an amount equal to the product obtained by
multiplying (x) the aggregate number of Shares to be sold by the
tendering Stockholder by (y) the Ownership Percentage (defined herein)
of Shares owned by each Stockholder other than the tendering
Stockholder who elects to participate in the tendering Stockholder's
sale (each a "Participant," and collectively the "Participants"). The
Ownership Percentage for any Participant shall be the percentage figure
which expresses the ratio between (x) the number of Shares owned by
such Participant and (y) the aggregate of (A) the number of Shares
owned by all Participants and (B) the number of Shares owned by the
tendering Stockholder (excluding any Shares acquired pursuant to
Section 3(b) or 3(c)). Within five (5) days after its receipt of the
Co-Sale Notice, any Stockholder electing to participate in the
tendering Stockholder's Transfer shall notify the tendering Stockholder
in writing of the number of Shares held by it to be included in the
sale.
(ii) Each Participant shall enter into such agreements and
take such actions consistent with the Notice of Offer, and as otherwise
reasonably directed by the tendering Stockholder in order to effect the
subject Transfer. The proceeds of any Transfer under this Section 3(d)
shall be remitted directly to each Participant by the Offeror.
(iii) The provisions of this Section 3(d) shall not apply to
any Transfer permitted under Section 3(g).
(e) TRANSFER. Subject to Section 6(c), if all of the tendered Shares
are not acquired by either the Corporation and/or the Stockholders within the
time periods provided for in Sections 3(b) and (c), respectively, and provided
that the notice required under Section 3(c), if any, was provided within five
(5) days after the end of the time period provided for in Section 3(b), then the
tendering Stockholder and each Participant may Transfer its Shares to the
Offeror at Offer Price and Terms; provided, however, that such Transfer must be
completed within forty five (45) days from the expiration of all response
periods provided in Sections 3(b), (c) or (d), as applicable.
(f) ALTERATION OF TERMS. Each time the Offer Price and Terms are altered
in any way, including, but not limited to, changes in the identity of the
proposed Offeror or the consideration to be paid for the Shares to be
Transferred, or in the event that a Transfer is not completed within the
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54
time period provided for in Section 3(e), then the subject Shares shall be
re-offered to the Corporation and the Stockholders in accordance with Section
3(b) and (c), respectively, and a new Co-Sale Notice shall be given in
accordance with Section 3(d), as if a totally new transaction were proposed.
(g) PERMITTED TRANSFER.
(i) Subject to Section 6(c), a non-entity Stockholder is
permitted to Transfer his Shares during his life without first offering
his Shares to the Corporation or Stockholders in accordance with
Sections 3(b) and (c), respectively, if, but only if, the Transfer is to
Stockholder's spouse or lineal descendants, or any trust created for his
or their benefit, or to a corporation wholly owned by the Stockholder
and/or his spouse and lineal descendants. An estate, executor,
administrator or other personal representative of a deceased non-entity
Stockholder is permitted to hold and, subject to Section 6(c), Transfer
the deceased non-entity Stockholder's Shares to the deceased
Stockholder's devisees and heirs at law. Shares Transferred in
accordance with this Section 3(g) may not be further Transferred except
in accordance with the provisions of this Section 3.
(ii) Subject to Section 6(c), an entity Stockholder is
permitted to Transfer its Shares without first offering its Shares to
the Corporation or Stockholders in accordance with Section 3(b) and (c),
respectively, if, but only if: (i) the Transfer is to an entity of which
at least fifty-one percent (51%) is owned by the Stockholder or its
affiliates, or if at least fifty-one percent (51%) of the Stockholder is
owned by the Transferee or an affiliate of the Stockholder, and each
such Transferee may further Transfer such Shares to similarly controlled
or controlling affiliate entities; or (ii) the Transfer is a spin-off,
dividend or other distribution to the owners of the Stockholder, based
on such ownership interests.
(iii) In the event of a permitted Transfer under this Section
3(g), the Transferor shall promptly furnish written notice thereof to
the Corporation. Concurrently therewith, the Transferee shall execute a
written agreement to be bound by the terms and provisions of this
Agreement, as provided in this Section 3(g).
(h) CERTAIN PURCHASE MONEY LIENS. Notwithstanding anything in Section 3
to the contrary, neither the grant of nor the foreclosure or other realization
by the Company or by Telxon, as the case may be, on the security interest in
200,000 Shares granted by Roger J. Murphy to the Corporation to secure the
payment of $372,000, nor the security interest in 808,500 Shares granted by
Telantis Venture Partners IV, Inc. to Telxon to secure the payment of
$1,503,810, or the security interest in up to 120,635 Shares, and warrants to
purchase 12,064 Shares, granted by Telantis Venture Partners V, Inc. to Telxon
to secure the payment of up to $422,000 shall be a prohibited Transfer under
Section 3(a).
(i) SPECIAL UNDERWRITER REQUIREMENTS. Each Stockholder agrees, if
requested by the Corporation and an underwriter of Common (or other securities)
of the Corporation, not to sell or otherwise transfer or dispose of any Common
(or other securities) of the Corporation held by such Stockholder during the one
hundred eighty (180) day period following the effective date of a registration
statement of the Corporation filed under the Securities Act, provided that such
agreement
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only applies to the first such registration statement of the Corporation
including securities to be sold on its behalf to the public in an underwritten
offering. Such agreement shall be in writing in a form satisfactory to the
Corporation and such underwriter. The Corporation may impose stop-transfer
instructions with respect to the shares (or securities) subject to the foregoing
restriction until the end of said one hundred eighty (180) day period.
(j) ADDENDUM. Before the holdings of any Transferee shall be honored by
the Corporation or accepted upon its stock register and before any right, title
or interest whatsoever therein shall vest in such Transferee, and before the
Corporation shall issue or agree to issue any previously unissued (or reissue or
agree to reissue, from treasury or otherwise) Shares of the Corporation, it
shall require, as a condition to the issuance of a stock certificate or other
instrument evidencing such stock, that said Transferee or the person or entity
to whom any such previously unissued (or reissued) Shares are to be issued, as
the case may be, execute and deliver to the Secretary of the Corporation an
Addendum to this Agreement in substantially the following form with appropriate
insertions:
ADDENDUM
Pursuant to the STOCKHOLDERS AGREEMENT (the "Agreement") dated
___, 1998 by and among Aironet Wireless Communications, Inc., a
Delaware corporation (the "Corporation"), and its Stockholders,
the undersigned, now the holder of __________ of the
Corporation evidenced by certificate(s) numbered __________,
does hereby become a party to the Agreement entitled to the
rights, and subject to the obligations, as set forth therein,
to the extent the undersigned is record holder of shares of the
Corporation's capital stock with the same force and effect as
though it had executed said Agreement as an initial
signatory party thereto. The undersigned acknowledges that he
has read the Agreement and is familiar with and understands its
terms.
Dated this _____ day of __________, 199__.
-------------------------------
(signature)
Whether or not such Addendum is executed, each Transferee or new holder of
Shares shall in any event be bound by, and shall perform the obligations imposed
by, this Agreement with the same force and effect as if such Transferee or new
holder had signed this instrument.
(k) HOLDERS OF OTHER SECURITIES. On the date of this Agreement, options
and warrants to purchase Shares are held by the persons identified in SCHEDULE
3(k). The Corporation shall use its best efforts to obtain from each such person
an Addendum similar to that provided for in Section 3(j) which in substance
provides that any Shares issued upon the exercise of such options and warrants,
and the holder thereof, shall be bound by the terms and conditions hereof and
shall then, but not before, be entitled to the rights afforded to the
Stockholders hereunder. Before the Corporation shall
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grant or issue, or agree to grant or issue, any securities convertible into or
exercisable or exchangeable for, stock of the Corporation, the Corporation shall
require, as a condition thereto, that the grantee or recipient of such
securities execute an Addendum of the type described in this Section 3(k),
except that no such Addendum shall be required with respect to securities which
may not be converted, exercised or exchanged into or for stock of the
Corporation prior to an IPO.
(l) PURCHASE OF INVESTOR SHARES UPON CERTAIN CHANGES IN CONTROL. On or
within ten (10) days after the date ninety (90) days after the consummation of a
Change in Control
(A) which is not a Hostile Change in Control,
(B) which occurs prior to May 1, 2001, and
(C) which occurs at a time when Telxon then owns at least
twenty percent (20%) of the issued and outstanding Shares,
the Person surviving such Change in Control shall give written notice to each of
the Investors that the surviving Person will purchase all Shares which such
Investor then owns at a price of Ten and 50/100 Dollars ($10.50) per Share in
cash. Each Investor must accept or reject such offer in writing within twenty
(20) after its receipt of the surviving Person's notice. If not timely rejected,
the surviving Person and each Investor that does not timely reject the surviving
Person's offer shall consummate the purchase of each such Investor's Shares by
the surviving Person on or before the date ten (10) days after the earlier of
(i) the date that the surviving Person receives the Investor's acceptance or
(ii) the expiration of the Investor's twenty (20) day rejection period. The
transactions under this Section 3(l) shall not be subject to any of the other
provisions of this Section 3, but the surviving Person and such purchased Shares
shall remain subject to this Agreement. Without limiting the generality of
Section 6(l), Telxon shall take all necessary actions to ensure that such a
surviving Person is obligated to take the actions required of it under this
Section 3(l).
4. CONFLICTS OF INTEREST
(a) As long as Telxon owns twenty percent (20%) or more of the issued
and outstanding Shares: (i) the Corporation's Chief Executive Officer shall not
be permitted to serve Telxon as an officer or director, and may not own five
percent (5%) or more of Telxon's issued and outstanding capital stock; and (ii)
no officer of Telxon may serve as an officer of Aironet (the prohibition in this
clause (ii) shall not commence until July 1, 1998).
(b) As Telxon remains a stockholder of the Corporation, and as the
Corporation and Telxon may engage in the same or similar activities or lines of
business and may have an interest in the same areas of corporate opportunity,
and in recognition of: (i) the benefits to be derived by the Corporation through
its continued contractual, corporate and business relations with Telxon
(including service of officers and Directors of Telxon as Directors of the
Corporation); and (ii) the difficulties and uncertainties attendant to any
Director, who desires and endeavors fully to satisfy such Director's fiduciary
duties, in determining the full scope of such duties in any particular
situation, the provisions of this Section 4 are set forth to regulate, define
and guide the conduct of
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certain affairs of the Corporation as they may involve Telxon and its officers
and Directors, and the powers, rights, duties, obligations and liabilities of
the Corporation and its officers, Directors and stockholders in connection
therewith.
(c) Except as Telxon may otherwise agree in writing:
(i) Except as may otherwise be set forth in any agreements
between the Corporation and Telxon, Telxon shall not have a duty to
refrain from engaging, directly or indirectly, in the same or similar
business activities or lines of business as the Corporation presently
engages in and in the future may engage in; and
(ii) neither Telxon nor any officer or Director thereof shall
be liable to the Corporation or its stockholders for breach of any
fiduciary duty by reason of any such activities of Telxon or of such
person's direct or indirect participation therein.
In the event that Telxon acquires knowledge of a potential transaction or matter
that may be a corporate opportunity for both Telxon and the Corporation, Telxon
shall have no duty to communicate or offer such corporate opportunity to the
Corporation and shall not be liable to the Corporation or its stockholders for
breach of any fiduciary duty as a stockholder of the Corporation or controlling
person by reason of the fact that Telxon pursues or acquires such corporate
opportunity for itself, directs such corporate opportunity to another person or
entity, or does not communicate information regarding, or offer, such corporate
opportunity to the Corporation.
(d) In the event that a Director, officer or employee of the Corporation
who is also a Director, officer or employee of Telxon acquires knowledge of a
potential transaction or matter that may be a corporate opportunity for the
Corporation and Telxon (whether such potential transaction or matter is proposed
by a third-party or is conceived of by such Director, officer or employee of the
Corporation), such Director, officer or employee shall be entitled to offer such
corporate opportunity to the Corporation or Telxon as such Director, officer or
employee deems appropriate under the circumstances in his sole and absolute
discretion, and no such Director, officer or employee shall be liable to the
Corporation or its stockholders for breach of any fiduciary duty or duty of
loyalty or failure to act in the best interests of the Corporation or the
derivation of any improper personal benefit by reason of the fact that: (i) such
Director, officer or employee offered such corporate opportunity to Telxon
(rather than the Corporation) or did not communicate information regarding such
corporate opportunity to the Corporation; or (ii) Telxon pursues or acquires
such corporate opportunity for itself or directs such corporate opportunity to
another person or does not communicate information regarding such corporate
opportunity to the Corporation. All information learned by any director of the
Corporation in the course of his service as a director is confidential
information of the Corporation, and notwithstanding any provision in this
Agreement to the contrary, no director may utilize such confidential information
except for the benefit of the Corporation, and may not disclose such
confidential information to any person or entity other than for the benefit of
the Corporation in the course of the director's service on the Corporation's
Board, or as an officer or employee of the Corporation.
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(e) Subject to Section 2(g), no contract, agreement, arrangement or
transaction (or any amendment, modification or termination thereof) between the
Corporation and Telxon or any Related Entity (defined herein) or between the
Corporation and one or more of the Directors or officers of the Corporation,
Telxon or any Related Entity, shall be void or voidable solely for the reason
that Telxon or any Related Entity or any one or more of the officers or
Directors of the Corporation, Telxon or any Related Entity are parties thereto,
or solely because any such Directors or officers are present at or participate
in the meeting of the Board of Directors or committee thereof which authorizes
the contract, agreement, arrangement, transaction, amendment, modification or
termination or solely because his or their votes are counted for such purpose,
but any such contract, agreement, arrangement or transaction (or any amendment,
modification or termination thereof) shall be governed by the provisions of this
Agreement, the Certificate, the Corporation's By-laws, Delaware Law and other
applicable law. For purposes of this Section 4, the term "Related Entities"
means any Director of the Corporation, or any corporations, partnerships,
associations or other organizations in which one or more of its Directors have a
direct or indirect financial or non-financial interest.
(f) Subject to Section 2(g), Directors of the Corporation who are also
directors or officers of Telxon or any Related Entity may be counted in
determining the presence of a quorum at a meeting of the Board of Directors or
of a committee that authorizes or approves any such contract, agreement,
arrangement or transaction (or amendment, modification or termination thereof),
and may vote thereon. Outstanding Shares owned by Telxon and any Related
Entities may be counted in determining the presence of a quorum at a meeting of
stockholders that authorizes or approves any such contract, agreement,
arrangement or transaction (or amendment, modification or termination thereof),
and may vote thereon.
(g) Neither Telxon nor any officer or Director thereof or any Related
Entity shall be liable to the Corporation or its stockholders for breach of any
fiduciary duty or duty of loyalty or failure to act in the best interests of the
Corporation or the derivation of any improper personal benefit by reason of the
fact that Telxon or an officer or Director thereof or such Related Entity in
good faith takes any action or exercises any rights or gives or withholds any
consent in connection with any agreement or contract between Telxon or of such
Related Entity and the Corporation. No vote cast or other action taken by any
person who is an officer, Director or other representative of Telxon or such
Related Entity, which vote is cast or action is taken by such person in his
capacity as a Director of the Corporation, shall constitute an action of or the
exercise of a right by or a consent of Telxon or such Related Entity for the
purpose of any such agreement or contract.
(h) Any person or entity purchasing or otherwise acquiring any interest
in any shares of capital stock of the Corporation shall, by virtue of the legend
required by Section 5(a) to be borne on certificates evidencing Shares, be
deemed to have notice of, to understand the ramifications of, to have consented
to the provisions of, and, to the fullest extent permitted by Delaware Law, to
have waived his right to contest this Section 4.
(i) For purposes of this Section 4, any contract, agreement, arrangement
or transaction with any corporation, partnership, joint venture, association or
other entity in which the Corporation beneficially owns (directly or indirectly)
fifty percent (50%) or more of the outstanding voting stock,
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voting power or similar voting interests, or with any officer or Director
thereof, shall be deemed to be a contract, agreement, arrangement or transaction
with the Corporation.
(j) For purposes of this Section 4 only: (i) the term "Corporation"
shall mean the Corporation and all corporations, partnerships, joint ventures,
associations and other entities in which the Corporation beneficially owns
(directly or indirectly) fifty percent (50%) or more of the outstanding voting
stock, voting power or similar voting interests; and (ii) the term "Telxon"
shall mean Telxon and all corporations, partnerships, joint ventures,
associations and other entities (other than the Corporation, defined in
accordance with clause (i)) in which Telxon beneficially owns (directly or
indirectly) fifty percent (50%) or more of the outstanding voting stock, voting
power or similar voting interests.
(k) Notwithstanding anything in this Agreement to the contrary, the
foregoing provisions of this Section 4 shall expire on the date that Telxon
ceases to own beneficially Shares representing at least twenty percent (20%) of
the issued and outstanding Shares, and no person who is a Director or officer of
the Corporation is also a Director or officer of Telxon. The provisions of this
Section 4 shall automatically terminate upon the consummation of a Hostile
Change in Control, except for the provisions of Section 4(a), which shall
survive such event. The alteration, amendment, change or repeal of any provision
of this Section 4 or the adoption of any provision inconsistent with this
Section 4, shall require the express written consent of Telxon, and will not
eliminate or reduce the effect of this Section 4 in respect of any matter
occurring, or any cause of action, suit or claim that, but for this Section 4,
would accrue or arise prior to such alteration, amendment, repeal or adoption.
5. COVENANTS
(a) INSPECTIONS. Upon no less than five (5) days advance written notice,
the Corporation shall permit each Investor (or its designated representative) to
visit and inspect any of the properties of the Corporation, including its books
of account, and to discuss its affairs, finances and accounts with the
Corporation's officers and its independent public accountants. All such
inspections shall be conducted during the Corporation's business hours, and
shall not unreasonably interfere with the conduct of the Corporation's business.
(b) FINANCIAL REPORTING. The Corporation will furnish the following
reports to the Investors:
(i) As soon as practicable after the end of each fiscal year of
the Corporation, and in any event within ninety (90) days thereafter, a
consolidated balance sheet of the Corporation and its subsidiaries, if
any, as at the end of such fiscal year, and consolidated statements of
operations, accumulated earnings and cash flows of the Corporation and
its subsidiaries, if any, for such year, prepared in accordance with
generally accepted accounting principles consistently applied and
setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail, audited (without scope
limitations imposed by the Corporation) and certified by independent
public accountants of recognized national standing selected by the
Corporation.
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(ii) As soon as practicable after the end of the first, second
and third quarterly accounting periods in each fiscal year of the
Corporation, and in any event within forty-five (45) days thereafter, a
consolidated balance sheet of the Corporation and its subsidiaries, if
any, as of the end of each such quarterly period, and consolidated
statements of operations, accumulated earnings and cash flows of the
Corporation and its subsidiaries, if any, for such period and for the
current fiscal year to date, prepared in accordance with generally
accepted accounting principles (provided that such statements will not
include all of the information and notes required for complete financial
statements) consistently applied and setting forth in comparative form
the figures for the corresponding periods of the previous fiscal year,
subject to changes resulting from year-end audit adjustments.
(iii) As soon as practicable after the last day of each month,
and in any event by the twentieth day of each month, a consolidated
balance sheet of the Corporation and its subsidiaries, if any, as of the
end of each such month, and consolidated statements of operations,
accumulated earnings and cash flows of the Corporation and its
subsidiaries, if any, for such period, prepared in accordance with
generally accepted accounting principles (provided that such statements
will not include all of the information and notes required for complete
financial statements) consistently applied.
(c) PROMPT PAYMENT OF TAXES, ETC. The Corporation will promptly pay and
discharge, or cause to be paid and discharged, when due and payable, all lawful
taxes, assessments and governmental charges or levies imposed upon the income,
profits, property or business of the Corporation; provided, however, that any
such tax, assessment, charge or levy need not be paid if the validity thereof
shall at the time be contested in good faith by appropriate proceedings, and
provided, further, that unless otherwise approved by the Corporation's Board of
Directors, the Corporation will pay all such taxes, assessments, charges or
levies forthwith upon the commencement of proceedings to foreclose any lien
which may have attached as security therefor. Unless otherwise approved by the
Corporation's Board of Directors, the Corporation will promptly pay or cause to
be paid when due, or in conformance with customary trade terms, all other
obligations incident to its operations.
(d) MAINTENANCE OF PROPERTIES AND LEASES. The Corporation will keep its
properties in good repair, working order and condition, reasonable wear and tear
excepted, and from time to time make all needful and proper, or legally
required, repairs, renewals, replacements, additions and improvements thereto;
and the Corporation will at all times comply with each provision of all leases
to which it is a party or under which it occupies, or has possession of,
property if the breach of such provision might have a material adverse effect on
the condition, financial or otherwise, or operations of the Corporation.
(e) INSURANCE. The Corporation will keep its assets which are of an
insurable character insured by financially sound and reputable insurers against
loss or damage by fire, extended coverage and explosion in amounts sufficient to
prevent the Corporation from becoming a coinsurer and not in any event less than
eighty percent (80%) of the insurable value of the property insured. The
Corporation will maintain, with financially sound and reputable insurers,
insurance against other hazards and risks and liability to persons and property
to the extent and in the manner customary for companies in similar businesses
similarly situated. All such policies of insurance shall be occurrence
14
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policies with "tail coverage" so-called respecting all prior "claims made"
policies. The Corporation shall give immediate written notice to the Investors
and to insurers of loss or damage to the property and shall promptly file proof
of loss with insurers. The Corporation shall maintain, either itself or under
its Services Agreement with Telxon, directors and officers insurance in an
amount at least equal to that which it presently maintains.
(f) COMPLIANCE WITH REQUIREMENTS OF GOVERNMENTAL AUTHORITIES. The
Corporation shall duly observe and conform to all valid requirements of
governmental authorities relating to the conduct of its businesses or to its
property or assets.
(g) MAINTENANCE OF CORPORATE EXISTENCE, ETC. The Corporation shall
maintain in full force and effect its corporate existence, rights, government
approvals and franchises, and all licenses and other rights to use patents,
processes, licenses, trademarks, trade names or copyrights owned or possessed by
it, which are deemed by the Corporation's Board of Directors to be necessary to
the conduct of its business.
(h) PROPRIETARY INFORMATION AGREEMENT AND KEY EMPLOYEE AGREEMENT.
(i) The Corporation and each person hereafter employed by it
with access to confidential information will enter into a proprietary
information agreement as approved by the Corporation's Board of
Directors.
(ii) The Corporation will require its employees to execute
non-competition agreements as approved by the Corporation's Board of
Directors.
(iii) The Corporation will cause all technological developments,
inventions, discoveries or improvements made by employees of the
Corporation to be fully documented in engineering notebooks in
accordance with the best prevailing industrial professional standards
and, where possible and appropriate, cause all employees to file and
prosecute United States and foreign patent applications relating to and
protecting such developments.
6. MISCELLANEOUS
(a) In order to effectuate the terms and restrictions of this Agreement,
each certificate of stock evidencing Shares owned by the Stockholders or issued
by the Corporation shall bear the following legend:
OWNERSHIP, ENCUMBRANCE, PLEDGE, ASSIGNMENT, TRANSFER, OR OTHER
DISPOSITION OF THE SHARES EVIDENCED BY THIS CERTIFICATE, AND
ANY SHARES ISSUED IN LIEU THEREOF, ARE SUBJECT TO RESTRICTIONS
CONTAINED IN A STOCKHOLDERS AGREEMENT DATED AND EFFECTIVE AS OF
MARCH ___, 1998, BY AND AMONG THE CORPORATION AND ITS
STOCKHOLDERS A COPY OF WHICH IS ON FILE IN THE OFFICE OF THE
SECRETARY OF
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THE CORPORATION. A COPY OF THE STOCKHOLDERS AGREEMENT AND THE
CORPORATION'S BY-LAWS WILL BE MAILED BY THE CORPORATION TO ANY
STOCKHOLDER WITHOUT CHARGE WITHIN FIVE (5) DAYS AFTER WRITTEN
REQUEST THEREFOR.
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR
APPLICABLE STATE SECURITIES LAWS ("STATE LAWS") AND HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR
HYPOTHECATED EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION
STATEMENT REGISTERING THE SHARES UNDER THE ACT AND STATE LAWS OR
(ii) A TRANSACTION PERMITTED BY RULE 144 OR RULE 145 UNDER THE ACT
OR EQUIVALENT STATE LAWS FOR WHICH THE ISSUER HAS RECEIVED
REASONABLY SATISFACTORY EVIDENCE OF COMPLIANCE WITH THE PROVISIONS
OF SUCH APPLICABLE RULE OR (iii) AN OPINION OF COUNSEL SATISFACTORY
TO ISSUER THAT SUCH SHARES ARE EXEMPT FROM THE REGISTRATION
PROVISIONS OF THE ACT AND STATE LAWS OR (iv) A NO-ACTION LETTER FROM
THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION AND THE
APPLICABLE STATE DIVISIONS OF SECURITIES THAT REGISTRATION IS NOT
REQUIRED UNDER THE ACT OR STATE LAWS."
(b) If a Stockholder or its Transferee shall be in default under any of
the terms and conditions of this Agreement, or if any Shares are held in any
manner contrary to the terms and conditions of this Agreement, the Corporation
may avail itself of all remedies afforded at law or in equity, and in addition,
no dividends shall be paid upon the Shares with respect to which such default
exists, and the holder of such Shares shall not be entitled to vote.
(c) Notwithstanding any other provision in this Agreement to the
contrary, in order to protect the Corporation's trade secrets, no Shares may be
transferred to any person or entity, other than to or by Telxon, which directly
competes with the Corporation or, so long as Telxon shall own at least twenty
percent (20%) of the issued and outstanding Shares, Telxon, as such competitors
are determined by the Corporation or Telxon, respectively, in its reasonable
discretion. Any merger, consolidation, change of control or any other
reorganization of any Stockholder (other than Telxon) with or involving any such
competitor shall be deemed to be a transfer of Shares prohibited by the
preceding sentence. Failure of the Corporation or any Stockholders to acquire
Shares as to which notice has been given hereunder or for which a right to
acquire has become exercisable, and the Transfer of any Shares to any Transferee
or any subsequent Transferee, shall not be deemed to release said Shares from
any of the restrictions herein contained. All restrictions imposed in this
Agreement
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shall apply to any future Transfers of Shares, whether acquired through
voluntary acts or by operation of law. Any purported Transfer of Shares in
violation of this Agreement will not affect the beneficial ownership of such
Shares, nor shall such Transfer be recognized in the books and records of the
Corporation. The Stockholder, or its successor, making the purported Transfer
will retain the right to vote, the right to receive dividends and liquidation
proceeds upon, and any other rights under, its Shares. Neither the Corporation,
nor any Director or officer of the Corporation, nor any transfer agent shall be
liable for any refusal to Transfer any Shares or issue any new certificates when
it or he in good faith believes that such Transfer or issuance would be in
violation of this Agreement. Nothing in this Agreement does or shall be
interpreted as granting any Stockholder any preemptive rights.
(d) No entity Stockholder shall suffer or permit the transfer of any
ownership interest in such Stockholder, or any other transaction, the effect of
which would be to circumvent the Corporation's or any Stockholder's rights under
Sections 3(b), (c) and (d) or the prohibitions contained in Section 6(c).
(e) This Agreement shall terminate and the Shares shall cease to be
subject to this Agreement upon the (i) merger of the Corporation with or into
any other corporation in an arms length transaction, (ii) consolidation of the
Corporation with any other corporation in an arms length transaction, (iii) sale
of all of the issued and outstanding Shares of the Corporation to a single
purchaser, (iv) sale or other disposition or all or substantially all of the
Corporation's assets or (v) registration of the Corporation's then issued and
outstanding Shares pursuant to Section 12 of the Exchange Act or the Corporation
is obligated to file periodic reports with the Securities and Exchange
Commission pursuant Section 15(d) of the Exchange Act; provided, however, that
any claim for breach of this Agreement arising prior to any such termination
shall survive such termination.
(f) Section headings are not to be considered part of this Agreement;
they are included solely for convenience and are not intended to be full or
accurate descriptions of the contents hereof.
(g) All of the terms and words used in this Agreement, regardless of the
number and gender in which they are used, shall be deemed and construed to
include any other number, singular or plural, and any other gender, masculine,
feminine or neuter, as the context of this Agreement or any section or clause
herein may require, the same as if such words had been fully and properly
written in the number and gender.
(h) This Agreement constitutes the entire agreement between the parties
with respect to the within subject matter and supersedes all prior and
contemporaneous agreements, written or oral, or understandings with respect
thereto. In addition to Telxon's written consent as specifically provided for
in, and required to amend, Section 4, (i) any waiver by a party of any
provision, covenant or condition hereof intended for its benefit must be in
writing and executed by that party; provided, however, that any waiver by the
Stockholders holding ninety five percent (95%) or more of the then issued and
outstanding Shares shall be deemed to be a waiver by all Stockholders, provided
that such waiver does not treat any Stockholder differently from other
Stockholders, (ii) no delay on the part of any party in exercising any right,
power or privilege hereunder shall operate as
17
64
a waiver thereof, nor shall any waiver on the part of any party of any such
right, power or privilege preclude any further exercise thereof or the exercise
of any other such right, power or privilege, (iii) this Agreement may not be
amended unless the Corporation and the Stockholders holding ninety five percent
(95%) or more of the then issued and outstanding Shares have consented to the
amendment in writing, provided that any amendment that treats a Stockholder
differently than other Stockholders must be consented to by such Stockholder.
(i) All clauses of this Agreement are distinct and severable. If any
clause shall be held to be unenforceable or overly broad, a court of competent
jurisdiction is hereby authorized to modify such clause so as to render the
terms, provisions and restrictions hereof enforceable to the maximum extent
permitted by law.
(j) This Agreement may be executed in multiple counterparts, each of
which shall be deemed an original, but all of which, when taken together, shall
constitute one and the same instrument. Faxed signatures shall be deemed to be
originals for evidentiary purposes.
(k) Notices required hereunder shall be deemed to have been given when
mailed, by certified mail, addressed to the Stockholders as set forth in the
stock records of the Corporation, or as set forth in any notice of change of
address previously given in writing by the addressee to the addressor, and to
the Corporation at its principal offices, with a copy to Robert A Goodman, Esq.,
Goodman Weiss Miller LLP, 100 Erieview Plaza, 27th Floor, Cleveland, Ohio 44114,
or as set forth in any notice of change of address previously given in writing
by the addressee to the addressor.
(l) The terms, provisions and restrictions set forth in this Agreement
shall be binding upon the Stockholders of the Corporation and their respective
heirs, executors, administrators, personal representatives, successors and
assigns, and upon the Corporation and any successors-in-interest to the
Corporation.
(m) This Agreement shall be governed under, and in accordance with the
laws of the State of Delaware, without regards to conflict or choice of laws,
statutes, regulations, rules or principles. Any action relating to the execution
or performance of this Agreement may be brought in the courts, state or federal,
sitting in Cuyahoga or Summit County, Ohio, and each party hereto consents to
the jurisdiction and venue of such courts, and agrees not to contest venue on
the grounds of forum non conveniens or otherwise.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
INVESTORS, ENTITIES: AXIOM VENTURE PARTNERS II LIMITED
PARTNERSHIP
By: Axiom Venture Associates II Limited
Liability Company, its General Partner
By:
______________________________________
Its:_____________________________________
HAMBRECHT & QUIST
By:
______________________________________
Its:_____________________________________
TELANTIS VENTURE PARTNERS V, INC.
By:
______________________________________
Richard W. Dyer, Treasurer
W, A & H INVESTMENTS LLC
By:Wessels, Arnold & Henderson Group, L.L.C.,
its managing member
By:
______________________________________
Thomas J. Brigl, CFO/Managing Director
McDONALD & COMPANY SECURITIES, INC.
By:
______________________________________
Its:_____________________________________
CLARION CAPITAL CORPORATION
By:
______________________________________
Its:_____________________________________
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first set forth above.
COMPANY: AIRONET WIRELESS COMMUNICATIONS, INC.
By:
__________________________________
Roger J. Murphy, President
INVESTORS, INDIVIDUALS: __________________________________
FRANK B. CARR
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
COMPANY: AIRONET WIRELESS COMMUNICATIONS, INC.
By:
__________________________________
Roger J. Murphy, President
TELXON: TELXON CORPORATION
By:
__________________________________
Kenneth W. Haver, Senior Vice President
and Chief Financial Officer
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EXHIBIT F
FORM OF REGISTRATION RIGHTS AGREEMENT
Attached
69
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of
March 31, 1998 by and among Aironet Wireless Communications, Inc., a Delaware
corporation with its principal offices at 367 Ghent Road, Fairlawn, Ohio 44333
(the "Company"), and each of the undersigned (the "Security Holders").
WHEREAS, certain of the Security Holders (the "Investors") and the
Company have entered into a Subscription Agreement dated March 31, 1998 (the
"Subscription Agreement"), pursuant to which the Investors have acquired shares
of the Company's Common Stock, par value $.01 per share ("Common"), and warrants
to purchase shares of Common ("Warrants"); and
WHEREAS, the execution and delivery of this Agreement is a condition
precedent to the transactions contemplated by the Subscription Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
agreements made herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. CERTAIN DEFINITIONS. In addition to terms defined elsewhere in this
Agreement, the following terms shall have the following respective meanings:
"COMMISSION" shall mean the United States Securities and Exchange
Commission, or any other federal agency at the time administering the Securities
Act and the Exchange Act.
"CONTINUING DIRECTORS" shall mean and include the persons constituting
Telxon's Board of Directors as of the date of this Agreement as well as each
person who becomes a director of Telxon subsequent to the date of this Agreement
whose election, or nomination for election by Telxon's stockholders, was
approved by an affirmative vote of at least a majority of the then Continuing
Directors (either by a specific vote or by approval of the proxy statement of
Telxon in which such person is named as a nominee for director or of the
inclusion of such person in such proxy statement as such a nominee, in any such
case without objection by any member of such approving majority of the then
Continuing Directors to the nomination of such person or the naming of such
person as a director nominee), for so long as each such director shall remain in
office.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, or any similar successor federal statute, and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at the time.
"HOLDER" shall mean a record holder of Registrable Securities, and its
successors and assigns.
A "HOSTILE CHANGE IN CONTROL" is deemed to have occurred if the
transaction causing such Change in Control shall not have been approved by the
affirmative vote of at least a majority of Telxon's Board of Directors, which
approving majority includes a majority of the then Continuing Directors. A
"Change in Control" is deemed to have occurred upon (i) any Person is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of
70
fifteen percent (15%) or more of the combined voting power of Voting Securities
of Telxon Corporation ("Telxon"), or (ii) the holders of Telxon's securities
entitled to vote thereon approve, or there otherwise occurs or is commenced, a
sale, lease, exchange or other disposition of all or substantially all the
assets, or the dissolution or liquidation, of Telxon, or any merger,
consolidation or reorganization to which Telxon is a party and as the result of
which Telxon's stockholders prior to the transaction do not own at least fifty
percent (50%) of the voting power of the surviving entity in the election of
directors, or (iii) the Continuing Directors cease for any reason to constitute
at least a majority of the Telxon Board of Directors, or (iv) any other event
occurs which is of such a nature that would be required to be reported as a
change in control in response to Item 1(a) of the Current Report on Form 8-K, as
in effect on the date hereof pursuant to Section 13 or 15(d) of the Exchange
Act, or similar successor public filing.
"IPO" shall mean the first firm commitment underwritten public offering
of the Common (or units which include the Common as an element) at a public
offering price of not less than Eight Dollars ($8.00) per share, pursuant to a
Registration Statement, on Form S-1 or other appropriate form, filed by the
Company under the Securities Act, pursuant to which the Company receives
proceeds, net of underwriting discounts, commissions and other expenses of the
offering, of not less than Eight Million Dollars ($8,000,000).
"NASD" shall mean the National Association of Securities Dealers, Inc.
"OPTIONS" shall mean options which have been granted on or prior to the
date hereof under the Aironet Wireless Communications, Inc. 1996 Employee Stock
Option Plan.
"PERSON" shall mean and include any individual, corporation,
partnership, group, association or other "person", as such term is used in
Section 14(d) of the Exchange Act, but excluding Telxon or any employee benefit
plan sponsored by Telxon.
"REGISTER" shall mean to register securities for offer and sale under
the Securities Act.
"REGISTRABLE SECURITIES" shall mean: (i) shares of the Common owned of
record on the date of this Agreement, whether by the Investors or any other
Holder; (ii) shares of the Common issued upon the exercise of the Options, or
upon the exercise of the Warrants owned of record on the date of this Agreement,
whether by the Investors or any other Holder; and (iii) any other securities
issued with respect to any shares described in clauses (i) and (ii) by way of a
stock dividend, stock split, distribution, reclassification, combination,
exchange, recapitalization, or otherwise; provided, however, that Registrable
Securities shall not include any securities which have previously been
Registered or which have previously been sold under Rule 144, and with respect
to an IPO, Registrable Securities shall not include any securities which are not
of a class then being offered for sale by the Company in the IPO.
"REGISTRATION" shall mean the registration of securities under the
Securities Act.
"REGISTRATION STATEMENT" shall mean a registration statement under the
Securities Act.
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"RULE 144" means Rule 144 promulgated under the Securities Act and any
successor or complementary rules thereto.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, or
any similar successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"SPIN-OFF" shall mean any spin-off, dividend or other distribution of
Registrable Securities by Telxon to its stockholders.
"VOTING SECURITIES" shall mean the Common Stock, par value $0.01 per
share, of Telxon and any and all other then outstanding Telxon securities
ordinarily having the right to vote generally in the election of the Telxon
directors.
2. DEMAND REGISTRATION.
2.1 After the earlier of (i) the first anniversary of the date of this
Agreement, (ii) the consummation of an IPO or (iii) a Spin-Off or Hostile Change
in Control at any time, Holders of at least fifty percent (50%) of all
Registrable Securities then held by parties to this Agreement (or in the case of
a Spin-Off the percentage of Registrable Securities equal to the proportion
which the majority of the number shares of Common acquired pursuant to the
Subscription Agreement bears to all Registrable Securities at the time of the
Spin-Off) may request the Company to Register any or all of their Registrable
Securities (a "Demand Notice"). Demand Notices shall be made in writing and
shall specify the Holders making the Demand Notice, the number and type of
Registrable Securities that each requests to be Registered, whether the
Registrable Securities will be sold through an underwriter, and if so, the
underwriters name, address, telephone number and contact person. The Company
will prepare and file a Registration Statement in accordance with Section 4 for
the Registrable Securities to be Registered pursuant to a valid Demand Notice;
provided that the Company shall not be required to prepare or file a
Registration Statement under this Section 2 more than once in any twelve (12)
month period, more than twice after an IPO or more than three (3) times in
total. Registrations pursuant to Demand Notices are subject to the further
limitations set forth in Section 2.3.
2.2 Within ten (10) days from its receipt of a valid Demand Notice, the
Company shall deliver written notice to all Holders that, pursuant to a Demand
Notice, the Company will prepare and file a Registration Statement. Any Holder
who was not a party to the Demand Notice may, within ten (10) days from receipt
of the Company's notice, request the Company to include the Holder's Registrable
Securities in the Registration Statement. If the Holders that initiated a Demand
Notice specify therein that they intend to distribute their Registrable
Securities through an underwriter, then each Holder that requests inclusion in
the Registration Statement must participate in such underwriting, and become
party to any required agreements, including, but not limited to, customary
underwriting and indemnification agreements. The Company shall have the right to
approve any underwriter, which approval shall not be unreasonably withheld. In
the event that the underwriter limits the number of Registrable Securities to be
included in the offering to fewer than the number that has been requested for
Registration, then each Holder's Registrable Securities shall
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72
be included in the underwriting pro rata, based on the total number of
Registrable Securities held by the participating Holders.
2.3 Registrations under this Section 2 are subject to the following
limitations: (i) the Company need not prepare or file a Registration Statement
pursuant to a Demand Notice within one hundred eighty (180) days after the
effective date of any Registration Statement filed by the Company in which the
Holders party to the Demand Notice could have included their Registrable
Securities; (ii) the Company may delay the effectiveness of a Demand Notice for
a period of not more than six months after receipt of a Demand Notice in any
12-month period if the Company furnishes a certificate signed by its president
stating that in the good faith judgment of the Company's board of directors it
would be detrimental to the Company for the Registration Statement to be
effected at such time; and (iii) the Company need not prepare or file a
Registration Statement pursuant to a Demand Notice if it is then preparing a
Registration Statement in connection with an underwritten public offering of
Company securities, and the Company may delay the effectiveness of such Demand
Notice until one hundred eighty (180) days after the effective date of such
Registration Statement.
3. INCIDENTAL REGISTRATION. Each time the Company determines to proceed
to Register any of its securities (other than a Registration pursuant to a
Demand Notice or on Forms S-4, S-8 or other limited purpose form), it will give
written notice of its intention to do so to each Holder. Upon the written
request of any Holder given within twenty (20) days after receipt by the Holder
of the Company's notice, the Company will use reasonable efforts to cause all
the Registrable Securities of the requesting Holders to be included in the
Registration Statement. If the Registration is for an underwritten offering,
then each Holder that requests inclusion in the Registration Statement must
participate in the underwriting if required by the Company and may participate
in the underwriting if the Holder timely requests in writing, and shall in
either such event become a party to any required agreements, including, but not
limited to, customary indemnification agreements. In the event that the
underwriter limits the number of Registrable Securities of requesting Holders as
a group to fewer than the number that has been requested for Registration
pursuant to this Section 3, then each Holder's Registrable Securities included
in the underwriting shall be reduced pro rata, based on the total number of
Registrable Securities held by the participating Holders. Notwithstanding the
foregoing, nothing in this Agreement to the contrary shall prevent the Company
from, at any time, abandoning or delaying a Registration Statement under this
Section 3.
4. REGISTRATION ON FORM S-2 OR FORM S-3.
4.1 The Company shall use its best efforts to qualify for the
use of Form S-2 and Form S-3 or any comparable or successor form or
forms of the Commission; and to that end the Company shall register
(whether or not required by law to do so) the Registrable Securities
under the Exchange Act, in accordance with the provisions of the
Exchange Act following the effective date of the first registration of
any securities of the Company on Form S-1. After the Company has
qualified for the use of either Form S-2 or Form S-3, or both, in
addition to the rights contained in the Sections 2 and 3, the Holders
shall have the right to request registrations on Form S-2 or Form S-3
(by written request stating the number of shares of Registrable
Securities to be disposed of and the intended method of disposition of
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such shares by such Holder or Holders).
4.2 Registrations under this Section 4 are subject to the
following limitations: (i) the Company need not prepare or file a
Registration Statement within ninety (90) days after the effective date
of any Registration Statement filed by the Company in which the Holders
requesting Registration under this Section 4 could have included all of
their Registrable Securities; (ii) the Company may delay the
effectiveness of a request for Registration under this Section 4 for a
period of not more than ninety (90) days after receipt of a Holder's
request for Registration, in any twelve (12) month period if the Company
furnishes a certificate signed by its president stating that in the good
faith judgment of the Company's board of directors it would be
detrimental to the Company for the Registration Statement to be effected
at such time; and (iii) the Company need not prepare or file a
Registration Statement pursuant to this Section 4 if it is then
preparing a Registration Statement in connection with an underwritten
public offering of Company securities, and the Company may delay the
effectiveness of a request for Registration under this Section 4 until
one ninety (90) days after the effective date of such Registration
Statement, if so required by the underwriter for such offering.
4.3 Upon a request for Registration under this Section 4, the
Company shall give notice to each Holder of its receipt of such request.
Upon the written request of any Holder given within twenty (20) days
after receipt by the Holder of the Company's notice, the Company will
use reasonable efforts to cause all the Registrable Securities of the
requesting Holders to be included in the Registration Statement. Subject
to the foregoing, the Company will use its best efforts to effect
promptly the registration of all shares of Registrable Securities on
Form S-2 or Form S-3 to the extent requested by the Holder or Holders
thereof for purposes of disposition.
5. REGISTRATION PROCEDURES. If and whenever the Company is required by
this Agreement to Register any Registrable Securities, the Company will:
5.1 use reasonable efforts to prepare and file with the Commission a
Registration Statement with respect to such securities and to cause such
registration statement to become and remain effective until completion of the
proposed offering, but no longer than nine (9) months;
5.2 prepare and file with the Commission such amendments and supplements
to the Registration Statement and the prospectus forming a part thereof as may
be necessary to keep the Registration Statement effective until completion of
the proposed offering, but no longer than nine (9) months;
5.3 furnish to each selling Holder and the underwriters, if any, a
reasonable number of copies of the Registration Statement, the preliminary
prospectus, prospectus and such other documents as may reasonably be required in
order to facilitate the public sale or other disposition of the securities owned
by such selling Holder;
5.4 use reasonable efforts to register or qualify the securities covered
by the Registration
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Statement under all state securities laws as each selling Holder reasonably
requests; provided, however, that the Company shall not be required to qualify
or register the securities, or take any other action, if to do so would require
the Company to qualify as a foreign corporation in any in which it is not then
qualified, or subject it to taxation or general service of process in any state
in which it is not then taxed or subject to service of process;
5.5 within a reasonable time before each filing with the Commission of a
Registration Statement or prospectus, or amendments or supplements thereto,
furnish to counsel selected by the selling Holders copies of such documents,
which shall be subject to the reasonable approval of such counsel, which if not
promptly objected to shall be deemed approved;
5.6 notify each selling Holder, promptly after it shall receive notice
thereof, of the time when the Registration Statement has become effective or a
supplement to any prospectus forming a part of such registration statement has
been filed;
5.7 notify each selling Holder promptly of any request by the Commission
for the amending or supplementing of the Registration Statement or prospectus or
for additional information;
5.8 prepare and promptly file with the Commission, upon the request of a
selling Holder, any amendments or supplements to the Registration Statement or
prospectus which, in the opinion of counsel for the Company, is required under
the Securities Act to permit the distribution of the Registered securities by
the selling Holder(s);
5.9 prepare and promptly file with the Commission, and promptly notify
each selling Holder as to, such amendments and supplements to such Registration
Statement or prospectus as may be necessary to correct any statements or
omissions if, at the time when a prospectus relating to such securities is
required to be delivered under the Securities Act, any event shall have occurred
as a result of which the prospectus then in effect would include an untrue
statement of a material fact or fail to state any material fact necessary to
make the statements therein, in the light of the circumstances in which they
were made, not misleading;
5.10 advise each selling Holder, promptly after the Company receives
notice or obtains knowledge thereof, of the issuance of any stop order by the
Commission suspending the effectiveness of the Registration Statement or the
initiation or threat by the Commission of any proceeding for that purpose, and
the Company shall promptly use reasonable efforts to prevent the issuance of any
stop order, if such stop order should be issued, to obtain its withdrawal;
5.11 not file any amendment or supplement to such registration statement
or prospectus to which a selling Holder shall have reasonably objected in
writing on grounds that such amendment or supplement does not comply in all
material respects with the requirements of the Securities Act, provided that the
Company has been furnished with a copy of the objection reasonably in advance of
the intended filing, unless in the opinion of counsel for the Company the filing
of such amendment or supplement is reasonably necessary to protect the Company
from any liabilities under any applicable federal or state law; and
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75
5.12 furnish to each selling Holder a legal opinion of counsel for the
Company, dated the effective date of the Registration Statement, and a "comfort"
letter from the independent public accountants who have certified the Company's
financial statements included in the Registration Statement, if reasonably
required by the selling Holder to sell the Registered securities.
6. LISTING. In connection with an IPO, the Company will use reasonable
efforts to cause the Registered securities to be listed on a securities exchange
or quoted on the Nasdaq Stock Market quotation system; and for all other
Registrable Securities which have been Registered under Section 2 or under
Section 3, if the Company's securities of the same type as the Registrable
Securities are listed on a securities exchange or quoted on the Nasdaq Stock
Market quotation system, then the Company will use reasonable efforts to cause
any Registrable Securities Registered under Section 2 or under Section 3 to also
be listed.
7. EXPENSES. The Company shall bear all fees, costs and expenses of any
Registration Statement prepared hereunder, including but not limited to all
registration, filing and NASD fees, printing expenses, fees and disbursements of
counsel and accountants for the Company, and all legal fees of the Company and
of one (1) attorney hired to represent the Holders as a group, and disbursements
and other expenses of the Company incurred in connection with its complying with
state securities or blue sky laws of any jurisdictions in which the securities
to be offered are to be registered or qualified, except that underwriting
discounts, commissions, transfer taxes and legal fees for the selling Holders
(other than a single attorney as set forth in this Section 7) shall be borne by
such Holder(s).
8. INDEMNIFICATION.
8.1 The Company will defend, indemnify and hold harmless each selling
Holder, each of its officers, directors and partners, and each person, if any,
who controls such selling Holder, and each underwriter (if any) from and against
any and all loss, damage, liability, cost and expense to which a selling Holder
or any such controlling person may become subject under the Securities Act or
otherwise, to the extent arising out of or based on any untrue statement (or
alleged untrue statement) of any material fact contained in a Registration
Statement, any prospectus contained therein or any amendment or supplement
thereto, or arising out of or are based upon the omission (or alleged omission)
to state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading; provided, however, that the Company will not be liable in
any such case to the extent that any such loss, damage, liability, cost or
expense arises out of or is based upon an untrue statement or omission so made
in conformity with information furnished to the Company by such selling Holder,
such a controlling person, or such underwriter, and stated to be specifically
for use therein.
8.2 Each selling Holder will defend, indemnify and hold harmless the
Company and each other selling Holder and each person, if any, who controls the
Company or a selling Holder from and against any and all loss, damage,
liability, cost and expense to which the Company or such selling Holder or
controlling person may become subject under the Securities Act or otherwise, to
the extent arising out of or based on any untrue statement (or alleged untrue
statement) of any material fact contained in a Registration Statement, any
prospectus contained therein or any amendment or
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supplement thereto, or arise out of or are based upon the omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading, to the extent, but only to the extent, that any
such loss, damage, liability, cost or expense arises out of or is based upon an
untrue statement or omission made in reliance upon and in conformity with
written information furnished to the Company by the selling Holder. A Holder's
indemnification obligation under this Section 8.2 shall be limited to such
Holders proceeds from the sale of its Registrable Securities under the subject
Registration Statement.
8.3. NOTICE; DEFENSE OF CLAIMS. Promptly after receipt by an indemnified
party of notice of any claim, liability or expense to which the indemnification
obligations set forth in Sections 8.1 or 8.2 would apply, the indemnified party
shall give notice thereof in writing to the indemnifying party. Such notice
shall state the information then available regarding the amount and nature of
such claim, liability or expense. If within twenty (20) days after receiving
such notice the indemnifying party gives written notice to the indemnified party
stating that (a) it would be liable under the provisions hereof for indemnity in
the amount of such claim if such claim were successful and (b) that it disputes
and intends to defend against such claim, liability or expense at its own cost
and expense, then counsel for the defense shall be selected by the indemnifying
party (subject to the consent of the indemnified party, which consent shall not
be unreasonably withheld or delayed), and the indemnified party shall not be
required to make any payment with respect to such claim, liability or expense as
long as the indemnifying party is conducting a good faith and diligent defense
at its own expense. The indemnifying party shall have the right, with the
consent of the indemnified party, which consent shall not be unreasonably
withheld or delayed, to settle all indemnifiable matters related to claims by
third parties which are susceptible to being settled, provided its obligation to
indemnify the indemnifying party therefor will be fully satisfied. The
indemnifying party shall keep the indemnified party appraised of the status of
the claim, liability or expense and any resulting suit, proceeding or
enforcement action, shall furnish the indemnified party with all documents and
information that the indemnified party shall reasonably request and shall
consult with the indemnified party prior to acting on major matters, including
settlement discussions. The indemnified party shall make available to the
indemnifying party all information and assistance that the indemnifying party
may reasonably request and shall cooperate with the indemnifying party in any
defense undertaken by it pursuant to this Section 8. Notwithstanding anything
herein to the contrary, the indemnified party shall at all times have the right
to fully participate in such defense at its own expense directly or through
counsel; provided, however, if the named parties to the action or proceeding
include both the indemnifying party and the indemnified party and representation
of both parties by the same counsel would be inappropriate under applicable
standards of professional conduct, the expense of separate counsel for the
indemnified party shall be paid by the indemnifying party. If no such notice of
intent to dispute and defend is given by the indemnifying party, or if such
diligent good faith defense is not being or ceases to be conducted, the
indemnified party may, at the expense of the indemnifying party, undertake the
defense of (with counsel selected by the indemnified party), and shall have the
right to compromise or settle (exercising reasonable business judgment), such
claim, liability or expense.
9. COMPLIANCE WITH RULE 144. From the first date that the Company is
required to file any reports under Section 13 or 15(d) of the Exchange Act, and
until the Holders as a group shall
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77
own less than an aggregate of ten percent (10%) of any class or series of equity
securities of the Company, the Company shall comply with the public information
requirements which are conditions to the availability of Rule 144 for the sale
of Registrable Securities. Company shall cooperate with the Holders in supplying
such information as may be necessary for them to complete and file any
information reporting forms presently or hereafter required by the Commission as
a condition to the availability of Rule 144 with respect to the Holders and such
Registrable Securities.
10. AMENDMENTS; WAIVER. The provisions of this Agreement may be amended
and waived pursuant to a written agreement executed by the Company and Holders
holding ninety five percent (95%) or more of the then issued and outstanding
Registrable Securities, provided that any amendment or waiver that treats a
Holder differently than other Holders must be consented to by such Holders.
11. TRANSFERABILITY OF REGISTRATION RIGHTS. A transferee acquiring
Registrable Securities may succeed to the rights and obligations under this
Agreement appurtenant to the Registrable Securities if, but only if, such
transferee acquires a minimum of fifty thousand (50,000) shares of Registrable
Securities in a single transaction, is not a direct competitor of the Company or
of Telxon Corporation (if Telxon Corporation then owns twenty percent (20%) or
more of the issued and outstanding capital stock of the Company) and the
transferee becomes a signatory hereto. The original signatory and any immediate
or subsequent transferee which becomes a party hereto shall retain the rights
and obligations under this Agreement with respect to those Registrable
Securities which it remains record owner.
12. MISCELLANEOUS.
12.1 GOVERNING LAW; JURISDICTION. This Agreement shall be construed
under and governed by the laws of the State of Ohio, without regards to conflict
or choice of laws, statutes, regulations, rules or principles. Any action
relating to the execution or performance of this Agreement shall be brought in
the courts, state or federal, sitting in Cuyahoga or Summit County, Ohio, and
each party hereto consents to the jurisdiction and venue of such courts, and
agrees not to contest venue on the grounds of forum non conveniens or otherwise.
12.2 NOTICES. Any notice, request, demand or other communication
required or permitted hereunder shall be in writing and shall be deemed to have
been given upon receipt, or if delivered or sent by facsimile transmission, upon
confirmation of transmission, or if sent by overnight courier, the second day
after deposit, as follows:
TO THE HOLDERS: To the respective addresses set forth
in the stock records of the Company
with a copy to: A legal counsel designated by
a majority of the Holders
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78
TO THE COMPANY Aironet Wireless Communications, Inc.
at the address set forth at the
beginning of this Agreement.
Attn: President
Fax Number: 330-664-7986
with a copy to: Goodman Weiss Miller LLP
100 Erieview Plaza, 27th Floor
Cleveland, Ohio 44114
Attn: Robert A. Goodman/Jay R. Faeges
Fax Number: 216-363-5835
or to such other address of which any party may notify the other parties
provided in accordance with this Section 12.2.
12.3 PRIOR AGREEMENTS SUPERSEDED. This Agreement supersedes all prior
and contemporaneous understandings and agreements, written or oral, between or
among the parties relating to the subject matter hereof.
12.4 ASSIGNABILITY. Except as set forth in Section 11, this Agreement
may not be assigned, and no right or obligation herein may be assigned or
delegated, without the written consent of the Company, and absent such consent
any such assignment or delegation shall be void and of no effect. Subject to the
foregoing, this Agreement shall be binding upon and enforceable by, and shall
inure to the benefit of, the parties hereto and their respective permitted
successors and assigns. Nothing in this Agreement is intended to give any person
not named herein the benefit of any legal or equitable right, remedy or claim
under this Agreement, except as expressly provided herein.
12.5 CAPTIONS AND GENDER. The captions in this Agreement are for
convenience only and shall not affect the construction or interpretation of any
term or provision hereof. The use in this Agreement of the masculine, feminine
or neuter pronoun, shall include the others as the context may require.
12.6 EXECUTION IN COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute one and the same document. An executed faxed
counterpart of this Agreement shall be binding on the parties, and for
evidentiary purposes shall be deemed to be an original.
12.7 SEVERABILITY. In case any of the provisions contained in this
Agreement shall for any reason be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement, but this Agreement shall be construed as
if such invalid, illegal or unenforceable provision had been limited or modified
(consistent with its general intent) to the extent necessary to make it valid,
legal and enforceable, or if it shall not be possible to so limit or modify such
invalid, illegal or unenforceable provision or part of a provision, this
Agreement shall be construed as if such invalid, illegal or unenforceable
provision or part of a provision had never been contained in this Agreement, so
long as to do so
10
79
would not materially alter the rights or obligations of the parties taken as a
whole.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
11
80
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
INVESTORS, ENTITIES: AXIOM VENTURE PARTNERS II LIMITED
PARTNERSHIP
By: Axiom Venture Associates II Limited
Liability Company, its General Partner
By:______________________________________
Its:______________________________________
HAMBRECHT & QUIST
By:______________________________________
Its:______________________________________
TELANTIS VENTURE PARTNERS V, INC.
By:______________________________________
Richard W. Dyer, Treasurer
W, A & H INVESTMENTS LLC
By: Wessels, Arnold & Henderson Group, L.L.C.,
its managing member
By:_______________________________________
Thomas J. Brigl, CFO/Managing Director
McDONALD & COMPANY SECURITIES, INC.
By:______________________________________
Its:______________________________________
CLARION CAPITAL CORPORATION
By:______________________________________
Its:______________________________________
12
81
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first set forth above.
COMPANY: AIRONET WIRELESS COMMUNICATIONS, INC.
By:______________________________________
Roger J. Murphy, President
HOLDERS, INDIVIDUALS: __________________________________________
FRANK B. CARR
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82
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
COMPANY: AIRONET WIRELESS COMMUNICATIONS, INC.
By:______________________________________
Roger J. Murphy, President
TELXON: TELXON CORPORATION
By:______________________________________
Kenneth W. Haver, Senior Vice President and
Chief Financial Officer
14
83
EXHIBIT G
FORM OF LEGAL OPINION
Attached
84
GOODMAN WEISS MILLER LLP
100 ERIEVIEW PLAZA, 27TH FLOOR
CLEVELAND, OHIO 44114
TELEPHONE 216-696-3366
FAX 216-363-5835
March 31, 1998
Axiom Venture Partners II Limited Partnership
Telantis Venture Partners V, Inc.
W, A & H Investments LLC
Frank B. Carr
Clarion Capital Corporation
Ladies and Gentlemen:
We have acted as counsel to Aironet Wireless Communications, Inc.
("Aironet"), a Delaware corporation, in connection with the sale of shares of
Aironet Common Stock, $.01 par value ("Shares"), and warrants ("Warrants") to
purchase Shares ("Warrant Shares"), to the addressees (each an "Investor," and
collectively the "Investors") by Aironet pursuant to the Subscription Agreement
dated March 31, 1998 (the "Subscription Agreement"). We also represent, as its
general counsel, Telxon Corporation ("Telxon"), a Delaware corporation, which
contemporaneously with the closing of the Subscription Agreement entered into
the Services Agreement ("Services Agreement"), Tax Benefit and Indemnification
Agreement ("Tax Agreement"), the Cross Covenant Not to Sue ("Covenant"), Patent
Assignments from Telxon to Aironet, as well as Patent Assignments from Aironet
to Telxon (collectively, the "Patent Assignments"), and the License, Rights and
Supply Agreement ("Supply Agreement"). The Services Agreement, the Tax
Agreement, Covenant, Patent Assignments, and Supply Agreement, for purposes
hereof, are the "Intercompany Agreements." While this firm represents Aironet as
its general counsel, and represented Aironet in connection with the Subscription
Agreement and the sale of the Shares and Warrants to the Investors, in the
negotiation and preparation of the Intercompany Agreements, Aironet was
represented by other independent counsel, and this firm represented only Telxon.
This opinion is being furnished to you pursuant to Section 5.1(e) of the
Subscription Agreement. Capitalized terms used and not otherwise defined herein
shall have the meanings ascribed to such terms in the Investment Documents
(defined herein).
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of (i) the Subscription
Agreement; (ii) the Registration Rights Agreement; (iii) the Stockholders
Agreement; (iv) the Warrants; (v) the Certificate of Incorporation of Aironet,
as currently in effect (the "Aironet Certificate"); (vi) the Certificate of
Incorporation of Telxon, as currently in effect (the "Telxon Certificate");
(vii) the By-laws of Aironet, as currently in effect (the "Aironet By-laws");
(viii) the By-laws of Telxon, as currently in effect (the "Telxon By-laws"),
(ix) the Intercompany Agreements; and (x) certain resolutions of the Board of
Directors
85
Axiom Venture Partners II Limited Partnership
Telantis Venture Partners V, Inc.
W, A & H Investments LLC
Frank B. Carr
Clarion Capital Corporation
March 31, 1998
Page 2
of each of Aironet and Telxon relating to the Subscription Agreement, the
Stockholders Agreement, the Registration Rights Agreement, the Warrants, the
Intercompany Agreements and the consummation of the various transactions
contemplated therein. We have also examined originals or copies, certified or
otherwise identified to our satisfaction, of such records of Aironet and Telxon
and such agreements, certificates of public officials, certificates of officers
or other representatives of Aironet, Telxon and others, and such other
documents, certificates and records as we have deemed necessary or appropriate
as a basis for the opinions set forth herein. The Subscription Agreement, the
Stockholders Agreement, the Registration Rights Agreement, the Warrants, and
the Intercompany Agreements, are hereinafter collectively referred to as the
"Investment Documents."
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such latter documents. In making our
examination of documents executed by parties, we have assumed, except as may be
specifically stated with respect to Aironet and Telxon in certain of our
opinions set forth below, that such parties had the power, corporate or other,
to enter into and perform all obligations thereunder, and, except as to Aironet
and Telxon, we have also assumed the due authorization by all requisite action,
corporate or otherwise, and execution and delivery by such parties of such
documents and the validity and binding effect thereof. As to any facts material
to the opinions expressed herein which we did not independently establish or
verify, we have relied upon oral or written statements and representations of
officers and other representatives of Aironet, Telxon and others.
We have further assumed that each Investor has duly executed and
delivered each of the Investment Documents to which it is a party.
Our opinion is specifically limited to the matters to which we opine. In
rendering opinions set forth below, we express no opinion with respect to any of
the following:
(a) the Investor's title in the Shares, Warrants or Warrant
Shares.
(b) the application of, or the effect of, any failure to comply
with, federal or state antitrust and unfair competition laws and
regulations;
(c) the accuracy, completeness or fairness of any information
furnished to any Investor by Aironet, Telxon or any of their agents and
representatives; or
(d) the enforceability of the remedy of specific performance or
the submission
86
Axiom Venture Partners II Limited Partnership
Telantis Venture Partners V, Inc.
W, A & H Investments LLC
Frank B. Carr
Clarion Capital Corporation
March 31, 1998
Page 3
to jurisdiction relating to potential litigation.
Our opinions below are further qualified to the extent that they may be
subject to or affected by (i) applicable bankruptcy, insolvency, reorganization,
moratorium, usury, fraudulent conveyance or similar laws affecting the rights of
stockholders and creditors generally, (ii) statutory or decisional law
concerning recourse by creditors or stockholders to security in the absence of
notice or hearing, and (iii) duties and standards imposed on creditors or
stockholders, and parties to contracts, including, without limitation,
requirements of good faith, reasonableness and fair dealing. Furthermore, we
express no opinion as to the availability of any equitable or specific remedy,
or as to the successful assertion of any equitable defense, upon any breach of
any of the documents as to which we are opining herein or any of the agreements,
documents or obligations referred to therein, inasmuch as the availability of
such remedies or defenses may be subject to the discretion of a court. We
express no opinion as to the enforceability of any indemnity provision that
indemnifies any person or entity against damages arising from his (its) own
negligence or misconduct.
Members of our firm are admitted to the bar in the State of Ohio, and we
do not express any opinion as to the laws of any jurisdiction other than the
State of Ohio, the federal laws of the United States of America and the Delaware
General Corporation Law, all as in effect on the date hereof. Without limiting
the generality of the foregoing, any opinion expressed herein respecting the due
qualification or good standing of any corporation in any jurisdiction is based
solely on the certificates of state officials, copies of which have been
provided to each Investor, and telephonic confirmations thereof with such
officials.
Based upon and subject to the limitations, qualifications, exceptions
and assumptions set forth herein, we are of the opinion that:
1. Each of Aironet and Telxon is a corporation duly organized, validly
existing and in good standing under the laws of the state of Delaware and each
is in good standing as a foreign corporation under the laws of the state of
Ohio. Aironet has all requisite corporate power and authority to own its
properties, to carry on its business as now being conducted, to execute and
deliver the Subscription Agreement, the Stockholders Agreement, the Warrants,
the Registration Rights Agreement, and the Intercompany Agreements
(collectively, the "Aironet Documents"), to perform its obligations thereunder
and to consummate the transactions contemplated therein. Telxon has all
requisite corporate power and authority to own its properties, to carry on its
business as now being conducted, to execute and deliver the Intercompany
Agreements, to perform its obligations thereunder and to consummate the
transactions contemplated therein.
87
Axiom Venture Partners II Limited Partnership
Telantis Venture Partners V, Inc.
W, A & H Investments LLC
Frank B. Carr
Clarion Capital Corporation
March 31, 1998
Page 4
2. The execution and delivery by Aironet of the Aironet Documents and
the consummation of the transactions contemplated therein have been duly
authorized by all required corporate action of Aironet.
3. The execution and delivery by Telxon of the Intercompany Agreements
and the consummation of the transactions contemplated therein have been duly
authorized by all required corporate action of Telxon.
4. Each of the Aironet Documents has been duly executed and delivered by
Aironet and constitutes the valid and binding obligation of Aironet, enforceable
against it in accordance with its respective terms.
5. Each of the Intercompany Agreements has been duly executed and
delivered by Telxon and constitutes the valid and binding obligation of Telxon,
enforceable against it in accordance with its respective terms.
6. Aironet has the right and power to issue, sell, and deliver the
Purchased Shares and Warrants under the Subscription Agreement.
7. When issued by Aironet to the Investors as provided in the
Subscription Agreement, and when paid for by the Investors as provided therein,
the Purchased Shares and Warrants will be validly issued, fully paid and
non-assessable, and if and when the Warrants are exercised in accordance with
their terms, and Aironet issues the Warrant Shares thereupon, and such Warrant
Shares are paid for, the Warrant Shares will be duly issued, fully paid and
non-assessable.
8. The execution, delivery and performance by Aironet of its obligations
under the Aironet Documents, and the consummation of the transactions
contemplated thereby, will not result in any violation of the Aironet
Certificate or the Aironet By-laws, or any applicable statute, law, regulation,
order or decree of any court or governmental authority, or, to the best of our
knowledge, after due inquiry and except as set forth in the Company Disclosure
Schedule, result in a breach or termination of, constitute a default under, or
result in the creation of any lien, charge, encumbrance or restriction on any of
the Purchased Shares, the Warrants or the Warrant Shares under any agreements or
other instruments to which Aironet is a party or by which Aironet is bound.
9. The execution, delivery and performance by Telxon of its obligations
under the Intercompany Agreements, and the consummation of the transactions
contemplated thereby, will not result in any violation of the Telxon Certificate
or the Telxon By-laws, or any applicable statute, law, regulation, order or
decree of any court or governmental authority, or, to the best of our knowledge,
88
Axiom Venture Partners II Limited Partnership
Telantis Venture Partners V, Inc.
W, A & H Investments LLC
Frank B. Carr
Clarion Capital Corporation
March 31, 1998
Page 5
after due inquiry result in a breach or termination of, constitute a default
under, or result in the creation of any lien, charge, encumbrance or restriction
on any of the Purchased Shares, Warrants or the Warrant Shares under any
agreements or other instruments to which Telxon is a party or by which Telxon is
bound.
10. To the best of our knowledge, after due inquiry, except as set forth
in the Company Disclosure Schedule, there is no action, proceeding, suit or
investigation pending or threatened against Aironet or Telxon which may have a
material adverse effect on Aironet's ability to perform its obligations under
the Aironet Documents or Telxon's ability to perform its obligations under the
Intercompany Agreements.
11. To the best of our knowledge, after due inquiry, except as set forth
in the Company Disclosure Schedule, no consent or approval by any governmental
authority or by any other person is required for the execution and delivery (i)
by Aironet of the Aironet Documents or any other documents to be executed and
delivered by Aironet pursuant thereto, or in connection with the consummation of
the transactions contemplated thereby, or (ii) by Telxon of the Intercompany
Agreements or any other documents to be executed and delivered by Telxon
pursuant thereto, or in connection with the consummation of the transactions
contemplated thereby.
12. Assuming the accuracy of the representations and warranties of the
Investors set forth in Article III of the Subscription Agreement, the issuance,
sale and delivery of the Shares and Warrants, and any Warrant Shares issuable
upon exercise of the Warrants, are exempt from the registration requirements of
the Securities Act.
13. The Shares necessary for issuance on exercise of the Warrants have
been duly and validly reserved (and are in addition to any other shares reserved
for any other purpose).
14. The authorized capital stock of Aironet consists of 15,000,000
Shares, of which 8,355,000 Shares are issued and outstanding. Immediately after
the consummation of the Closing in accordance with the terms of the Subscription
Agreement, 9,402,619 Shares will be issued and outstanding, and Warrants to
purchase 204,762 Shares will be issued and outstanding. Further, options to
purchase an aggregate of 1,250,500 Shares have been granted pursuant to the
Aironet Wireless Communications, Inc. 1996 Stock Option Plan and options to
purchase an aggregate of 500,000 Shares will have been granted pursuant to the
Amended and Restated Aironet Wireless Communications, Inc. 1996 Stock Option
Plan. To our knowledge, other than as stated in this Section 14 or as disclosed
by Aironet in the Company Disclosure Schedule, there are no outstanding options,
warrants, subscriptions, rights, convertible securities or other agreements or
plans under
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Axiom Venture Partners II Limited Partnership
Telantis Venture Partners V, Inc.
W, A & H Investments LLC
Frank B. Carr
Clarion Capital Corporation
March 31, 1998
Page 6
which Aironet may become obligated to issue, sell or transfer shares of its
capital stock or other securities, other than pursuant to or as contemplated by
the Subscription Agreement.
When in this opinion we have used the expression "to the best of our
knowledge, after due inquiry" or words of similar import, we have not made any
independent investigation of the applicable facts but have relied solely on (i)
the actual, conscious knowledge of Robert A. Goodman, Ronald I. Weiss or Jay R.
Faeges, the attorneys in this firm who are actively working on the transactions
contemplated by the Investment Documents, (ii) representations, warranties and
covenants made in the aforesaid documents and (iii) other verbal or written
representations made by agents and representatives of Aironet and Telxon to the
aforenamed attorneys.
We bring to your attention the fact that our legal opinions are an
expression of professional judgment only and are not a guarantee of a result.
This opinion speaks as of the date hereof, and we do not undertake to advise you
of matters which arise and/or may come to our attention subsequent to the date
hereof which may affect any of the legal opinions expressed herein.
This opinion is furnished to you solely for your benefit in connection
with the consummation of the transactions contemplated by the Investment
Documents and is not to be relied upon by any other person or entity or to be
used, circulated, quoted, in whole or in part, or otherwise referred to for any
other purpose; nor may copies of this opinion be provided to any other person or
entity, other than as is required by law, without our prior express written
permission.
GOODMAN WEISS MILLER LLP
90
EXHIBIT H
FORM OF OFFICER'S CERTIFICATE
Attached
91
AIRONET WIRELESS COMMUNICATIONS, INC.
-------------------------------------
CLOSING CERTIFICATE
-------------------
Aironet Wireless Communications, Inc. ("Aironet") is a party to the
Subscription Agreement dated March 31, 1998, by and among Aironet and the
parties identified in EXHIBIT A attached hereto (the "Investors") (the
"Subscription Agreement"). Pursuant to Section 5.1(f) of the Subscription
Agreement, Roger J. Murphy, President and Chief Executive Officer of Aironet,
hereby certifies to each of the Investors that all conditions set forth in
Sections 4.1 and 4.2(e) of the Subscription Agreement have been satisfied.
IN WITNESS WHEREOF, the undersigned has executed this Closing
Certificate at Akron, Ohio, on March 31, 1998.
--------------------------------------
Roger J. Murphy, President and Chief
Executive Officer of Aironet Wireless
Communications, Inc.
92
TELXON CORPORATION
------------------
CLOSING CERTIFICATE
-------------------
Telxon Corporation ("Telxon") is a party to the Stockholders Agreement
and Registration Rights Agreement, each dated March 31, 1998, by and among
Aironet Wireless Communications, Inc. ("Aironet") and its stockholders, and
Telxon and Aironet have entered into a Services Agreement, Tax Benefit and
Indemnification Agreement, a Cross Covenant Not to Sue, Patent Assignments and a
License, Rights and Supply Agreement each dated as of March 31, 1998
(collectively the "Agreements"). In connection with Telxon's execution of the
Agreements, Telxon hereby represents and warrants to each of the parties
identified in EXHIBIT A attached hereto that:
1. Telxon is a corporation duly organized, validly existing and in good
standing under the laws of the state of Delaware and is in good standing as a
foreign corporation under the laws of the state of Ohio. Telxon has all
requisite corporate power and authority to own its properties, to carry on its
business as now being conducted, to execute and deliver the Agreements, to
perform its obligations thereunder and to consummate the transactions
contemplated therein.
2. The execution and delivery by Telxon of the Agreements and the
consummation of the transactions contemplated therein have been duly authorized
by all required corporate action of Telxon.
3. Each of the Agreements has been duly executed and delivered by Telxon
and constitutes the valid and binding obligation of Telxon, enforceable against
it in accordance with its respective terms; provided, however, that Telxon makes
no representation or warranty regarding the legal right or ability of a director
of Aironet to act as a director other than in accordance with the laws of the
state of Delaware.
4. The execution, delivery and performance by Telxon of its obligations
under the Agreements, and the consummation of the transactions contemplated
thereby, will not result in any violation of Telxon's Certificate of
Incorporation, as amended, or the Telxon By-laws, as amended, or any applicable
statute, law, regulation, order or decree of any court or governmental authority
(provided, however, that Telxon makes no representation or warranty regarding
the legal right or ability of a director of Aironet to act as a director other
than in accordance with the laws of the state of Delaware), and to the best of
our knowledge, after due inquiry, will not result in a breach or termination of,
constitute a default under, or result in the creation of any lien, charge,
encumbrance or restriction on (i) any shares of Aironet Common Stock, Warrants
or shares of Aironet Common Stock issued upon the exercise of any Warrants,
issued by Aironet pursuant to the Subscription Agreement dated as of March 31,
1998 by and among Aironet and the addressees of this certificate, or (ii) any
agreements or other instruments to which Telxon is a party or by which Telxon is
bound.
5. To the best of our knowledge, after due inquiry, except as disclosed
by Aironet in writing to the addressees of this certificate, there is no action,
proceeding, suit or investigation pending or threatened against Telxon which may
have a material adverse effect on Telxon's ability to perform its obligations
under the Agreements.
6. To the best of our knowledge, after due inquiry, except as disclosed
by Aironet in
93
writing to the addressees of this certificate, no consent or approval by any
governmental authority or by any other person is required for the execution and
delivery by Telxon of the Agreements or any other documents to be executed and
delivered by Telxon pursuant thereto, or in connection with the consummation of
the transactions contemplated thereby.
IN WITNESS WHEREOF, the undersigned has executed this Closing
Certificate at Akron, Ohio, as of March 31, 1998.
_______________________________________________
Kenneth W. Haver, Senior Vice President and
Chief Financial Officer of Telxon Corporation
94
AIRONET WIRELESS COMMUNICATIONS, INC.
-------------------------------------
TELXON CORPORATION
------------------
OFFICER'S CERTIFICATE
---------------------
Glenn S. Hansen, Secretary of Aironet Wireless Communications, Inc., a
Delaware corporation ("Aironet"), and Vice President, Legal Administration and
Assistant Secretary of Telxon Corporation, a Delaware corporation ("Telxon"),
hereby certifies to each party identified in EXHIBIT A attached hereto that:
1. Attached as EXHIBIT B hereto are true and correct copies of
resolutions duly adopted by Telxon's Board of Directors at its meeting held on
March 29, 1998, none of which have been modified or rescinded and all of which
are in full force and effect on the date of this Officer's Certificate.
2. Attached as EXHIBIT C hereto are true and correct copies of
Resolutions duly adopted by Aironet's Board of Directors by written consent
dated March 30, 1998, none of which have been modified or rescinded and all of
which are in full force and effect on the date of this Officer's Certificate.
3. The individuals listed below are duly elected and qualified officers
of Aironet holding the offices indicated, and appearing next to each person's
name is his genuine signature:
Office Name Specimen Signature
- ------ ---- ------------------
President and
Chief Executive Officer Roger J. Murphy -------------------------------
Treasurer Kenneth W. Haver -------------------------------
Assistant Secretary Jay R. Faeges -------------------------------
4. The individuals listed below are duly elected and qualified officers
of Telxon holding the offices indicated, and appearing next to each person's
name is his genuine signature:
Office Name Specimen Signature
- ------ ---- ------------------
Senior Vice President
Chief Financial Officer Kenneth W. Haver -------------------------------
Page 1 of 2
95
AIRONET WIRELESS COMMUNICATIONS, INC.
-------------------------------------
TELXON CORPORATION
------------------
OFFICER'S CERTIFICATE
---------------------
IN WITNESS WHEREOF, the undersigned has executed this Officer's Certificate at
Akron, Ohio, on March 31, 1998.
-----------------------------------------
Glenn S. Hansen, Vice President, Legal
Administration and Assistant Secretary
of Telxon Corporation and Secretary of
Aironet Wireless Communications, Inc.
Page 2 of 2
96
AIRONET WIRELESS COMMUNICATIONS, INC.
SUBSCRIPTION AGREEMENT COMPANY DISCLOSURE SCHEDULE
The following is the Company Disclosure Schedule called for in Article
II of the Subscription Agreement dated as of March 31, 1998, by and among
Aironet Wireless Communications, Inc. (the "Company") and various investors (the
"Agreement"). Any initially capitalized word which is not defined where first
used shall have the meaning as defined in the Agreement. Sections numbers used
herein refer to Sections in the Agreement.
2.4 The Company's corporate record book as provided to Investors' special
counsel has been updated with the Actions by Written Consent required
under Section 5.1.
2.9 The Company's Capitalization Table is attached to this Disclosure
Schedule.
2.10 The Company's Capitalization Table is attached to this Disclosure
Schedule.
Hambrecht & Quist, McDonald & Company Securities, Inc. and Telantis
Venture Partners V, Inc. each have a right to purchase shares of Common
under this Agreement (see Exhibit A to the Agreement).
2.12 and 2.13
The Stockholder Agreements between the Company and (i) D. Michael
Grimes, (ii) Roger J. Murphy and (iii) Thomas Snow restrict the transfer
of such stockholders' shares and provide that such stockholders may
become a party to agreements like the Stockholders Agreement and the
Registration Rights Agreement. The Stock Purchase Agreement among
Telxon, the Company and Telantis Venture Partners IV, Inc. ("TVP IV")
provides TVP IV with "registration rights" and provides that TVP IV may
become a party to agreements like the Stockholders Agreement and the
Registration Rights Agreement. The secured promissory note made by Roger
J. Murphy to the order of the Company and the secured promissory notes
made by TVP IV and by Telantis Venture Partners V, Inc. to the order of
Telxon each restricts the transferability of the shares secured thereby.
2.14 The Company directly or indirectly owns 100% of the issued and
outstanding stock of Aironet Canada Limited, Aironet Canada, Inc. and
Aironet S.A. (legal title to one share of Aironet SA is owned by the
Company's Chief Executive Officer to satisfy Belgium law).
2.18 The landlord for the Company's headquarters office facility leased at
Ghent Road, Fairlawn, Ohio, has notified the Company that it has failed
to pay the electrical utilities fee provided for under the lease. The
accumulated arrearage is approximately $33,000.
97
AIRONET WIRELESS COMMUNICATIONS, INC.
SUBSCRIPTION AGREEMENT COMPANY DISCLOSURE SCHEDULE
2.19(d)
The outstanding balance of the working capital advances made by Telxon
to the Company may fluctuate from day to day.
2.22 From time to time the Company enters into equipment leases and grants
purchase money security interests in the ordinary course of its
business, the amounts of which are not material to the Company or its
financial position.
See also the disclosure in Section 2.23.
2.23. On or about January 6, 1995, Aironet filed Applications, Serial Nos.
630,655 and 630,657, with the United States Patent and Trade Office for
registration of the trademarks (collectively, the "Marks") titled
"Hurricane" and "Aironet and Design," respectively, based on its bona
fide intent to use the Marks in interstate commerce. The Marks were
published for opposition, and thereafter, America On Line, Inc. ("AOL")
obtained extensions of time in which to file an opposition to
registration of these Marks.
AOL has raised its concern that the Marks may cause confusion with an
AOL mark. The Company and AOL, through their respective counsel, engaged
in discussions concerning resolution of this matter; however, these
discussions did not result in a resolution.
On about April 29, 1996, AOL filed a Notice of Opposition (the
"Opposition") to Aironet's "Aironet and Design" mark in the United
States Department of Commerce, Patent and Trademark Office-Trademark
Trial and Appeal Board (the "TTAB"); however, no opposition to the
"Hurricane" mark was filed by AOL, and it has now been registered. On
about July 11, 1996, Aironet filed its Answer to the Opposition. The
TTAB calendar for the case has been extended numerous times, and
discovery in this case has yet to be completed.
AOL has not alleged any trademark infringement by Aironet and, to date,
there is no outstanding claim for damages, and no suit for trademark
infringement has been threatened or filed against Aironet.
The Company believes that the Opposition is without merit and will
vigorously contest it, although there can be no assurance that Aironet
will be successful. Based on its knowledge of the foregoing matter and
given the present stage of such matter, the Company does not believe
that the potential loss, if any, which might result to it if the
ultimate outcome in such matter was unfavorable is likely to have a
material adverse affect on it or its financial position.
2 of 4
98
AIRONET WIRELESS COMMUNICATIONS, INC.
SUBSCRIPTION AGREEMENT COMPANY DISCLOSURE SCHEDULE
On April 3, 1998, Plaintiff James Edward Horton filed an action against
Aironet and others in the case styled JAMES EDWARD HORTON V. TELXON
CORPORATION, ET AL., Court of Common Pleas, Summit County, Ohio, Case No
CV 98 04 1356. Horton alleges that Aironet improperly terminated a
consulting contract that he had with Aironet. Horton alleges that he
"suffered contractual and extra-contractual damages." Horton seeks
unspecified compensatory damages, damages for "loss of reputation,
humiliation, embarrassment, emotional pain and suffering" in the amount
of $500,000, punitive damages in the amount of $1,000,000 and reasonable
attorneys fees against Aironet and the other defendants. Aironet and the
other defendants believe that there is no merit to the litigation and
will vigorously defend this suit. Based on its knowledge of the
foregoing matter and given the present stage of such matter, Aironet
does not believe that the potential loss, if any, which might result to
it if the ultimate outcome in such matter was unfavorable is likely to
have a material adverse affect on it or its financial position.
2.24 The Company will pay James H. Furneaux $125,000 and grant Mr. Furneaux
warrants to purchase 100,000 shares of the Company's common stock at
$3.50 per share as payment for, and in settlement of, all promises to
compensate Mr. Furneaux for services that have been rendered by him to
the Company in connection with this and other transactions.
2.25 In connection with the promulgation of the IEEE 802.11 standard, each
member of the Standards Committee represented to the Committee that, to
the extent compliance with the 802.11 standard requires a license of any
patents owned by such member, it would license the patents on a fair and
equitable basis. The Company is currently negotiating such a cross
license with Lucent Technologies (the "Cross License"), pursuant to
which the Company would license certain patents to Lucent, and Lucent
would license certain patents to the Company, relating to compliance
with the 802.11 standard. In addition, the Company currently anticipates
seeking similar licenses from Symbol Technologies and UNOVA
(Intermec/Norand). The Company has no reason to believe that it will not
obtain the Cross License, or other similar licenses, on fair and
equitable terms; however, the Company's failure to obtain such licenses
could have a material adverse affect on the Company and its business and
financial position.
See also the disclosure in Section 2.23.
2.30 The proceeds of the offering will be used as follows(1):
Working capital $6,097,082
(Day to day operating expenses)
(Equipment and facilities)
(Recruitment and employee related expenses)
(Research and development)
3 of 4
99
AIRONET WIRELESS COMMUNICATIONS, INC.
SUBSCRIPTION AGREEMENT COMPANY DISCLOSURE SCHEDULE
(Trade payables other than to Telxon)
Estimated legal fees related to inter-company agreements $50,000 (Paul Weiss Rifkind)
Estimated Offering Costs
legal, accounting, printing and other $54,863 (Shipman & Goodwin)
$35,000 (Coopers & Lybrand)
$82,500(Goodman Weiss Miller)
Financial Consultant $125,000 (Furneaux)
- ---------------
(1) This is only an estimate, and this assumes that the offering is fully
funded at $6,444,445. The actual use of proceeds may vary based on (i)
the actual amount of the gross proceeds, (ii) the future needs of the
Company, and (iii) the actual costs of the offering.
2.32 Depleted and obsolete property has been reserved for in the Most Recent
Financial Statement.
4 of 4
100
SCHEDULE 2.9
CAPITALIZATION TABLE
101
AIRONET WIRELESS COMMUNICATIONS, INC.
CAPITALIZATION TABLE
Authorized Shares 3/31/98 15,000,000
Shares Outstanding Pre-Investment
- ---------------------------------
Telxon Corporation 7,276,500
Telantis IV 808,500
Roger J. Murphy 200,000
Michael D. Grimes 60,000
Tom Snow 10,000
---------
Sub Total 8,355,000
Shares Outstanding Post-Investment(1)
- ----------------------------------
Telxon Corporation 7,276,500
Telantis IV 808,500
Roger J. Murphy 200,000
Michael D. Grimes 60,000
Tom Snow 10,000
Axiom Venture Partners II Limited Partnership 714,285
W, A & H Investments LLC 142,857
Telantis V 104,762
Frank B. Carr 28,571
Clarion Capital Corporation 57,143
---------
Sub Total 9,402,618
Options
- -------
1996 Stock Option Plan (Grants Outstanding)(2) 980,500
Amended & Restated 1996 Stock Option Plan (Grants Outstanding)(3) 500,000
---------
Sub Total 1,480,500
Warrants(4)
- --------
Axiom Venture Partners II Limited Partnership 214,285
W, A & H Investments LLC 42,857
Frank B. Carr 8,571
Clarion Capital Corporation 17,143
Telantis V 31,429
James Furneaux 100,000
---------
Sub Total 414,255
(1) - H&Q and McDonald & Co. Securities will have the right to purchase 571,429
shares and 142,857 shares respectively, by April 30,1998 (to the extent
these shares are not purchased in full, Aironet may offer these shares to
the other listed investors) Telantis Venture Partners V to purchase an
additional 63,492 shares if H&Q funds and 15,873 shares if McDonald & Co.
Securities funds (or proportionate amounts of any unpurchased shares
offered to other listed investors)
(2) - See Attached List
(3) - See Attached List
(4) - H&Q to be issued 171,429 warrants with the purchase in 1 above
McDonald & Co. Securities to be issued 42,857 warrants with the purchase in 1
above Upon purchasing its proportionate allocation of shares, Telantis Venture
Partners V to be issued 19,048 warrants if H&Q funds and 4,762 warrants if
McDonald & Co. Securities funds or in proportion to purchases by other listed
investors of shares
Page 1
102
AIRONET WIRELESS COMMUNICATIONS, INC.
OPTIONS OUTSTANDING
AS OF 4/3/98
Options Options
Optionee Granted Outstanding
- ----------------------------------------------------------------
Sloan, Don I 100,000 100,000 7.4%
Belanger, Phil H 100,000 100,000 7.4%
Murphy Jr., Roger J. 300,000 100,000(a) 7.4%
Ikeman, Harvey A 75,000 75,000 5.6%
Meyer, Steve 65,000 65,000 4.8%
Loadman, Dave 60,000 60,000 4.5%
Grimes, Michael D. 120,000 60,000(b) 4.5%
Weinreb, Pedro 40,000 40,000 3.0%
Furneaux, Jim 30,000 30,000 2.2%
Anderson, Fred 30,000 30,000 2.2%
Reddy, Dr. Raj 30,000 30,000 2.2%
Petako, David 25,000 25,000 1.9%
Friedman, James 25,000 25,000 1.9%
Brodnick, Bill J. 25,000 25,000 1.9%
Wall, Dan 20,000 20,000 1.5%
Alexander, Bruce 15,000 15,000 1.1%
Norman, Stuart 15,000 15,000 1.1%
Sojka, Marv 15,000 15,000 1.1%
Tyre, Mark 15,000 15,000 1.1%
Adams, Chris 15,000 15,000 1.1%
Frankel, Jesse 15,000 15,000 1.1%
Johnson, Gary 10,000 10,000 0.7%
Smith, Doug 10,000 10,000 0.7%
Trompower, Michael 7,500 7,500 0.6%
Smith, Jane 7,500 7,500 0.6%
Saliga, Steve 5,000 5,000 0.4%
Kiebau, Joe 5,000 5,000 0.4%
Porter, Jeff 5,000 5,000 0.4%
Griswold, Victor 5,000 5,000 0.4%
Stratigakis, John 5,000 5,000 0.4%
Amos, Jim 5,000 5,000 0.4%
Halasz, Dave 5,000 5,000 0.4%
Martin, Randy 5,000 5,000 0.4%
Lahey, Jim 5,000 5,000 0.4%
Napiorkowski, Vic 4,000 4,000 0.3%
Ciotti, Frank 4,000 4,000 0.3%
Batcher, Ken 2,500 2,500 0.2%
Case, David 2,500 2,500 0.2%
Cloud, Steve 2,500 2,500 0.2%
Casto, Brian 2,500 2,500 0.2%
Nassar, Ned 2,500 2,500 0.2%
Nahra, Jim 2,500 2,500 0.2%
Whelan, Bill 2,500 2,500 0.2%
Snow, Tom 15,000 0(c) 0.0%
1,255,500 980,500 72.8%
Total Available for grant 366,500 27.2%
------- ------
Total Options Outstanding 1,347,000 100.0%
========= =====
Total Options Exercised 270,000
---------
Total beginning available shares 1,617,000
=========
(a) 200,000 exercised and shares issued
(b) 60,000 exercised and shares issued
(c) 10,000 exercised and shares issued
103
AIRONET WIRELESS COMMUNICATIONS, INC.
NEW OPTION GRANTS
AS OF 3/31/98
New
Optionholders: Grant
1 Taylor Jr., John 15,000
2 Rebo, Rick 15,000
3 Smedley, Michael 15,000
4 O'Hara, Richard 12,500
5 Whelan, Bill 12,500
6 Lahey, Jim 12,500
7 Meyer, Steve 10,000
8 DeLamatter, Donna 5,000
9 Isham, Jane 5,000
10 Greg Canda 5,000
11 Smith, Jane 5,000
12 Stager, Paul 5,000
13 Cisar, Jim 5,000
14 Hunter, Gary 5,000
15 Fishman, Ronald 5,000
16 Tyre, Mark 5,000
17 Friedman, James 5,000
18 Janke, Chris 3,500
19 Magilavy, Susan 3,500
20 Courtney, Michael 2,500
21 Sexton, Daniel 2,500
22 Dollard, Michael 2,500
23 Peroni, Vic 2,500
24 Staudt, Joseph 2,500
25 Batcher, Ken 2,500
26 Nahra, Jim 2,500
27 Casto, Brian 2,500
28 Niehaus, Fred 2,500
29 Ross, Larry 2,500
30 Dedonder, Johann 2,500
31 Cloud, Steve 2,500
32 Tomasheski, Mark 2,500
33 Halasz, Dave 2,500
34 Saliga, Steve 2,500
35 Trompower, Michael 2,500
36 Nyitray, John 2,000
37 Nassar, Ned 1,500
38 Mackey, Candryth 1,000
39 Kopper, Dennis 1,000
40 Wagner, Susan 1,000
41 Borah,Jeff 1,000
42 Fahrni, Mark 1,000
43 Lutman, Thomas 1,000
44 Weber, Ralph 1,000 Grant to Telxon Employees to be named
Total 200,000 300,000
03/26/98 HIGHLY CONFIDENTIAL 1