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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">UNITED
      STATES</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SECURITIES
      AND EXCHANGE COMMISSION</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Washington,
      D.C. 20549</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 16pt; FONT-FAMILY: Times New Roman">FORM
      8-K</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Current
      Report pursuant</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">to
      Section 13 or 15(d) of the</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Securities
      Exchange Act of 1934</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Date
      of
      report (Date of earliest event reported): September 25, 2006</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 24pt; FONT-FAMILY: Times New Roman">AIRSPAN
      NETWORKS, INC.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Exact
      name of registrant as specified in its charter)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Washington</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(State
      or
      other jurisdiction of incorporation)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div align="center">
      <table bgcolor="white" cellpadding="0" cellspacing="0" width="100%">

          <tr bgcolor="white">
            <td width="50%">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font size="2">000-31031</font>&#160;</div>
            </td>
            <td width="50%">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font size="2">75-2743995</font>&#160;</div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td width="50%">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font size="2">(Commission
                file number)</font>&#160;</div>
            </td>
            <td width="50%">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font size="2">(I.R.S.
                Employer Identification
                No.)</font>&#160;</div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td width="50%">&#160;</td>
            <td width="50%">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td width="50%">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font size="2">777
                Yamato Road, Suite 310, Boca Raton,
                Florida</font>&#160;</div>
            </td>
            <td width="50%">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font size="2">33431</font>&#160;</div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td width="50%">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font size="2">(Address
                of principal executive
                offices)</font>&#160;</div>
            </td>
            <td width="50%">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font size="2">(Zip
                code)</font>&#160;</div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(561)
      893-8670</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Registrant&#8217;s
      telephone number, including area code)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Check
      the
      appropriate box below if the Form 8-K filing is intended to simultaneously
      satisfy the filing obligation of the registrant under any of the following
      provisions:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">[
      ]
</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Written
      communications pursuant to Rule 425 under the Securities Act (17 CFR
      230.425)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">[
      ]
</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Soliciting
      material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
      240.14a-12)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">[
      ]
</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pre-commencement
      communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
      240.14d-2(b))</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">[
      ]
</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pre-commencement
      communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
      240.13e-4(c))</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
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    </div><br>
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          <tr valign="top" style="line-height: 1.25;">
            <td align="left" style="width: 63pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
              1.02</strong></font></td>
            <td align="left">
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Termination
                of a Material Definitive
                Agreement.</strong></font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em><u>Termination
      of the Series A Purchase Agreement Upon Closing of the Series B Purchase
      Agreement</u></em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Effective
      September 25, 2006, the </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Preferred
      Stock Purchase Agreement (the &#8220;Series A Purchase Agreement&#8221;)</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,
      dated
      September 13, 2004, by and between Airspan Networks, Inc. (the &#8220;Company&#8221;) and
</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Oak
      Investment Partners XI, Limited Partnership (the &#8220;Purchaser&#8221;) pursuant to which
      the Purchaser purchased 73,000 shares of the Company&#8217;s Series A Preferred Stock
</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">automatically
      terminated pursuant to and in accordance with the terms of the Preferred Stock
      Purchase Agreement, dated July 28, 2006, by and between the Company and the
      Purchaser (the &#8220;Series B Purchase Agreement&#8221;). Pursuant to the Series B Purchase
      Agreement, the Purchaser transferred $29 million of cash and all 73,000 shares
      of Series A Preferred Stock held by the Purchaser to the Company in exchange
      for
      200,690 shares of the Company&#8217;s Series B Preferred Stock. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      discussed in greater detail in </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8220;Item
      3.02. Unregistered Sales of Equity Securities&#8221;, incorporated into this Item 1.02
      by reference, the Series B Purchase Agreement contains the following type of
      provisions which supercede the comparable provisions of the Series A Purchase
      Agreement:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">transfer
      restrictions on the preferred stock;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">registration
      rights with respect to the resale of the common stock underlying the
</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">outstanding
      preferred stock; and</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">liquidated
      damages for delays in registering the resale of the common stock.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company did not incur </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">any
      early
      termination penalties in connection with the termination of the Series A
      Purchase Agreement.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td align="left" style="width: 63pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
              3.02.</strong></font></td>
            <td align="left">
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Unregistered
                Sales of Equity Securities</strong></font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      September 25, 2006 (the &#8220;Closing Date&#8221;), the Company concluded its previously
      announced private placement of 200,690 shares of Series B Preferred Stock (the
      &#8220;Shares&#8221;) to the Purchaser pursuant to the terms of the Series B Purchase
      Agreement. Upon closing, the Shares were issued to the Purchaser in exchange
      for
      $29 million in cash and the Purchaser&#8217;s transfer to the Company of 73,000 shares
      of the Company&#8217;s Series A Preferred Stock owned by the Purchaser as of the
      Closing Date. The 73,000 shares of Series A Preferred Stock transferred to
      the
      Company at closing represent all of the issued and outstanding Series A
      Preferred Stock and, accordingly, as of the Closing Date, there are no shares
      of
      Series A Preferred Stock issued and outstanding. Based upon the Company&#8217;s
      capitalization as of the Closing Date, the Shares are initially convertible
      into
      a total of approximately 33% of the Company&#8217;s Common Stock (assuming conversion
      of the 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.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Shares have been issued pursuant to an exemption from registration provided
      by
      Section&#160;4(2) of the Securities Act of 1933, as amended.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      transactions contemplated by the Series B Purchase Agreement were approved
      of by
      the holders of a majority of the Company&#8217;s Common Stock that voted at the
      Special Meeting of the Company&#8217;s shareholders (excluding shares held by the
      Purchaser and its affiliates).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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      <div>&#160;</div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
      to the Series B Purchase Agreement, the holders of the Series B Preferred Stock
      have agreed to a lockup with respect to 125,172 of the Shares (and the
      underlying common stock). The lockup with respect to approximately 33,333.3
      of
      the Shares (initially convertible into approximately 3,333,333 shares of the
      Company&#8217;s Common Stock) will expire on each of the ninth month, the twelfth
      month and the fifteenth month after the Closing Date. The lock up with respect
      to 25,172 of the Shares (initially convertible into 2,517,200 shares of Common
      Stock) will expire on December 31, 2006. The remainder of the Shares will not
      be
      subject to a lockup.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      lockup arrangements may expire earlier than indicated above (i) if any
      representation or warranty made by the Company in connection with the Series
      B
      Purchase Agreement is materially untrue and such breach has or will result
      in at
      least a 20% decline in the value of the Purchaser&#8217;s investment in the Company,
      or (ii) upon an event of Liquidation (as defined below).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company has agreed, upon certain terms and conditions, to register the resale
      of
      the shares of Common Stock underlying the Series B Preferred Stock with the
      Securities and Exchange Commission (the &#8220;SEC&#8221;). If a registration statement with
      respect to the resale of such shares has not been declared effective by the
      SEC
      prior to the 9-month anniversary of the closing of the Series B Purchase
      Agreementor if declared effective, ceases to be effective as to the shares
      at
      any time thereafter for longer than 30 days at any one time or 60 days during
      any one year, the Company may be required to pay certain liquidated damages
      to
      the Purchaser not to exceed $30 million. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      connection with this transaction, on September 25, 2006, the Company filed
      an
      amendment (the &#8220;Articles of Amendment&#8221;) to its Amended and Restated Articles of
      Incorporation with the Washington Secretary of State, as amended, setting forth
      the designations, relative rights, preferences, and limitations applicable
      to
      the Series B Preferred Stock. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      following discussion of the Series B Preferred Stock provides only a summary
      of
      the material terms and conditions of the Series B Preferred Stock. For a more
      complete understanding of the Series B Preferred Stock, the Company urges you
      to
      review the copy of the Articles of Amendment filed as Exhibit 3.1 to this Form
      8-K and incorporated herein by reference.</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em><u>Terms
      of the Series B Preferred Stock</u></em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Conversion
      Rights</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Holders
      of the Series B Preferred Stock may convert the stock into shares of the
      Company&#8217;s Common Stock at any time at the rate of 100 shares of Common Stock for
      each share of Series B Preferred Stock (the &#8220;Conversion Rate&#8221;). After 24 months,
      the Series B Preferred Stock will automatically convert into shares of the
      Company&#8217;s Common Stock at the Conversion Rate if the Common Stock trades above
      $9.00 per share for 30 consecutive days. The Conversion Rate will be adjusted
      upon the occurrence of any of the following events: (i) the Company&#8217;s payment of
      Common Stock dividends or distributions, (ii) Common Stock splits, subdivisions
      or combinations and (iii) reclassification, reorganization, change or conversion
      of the Common Stock.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Conversion Rate will also be subject to anti-dilution adjustments pursuant
      to a
      broad-based weighted average formula for certain issuances of equity securities
      by the Company 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 Company&#8217;s existing
      equity compensation plans.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
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        </div>
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      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Voting
      Rights</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Each
      share of Series B Preferred Stock will initially be entitled to 81 votes on
      all
      matters submitted to a vote of the holders of the Company&#8217;s Common Stock. This
      voting rate will adjust upon (i) the Company&#8217;s payment of Common Stock dividends
      and distributions, (ii) Common Stock splits, subdivisions or combinations,
      and
      (iii) reclassification, reorganization, change or conversion of the Common
      Stock. The voting rate will not adjust due to the issuance of equity securities
      by the Company below $2.90 per share.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      long
      as the Purchaser is a majority holder of the Series B Preferred Stock and the
      beneficial holder of at least 15% of the Company&#8217;s common stock, the Purchaser
      will be entitled to elect one member to the Company&#8217;s Board of
      Directors.</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#160;</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Dividends</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Holders
      of the Series B Preferred Stock are entitled to participate in dividends
      declared with respect to the Common Stock as if the Series B Preferred Stock
      was
      converted into the Common Stock. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Redemption
      Rights</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company has the right, after 5 years, to buy back the Series B Preferred Stock
      at a price of $3.625 per common share equivalent. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Liquidation</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Series B Preferred Stock is identified as ranking senior and prior to the Common
      Stock and all other classes or series of capital stock with respect to payments
      upon liquidation.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Upon
      any
      liquidation of the Company, certain mergers, reorganizations and/or
      consolidations of the Company into or with another corporation, the sale by
      the
      Company of all or substantially all of its assets or any transaction or series
      of related transactions in</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#160;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">which
      a
      person, entity or group acquires 50% or more of the combined voting power of
      the
      Company&#8217;s then outstanding securities (a &#8220;Liquidation&#8221;), holders are entitled to
      receive prior and in preference to any distribution to holders of the Company's
      Common Stock, the greater of the amount they invested plus all accumulated
      or
      accrued and unpaid dividends thereon or the amount they would receive in such
      transaction if they converted the Series B Preferred stock into Common
      Stock.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Restrictive
      Covenants</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">So
      long
      as the Series B Preferred Stock is outstanding, pursuant to the Agreement,
      the
      Company will refrain from taking certain actions without the approval of the
      Company&#8217;s holders of a majority of the then outstanding Series B Preferred Stock
      voting separately as a class (the &#8220;Series B Vote&#8221;). Among other things, the
      Company has agreed, with certain exceptions, to refrain from (either directly
      or
      indirectly by merger, consolidation or reclassification):</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">adversely
                changing the rights, preferences or privileges of the Series B Preferred
                Stock or any holder thereof;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">issuing
                any equity security that is senior to or pari passu with the Series
                B
                Preferred Stock with respect to voting rights, dividends, liquidation
                preference or conversion right. Notwithstanding the above,</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>&#160;</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                Company may, without obtaining the Series B Vote, authorize and issue
                Common Stock or any series of preferred stock with equal voting rights
                and
                dividend rights to the Series B Preferred Stock as long as such Common
                Stock and/or preferred stock is junior in liquidation preference
                to the
                Series B Preferred Stock;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 27pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">creating
                any new debt instrument or increasing any existing debt obligation,
                excluding trade payables and capital lease lines, if thereafter the
                Company&#8217;s aggregate indebtedness entered into after the closing of the
                Series B Purchase Agreement exceeds
                $10,000,000.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
      <div>&#160;</div>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td align="left" style="width: 63pt;">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
                5.02</strong></font></div>
            </td>
            <td align="left">
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Departure
                of Directors or Principal Officers; Election of Directors; Appointment
                of
                Principal Officers.</strong></font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      September 22, 2006, the Board of Directors of the Company appointed a new
      member, Mr. Bandel L. Carano, to the Company&#8217;s Board of Directors. One of the
      conditions to the Closing of the Series B Purchase Agreement was the appointment
      of a director designated by the Purchaser to the Company&#8217;s Board of Directors.
      The Purchaser has designated Mr. Carano as its appointee to the
      Board.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mr.
      Carano, who was a member of the Company&#8217;s Board of Directors from January 1998
      to February 2001, has been a general partner of Oak Investment Partners,&#160;a
      multi-stage venture capital firm, since 1987. Mr.&#160;Carano also serves on the
      Investment Advisory Board of the Stanford Engineering Venture Fund, the Board
      of
      Directors of Wireless Facilities, Inc., the Supervisory Board of Tele Atlas
      N.V.
      and the Board of Directors of numerous private companies, including Airgo
      Networks, nLight Photonics, Tensilica and Visto Corporation. Mr. Carano holds
      a
      B.S. and an M.S. in Electrical Engineering from Stanford University</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      addition of Mr. Carano brings the Board&#8217;s membership to nine. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td align="left" style="width: 63pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
              5.03.</strong></font></td>
            <td align="left">
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Amendment
                to Articles of Incorporation or Bylaws, Change in Fiscal Year.
                </strong></font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em><u>Amendment
      to Articles of Incorporation</u></em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      September 25, 2006, in connection with the issuance of the Series B Preferred
      Stock described in further detail above under &#8220;Item 3.02. Unregistered Sales of
      Equity Securities,&#8221; on September 25 2006, the Company filed an amendment to its
      Amended and Restated Articles of Incorporation, as amended, with the Washington
      Secretary of State. The amendment is filed as Exhibit 3.1 to this Form
      8-K.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em><u>Amendment
      to Bylaws</u></em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Effective
      September 22, 2006, the Company amended and restated its Bylaws to increase
      the
      maximum number of members of its Board of Directors from eight persons to nine
      persons. The Company&#8217;s Amended and Restated Bylaws are filed as Exhibit 3.2 to
      the Form 8-K.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td align="left" style="width: 63pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
              9.01</strong></font></td>
            <td align="left">
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Financial
                Statements and Exhibits</strong></font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">
            </td>
            <td align="left" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(d)</font></td>
            <td align="left">
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Exhibits</u></font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">
            </td>
            <td align="left" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.1</font></td>
            <td align="left">
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Articles
                of Amendment to the Articles of Incorporation of Airspan Networks,
                Inc.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">
            </td>
            <td align="left" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.2</font></td>
            <td align="left">
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Amended
                and Restated Bylaws of Airspan Networks,
                Inc.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">
            </td>
            <td align="left" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">99.1</font></td>
            <td align="left">
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Press
                Release, dated September 25, 2006.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SIGNATURES</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
      to the requirements of the Securities Exchange Act of 1934, the Registrant
      has
      duly caused this report to be signed on its behalf by the undersigned hereunto
      duly authorized.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dated:
      September 25, 2006</font></div>
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            <td width="49%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
          </tr>
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            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
            <td colspan="2"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">AIRSPAN
              NETWORKS,
              INC</font></td>
          </tr>
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            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;<br>&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;<br>&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;<br>&#160;</font></td>
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            <td style="border-bottom: #ffffff solid;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">By:&#160;&#160;</font></td>
            <td style="border-bottom: black thin solid;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: "><strong>/</strong><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">s/
              Peter Aronstam</font></font></td>
          </tr>
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            <td colspan="2"><font style="FONT-FAMILY: " size="1">&#160;</font></td>
            <td align="left"><font size="2">Peter Aronstam</font></td>
          </tr>
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            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">Senior
              Vice President and</font></td>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
            <td colspan="2">&#160;</td>
            <td><font size="2">Chief Financial
              Officer</font>&#160;</td>
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{"company-data": {"conformed-name": "AIRSPAN NETWORKS INC", "cik": "0001105542", "assigned-sic": "3663", "irs-number": "000000000", "state-of-incorporation": "WA", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-31031", "film-number": "061108890"}, "business-address": {"street1": "777 YAMATO ROAD", "street2": "SUITE 105", "city": "BOCA RATON", "state": "FL", "zip": "33431", "phone": "561-893-8670"}, "mail-address": {"street1": "777 YAMATO ROAD", "street2": "SUITE 105", "city": "BOCA RATON", "state": "FL", "zip": "33431"}}
Unassociated Document
UNITED
      STATES
SECURITIES
      AND EXCHANGE COMMISSION
Washington,
      D.C. 20549
FORM
      8-K
Current
      Report pursuant
to
      Section 13 or 15(d) of the
Securities
      Exchange Act of 1934
Date
      of
      report (Date of earliest event reported): September 25, 2006
AIRSPAN
      NETWORKS, INC.
(Exact
      name of registrant as specified in its charter)
Washington
(State
      or
      other jurisdiction of incorporation)
000-31031
75-2743995
(Commission
                file number)
(I.R.S.
                Employer Identification
                No.)
777
                Yamato Road, Suite 310, Boca Raton,
                Florida
33431
(Address
                of principal executive
                offices)
(Zip
                code)
(561)
      893-8670
(Registrant's
      telephone number, including area code)
Check
      the
      appropriate box below if the Form 8-K filing is intended to simultaneously
      satisfy the filing obligation of the registrant under any of the following
      provisions:
[
      ]
Written
      communications pursuant to Rule 425 under the Securities Act (17 CFR
      230.425)
[
      ]
Soliciting
      material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
      240.14a-12)
[
      ]
Pre-commencement
      communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
      240.14d-2(b))
[
      ]
Pre-commencement
      communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
      240.13e-4(c))
Item
              1.02
Termination
                of a Material Definitive
                Agreement.
Termination
      of the Series A Purchase Agreement Upon Closing of the Series B Purchase
      Agreement
Effective
      September 25, 2006, the
Preferred
      Stock Purchase Agreement (the "Series A Purchase Agreement")
,
      dated
      September 13, 2004, by and between Airspan Networks, Inc. (the "Company") and
Oak
      Investment Partners XI, Limited Partnership (the "Purchaser") pursuant to which
      the Purchaser purchased 73,000 shares of the Company's Series A Preferred Stock
automatically
      terminated pursuant to and in accordance with the terms of the Preferred Stock
      Purchase Agreement, dated July 28, 2006, by and between the Company and the
      Purchaser (the "Series B Purchase Agreement"). Pursuant to the Series B Purchase
      Agreement, the Purchaser transferred $29 million of cash and all 73,000 shares
      of Series A Preferred Stock held by the Purchaser to the Company in exchange
      for
      200,690 shares of the Company's Series B Preferred Stock.
As
      discussed in greater detail in
"Item
      3.02. Unregistered Sales of Equity Securities", incorporated into this Item 1.02
      by reference, the Series B Purchase Agreement contains the following type of
      provisions which supercede the comparable provisions of the Series A Purchase
      Agreement:
·
transfer
      restrictions on the preferred stock;
·
registration
      rights with respect to the resale of the common stock underlying the
outstanding
      preferred stock; and
·
liquidated
      damages for delays in registering the resale of the common stock.
The
      Company did not incur
any
      early
      termination penalties in connection with the termination of the Series A
      Purchase Agreement.
Item
              3.02.
Unregistered
                Sales of Equity Securities
On
      September 25, 2006 (the "Closing Date"), the Company concluded its previously
      announced private placement of 200,690 shares of Series B Preferred Stock (the
      "Shares") to the Purchaser pursuant to the terms of the Series B Purchase
      Agreement. Upon closing, the Shares were issued to the Purchaser in exchange
      for
      $29 million in cash and the Purchaser's transfer to the Company of 73,000 shares
      of the Company's Series A Preferred Stock owned by the Purchaser as of the
      Closing Date. The 73,000 shares of Series A Preferred Stock transferred to
      the
      Company at closing represent all of the issued and outstanding Series A
      Preferred Stock and, accordingly, as of the Closing Date, there are no shares
      of
      Series A Preferred Stock issued and outstanding. Based upon the Company's
      capitalization as of the Closing Date, the Shares are initially convertible
      into
      a total of approximately 33% of the Company's Common Stock (assuming conversion
      of the 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.
The
      Shares have been issued pursuant to an exemption from registration provided
      by
      Section 4(2) of the Securities Act of 1933, as amended.
The
      transactions contemplated by the Series B Purchase Agreement were approved
      of by
      the holders of a majority of the Company's Common Stock that voted at the
      Special Meeting of the Company's shareholders (excluding shares held by the
      Purchaser and its affiliates).
Pursuant
      to the Series B Purchase Agreement, the holders of the Series B Preferred Stock
      have agreed to a lockup with respect to 125,172 of the Shares (and the
      underlying common stock). The lockup with respect to approximately 33,333.3
      of
      the Shares (initially convertible into approximately 3,333,333 shares of the
      Company's Common Stock) will expire on each of the ninth month, the twelfth
      month and the fifteenth month after the Closing Date. The lock up with respect
      to 25,172 of the Shares (initially convertible into 2,517,200 shares of Common
      Stock) will expire on December 31, 2006. The remainder of the Shares will not
      be
      subject to a lockup.
The
      lockup arrangements may expire earlier than indicated above (i) if any
      representation or warranty made by the Company in connection with the Series
      B
      Purchase Agreement is materially untrue and such breach has or will result
      in at
      least a 20% decline in the value of the Purchaser's investment in the Company,
      or (ii) upon an event of Liquidation (as defined below).
The
      Company has agreed, upon certain terms and conditions, to register the resale
      of
      the shares of Common Stock underlying the Series B Preferred Stock with the
      Securities and Exchange Commission (the "SEC"). If a registration statement with
      respect to the resale of such shares has not been declared effective by the
      SEC
      prior to the 9-month anniversary of the closing of the Series B Purchase
      Agreementor if declared effective, ceases to be effective as to the shares
      at
      any time thereafter for longer than 30 days at any one time or 60 days during
      any one year, the Company may be required to pay certain liquidated damages
      to
      the Purchaser not to exceed $30 million.
In
      connection with this transaction, on September 25, 2006, the Company filed
      an
      amendment (the "Articles of Amendment") to its Amended and Restated Articles of
      Incorporation with the Washington Secretary of State, as amended, setting forth
      the designations, relative rights, preferences, and limitations applicable
      to
      the Series B Preferred Stock.
The
      following discussion of the Series B Preferred Stock provides only a summary
      of
      the material terms and conditions of the Series B Preferred Stock. For a more
      complete understanding of the Series B Preferred Stock, the Company urges you
      to
      review the copy of the Articles of Amendment filed as Exhibit 3.1 to this Form
      8-K and incorporated herein by reference.
Terms
      of the Series B Preferred Stock
Conversion
      Rights
Holders
      of the Series B Preferred Stock may convert the stock into shares of the
      Company's Common Stock at any time at the rate of 100 shares of Common Stock for
      each share of Series B Preferred Stock (the "Conversion Rate"). After 24 months,
      the Series B Preferred Stock will automatically convert into shares of the
      Company's Common Stock at the Conversion Rate if the Common Stock trades above
      $9.00 per share for 30 consecutive days. The Conversion Rate will be adjusted
      upon the occurrence of any of the following events: (i) the Company's payment of
      Common Stock dividends or distributions, (ii) Common Stock splits, subdivisions
      or combinations and (iii) reclassification, reorganization, change or conversion
      of the Common Stock.
The
      Conversion Rate will also be subject to anti-dilution adjustments pursuant
      to a
      broad-based weighted average formula for certain issuances of equity securities
      by the Company 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 Company's existing
      equity compensation plans.
Voting
      Rights
Each
      share of Series B Preferred Stock will initially be entitled to 81 votes on
      all
      matters submitted to a vote of the holders of the Company's Common Stock. This
      voting rate will adjust upon (i) the Company's payment of Common Stock dividends
      and distributions, (ii) Common Stock splits, subdivisions or combinations,
      and
      (iii) reclassification, reorganization, change or conversion of the Common
      Stock. The voting rate will not adjust due to the issuance of equity securities
      by the Company below $2.90 per share.
As
      long
      as the Purchaser 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 Purchaser
      will be entitled to elect one member to the Company's Board of
      Directors.
Dividends
Holders
      of the Series B Preferred Stock are entitled to participate in dividends
      declared with respect to the Common Stock as if the Series B Preferred Stock
      was
      converted into the Common Stock.
Redemption
      Rights
The
      Company has the right, after 5 years, to buy back the Series B Preferred Stock
      at a price of $3.625 per common share equivalent.
Liquidation
The
      Series B Preferred Stock is identified as ranking senior and prior to the Common
      Stock and all other classes or series of capital stock with respect to payments
      upon liquidation.
Upon
      any
      liquidation of the Company, certain mergers, reorganizations and/or
      consolidations of the Company into or with another corporation, the sale by
      the
      Company of all or substantially all of its 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
      the
      Company's then outstanding securities (a "Liquidation"), holders are entitled to
      receive prior and in preference to any distribution to holders of the Company's
      Common Stock, the greater of the amount they invested plus all accumulated
      or
      accrued and unpaid dividends thereon or the amount they would receive in such
      transaction if they converted the Series B Preferred stock into Common
      Stock.
Restrictive
      Covenants
So
      long
      as the Series B Preferred Stock is outstanding, pursuant to the Agreement,
      the
      Company will refrain from taking certain actions without the approval of the
      Company's holders of a majority of the then outstanding Series B Preferred Stock
      voting separately as a class (the "Series B Vote"). Among other things, the
      Company has agreed, with certain exceptions, to refrain from (either directly
      or
      indirectly by merger, consolidation or reclassification):
·
adversely
                changing the rights, preferences or privileges of the Series B Preferred
                Stock or any holder thereof;
·
issuing
                any equity security that is senior to or pari passu with the Series
                B
                Preferred Stock with respect to voting rights, dividends, liquidation
                preference or conversion right. Notwithstanding the above,
the
                Company may, without obtaining the Series B Vote, authorize and issue
                Common Stock or any series of preferred stock with equal voting rights
                and
                dividend rights to the Series B Preferred Stock as long as such Common
                Stock and/or preferred stock is junior in liquidation preference
                to the
                Series B Preferred Stock;
·
creating
                any new debt instrument or increasing any existing debt obligation,
                excluding trade payables and capital lease lines, if thereafter the
                Company's aggregate indebtedness entered into after the closing of the
                Series B Purchase Agreement exceeds
                $10,000,000.
Item
                5.02
Departure
                of Directors or Principal Officers; Election of Directors; Appointment
                of
                Principal Officers.
On
      September 22, 2006, the Board of Directors of the Company appointed a new
      member, Mr. Bandel L. Carano, to the Company's Board of Directors. One of the
      conditions to the Closing of the Series B Purchase Agreement was the appointment
      of a director designated by the Purchaser to the Company's Board of Directors.
      The Purchaser has designated Mr. Carano as its appointee to the
      Board.
Mr.
      Carano, who was a member of the Company's Board of Directors from January 1998
      to February 2001, has been a general partner of Oak Investment Partners, a
      multi-stage venture capital firm, since 1987. Mr. Carano also serves on the
      Investment Advisory Board of the Stanford Engineering Venture Fund, the Board
      of
      Directors of Wireless Facilities, Inc., the Supervisory Board of Tele Atlas
      N.V.
      and the Board of Directors of numerous private companies, including Airgo
      Networks, nLight Photonics, Tensilica and Visto Corporation. Mr. Carano holds
      a
      B.S. and an M.S. in Electrical Engineering from Stanford University
.
The
      addition of Mr. Carano brings the Board's membership to nine.
Item
              5.03.
Amendment
                to Articles of Incorporation or Bylaws, Change in Fiscal Year.
Amendment
      to Articles of Incorporation
On
      September 25, 2006, in connection with the issuance of the Series B Preferred
      Stock described in further detail above under "Item 3.02. Unregistered Sales of
      Equity Securities," on September 25 2006, the Company filed an amendment to its
      Amended and Restated Articles of Incorporation, as amended, with the Washington
      Secretary of State. The amendment is filed as Exhibit 3.1 to this Form
      8-K.
Amendment
      to Bylaws
Effective
      September 22, 2006, the Company amended and restated its Bylaws to increase
      the
      maximum number of members of its Board of Directors from eight persons to nine
      persons. The Company's Amended and Restated Bylaws are filed as Exhibit 3.2 to
      the Form 8-K.
Item
              9.01
Financial
                Statements and Exhibits
(d)
Exhibits
3.1
Articles
                of Amendment to the Articles of Incorporation of Airspan Networks,
                Inc.
3.2
Amended
                and Restated Bylaws of Airspan Networks,
                Inc.
99.1
Press
                Release, dated September 25, 2006.
SIGNATURES
Pursuant
      to the requirements of the Securities Exchange Act of 1934, the Registrant
      has
      duly caused this report to be signed on its behalf by the undersigned hereunto
      duly authorized.
Dated:
      September 25, 2006
AIRSPAN
              NETWORKS,
              INC
By:
/
s/
              Peter Aronstam
Peter Aronstam
Senior
              Vice President and
Chief Financial
              Officer