As
Filed
with the Securities and Exchange Commission on January 23, 2007
Registration
No. 333-[ ]
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
S-3
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
AIRSPAN
NETWORKS, INC.
(Exact
name of registrant as specified in its charter)
|
Washington
|
75-2743995
|
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
777
Yamato Road
Suite
310
Boca
Raton, FL 33431
(561)
893-8670
(Address,
including zip code, and telephone number, including area code, of registrant’s
principal executive offices)
Eric
Stonestrom
Chief
Executive Officer
777
Yamato Road
Suite
310
Boca
Raton, FL 33431
(561)
893-8670
(Name,
address, including zip code, and telephone number, including area code, of
agents for service)
Copy
to:
David
E. Wells, Esq.
Hunton
& Williams LLP
1111
Brickell Avenue, Suite 2500
Miami,
FL 33131
(305)
810-2500
Approximate
date of commencement of proposed sale to the public:
From
time to time after this Registration Statement becomes effective.
If
the
only securities being registered on this Form are being offered pursuant
to
dividend or interest reinvestment plans, please check the following
box. o
If
any of
the securities being registered on this Form are to be offered on a delayed
or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, other
than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. x
If
this
Form is filed to register additional securities for an offering pursuant
to Rule
462(b) under the Securities Act, please check the following box and list
the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. o
If
this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the
same
offering. o
If
this
Form is a registration statement pursuant to General Instruction I.D. or
a
post-effective amendment thereto that shall become effective upon filing
with
the Commission pursuant to Rule 462(e) under the Securities Act, check the
following box. o
If
this
Form is a post-effective amendment to a registration statement filed pursuant
to
General Instruction I.D. filed to register additional securities or additional
classes of securities pursuant to Rule 413(b) under the Securities Act, check
the following box. o
CALCULATION
OF REGISTRATION FEE
|
Title
of Each Class of
Securities
to Be Registered
|
Amount
to
be
Registered (1)
|
Proposed
Maximum
Offering
Price
Per
Share (2)
|
Proposed
Maximum
Aggregate
Offering
Price (2)
|
Amount
of Registration Fee (2)
|
|||||||||
|
Common
Stock, par value $.0003
per
share
|
20,069,000
|
$
|
4.295
|
$
|
86,196,355
|
$
|
9,223.01
|
||||||
| (1) |
Consists
of (a) 20,069,000 shares issuable upon conversion of Series B convertible
preferred stock, par value $.0001 per share, and (b) such indeterminate
number of shares pursuant to Rule 416 under the Securities Act
of 1933, as
amended (the “Securities Act”), as may be issued with respect to the
shares being registered hereunder as a result of anti-dilution
adjustments
to the conversion rate, stock splits, stock dividends, recapitilizations,
and similar transactions.
|
| (2) |
Estimated
solely for purposes of determining the registration fee pursuant
to Rule
457(c) under the Securities Act, and based upon the average of
the high
and low prices of the registrant's common stock on the Nasdaq Global
Market on January 18, 2007.
|
The
Registrant hereby amends this Registration Statement on such date or dates
as
may be necessary to delay its effective date until the Registrant shall file
a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), shall determine.
The
information in this prospectus is not complete and may be changed. The
Selling
Shareholder named in this prospectus may not sell these securities until
the
registration statement filed with the Securities and Exchange Commission
is
effective. This prospectus is not an offer to sell these securities and
it is
not soliciting an offer to buy these securities in any state where the
offer or
sale is not permitted.
Subject
to Completion, Dated January [___],
2007Prospectus
AIRSPAN
NETWORKS, INC.
COMMON
STOCK, PAR VALUE $.0003 PER SHARE
20,069,000
SHARES
This
prospectus is being used in connection with the offering from time to time
by
Oak Investment Partners XI, Limited Partnership (the “Selling Shareholder”) and
its
successors, which includes its pledgees, donees, partnership distributees,
and
other transferees receiving the Shares from the Selling Shareholder in non-sale
transfers (the “Successors”), of
up to
20,069,000 shares of common stock, par value $.0003 per share (the “Shares”) of
Airspan Networks, Inc., a Washington corporation (“We” or the “Company”). The
Shares offered include shares that are issuable from time to time upon
conversion of shares of our Series B preferred stock, par value $.0001 per
share
(the “Preferred Stock”), issued to the Selling Shareholder in a private
placement transaction on September 25, 2006.
The
Selling Shareholder and its Successors may offer the Shares from time to
time
through public or private transactions at prevailing market prices, at prices
related to prevailing market prices or at privately negotiated prices. You
should read the prospectus carefully before you invest.
We
will
not be entitled to any of the proceeds from the sale of the Shares.
Our
common stock is traded on the Nasdaq Global Market (“Nasdaq”) under the symbol
“AIRN”. As of January 18, 2007, the market price of the common stock was $4.295
per share. You are urged to obtain current market quotations for the common
stock.
Investing
in the Shares involves risks. See “Risk Factors” beginning on page
9.
Neither
the
Securities and Exchange Commission nor any state securities commission has
approved or disapproved of the securities or determined if this prospectus
is
truthful or complete. Any representation to the contrary is a criminal
offense.
The
date
of this prospectus is , 2007
1
TABLE
OF CONTENTS
|
INCORPORATION
OF DOCUMENTS BY REFERENCE
|
2
|
|
ABOUT
THIS PROSPECTUS
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2
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AIRSPAN
NETWORKS, INC.
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3
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SELLING
SHAREHOLDER
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6
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USE
OF PROCEEDS
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7
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PLAN
OF DISTRIBUTION
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7
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RISK
FACTORS
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8
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|
SPECIAL
NOTE REGARDING FORWARD-LOOKING INFORMATION
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22
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|
WHERE
YOU CAN FIND MORE INFORMATION
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22
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LEGAL
MATTERS
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23
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EXPERTS
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23
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INFORMATION
NOT REQUIRED IN PROSPECTUS
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24
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SIGNATURES
|
28
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|
INDEX
TO EXHIBITS
|
30
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INCORPORATION
OF DOCUMENTS BY REFERENCE
You
should rely only on the information contained in this prospectus, including
information incorporated by reference as described below. We have not authorized
anyone else to provide you with different information. You should not assume
that the information in this prospectus is accurate as of any date other
than
the date on the front of this prospectus or that any document incorporated
by
reference is accurate as of any date other than its filing date. You should
not
consider this prospectus to be an offer or solicitation relating to the
securities in any jurisdiction in which such an offer or solicitation relating
to the securities is not authorized. Furthermore, you should not consider
this
prospectus to be an offer or solicitation relating to the securities if the
person making the offer or solicitation is not qualified to do so, or if
it is
unlawful for you to receive such an offer or solicitation. References made
to
this prospectus shall include any prospectus supplement subsequently
filed.
ABOUT
THIS PROSPECTUS
This
prospectus is part of a registration statement that we filed with the SEC
utilizing a “shelf” registration process. Under this shelf registration process,
the Shares may be resold by the Selling Shareholder and/or its Successors
from
time to time, in one or more offerings. This prospectus provides you with
a
general description of the Shares.
Please
carefully read both this prospectus, together with additional information
referred to in “Where You Can Find More Information,” before investing in the
Shares.
The
Shares are not being offered in any state where the offer is not
permitted.
2
AIRSPAN
NETWORKS, INC.
We
are a
global supplier of Broadband Wireless equipment and other technologies,
including Voice-over-IP (VoIP) switching that allow communications service
providers (often referred to as “local exchange carriers,” or simply telephone
companies), Internet service providers (often referred to as “ISPs”) and other
telecommunications users, such as utilities and enterprises, to cost-effectively
deliver high-speed data and voice services using radio frequencies rather
than
wires. We call this transmission method “Broadband Wireless”. The primary market
for our systems has historically been a subset of the fixed broadband wireless
access systems market, which is the fixed point-to-multipoint market in radio
frequencies below 6.0GHz.
Each
of
our wireless systems utilizes digital radio technology, which provides either
wide- or local-area coverage, robust security and resistance to fading. These
systems can be deployed rapidly and cost effectively, providing an attractive
alternative or complement to traditional copper wire, cable, or fiber-optic
communications access networks. Our products also include software tools
that
optimize geographic coverage of our systems and provide ongoing network
management. To facilitate the deployment and operation of our systems, we
also
offer network installation, training and support services. A more complete
description of our various wireless access systems is provided below. Our
broadband wireless systems have been installed by more than 350 network
operators in more than 100 countries.
Our
product portfolio is comprised of a variety of products which operate based
on
(i) proprietary technologies we or others have developed and patented, (ii)
WiMAX standards or (iii) WiFi standards. Our product portfolio also includes
VoIP products.
Products
Based Upon Proprietary Technologies
Our
earliest products were developed and sold originally to provide wireless
voice
connections between network operators and their end customers. Product
enhancements introduced in 1998 enabled us to offer both voice and data
connectivity over a single wireless link. We have continued to develop the
capabilities and features of the original products, and today we sell them
as
the AS4000 and AS4020 products, in systems capable of delivering high-capacity
broadband data with carrier-quality voice connections to operators globally.
In
October 2002, we strengthened our position in the Broadband Wireless Access
(BWA) equipment market with the acquisition of the WipLL (Wireless Internet
Protocol in the Local Loop) business from Marconi (“Marconi WipLL”) for $3
million in cash, and we renamed the business Airspan Networks (Israel) Limited
(“Airspan Israel”). The products and services produced by Airspan Israel enable
operators in licensed and unlicensed wireless bands to offer high-speed,
low
cost, wireless broadband connections for data and voice over the Internet,
using
the Internet Protocol (“IP”).
In
October 2003, we began marketing our AS4030 and AS3030 product range of Airspan
branded high-end point-to-multipoint and point-to-point products suitable
for
operators wishing to deliver service offerings to medium and large businesses
and multi-tenant dwellings that require considerable bandwidth for their
end
users. These products, based on Orthogonal Frequency Division Multiplexing
(“OFDM”) technology, can also be used for a wide range of backhaul applications,
for example connecting remote base stations to a central office.
In
December 2003, we acquired the fixed wireless access business of Nortel Networks
known as “Proximity” for $13.1 million in cash. The Proximity products enable
operators to provide carrier class circuit switched voice and data services
using Time Division Multiple Access (“TDMA”) technology. We acquired inventory
relating to the Proximity business as well as existing assets associated
with
the manufacture, development and support of the Proximity product line. We
also
assumed the product supply obligations associated with customer contracts
and
certain other liabilities and obligations along with the workforce then directly
employed in the Proximity business.
Products
Based on WiMAX Standards
All
of
the BWA products we had sold or acquired before 2005 operated according to
proprietary technologies we or others had developed and patented. The same
applied to BWA technologies against which we competed. At the end of 2002,
a
small group of BWA system and component manufactures, including Intel
Corporation and Airspan, formed the WiMAX Forum. The goal of the Forum was
to
create global standards to ensure true interoperability between BWA systems.
The
founding members believed that interoperability was essential to the future
growth of the broadband wireless market. By the end of 2005, the Forum members,
working together with the Institute of Electrical and Electronics Engineers
(IEEE), had established the first three WiMAX standards - the IEEE 802.16a
standard; the IEEE 802.16-2004 WirelessMAN® Standard for Wireless Metropolitan
Area Networks (formerly the 802.16d) standard, intended for fixed and some
nomadic applications; and the 802.16-2005 (formerly the 802.16e) standard,
intended for mobile and some nomadic/portable applications. See the “Risk
Factors” section of our Form 10-K for a discussion of some of the potential
implications for Airspan of the introduction of standard-based systems and
technologies.
3
Where
we
refer in this document to “WiMAX” products, we are referring to both WiMAX Forum
CertifiedTM
products
(those products that been certified as meeting the standards established
by the
WiMAX Forum) and non-certified products that we believe we have manufactured
according to those standards but which may or may not become WiMAX Forum
CertifiedTM
products
in the future.
AS.MAX
Product Portfolio
Our
first
products based on WiMAX standards, part of our “AS.MAX” product portfolio, were
introduced in March 2005. “AS.MAX” is a portfolio of WiMAX systems comprising
Base Stations and Customer Premise Equipment (“CPEs”) based on the 802.16
standard. As of the date of this report, we have available three primary
types
of Base Stations - the MacroMAX base station, the MicroMAX base station and
the
HiperMAX base station - and two types of CPEs - the indoor self-installable
EasyST, and the outdoor mounted ProST.
The
AS.MAX product range is designed to serve both:
|
·
|
our
traditional fixed point-to-multipoint BWA market;
and
|
|
·
|
new
markets, such as the BWA market for nomadic and portable, and eventually
mobile, applications.
|
In
March
2006, we announced that the MacroMAX base station and the EasyST CPE had
been
certified in the 3.5GHz band by the WiMAX Forum as meeting the standards
required by the IEEE for interoperability.
In
June
2006, we announced the availability of the AS.MAX MicroMAX base station and
ProST Wi-Fi access point for deployment in the Public Safety and Municipal
Wireless markets in the USA. The system is available in the licensed 4.9GHz
band
for Public Safety applications and in the unlicensed 5.8GHz band for Municipal
Wireless systems. By combining 802.11 Wi-Fi for access and 802.16 WiMAX for
backhaul in a single integrated package, we provide the benefits of WiMAX
range,
capacity and quality of service together with the flexibility of Wi-Fi at
no
extra cost.
In
October 2006, we announced that the MicroMAX base station had been certified
in
the 3.5GHz band by the WiMAX Forum as meeting the standards required by the
IEEE
for interoperability.
In
October 2006, we announced the launch of our HiperMAX base station portfolio.
The HiperMAX base station is based on an industry-leading design that uses
a
fully Software Defined Radio (SDR) that enables network operators to use
the
platform for either mobile or fixed WiMAX services. HiperMAX products also
allow
for simultaneous mobile and fixed operation from the same baseband and radio
transceiver hardware.
Products
Based on WiFi Standards
In
November 2005 we acquired Radionet Oy, a Finnish limited liability company
(“Radionet”), for $2 million in cash. Established in 2000, Radionet is a leading
provider of municipal wireless Hotzones, community networks, mobile broadband
solutions for industrial applications, such as ports, mines and public
transport, and link solutions for wireless backhaul and enterprises. Radionet’s
environmentally-robust product portfolio, operating in unlicensed frequency
bands using IEEE 802.11 a/b/g WiFi standards, delivers high performance
connectivity with built-in bandwidth management and advanced security features.
The Radionet product architecture includes network and subscriber management
capabilities and Radionet’s patented “MageIP”™ technology allows roaming within
Hotzones, offering seamless mobility between access points and subnets in
a
wireless network. The acquisition added to our product portfolio wireless
products that operate according to the IEEE 802.11 standard for wireless
local
area networks (also known as WiFi). Radionet products are now being sold
under
the “AS.NET” name.
4
Our
AS.MAX and AS.NET products constitute our first entry into the market of
open-standard systems, in which products that operate according to the same
standards are interoperable. AS.MAX and AS.NET support nomadic and portable
users in addition to our traditional fixed broadband access users. AS.NET
systems also have the ability to support mobile users today. In June 2006,
we
announced the availability of AS.NET SR2.0 enhancements targeted at the North
American market. We believe that the new higher power radios and Quality
of
Service (QoS) features available on our AS.NET product line are significant
improvements for operators looking to expand their coverage area and service
offerings.
Voice
Over Internet Protocol (VoIP) Products
In
June
2005, we acquired all of the outstanding shares of capital stock of ArelNet
Ltd
(“ArelNet”). ArelNet is a pioneer in VoIP network infrastructure equipment and
solutions, including soft switches and gateways supporting all major VoIP
standards. ArelNet has extensive experience worldwide, having installed network
equipment with a capacity exceeding two billion minutes per year. The final
purchase price of $9.1 million included $4.0 million of cash, $4.7 million
for
shares in Airspan and $0.3 million in Airspan options. The ArelNet product
portfolio (“AS.TONE”) gives us the ability to sell VoIP products on a
stand-alone basis or in combination with AS.MAX or Radionet products to
operators wishing to offer voice services over their IP-based
networks.
5
SELLING
SHAREHOLDER
The
following table provides the name of the Selling Shareholder and the number
of
shares of common stock beneficially owned by the Selling Shareholder as of
January 11, 2007 on an as-converted to common stock basis. When we refer
to the
Selling Shareholder in this prospectus, we mean the person listed in the
table
below, as well as the pledgees, donees, assignees, transferees, successors,
partnership distributees and others who later hold any of the Selling
Shareholder’s interests.
Beneficial
ownership is determined in accordance with the rules of the SEC. Percentage
of
beneficial ownership as of January 11, 2007, is based upon
40,490,838 shares
of
common stock outstanding on an as-converted to common stock basis (assuming
conversion of the Shares, but without giving effect to the exercise or
conversion of any other outstanding options, warrants or convertible
securities).
The
Shares are issuable on conversion of shares of our Series B Preferred Stock
that
the Selling Shareholder purchased in a private placement on September 25,
2006.
For more information related to this transaction, see our Current Reports
on
Form 8-K filed with the Securities and Exchange Commission on August 1, 2006
and
September 25, 2006. The following description is a summary only, and you
should
read these 8-Ks and the documents attached as exhibits for more complete
information.
In
connection with our issuance of Series B Preferred Stock, we agreed to register
the Shares with the Securities and Exchange Commission. The Selling Shareholder
agreed not to sell 12,517,200 of the Shares until December 31, 2006. These
12,517,200 Shares have been or will be released from this contractual lock-up
as
follows:
|
·
|
2,517,200
of the Shares were released on December 31,
2006;
|
|
·
|
3,333,334
of the Shares will be released on
June 25, 2007;
|
|
·
|
3,333,333
of the Shares will be released on
September 25, 2007; and
|
|
·
|
3,333,333
of the Shares will be released on
December 25, 2007.
|
All
Shares will be released from the lock-up earlier if:
|
·
|
a
change of control or liquidation of Airspan occurs;
or
|
|
·
|
the
Selling Shareholder sends us notice that it has reasonably concluded
that
we breached the representations and warranties we made to the Selling
Shareholder, if the breach results in a 20% or greater decline
in the
value of the Selling Shareholder’s investment in
us.
|
The
holders of Series B Preferred Stock are entitled to certain rights, such
as:
|
·
|
a
liquidation preference initially equal
to $290 per share over
our common stock in the event of a change of control or liquidation
of
Airspan;
|
|
·
|
the
right to approve corporate actions such as amendments to our Articles
of
Incorporation that adversely affect the Series B Preferred Stock,
the
creation of securities with rights that are senior to or pari passu
with
the rights of the Series B Preferred Stock, payments of dividends
or the
creation of any
new debt instrument or increase of any existing debt obligation,
excluding
trade payables and capital lease lines, if thereafter our aggregate
indebtedness entered into after September 25, 2006 exceeds $10,000,000;
and
|
|
·
|
the
right to elect one member to the Company’s Board of Directors as long as
Oak Investment Partners XI, Limited Partnership is a majority holder
of
the Series B Preferred Stock and the beneficial holder of at least
15% of
the Company’s common stock.
|
The
rate
at which the Series B Preferred Stock converts to shares of our common stock
(the “Conversion Rate”) is subject to anti-dilution adjustments pursuant to a
broad-based weighted average formula for certain issuances of equity securities
by us below $2.90. The Conversion Rate will not adjust due to issuances in
connection with merger and acquisition activity, if any, the payment of
dividends or certain fees to the holders of Series B Preferred Stock, or
the
issuance of up to 5 million of securities as part of the our existing equity
compensation plans.
6
Since
the
Selling Shareholder may sell all, some or none of their respective shares,
we
cannot estimate the aggregate number and percentage of shares of common stock
that the Selling Shareholder will offer pursuant to this prospectus or that
the
Selling Shareholder will own upon completion of an offering to which this
prospectus relates.
|
|
Shares
Beneficially
Owned
Prior to this
Offering
|
||||||
|
Name
of Selling Shareholder
|
Number
|
Percent
|
|||||
|
Oak
Investment Partners XI, Limited Partnership (1)
c/o
Oak Management Corporation
One
Gorham Island
Westport,
CT 06880
|
20,105,614
|
33.2
|
%
|
||||
(1)
Consists of (i)
20,069,000 shares of common stock issuable on the conversion of the Company’s
Series B Preferred Stock owned by Oak Investment Partners XI, Limited
Partnership, (ii) 35,918 shares of common stock owned by Oak Investment Partners
VIII, Limited Partnership and (iii) 696 shares owned by Oak VIII Affiliates
Fund, Limited Partnership. Excludes an aggregate of 133,241 shares of Common
Stock held Messrs. Glassmeyer and Harman and Ms. Lamont.
The
names
of the parties who share power to vote and share power to dispose of the
shares
held by Oak Investment Partners XI, Limited Partnership are Fredric W. Harman,
Bandel L. Carano, Ann H. Lamont, Edward F. Glassmeyer, Gerald R. Gallagher
and
David B. Walrod, all of whom are managing members of Oak Associates XI, LLC,
the
General Partner of Oak Investment Partners XI, Limited Partnership. Fredric
W.
Harman, Bandel L. Carano, Ann H. Lamont, Edward F. Glassmeyer, Gerald R.
Gallagher and David B. Walrod disclaim beneficial ownership of the securities
held by such partnership in which Fredric W. Harman, Bandel L. Carano, Ann
H.
Lamont, Edward F. Glassmeyer, Gerald R. Gallagher and David B. Walrod do
not
have a pecuniary interest.
The
names
of the parties who share the power to vote and share power to dispose of
the
shares held by Oak Investment Partners VIII, Limited Partnership and Oak
VIII
Affiliates Fund, Limited Partnership are Fredric W. Harman, Bandel L. Carano,
Ann H. Lamont, Edward F. Glassmeyer and Gerald R. Gallagher, all of whom
are
managing members of both Oak Associates VIII, LLC, the General Partner of
Oak
Investment Partners VIII, Limited Partnership, and Oak VIII Affiliates, LLC,
the
General Partner of Oak VIII Affiliates Fund, Limited Partnership. Fredric
W.
Harman, Bandel L. Carano, Ann H. Lamont, Edward F. Glassmeyer and Gerald
R.
Gallagher disclaim beneficial ownership of the securities held by such
partnership in which Fredric W. Harman, Bandel L. Carano, Ann H. Lamont,
Edward
F. Glassmeyer and Gerald R. Gallagher do not have a pecuniary
interest.
USE
OF PROCEEDS
The
Shares are being sold by the Selling Shareholder acting as principal for
its own
account. We will not be entitled to any of the proceeds from such
sales.
PLAN
OF DISTRIBUTION
The
Shares may be offered and sold from time to time by the Selling Shareholder.
The
Selling Shareholder will act independently of us in making decisions with
respect to the timing, manner and size of each sale. The Selling Shareholder
and
its successors, which includes its pledgees, donees, partnership distributees,
and other transferees receiving the Shares from the Selling Shareholder in
non-sale transfers (the “Successors”), may sell the shares being offered hereby
on the Nasdaq Global Market, or otherwise, at prices and under terms then
prevailing or at prices related to the then current market price, at varying
prices or at negotiated prices. These sales
may
be effected at various times in one or more of the following transactions,
or in
other kinds of transactions:
|
·
|
transactions
on the Nasdaq Global Market or any national securities exchange
or U.S.
inter-dealer system of a registered national securities association
on
which our Common Stock may be listed or quoted at the time of
sale;
|
7
|
·
|
in
the over-the-counter market;
|
|
·
|
in
private transactions and transactions otherwise than on these exchanges
or
systems or in the over-the-counter
market;
|
|
·
|
in
connection with short sales of the
shares;
|
|
·
|
by
pledge to secure debt and other
obligations;
|
|
·
|
through
the writing of options, whether the options are listed on an options
exchange or otherwise;
|
|
·
|
in
connection with the writing of non-traded and exchange-traded call
options, in hedge transactions and in settlement of other transactions
in
standardized or over-the-counter options;
or
|
|
·
|
through
a combination of any of the above
transactions.
|
The
Selling Shareholder and its Successors may sell the Shares directly to
purchasers or through underwriters, broker-dealers or agents, who may receive
compensation in the form of discounts, concessions or commissions from the
Selling Shareholder or the purchasers. These discounts, concessions or
commissions as to any particular underwriter, broker-dealer or agent may
be in
excess of those customary in the types of transactions involved.
In
addition, any securities covered by this prospectus that qualify for sale
pursuant to Rule 144 of the Securities Act may be sold under Rule 144
rather than pursuant to this prospectus.
We
entered into an agreement for the benefit of the Selling Shareholder to register
the Shares under applicable federal and state securities laws. This agreement
provides for cross- indemnification of the Selling Shareholder and us and
our
respective directors, officers and controlling persons against specific
liabilities in connection with the offer and sale of the Shares, including
liabilities under the Securities Act. We will pay substantially all of the
expenses incurred by the Selling Shareholder incident to the offering and
sale
of the Shares.
We
have
advised the Selling Shareholder that the anti-manipulation rules of
Regulation M under the Exchange Act may apply to sales of the Shares in the
market and to the activities of the Selling Shareholder and its affiliates.
In
addition, we will make copies of this prospectus available to the Selling
Shareholder and have informed it of the need for delivery of copies of this
prospectus to purchasers at or prior to the time of any sale of the Shares
pursuant to the prospectus. The Selling Shareholder may indemnify any
broker-dealer than participates in transactions involving the sale of the
shares
against certain liabilities, including liabilities arising under the Securities
Act.
At
the
time a particular offer of Shares is made, if required, a prospectus supplement
will be distributed that will set forth the number of Shares being offered
and
the terms of the offering, including the name of any underwriter, dealer
or
agent, the purchase price paid by any underwriter, any discount, commission
and
other item constituting compensation, any discount, commission or concession
allowed or reallowed or paid to any dealer, and the proposed selling price
to
the public.
RISK
FACTORS
If
we continue to incur substantial losses and negative operating cash flows,
we
may not succeed in achieving or maintaining profitability in the future.
We
have
incurred net losses since we became an independent company, and as of December
31, 2005 we had an accumulated deficit of $203 million. We anticipate that
we
will continue to experience negative cash flows over the next 12 months.
Our
operating losses have been due in part to the commitment of significant
resources to our research and development and sales and marketing organizations.
We expect to continue to devote resources to these areas and, as a result,
we
will need to continue increasing our quarterly revenues to achieve and maintain
profitability. We cannot be certain that we will achieve sufficient revenues
for
profitability. If we do achieve profitability, we cannot be certain that
we can
sustain or increase profitability on a quarterly or annual basis in the future.
8
Any
reduction in expenditures by communications service providers could have
a
negative impact on our results of operations.
We
believe telecommunications carriers and service providers continue to spend
less
annually on capital investments and network expansions than they did at the
end
of the prior decade. Service providers have operated at reduced capital spending
levels for a number of years, and there is no indication that they will increase
spending to earlier levels in the foreseeable future. Any further decline
in
their capital spending may reduce our sales, increase the need for inventory
write-offs and could result in downward pressure on the price of our products,
all of which would have a material adverse effect on our results of operations
and stock price.
Since
a significant percentage of our expenses are fixed and do not vary with
revenues, our quarterly operating results are volatile and difficult to predict,
and our stock price could decline.
We
believe that period-to-period comparisons of our operating results are not
necessarily meaningful. Since our customers are not typically required to
purchase a specific number of our products in any given quarter, we may not
be
able to accurately forecast our quarterly revenues. Revenues are further
affected if major deployments of our products do not occur in any particular
quarter as we anticipate and/or our customers delay shipments or payments
due to
their inability to obtain licenses or for other reasons. As a result, our
quarterly operating results have fluctuated in the past and will likely vary
in
the future. This could cause the market price of our common stock to decline.
Other factors that may affect our quarterly operating results and our stock
price include the loss of a major customer, our ability to react quickly
to new
competing technologies, products and services which may cause us to lose
our
customers, or if our suppliers and manufacturers are not able to fulfill
our
orders as a result of a shortage of key components that leads to a delay
in
shipping our products. We incur expenses in significant part based on our
expectations of future revenue, and we expect our operating expense, in
particular salaries and lease payments, to be relatively fixed in the short
run.
Accordingly, any unanticipated decline in revenue for a particular quarter
could
have an immediate negative effect on results for that quarter, possibly
resulting in a change in financial estimates or investment recommendations
by
securities analysts, which could result in a fall in our stock price. The
results of any one quarter should not be relied upon as an indication of
future
performance.
If
we are not able to implement a program to reduce costs over time, introduce
new
products or increase sales volume to respond to declines in the average selling
prices of our products, our gross margin may decline.
We
expect
the average selling prices of our products to decline due to a number of
factors, including competitive pricing pressures, rapid technological change,
industry standardization and volume sales discounts. Accordingly, to maintain
or
increase our gross margin, we must develop and introduce new products or
product
enhancements with higher gross margins and implement cost reductions. If
our
average selling prices continue to decline and we are not able to maintain
or
increase our gross margin, our results of operations could be harmed.
Our
industry is subject to change as a result of emerging new technologies and
industry standards.
The
market for BWA equipment has historically been characterized by rapid
technological developments and evolving industry standards. Our future success
will therefore depend on our ability to adapt to these new standards and
to
successfully introduce new technologies that meet customer preferences.
Accordingly, our success selling certain types of BWA equipment in one year
should not be considered indicative of our future sales efforts.
9
Although
we have been marketing BWA equipment for many years, our experience marketing
and supplying WiMAX equipment has only been developed since August 2005.
Although our AS.MAX products have performed to date in accordance with our
expectations, the AS.MAX products are still relatively new products and their
future commercial success is not yet certain. Some of our competitors have
developed and are currently marketing WiMAX equipment. Although we believe
our
AS.MAX products compare favorably to the existing competitive products in
terms
of price, performance, features and ease of use, we do not have enough
information at this time to determine if our potential customers will share
our
perceptions.
If
WiMAX
does become a principal standard for the BWA industry, we face the risk that
our
non-WiMAX products will become obsolete. In such event, we anticipate that
our
results of operations would be materially adversely affected unless our sales
of
AS.MAX products compensate for the loss of sales of non-WiMAX products. In
the
course of committing to research and development, enhancing our existing
products and developing the AS.MAX product line, we have made projections
and
assumptions about the potential demand for our various product lines. If
our
projections or assumptions are incorrect for any reason, we anticipate that
our
product lines will not sell as projected and our results of operations will
be
materially adversely affected.
Since
we incur most of our expenses and a portion of our cost of goods sold in
foreign
currencies, fluctuations in the values of foreign currencies could have a
negative impact on our profitability.
Although
96% of our sales in 2005 and a majority of our cost of goods sold were
denominated in US dollars, we incur most of our operating expenses in British
pounds and, to a lesser extent, New Israeli Shekels. We expect these percentages
to fluctuate over time. Fluctuations in the value of foreign currencies could
have a negative impact on the profitability of our global operations and
our
business and our currency hedging activities may not limit these risks. The
value of foreign currencies may also make our products more expensive than
local
products.
We
operate in highly dynamic and volatile industries characterized by rapidly
changing technologies, evolving industry standards, frequent new product
introductions and short product life cycles.
The
markets for our products have been characterized by rapidly changing
technologies, evolving industry standards, frequent new product introductions
and short product life cycles. Our success depends, in substantial part,
on the
timely and successful introduction of high quality new products and upgrades,
as
well as cost reductions on current products to address the operational speed,
bandwidth, efficiency and cost requirements of our customers. With the adoption
by the wireless broadband industry of the IEEE 802.16 and ETSI HiperMAN wireless
MAN standards, our success will also depend on our ability to comply with
these
and other emerging industry standards, to operate with products of other
suppliers.
With
the
acquisition of our new AS.TONE and AS.NET product portfolios, we are moving
more
and more of our products to IP (Internet Protocol) based operating systems.
The
development of new, technologically advanced IP-optimized networking solutions
and software products is a complex and uncertain process requiring high levels
of innovation, as well as the anticipation of technological and market trends.
Our commitment to develop and refine our IP based operating systems may result
in our expenses growing at a faster rate than our revenues, particularly
since
the initial investment to bring a new or enhanced product to market may be
high.
We may not be successful in targeting new market opportunities, in developing
and commercializing new products in a timely manner or in achieving market
acceptance for our new products.
The
success of new or enhanced products depends on a number of other factors,
including the timely introduction of those products, market acceptance of
new
technologies and industry standards, the perceived quality and robustness
of new
or enhanced products, competing product offerings, the pricing and marketing
of
our products and the availability of funding for those networks. Products
and
technologies developed by our competitors may render our products obsolete.
If
we fail to respond in a timely and effective manner to unanticipated changes
in
one or more of the technologies affecting telecommunications and data networking
or our new products or product enhancements fail to achieve market acceptance,
our ability to compete effectively in our industry, and our sales, market
share
and customer relationships could be materially and adversely affected.
10
In
addition, unanticipated changes in market demand for products based on a
specific technology, particularly lower than anticipated demand for IP-optimized
networking solutions in either broadband wireless applications or on a
stand-alone basis, could have a material adverse effect on our business,
results
of operations and financial condition if we fail to respond to those changes
in
a timely and effective manner.
The
adoption of open standards in the broadband wireless communications industry
could result in increased competition.
Prior
to
the adoption of the WiMAX standards, we sold products that operated on our
own,
proprietary operating technologies. We anticipate that we and other BWA
equipment suppliers will increasingly sell products that are WiMAX Forum
Certified. With the adoption of WiMAX as the new industry standard for broadband
wireless communications, many of those proprietary technologies will no longer
be used in Airspan products. As a result, as it brings its new WiMAX-based
systems to market, we expect that we will face increased competition from
a
number of other manufacturers who are no longer restricted by our intellectual
property rights from building competing products. To remain competitive,
we
believe we will need to must continue to invest significant resources in
research and development, sales and marketing and customer support for WiMAX.
We
cannot be certain that we will have sufficient resources to make these
investments or that we will be able to make the technological advances necessary
to remain competitive. In developing products that conform to defined
wireless-industry standards, we recognize that, by diminishing product
differentiation, standardization may lower the barriers to entry by other
manufacturers in the markets in which we seek to sell our products. If companies
with greater resources than us choose to manufacture any standards-based
products to compete with us, this may cause competition to be based on criteria
such as the relative size, resources, marketing skills and financial incentives
provided by our competitors, where we may be weaker than if competition is
based
on product differentiation alone. If we are unable to maintain our position
as a
technology leader in this market of open standards and broader competition,
we
may suffer reductions in revenues and margins and loss of market share, revenues
and operating margins, which could result in reduced stock prices.
If
we are not able to implement a program to conform our products to industry
standards or to successfully market and sell our standards-based products,
our
revenues may decline
We
have
developed and continue to develop certain of our products in accordance with
existing, emerging and anticipated wireless-industry standards. In particular,
we develop our AS.MAX wireless products and product features to conform to
IEEE
802.16-2004 and IEEE 802.16e standards. If our products fail to comply with
these standards, we may not be able to sell them. Industry standards are
subject
to change from time to time by their regulatory bodies. If, as a result of
any
changes, the products we have developed fail to meet industry standards,
as
revised, we may not be able to sell such products.
Our
future success depends in part on the successful adoption by our customers
of
products that meet these industry standards. If the wireless broadband market
does not adopt these standards or if our customers are unable to successfully
deploy products based on these standards, we will not be successful selling
these products.
In
developing products that conform to defined wireless-industry standards,
we
recognize that, by diminishing product differentiation, standardization may
lower the barriers to entry by other manufacturers in the markets in which
we
seek to sell our products. If companies with greater resources than us choose
to
manufacture any standards-based products to compete with us, this may cause
competition to be based on criteria such as the relative size, resources,
marketing skills and financial incentives provided by our competitors, where
we
may be weaker than if competition is based on product differentiation
alone.
Competition
from larger, better-capitalized or emerging competitors could result in price
reductions, reduced gross margins and loss of or inhibited growth of market
share.
We
compete in a relatively new, rapidly evolving and highly competitive and
fragmented market. We now compete with companies that are producing both
mobile
and fixed wireless communications systems, wired DSL, cable networks, fiber
optic cable and occasionally satellite technologies and other new entrants
to
this industry, as well as traditional communications companies.
11
Competitors
vary in size and scope, in terms of products and services offered. With respect
to the fixed broadband wireless solutions we offer today to serve in licensed
and unlicensed frequencies, we believe we compete directly with Siemens,
Alcatel, Motorola, Alvarion, Terabeam, SR Telecom, with a number of smaller
privately-held companies and with the divisions of a number of institutional
telecommunication equipment companies. We also believe we compete indirectly
with a number of large telecommunication equipment suppliers such as Alcatel
and
Harris.
Many
of
our competitors are substantially larger than we are and have significantly
greater financial, sales and marketing, technical, manufacturing and other
resources and more established distribution channels. These competitors may
be
able to respond more rapidly to new or emerging technologies such as WiMAX
and
changes in customer requirements, or to devote greater resources to the
development, promotion, sale and financing of their products than we can.
Furthermore, some of our competitors have made or may make strategic
acquisitions or establish cooperative relationships among themselves or with
third parties to increase their ability to gain customer market share rapidly.
These competitors may enter our existing or future markets with systems that
may
be less expensive, provide higher performance or contain additional features.
We
expect
our competitors to continue to improve the performance of their current products
and to introduce new products or new technologies that may supplant or provide
lower-cost alternatives to our systems. This or other factors may result
in
changes in the market valuations of our competitors, which have been volatile
recently, and could cause our stock price to fall. To remain competitive,
we
must continue to invest significant resources in research and development,
sales
and marketing and customer support. We cannot be certain that we will have
sufficient resources to make these investments or that we will be able to
make
the technological advances necessary to remain competitive.
An
inability to overcome competition from alternative communication systems
could
adversely affect our results of operations.
We
believe we encounter, and may increasingly encounter, competition from competing
wireless technologies such as cellular technology. Cellular networks are
now
capable of delivering both voice and broadband data connectivity to fixed,
mobile, nomadic and portable applications. These technologies, such as 1XRTT
and
EVDO, have the ability to provide for multiple voice channels and rate data
services at transmission rates of 512Kbps on the uplink and 2.4 Mbps on the
down
link. Their data rates speeds continue to improve as they are modified. In
addition, our technology competes with other high-speed solutions, such as
wired
DSL, cable networks, fiber optic cable and occasionally satellite technologies.
The performance and coverage area of our wireless systems are dependent on
certain factors that are outside of our control, including features of the
environment in which the systems are deployed, such as the amount of clutter
(natural terrain features and man-made obstructions) and the radio frequency
available. Any inability to overcome these obstacles may make our technology
less competitive in comparison with other technologies and make other
technologies less expensive or more suitable. Our business may also compete
in
the future with products and services based on other wireless technologies
and
other technologies that have yet to be developed.
We
currently depend on a few key customers for substantially all of our sales.
A
loss of one or more of those customers could cause a significant decrease
in our
net revenue.
We
currently derive, and expect to continue to derive, a substantial percentage
of
our net sales from fewer than ten customers. In fiscal 2005, 71% of our revenue
was derived from our top ten customers. In fiscal 2005, Axtel accounted for
approximately 56% of our annual revenue and was the only customer that
individually accounted for more than 10% of our annual revenue. In fiscal
2006,
we believe that Axtel and Yozan Inc. of Japan will account for approximately
45%
of our projected annual revenue. It is possible that in fiscal 2007, Axtel
and
Yozan may account for greater than 25% of our projected annual revenue. We
believe that there are certain economies of scale inherent in our industry.
Accordingly, the loss of Axtel or Yozan as a customer or the loss of any
large
percentage of our customer contracts could negatively impact our gross profit
margins, our profitability and efforts to preserve cash resources.
Axtel
has
the right to terminate the Axtel supply agreement if we fail to comply with
the
terms and conditions of the agreement and such breach is not cured. For
instance, if we fail to meet delivery schedules or if we fail to deliver
products and services that meet the contract specifications, Axtel may claim
we
breached the agreement. Even if such failures are solely attributable to
the
acts or failures to act of third parties, Axtel may have the right to terminate
the agreement. Additionally, Axtel itself has a limited operating history
having
only commenced operations in 1999, and is subject to its own competitive
pressures and operating constraints in the Mexican economy. If Axtel should
fail
for any reason, or fail to have access to debt and equity markets for liquidity,
it may not be able to continue to make purchases at the same levels as prior
years.
12
Yozan
also has the right to terminate our supply agreement if we fail to comply
with
the terms and conditions of the agreement and such breach is not cured. For
instance, if we fail to meet delivery schedules or if we fail to deliver
products and services that meet the contract specifications, Yozan may claim
we
breached the agreement. Yozan is subject to its own competitive pressures
and
operating constraints in the Japanese economy. If Yozan should fail for any
reason, or fail to have access to debt and equity markets for liquidity,
it may
not be able to make the purchases that we have forecast commitments under
our
supply agreement.
The
amount of revenue we derive from a specific customer is likely to vary from
period to period, and a major customer in one period may not produce significant
additional revenue in a subsequent period. We anticipate that our operating
results will continue to depend on sales to a small number of key customers
in
the foreseeable future. In general, our contracts with our customers involve
major deployments that require several months to fulfill, so our results
may
depend on the same major customers for consecutive quarters. Once a contract
is
fulfilled, we cannot assure you that the customer will continue to purchase
upgrades or services from us, or possibly new products. It is necessary
therefore for us to continually seek new customers in order to increase our
revenue. To the extent that any major customer terminates its relationship
with
us, our revenues could decline significantly.
We
face certain risks related to the Yozan contract amendment
We
face
the risk that Yozan will materially delay or seek to cancel equipment orders.
In
a Memorandum of Understanding (MOU) signed on September 8, 2006, we agreed
with
Yozan that the amount of the original supply agreement will be reduced from
$42.9 million to approximately $28 million. As of the end of the third quarter
of 2006, approximately $19.5 million of equipment had been delivered to Yozan,
most of which had been accepted by Yozan. Yozan has made payments totaling
$19.0
million for this equipment. The MOU requires delivery of 2,000 MicroMAX-SDR
Base
Stations and 20,000 subscriber terminals, but the final composition of products
to be delivered may change under the agreement. The parties agreed to use
reasonable efforts to complete deliveries by the end of 2006, but accept
that
reasonable delays may occur in the delivery schedule. The remaining $8.5
million
of equipment contracted for is subject to revised payment terms, including
payment by Yozan 45 days after equipment acceptance. Scheduling of future
deliveries is still under discussion.
In
the
second quarter of 2006, we took a $4.4 million charge related to an excess
inventory provision reflecting our estimate of the most probable amount of
excess inventories and purchase commitments (net of amounts that are
cancelable), based on the amount we expected to deliver to Yozan under the
amended supply contract. Since then, as a result of our ability to cancel
or
reduce some inventory purchase commitments with our contract manufacturers,
and
to obtain some more favorable payment and delivery terms for some of the
inventories that are still to be delivered under orders we placed originally
to
fulfill the Yozan supply agreements, we revised our estimates of the most
probable amount of excess inventories and purchase commitments. Accordingly,
we
reduced the amount of the provision by approximately $1.3 million in the
third
quarter of 2006. The charge may increase, however, if Yozan does not fully
honor
its amended purchase commitments in the agreed timeframe.
Our
customer contracts vary widely in terms and duration, with a many of our
customers executing only short-term purchase orders, and allow our customers
to
terminate without significant penalties.
Our
contracts and purchase orders are separately negotiated with each of our
customers and the terms vary widely. A majority of our customers may only
execute short-term purchase orders for a single or a few systems at one time
instead of long-term contracts for large-scale deployment of our systems.
These
contracts and purchase orders do not ensure that they will purchase any
additional products beyond that specifically listed in the order.
13
Moreover,
since we often believe that these purchase orders may represent the early
portion of longer-term customer programs, we often expend significant financial,
personnel and operational resources to fulfill these orders. If our customers
fail to purchase additional products to fulfill their programs as we hope,
we
may be unable to recover the costs we incur and our business could suffer.
In
addition, our general framework contracts are generally non-exclusive and
contain provisions allowing our customers to terminate the agreement without
significant penalties. Our contracts also may specify the achievement of
shipment, delivery and installation commitments. If we fail to meet these
commitments or negotiate extensions in a timely manner, our customers may
choose
to terminate their contracts with us or impose monetary penalties.
Changes
in telecommunications regulation or delays in receiving licenses could adversely
affect many of our customers and may lead to lower sales.
Many
of
our customers are subject to extensive regulation as communications service
providers. Changes in legislation or regulation that adversely affect those
existing and potential customers could lead them to delay, reduce or cancel
expenditures on communications access systems, which actions would harm our
business. In the past, we have suffered the postponement of anticipated customer
orders because of regulatory issues. The resolution of those issues can be
lengthy and the outcome can be unpredictable. We have also received orders
in
the past from customers that were contingent upon their receipt of licenses
from
regulators, the timing of which were uncertain. The receipt of licenses by
our
customers may occur a year or more after they initially seek those licenses,
or
even after they place orders with us.
At
present there are few laws or regulations that specifically address our business
of providing communications access equipment. However, future regulation
may
include access or settlement charges or tariffs that could impose economic
burdens on our customers and us. We are unable to predict the impact, if
any,
that future legislation, judicial decisions or regulations will have on our
business.
Our
sales cycle is typically long and unpredictable, making it difficult to
accurately predict inventory requirements, forecast revenues and control
expenses.
Typically
our sales cycle can range from one month to two years and varies by customer.
The length of the sales cycle with a particular customer may be influenced
by a
number of factors.
Before
we
receive orders, our customers typically test and evaluate our products for
a
period that can range from a month to more than a year. In addition, the
emerging and evolving nature of the communication access market may cause
prospective customers to delay their purchase decisions as they evaluate
new
and/or competing technologies or, wait for new products or technologies to
come
to market. As the average order size for our products increases, our customers’
processes for approving purchases may become more complex, leading to a longer
sales cycle. We expect that our sales cycle will continue to be long and
unpredictable. Accordingly, it is difficult for us to anticipate the quarter
in
which particular sales may occur, to determine product shipment schedules
and to
provide our manufacturers and suppliers with accurate lead-time to ensure
that
they have sufficient inventory on hand to meet our orders. Therefore, our
sales
cycle impairs our ability to forecast revenues and control expenses.
Our
international sales may be difficult and costly as a result of the political,
economic and regulatory risks in those regions.
Sales
to
customers based outside the US have historically accounted for a substantial
majority of our revenues. In 2005, our international sales (sales to customers
located outside the US which includes a small percentage of US customers
where
the final destination of the equipment is outside of the US) accounted for
93%
of our total revenue, with sales to customers in Latin America, particularly
Mexico, accounting for 65% of total revenue, and sales to customers in Europe,
Asia and Africa accounting for 13%, 10% and 5%, respectively, of total revenue.
In many international markets, long-standing relationships between potential
customers and their local suppliers and protective regulations, including
local
content requirements and type approvals, create barriers to entry. In addition,
pursuing international opportunities may require significant investments
for an
extended period before returns on such investments, if any, are realized
and
such investments may result in expenses growing at a faster rate than revenues.
The following risks inherent in international business could reduce the
international demand for our products, decrease the prices at which we can
sell
our products internationally or disrupt our international operations, which
could adversely affect our operations:
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the
imposition of tariffs, duties, price controls or other restrictions
on
foreign currencies or trade barriers imposed by foreign countries;
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import
or export controls, including licensing or product-certification
requirements;
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unexpected
changes in government policies or regulatory requirements in the
Unites
States or in foreign governments and delays in receiving licenses
to
operate;
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political
instability and acts of war or
terrorism;
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economic
instability, including the impact of economic recessions;
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difficulty
in staffing and managing geographically diverse operations, including
our
reluctance to staff and manage foreign operations as a result of
political
unrest even though we have business opportunities in a country;
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any
limitation on our ability to limited ability to enforce intellectual
property rights or agreements in regions where the judicial legal
systems
may be less developed or less protective of intellectual property
or
contractual rights;
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capital
and exchange control programs;
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challenges
caused by distance, language and cultural
differences;
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fluctuations
in currency exchange rates;
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labor
unrest;
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restrictions
on the repatriation of cash;
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the
nationalization of local industry; and
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potentially
adverse tax consequences.
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We
may not be able to expand our sales and distribution capabilities, including
establishing relationships with distributors and major system integrators
and
telecommunications equipment OEMs, which would harm our ability to generate
revenue.
We
believe that our future success, particularly with respect to WiMAX, will
depend
upon our ability to expand our direct and indirect sales operations, including
establishing relationships with distributors and major system integrators
and
telecommunications equipment OEMs. While we have been at times successful
in
signing country-specific OEM agreements with major suppliers such as Siemens
and
L.M. Ericsson, we cannot be certain that we will be successful in maintaining
or
expanding these agreements.
Our
operations in Israel may be disrupted by political and military tensions
in
Israel and the Middle East.
We
conduct various activities related to the WipLL, WiMAX and AS.TONE products
in
Israel, including: research and development; design; raw material procurement;
and manufacturing through manufacturing subcontractors based in Israel. Our
operations could be negatively affected by the political and military tensions
in Israel and the Middle East.
Israel
has been involved in a number of armed conflicts with its neighbors since
1948
and a state of hostility, varying in degree and intensity, has led to security
and economic problems in Israel. Since September 2000, a continuous armed
conflict with the Palestinian Authority has been taking place. While these
conflicts have not had a material adverse effect on our operations in the
past,
conditions in Israel could, in the future, disrupt the development, manufacture
and/or distribution of our products.
Our
dependence on key suppliers and contract manufacturers may result in product
delivery delays if they do not have components in stock or terminate their
non-exclusive arrangements with us.
Some
of
the key components of our products are purchased from single vendors, including
printed circuit board assemblies, application specific integrated circuits
and
radio frequency filters, for which alternative sources are generally not
readily
available in the short to medium term. If our vendors fail to supply us with
components because they do not have them in stock when we need them, if the
supply of the components in the market is limited, or if our vendors reduce
or
eliminate their manufacturing capacity for these components or enter into
exclusive relationships with other parties which prevent them from selling
to
us, we could experience significant delays in shipping our products while
we
seek other supply sources, which may result in our customers claiming damages
for delays. At times we have been forced to purchase these components from
distributors instead of from the manufacturers, which has significantly
increased our costs. During the second quarter of 2005, as a result of a
temporary shortage of components, we experienced temporary difficulty
manufacturing enough products to meet certain existing orders in a timely
manner. We do not have long-term contracts with all of our suppliers. Instead,
we execute purchase orders approximately three to six months in advance of
when
we believe we may need the components. These purchase orders are non-exclusive,
and we are generally not required to purchase any minimum volume of components
from any of these suppliers. In those instances in which we do not have a
long-term contract with a supplier, the supplier may terminate our relationship
upon six months’ prior notice.
15
In
addition, we generally outsource our manufacturing processes to subcontractors
all of whom rely on our forecasts of future orders to make purchasing and
manufacturing decisions. We provide them with forecasts on a regular basis.
If a
forecast turns out to be inaccurate, it may lead either to excess inventory
that
would increase our costs or a shortage of components that would delay shipments
of our systems. Our contracts with our major manufacturing subcontractors
are
non-exclusive and most contracts may be terminated with six months notice
by
either party without significant penalty. Other than agreeing to purchase
the
materials we request in the forecasts, we do not have any agreements with
them
to purchase any minimum volume.
If
we lose Eric Stonestrom or any of our other executive officers, we may encounter
difficulty replacing their expertise, which could impair our ability to
implement our business plan successfully.
We
believe that our ability to implement our business strategy and our future
success depends on the continued employment of our senior management team,
in
particular our president and chief executive officer, Eric Stonestrom. Our
senior management team, who have extensive experience in our industry and
are
vital to maintaining some of our major customer relationships, may be difficult
to replace. The loss of the technical knowledge and management and industry
expertise of these key employees could make it difficult for us to execute
our
business plan effectively, could result in delays in new products being
developed, lost customers and diversion of resources while we seek replacements.
We
may not have adequate protection for our intellectual property, which may
make
it easier for others to misappropriate our technology and enable our competitors
to sell competing products at lower prices and harm our business.
Our
success has historically depends in part on proprietary technology. We have
historically relied on a combination of patent, copyright, trademark and
trade
secret laws and contractual restrictions on disclosure to protect our
intellectual property rights associated with our products other than AS.MAX.
Despite our efforts to protect our proprietary rights, we cannot be certain
that
the steps we have taken will prevent misappropriation of our technology,
and we
may not be able to detect unauthorized use or take appropriate steps to enforce
our intellectual property rights. The laws of some foreign countries,
particularly in Asia, do not protect our proprietary rights to the same extent
as the laws of the US and the UK, and we may encounter substantial infringement
problems in those countries. In addition, we do not file for patent protection
in every country where we conduct business. In instances where we have licensed
intellectual property from third parties, we may have limited rights to
institute actions against third parties for infringement of the licensed
intellectual property or to defend any suit that challenges the validity
of the
licensed intellectual property. If we fail to adequately protect our
intellectual property rights, or fail to do so under applicable law, it would
be
easier for our competitors to copy our products and sell competing products
at
lower prices, which would harm our business.
Our
products may infringe on the intellectual property rights of third parties,
which may result in lawsuits that could be costly to defend and prohibit
us from
selling our products.
Third
parties could assert exclusive patent, copyright, trademark and other
intellectual property infringement claims against the technologies that are
important to us. If any inquiry from a third party relating to patents or
trademarks leads to a proceeding against us and we are unable to defend
ourselves successfully, our ability to sell our products may be adversely
affected and our business would be harmed. In addition, third parties may
assert
claims, or initiate litigation against us, or our manufacturers, suppliers
or
customers with respect to existing or future products, trademarks or other
proprietary rights. Any claims against us, or customers that we indemnify
against intellectual property claims, with or without merit, may:
|
·
|
be
time-consuming, costly to defend and harm our reputation;
|
16
|
·
|
divert
management’s attention and resources;
|
|
·
|
cause
delays in the delivery of our products;
|
|
·
|
require
the payment of monetary damages;
|
|
·
|
result
in an injunction, which would prohibit us from using these technologies
and require us to stop shipping our systems until they could be
redesigned, if possible; and
|
|
·
|
require
us to enter into license or royalty agreements, which may not be
available
on acceptable terms or require payment of substantial sums.
|
A
material defect in our products that either delays the commencement of services
or affects customer networks could seriously harm our credibility and our
business, and we may not have sufficient insurance to cover any potential
liability.
Fixed
wireless devices are highly complex and frequently contain undetected software
or hardware errors when first introduced or as new versions are released.
We
have detected and are likely to continue to detect errors and product defects
in
connection with new product releases and product upgrades. In the past, some
of
our products have contained defects that delayed the commencement of service
by
our customers.
If
our
hardware or software contains undetected errors, we could
experience:
|
·
|
delayed
or lost revenues and reduced market share due to adverse customer
reactions;
|
|
·
|
higher
costs and expenses due to the need to provide additional products
and
services to a customer at a reduced charge or at no charge;
|
|
·
|
claims
for substantial damages against us, regardless of our responsibility
for
any failure, which may lead to increased insurance costs;
|
|
·
|
negative
publicity regarding us and our products, which could adversely
affect our
ability to attract new customers; and
|
|
·
|
diversion
of management and development time and resources.
|
Our
general liability insurance coverage may not continue to be available on
reasonable terms or in sufficient amounts to cover one or more large claims
or
our insurer may disclaim coverage as to any future claim. The successful
assertion of any large claim against us could adversely affect our business.
We
have made, and may continue to make, strategic acquisitions or enter into
joint
ventures. If we are not successful in operating or integrating these
acquisitions or joint ventures, our business, results of operations and
financial condition may be materially and adversely
affected.
In
the
past, we have acquired companies that we believed would enhance the expansion
of
our business and products. We may make selective opportunistic acquisitions
of
companies or businesses with resources and product or service offerings capable
of providing us with additional product and/or market strengths. Acquisitions
involve significant risks and uncertainties, including:
|
·
|
the
industry may develop in a different direction than anticipated
and the
technologies we acquire may not prove to be those we
need;
|
17
|
·
|
the
future valuations of acquired businesses may decrease from the
market
price we paid for these
acquisitions;
|
|
·
|
the
revenues of acquired businesses may not offset increased operating
expenses associated with these
acquisitions;
|
|
·
|
potential
difficulties in integrating new products, software, businesses
and
operations in an efficient and effective
manner;
|
|
·
|
our
customers or customers of the acquired businesses may defer purchase
decisions as they evaluate the impact of the acquisitions on our
future
product strategy;
|
|
·
|
potential
loss of key employees of the acquired
businesses;
|
|
·
|
diversion
of the attention of our senior management from the operation of
our daily
business;
|
|
·
|
entering
new markets in which we have limited experience and where competitors
may
have a stronger market presence;
|
|
·
|
the
potential adverse effect on our cash position as a result of all
or a
portion of an acquisition purchase price being paid in
cash;
|
|
·
|
potential
issuance of securities that are superior to the right of holders
of our
common stock, or that would dilute our shareholders’ percentage
ownership;
|
|
·
|
potential
assumption and/or incurrence of liabilities and the increased risk
of
costly and time-consuming litigation, including stockholder lawsuits;
and
|
|
·
|
the
potential assumption of significant amounts of debt.
|
Our
inability to successfully operate and integrate newly acquired businesses
in a
timely manner could have a material adverse effect on our ability to take
advantage of further growth in demand for IP-optimized network solutions,
if
any, and other advances in technologies and ultimately our results of operations
and/or financial condition.
Acquisitions
are inherently risky, and no assurance can be given that our previous or
future
acquisitions will be successful and will not materially adversely affect
our
business, operating results, or financial condition. Failure to manage and
successfully integrate acquisitions could materially harm our business and
operating results.
Our
use of the Credit Facility from Silicon Valley Bank presents certain
risks.
On
August
1, 2006, we and our wholly-owned subsidiary, Airspan Communications Limited,
entered into a Loan and Security Agreement (the "Loan and Security Agreement")
with Silicon Valley Bank ("SVB"), with respect to a revolving credit line.
For
the two year term of the credit line, we may, subject to certain adjustments,
borrow up to the lesser of (i) $10,000,000 and (ii) 80% of eligible accounts
receivable. Although we believe the credit facility will increase our financial
resources and financial flexibility, our use of the credit facility does
present
certain risks. Our ability to borrow under the credit facility is a function
of,
among other things, our base of eligible accounts receivable and the rate
at
which advances are made against eligible receivables (the "Advance Rate").
If
the amount or quality of our accounts receivable deteriorates or the Advance
Rate is adjusted downward, our ability to borrow under the credit facility
will
be directly, negatively affected. If there is a downward adjustment in the
borrowing base at a time when we are unable to, within three business days,
repay SVB the amount by which the borrowing base has been decreased, we will
likely be in default under the Loan and Security Agreement. In addition,
the
credit facility requires us to satisfy certain financial covenants. As a
result,
we cannot provide any assurances that we will be able to borrow under the
Loan
and Security Agreement at a time when we most need money to fund working
capital
or other needs. The credit facility also contains various provisions that
restrict our use of cash and operating flexibility. These provisions could
have
important consequences for us, including (i) causing us to use a portion
of our
cash flow from operations for debt repayment and/or service rather than other
perceived needs, (ii) precluding us from incurring additional debt financing
for
future working capital or capital expenditures and (iii) impacting our ability
to take advantage of significant, perceived business opportunities, such
as
acquisition opportunities or to react to market conditions. Our failure to
meet
financial and other covenants could give rise to a default under the Loan
and
Security Agreement. In the event of an uncured default, the Loan and Security
Agreement provides that all amounts owed to SVB are immediately due and payable
and that SVB has the right to enforce its security interest in our assets.
18
Our
projected demand for capital in future periods may change quickly and may
adversely affect our results of operations and/or
prospects.
We
recognize that our projected demand for capital in future periods may change
quickly due to a variety of factors, estimates and assumptions. If our projected
demand for capital materially increases and our then current and/or projected
cash resources have not increased a comparable amount, we may need to modify
our
existing business plan. If we are ever compelled to adopt measures to conserve
cash resources, such measures may adversely affect our results of operations
and
our short term and/or long term prospects for growth and profitability.
If
our stock price falls below $1.00 per share, our common stock may be de-listed
from the Nasdaq Global Market.
The
National Association of Securities Dealers, Inc. has established certain
standards for the continued listing of a security on the Nasdaq Global Market.
These standards require, among other things, that the minimum bid price for
a
listed security be at least $1.00 per share. Under Nasdaq’s listing maintenance
standards, if the closing bid price of our common stock remains below $1.00
per
share for 30 consecutive trading days, Nasdaq will issue a deficiency notice
to
us. If the closing bid price subsequently does not reach $1.00 per share
or
higher for a minimum of ten consecutive trading days during the 180 calendar
days following the issuance of the deficiency notice from Nasdaq, Nasdaq
may
de-list our common stock from trading on the Nasdaq Global Market.
If
our
common stock is to be de-listed from the Nasdaq Global Market, we may apply
to
have our common stock listed on the Nasdaq SmallCap Market. In the event
that
such application is accepted, of which there can be no assurance, we anticipate
the change in listings may result in a reduction in some or all of the
following, each of which could have a material adverse effect on our investors:
|
·
|
the
liquidity of our common stock;
|
|
·
|
the
market price of our common stock;
|
|
·
|
the
number of institutional investors that will consider investing
in our
common stock;
|
|
·
|
the
number of investors in general that will consider investing in
our common
stock;
|
|
·
|
the
number of market makers in our common stock;
|
|
·
|
the
availability of information concerning the trading prices and volume
of
our common stock;
|
|
·
|
the
number of broker-dealers willing to execute trades in shares of
our common
stock; and
|
19
|
·
|
our
ability to obtain financing for the continuation of our operations.
|
Should
our application to the Nasdaq SmallCap Market be rejected or if we fail to
continue to satisfy the Nasdaq SmallCap Market’s continued listing requirements,
our common stock could be delisted entirely or relegated to trading on the
over-the-counter-market.
For
2004 and 2005, our independent registered public accounting firm reported
material weaknesses in our internal control over financial reporting. If
such
material weaknesses were to recur, they could result in a material misstatement
in our financial statements that would not be prevented or detected, cause
investors to lose confidence in our reported financial information and have
a
negative effect on the trading price of our stock.
In
connection with the audits of our financial statements for 2004 and 2005,
our
independent registered public accounting firm reported to our Audit Committee
a
"material weakness" in our internal control over financial reporting. In
general, a material weakness is defined as a control deficiency, or combination
of control deficiencies, that results in more than a remote likelihood that
a
material misstatement of the annual or interim financial statements will
not be
prevented or detected.
The
material weakness reported in 2004 was that that the Company’s internal control
pertaining to the review and evaluation of the accounting treatment required
for
complex and non-standard Stockholders’ Equity transactions, in particular the
Company’s issuance of Series A Preferred Stock, was ineffective.
The
material weakness reported in 2005 was that our processes and procedures
relating to the appropriate accounting treatment for the recognition of revenue
under certain types of extended payment arrangements in our sales contracts
did
not operate effectively.
Although
we believe we have remediated the material weakness identified above, the
measures we have taken to date or any future measures we may take might not
sufficiently allow us to maintain adequate controls over our financial processes
and reporting in the future.
In
addition, we identified an additional material weakness in 2005. Following
the
performance of a physical inventory count at our Israeli subsidiary in January
2006, significant differences were identified between the count and the
inventory subledger. The differences were for the most part due to inventory
movements that had not been recorded or were recorded incorrectly. We also
identified at our Israeli subsidiary insufficient segregation of duties in
the
Logistics department, inadequate security access controls and failure to
perform
effective and timely reviews of reconciliations by individuals with appropriate
levels of experience, which contributed to the delay in the differences being
detected. We are in the process of remediating this material
weakness.
Furthermore,
additional material weaknesses in our internal control over financial reporting
could be discovered in the future. To the extent we identify any additional
weaknesses in our internal control over financial reporting, significant
resources from our management team and additional expenses may be required
to
implement and maintain effective controls and procedures. In addition, we
may
need to hire additional employees and outside consultants and further train
our
existing employees. If the material weaknesses previously reported by our
independent registered public accounting firm were to recur, if we fail to
implement required new or improved controls, or if we encounter difficulties
in
their implementation, our operating results could be adversely affected.
If such
an event were to occur, we may fail to meet our reporting obligations or
we may
have material misstatements in our financial statements. Any such failure
also
could adversely affect the results of the periodic management evaluations
and
annual independent registered public accounting firm attestation reports
regarding the effectiveness of our internal control over financial reporting.
Ineffective internal control over financial reporting could also cause investors
to lose confidence in our reported financial information, which could have
a
negative effect on the trading price of our common stock.
We
have a significant shareholder whose interests may conflict with other
shareholders of the Company.
As
of the
date of this prospectus, it is our understanding that Oak Investment Partners
XI, Limited Partnership (“Oak”) owns all of the outstanding shares of the
Company’s Series B Preferred Stock (the “Series B Shares”). Based upon our
capitalization as of January 11, 2007, the Series B Shares are initially
convertible into a total of approximately 33% of our common stock (assuming
conversion of the Series B Shares, but without giving effect to the exercise
or
conversion of any other outstanding options, warrants or convertible securities)
and, upon such conversion, would represent approximately 29% of the voting
power
outstanding.
20
Because
Oak will own a significant percentage of our voting power, it may have
considerable influence in determining the outcome of any corporate transaction
or other matter submitted to our shareholders for approval, including the
election of directors and approval of mergers, consolidations and the sale
of
all or substantially all of our assets. In addition, for as long as Oak is
the
holder of at least a majority of the issued and outstanding shares of Series
B
Preferred Stock and the number of shares of common stock into which the then
outstanding shares of Series B Preferred Stock are convertible represents
at
least fifteen percent of the total issued and outstanding shares of our common
stock, Oak will be entitled to elect one member of our Board of Directors.
On
September 22, 2006, our Board of Directors appointed a new member, Mr. Bandel
L.
Carano, to the Company's Board of Directors. Mr. Carano has been designated
by
Oak as Oak's appointee to the Board.
So
long
as the Series B Preferred Stock is outstanding, we have agreed to refrain
from
taking certain actions without the approval of our holders of a majority
of the
then outstanding Series B Preferred Stock voting separately as a
class.
The
rights and privileges of the Series B Preferred Stock may have an effect
on our
conduct of operations, financing or investing. In addition, upon any
liquidation of the Company, certain mergers, reorganizations and/or
consolidations of the Company into or with another corporation, the sale
by us
of all or substantially all of our assets or any transaction or series of
related transactions in which a person, entity or group acquires 50% or more
of
the combined voting power of our then outstanding securities (a
“Liquidation”),
the
holders of the Series B Preferred Stock will have a claim against our assets
senior to the claim of the holders of common stock in an amount equal to
$290.00
per share of Series B Stock (as appropriately adjusted for any combinations,
divisions, or similar recapitalizations affecting the Series B Preferred
Stock
after issuance).
21
SPECIAL
NOTE REGARDING FORWARD-LOOKING INFORMATION
This
prospectus, any prospectus supplement and the documents we incorporate by
reference in this prospectus contain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. All statements, other than statements of
historical facts, included in this prospectus or in any prospectus supplement
or
incorporated by reference in this prospectus, including statements regarding
our
strategy, future operations, financial position, future revenues, projected
costs, prospects, plans and objectives of management, may be deemed to be
forward-looking statements. The words "anticipates," "believes," "estimates,"
"expects," "intends," "may," "plans," "projects," "will," "would" and similar
expressions are intended to identify forward-looking statements, although
not
all forward-looking statements contain these identifying words.
We
may
not actually achieve the plans, intentions or expectations disclosed in our
forward-looking statements and you should not place undue reliance on our
forward-looking statements. There are a number of important factors that
could
cause actual results or events to differ materially from the plans, intentions
and expectations disclosed in the forward-looking statements we make. These
important factors include the factors that we identify in the documents we
incorporate by reference in this prospectus, particularly the factors referenced
under the heading "Risk Factors." You should read these factors and other
cautionary statements made in this prospectus and in the documents we
incorporate by reference as being applicable to all related forward-looking
statements wherever they appear in the prospectus, in any prospectus supplement
and in the documents we incorporate by reference in this prospectus. We do
not
assume any obligation to update any forward-looking statements.
WHERE
YOU CAN FIND MORE INFORMATION
We
file
annual, quarterly and special reports and other information with the SEC.
Our
SEC filings are available to the public over the Internet on our website
at
www.airspan.com. This information can also be examined without charge at
the
public reference facilities of the SEC located at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and copies of this material can be obtained from
the SEC
at prescribed rates. You may obtain information about the public reference
facilities by calling the SEC at (800) SEC-0330. In addition, the SEC maintains
a web site www.sec.gov that contains the reports, proxy and information
statements and other information regarding registrants that file electronically
with the SEC, including the Company.
Our
Shares are traded on Nasdaq under the symbol “AIRN,” and you may inspect copies
of any documents we file with the SEC at the offices of The National Association
of Securities Dealers, Inc. located at 1735 K Street, NW, Washington, DC
20006.
The
SEC
allows us to "incorporate" into this prospectus information that we file
with
the SEC in other documents. This means that we can disclose important
information to you by referring to other documents that contain that
information. Any information that we incorporate by reference is considered
part
of this prospectus. The documents and reports that we list below are
incorporated by reference into this prospectus. In addition, all documents
and
reports which we file pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act after the date of this prospectus are incorporated
by
reference in this prospectus as of the respective filing dates of these
documents and reports. Statements contained in documents that we file with
the
SEC and that are incorporated by reference in this prospectus will automatically
update and supersede information contained in this prospectus, including
information in previously filed documents or reports that have been incorporated
by reference in this prospectus, to the extent the new information differs
from
or is inconsistent with the old information.
We
have
filed the following documents with the SEC. These documents are incorporated
herein by reference as of their respective dates of filing:
(1) Our
Annual Report on Form 10-K for the year ended December 31, 2005, as filed
with
the SEC on March 31, 2006;
(2) Our
Quarterly Reports on Form 10-Q for the quarters ended April 2, 2006, July
2,
2006 and October 1, 2006, as filed with the SEC on May 12, 2006, August 11,
2006
and November 13, 2006;
22
(3) Our
Current Reports on Form 8-K, as filed with the SEC on January 24, 2006, February
8, 2006, March 13, 2006, March 24, 2006, March 31, 2006, May 15, 2006, June
19,
2006, June 29, 2006, July 7, 2006, July 14, 2006, July 25, 2006, July 31,
2006,
August 1, 2006, August 7, 2006, August 11, 2006, September 21, 2006, September
26, 2006, November 9, 2006 and December 26, 2006;
(4) All
of
our filings pursuant to the Securities Exchange Act after the date of filing
the
initial registration statement and prior to effectiveness of the registration
statement; and
(5) A
description of our Common Stock contained in our registration statement on
Form
S-1 filed with the SEC on July 18, 2000.
Certain
Current Reports on Form 8-K dated both prior to and after the date of this
prospectus are or will be furnished to the SEC and shall not be deemed “filed”
with the Securities and Exchange Commission and will not be incorporated
by
reference into this prospectus. However, all other reports and documents
filed
by us after the date of this prospectus under Sections 13(a), 14 and 15(d)
of the Securities Exchange Act of 1934 prior to the termination of the offering
of the Common Stock covered by this prospectus are also incorporated by
reference in this prospectus and are considered to be part of this prospectus
from the date those documents are filed.
You
may
request a copy of this prospectus and any document incorporated by reference
herein at no cost, by writing, calling or e-mailing us at the following
address:
Airspan
Networks, Inc.
777
Yamato Road, Suite 310
Boca
Raton, FL 33431
Attention:
Airspan Shareholder Services
Telephone:
(561) 893-8670
Email:
estonestrom@airspan.com
You
should rely only on the information contained or incorporated by reference
in
this prospectus and the applicable prospectus supplement. We have not authorized
anyone else to provide you with different information
LEGAL
MATTERS
Legal
matters with respect to the Common Stock offered by this prospectus will
be
passed upon for us by Hunton & Williams LLP.
EXPERTS
The
consolidated financial statements of Airspan Networks, Inc. and schedule,
appearing in Airspan Networks Inc.’s Annual Report (Form 10-K) for the year
ended December 31, 2005 and management’s assessment of the effectiveness of
internal control over financial reporting as of December 31, 2005 incorporated
by reference in this prospectus and elsewhere in the registration statement
have
been audited by Grant Thornton LLP, independent registered public accountants,
as indicated in their reports with respect thereto, and are included herein
in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said reports.
23
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
14. Other Expenses of Issuance and Distribution.
The
expenses in connection with the issuance and distribution of the securities,
other than underwriting discounts and agency fees or commissions, are set
forth
in the following table. All amounts except the SEC registration fee are
estimated. None of these expenses will be borne by the Selling
Shareholder.
|
SEC
registration fee
|
$
|
9,223.01
|
||
|
Nasdaq
Global Market listing fees
|
$
|
0
|
||
|
Accounting
fees and expenses
|
$
|
7,500
|
||
|
Printing
expenses
|
$
|
1,000
|
||
|
Legal
fees and expenses
|
$
|
30,000
|
||
|
Miscellaneous
|
$
|
0
|
||
|
Total
|
$
|
47,723.01
|
Item
15. Indemnification of Directors and Officers.
Section
23B.08.510 of the Washington Business Corporation Act authorizes Washington
corporations to indemnify their officers and directors under certain
circumstances against expenses and liabilities incurred in legal proceedings
involving such persons because of their being or having been an officer or
director. The Company’s Amended and Restated Articles of Incorporation require
indemnification of the Company’s officers and directors to the fullest extent
permitted by Washington law. The Company also maintains directors’ and officers’
liability insurance.
The
Company’s Amended and Restated Articles of Incorporation, as amended to date,
provide that the Company shall, to the full extent permitted by the Washington
Business Corporation Act of the State of Washington, as amended from time
to
time, indemnify all directors and officers of the Company and advance expenses
to each of our currently acting and former directors, subject to certain
exceptions in the By-laws. In addition, the Company’s Amended and Restated
Articles of Incorporation contain a provision eliminating the personal liability
of directors to the Company or its shareholders for monetary damages arising
out
of a breach of fiduciary duty. Under Washington law, this provision eliminates
the liability of a director for breach of fiduciary duty but does not eliminate
the personal liability of any director for (i) acts or omissions of a director
that involve intentional misconduct or a knowing violation of law, (ii) conduct
in violation of Section 23B.08.310 of the Washington Business Corporation
Act
(which section relates to unlawful distributions) or (iii) any transaction
from
which a director personally received a benefit in money, property or services
to
which the director was not legally entitled.
The
Company’s Amended and Restated Articles of Incorporation, as amended to date,
further provides that the indemnification provided therein is not exclusive,
and
provides that in the event that the Washington Business Corporation Act is
amended to expand the indemnification permitted to directors or officers
the
Company must indemnify those persons to the full extent permitted by such
law as
so amended.
Directors
and officers of the Company are insured, at the expense of the Company, against
certain liabilities which might arise out of their employment and which might
not be indemnified or indemnifiable under the By-Laws. The primary coverage
is
provided by a Directors and Officers Liability Insurance Policy in customary
form. No deductibles or retentions apply to individual directors or officers.
24
Item
16. Exhibits.
|
Exhibit
No.
|
Description
|
|
|
4.1
|
Amended
and Restated Articles of Incorporation of Airspan (1)
|
|
|
4.2
|
Articles
of Amendment to the Articles of Incorporation (2)
|
|
|
4.3
|
Articles
of Amendment to the Articles of Incorporation (3)
|
|
|
4.4
|
Amended
and Restated Bylaws of Airspan (3)
|
|
|
4.5
|
Form
of Airspan’s common stock certificate (4)
|
|
|
4.6
|
Preferred
Stock Purchase Agreement, dated July 28, 2006 among Airspan Networks,
Inc.
and Oak Investment Partners XI, Limited Partnership (5)
|
|
|
5.1
|
Opinion
of Hunton & Williams LLP*
|
|
|
23.1
|
Consent
of Grant Thornton LLP*
|
|
|
23.2
|
Consent
of Hunton & Williams LLP(included in Exhibit 5.1)*
|
|
|
24.1
|
Power
of Attorney (Included on the Signature Page
hereto)
|
*filed
herewith
|
1
|
Incorporated
by reference to Airspan’s Form 10-Q for the quarter ended April 4, 2004.
|
|
2
|
Incorporated
by reference to the Company’s report on Form 8-K filed on September 15,
2004.
|
|
3
|
Incorporated
by reference to the Company’s report on Form 8-K filed on September 26,
2006.
|
|
4
|
Incorporated
by Reference to Airspan’s Registration Statement on Form S-1 (333-34514)
filed July 18, 2000.
|
|
5
|
Incorporated
by reference to the Company’s report on Form 8-K filed on August 1,
2006.
|
Item
17. Undertakings.
(a) The
undersigned Registrant hereby undertakes:
(1)
To
file,
during any period in which offers or sales are being made, a post-effective
amendment to this Registration Statement:
(i)
To
include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933;
(ii)
To
reflect in the prospectus any facts or events arising after the effective
date
of the Registration Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental
change
in the information set forth in the Registration Statement. Notwithstanding
the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of a prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the “Calculation of Registration Fee” table in the
effective registration statement; and
(iii)
To
include any material information with respect to the plan of distribution
not
previously disclosed in the registration statement or any material change
to
such information in the registration statement;
Provided,
however, that paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) do not apply
if
the information required to be included in a post-effective amendment by
those
paragraphs is contained in reports filed with or furnished to the Commission
by
the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in this
Registration Statement, or that is contained in a form of prospectus filed
pursuant to Rule 424(b) that is part of this Registration Statement.
25
(2)
That,
for
the purpose of determining any liability under the Securities Act of 1933,
each
such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona
fide
offering
thereof;
(3)
To
remove
from the registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering; and
(4)
That,
for
the purpose of determining liability under the Securities Act to any purchaser:
(i)
Each
prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed
to
be part of the registration statement as of the date the filed prospectus
was
deemed part of and included in the registration statement; and
(ii) Each
prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7)
as
part of a registration statement in reliance on Rule 430B relating to an
offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose
of providing the information required by Section 10(a) of the Securities
Act shall be deemed to be part of and included in the registration statement
as
of the earlier of the date such form of prospectus is first used after
effectiveness or the date of the first contract of sale of securities in
the
offering described in the prospectus. As provided in Rule 430B, for liability
purposes of the issuer and any person that is at that date an underwriter,
such
date shall be deemed to be a new effective date of the registration statement
relating to the securities in the registration statement to which that
prospectus relates, and the offering of such securities at that time shall
be
deemed to be the initial bona fide offering thereof. PROVIDED, HOWEVER, that
no
statement made in a registration statement or incorporated by reference into
the
registration statement or prospectus that is part of the registration statement
will, as to a purchaser with a time of contract of sale prior to such effective
date, supersede or modify any statement that was made in the registration
statement or prospectus that was part of the registration statement or made
in
any such document immediately prior to such effective date.
(5)
That,
for
the purpose of determining liability of a Registrant under the Securities
Act of
1933 to any purchaser in the initial distribution of the securities, the
undersigned Registrant undertakes that in a primary offering of securities
of
the undersigned Registrant pursuant to this Registration Statement, regardless
of the underwriting method used to sell the securities to the purchaser,
if the
securities are offered or sold to such purchaser by means of any of the
following communications, the undersigned Registrant will be a seller to
the
purchaser and will be considered to offer or sell such securities to such
purchaser:
(i) Any
preliminary prospectus or prospectus of the undersigned Registrant relating
to
the offering required to be filed pursuant to Rule 424;
(ii)
Any
free writing prospectus relating to the offering prepared by or on behalf
of the
undersigned Registrant or used or referred to by the undersigned Registrant;
(iii)
The
portion of any other free writing prospectus relating to the offering containing
material information about an undersigned Registrant or its securities provided
by or on behalf of the undersigned Registrant; and
(iv)
Any
other communication that is an offer in the offering made by the undersigned
Registrant to the purchaser.
(b)
The
undersigned Registrant hereby undertakes that, for purposes of determining
any
liability under the Securities Act of 1933, each filing of the Registrant’s
annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan’s annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona
fide
offering
thereof.
26
(c)
Insofar
as indemnification for liabilities arising under the Securities Act of 1933
may
be permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act
of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in
the opinion of its counsel the matter had been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
27
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the Registrant certifies
that
it has reasonable grounds to believe that it meets all of the requirements
for
filing on Form S-3 and has duly caused this Registration Statement to be
signed
on its behalf by the undersigned, thereunto duly authorized, in the City
of Boca
Raton, State of Florida, on this 23rd day of January, 2007.
|
AIRSPAN
NETWORKS, INC.
|
||
| |
|
|
| By: | /s/ Eric D. Stonestrom | |
|
Name:
Eric D. Stonestrom
Title:
President and Chief Executive Officer
|
||
Pursuant
to the requirements of the Securities Act of 1933, this Registration Statement
has been signed by the following persons in the capacities and on the dates
indicated.
Each
person whose signature appears below constitutes and appoints Eric D. Stonestrom
and Matthew J. Desch, and each of them, his or her true and lawful
attorney-in-fact and agent, with full power of substitution, for him or her
and
in his or her name, place and stead, in any and all capacities, to sign any
and
all pre-effective and post-effective amendments to this Registration Statement,
including any filings pursuant to Rule 462(b) under the Securities Act of
1933,
as amended, and to file the same, with all exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto such attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes
as he
might or could do in person, hereby ratifying all that such attorneys-in-fact
and agents, or any of them or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
|
Signature
|
Title
|
Date
|
||
|
/s/
Eric D. Stonestrom
Eric D. Stonestrom |
President,
Chief Executive Officer and
Director
(Principal Executive Officer)
|
January
23, 2007
|
||
|
/s/
David Brant
David
Brant
|
Senior
Vice President, Finance and Chief Financial Officer (Principal
Financial
Officer and Principal Accounting Officer)
|
January
23, 2007
|
||
|
/s/
Matthew J. Desch
Matthew
J. Desch
|
Chairman
of the Board and Director
|
January
23, 2007
|
||
|
/s/
Frederick R. Fromm
Frederick
R. Fromm
|
Director
|
January
23, 2007
|
||
|
/s/
Guillermo Heredia
Guillermo Heredia |
Director
|
January
23, 2007
|
||
|
/s/
Thomas S. Huseby
Thomas
S. Huseby
|
Director
|
January
23, 2007
|
||
|
/s/
David A. Twyver
David Twyver |
Director
|
January
23, 2007
|
28
|
Signature
|
Title
|
Date
|
||
|
|
||||
|
/s/
Michael T. Flynn
Michael
T. Flynn
|
Director
|
January
23, 2007
|
||
|
/s/
Julianne M. Biagini
Julianne
M. Biagini
|
Director
|
January
23, 2007
|
||
|
/s/
Bandel L. Carano
Bandel
L. Carano
|
Director
|
January
23, 2007
|
29
INDEX
TO EXHIBITS
|
Exhibit
No.
|
Description
|
|
|
4.1
|
Amended
and Restated Articles of Incorporation of Airspan (1)
|
|
|
4.2
|
Articles
of Amendment to the Articles of Incorporation (2)
|
|
|
4.3
|
Articles
of Amendment to the Articles of Incorporation (3)
|
|
|
4.4
|
Amended
and Restated Bylaws of Airspan (3)
|
|
|
4.5
|
Form
of Airspan’s common stock certificate (4)
|
|
|
4.6
|
Preferred
Stock Purchase Agreement, dated July 28, 2006 among Airspan Networks,
Inc.
and Oak Investment Partners XI, Limited Partnership (17)
|
|
|
5.1
|
Opinion
of Hunton & Williams LLP*
|
|
|
23.1
|
Consent
of Grant Thornton LLP*
|
|
|
23.2
|
Consent
of Hunton & Williams LLP(included in Exhibit 5.1)*
|
|
|
24.1
|
Power
of Attorney (Included on the Signature Page
hereto)
|
|
1
|
Incorporated
by reference to Airspan’s Form 10-Q for the quarter ended April 4, 2004.
|
|
2
|
Incorporated
by reference to the Company’s report on Form 8-K filed on September 15,
2004.
|
|
3
|
Incorporated
by reference to the Company’s report on Form 8-K filed on September 26,
2006.
|
|
4
|
Incorporated
by Reference to Airspan’s Registration Statement on Form S-1 (333-34514)
filed July 18, 2000.
|
|
5
|
Incorporated
by reference to the Company’s report on Form 8-K filed on August 1,
2006.
|
30