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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>
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      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>
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      8-K</strong></font></div>
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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">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="justify">&#160;</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): July 28, 2006</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</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">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>
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        or
        other jurisdiction of incorporation)</font></div>
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              </td>
              <td valign="middle" width="36%">
                <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">75-2743995</font></div>
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                  file number)</font></div>
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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">(I.R.S.
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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">777
                  Yamato Road, Suite 310, Boca Raton, Florida </font></div>
              </td>
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                  of principal executive offices) </font></div>
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      893-8670</font></div>
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      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>
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      communications pursuant to Rule 425 under the Securities Act (17 CFR
      230.425)</font></div>
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      material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
      240.14a-12)</font></div>
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      240.14d-2(b))</font></div>
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    <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>Preferred
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    <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 id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      July
      28, 2006, Airspan Networks, Inc. (the &#8220;Company&#8221;) entered into a Preferred Stock
      Purchase Agreement (the "Purchase Agreement") with Oak Investment Partners,
      XI,
      Limited Partnership (the "Purchaser").</font></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">The
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      Preferred Stock&#8221;) in exchange for $29 million in cash and the Purchaser&#8217;s
      transfer to the Company of all shares of the Company&#8217;s Series A Preferred Stock
      owned by the Purchaser on the closing date of the transaction. The Purchaser
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      number of shares of Series B Preferred Stock to be sold to the Purchaser will
      be
      determined as follows:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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      <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: 54pt;">&#160;</td>
              <td style="width: 18pt;">
                <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>
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                <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">The
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                  in
                  exchange for the Purchaser&#8217;s $29 million cash investment (the &#8220;Cash
                  Shares&#8221;); and</font></div>
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      <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: 54pt;">&#160;</td>
              <td style="width: 18pt;">
                <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>
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                <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">The
                  Purchaser will receive approximately 1.379 shares of Series B Preferred
                  Stock in exchange for each share of Series A Preferred Stock transferred
                  to the Company (the &#8220;Exchange Shares&#8221;). Assuming the Purchaser transfers
                  to the Company 73,000 shares of Series A Preferred Stock held by
                  the
                  Purchaser today, the Purchaser will receive 100,690 shares of Series
                  B
                  Preferred Stock.</font></div>
              </td>
            </tr>

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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</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
      Purchaser has agreed to convert into common stock any shares of Series A
      Preferred Stock it elects to transfer to third parties prior to the closing
      of
      the Purchase Agreement (the &#8220;Closing&#8221;).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</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:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
        <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: 54pt;">&#160;</td>
                <td style="width: 18pt;">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
                    <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>
                  </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">convertible
                    into 100 shares of the Company&#8217;s Common Stock,
</font></div>
                </td>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
        <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: 54pt;">&#160;</td>
                <td style="width: 18pt;">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
                    <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>
                  </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">entitled
                    to 81 votes on all matters submitted to a vote of the holders
                    of the
                    Company&#8217;s Common Stock,
</font></div>
                </td>
              </tr>

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      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
        <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: 54pt;">&#160;</td>
                <td style="width: 18pt;">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
                    <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>
                  </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">entitled
                    to participate in dividends declared with respect to the common
                    stock as
                    if the Series A Preferred Stock was converted into the common
                    stock;
                    and</font></div>
                </td>
              </tr>

          </table>
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
        <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: 54pt;">&#160;</td>
                <td style="width: 18pt;">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
                    <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>
                  </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">entitled
                    to a liquidation preference equal to $290 per share upon the
                    occurrence of
                    certain events. </font></div>
                </td>
              </tr>

          </table>
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</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">The
      Company&#8217;s Series A Preferred Stock has comparable terms but with a higher
      liquidation preference, $400 per share. See the section below entitled
&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Series
      B Preferred Stock</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;
for
      more information regarding the rights, designations and privileges of the 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">&#160;</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
      closing of the transaction is subject to a number of material conditions and
      uncertainties, including: the approval of the transactions contemplated by
      the
      Purchase Agreement by a majority of the holders of the Company&#8217;s Common Stock
      that vote (excluding any shares held by the Purchaser or its affiliates); there
      being no change to the business, financial condition or operations of the
      Company that is or could have a material adverse effect on the Company&#8217;s
      condition (financial or other), business, properties or results of operations;
      NASDAQ shall have explicitly or implicitly indicated that it will not object
      to
      the transactions contemplated by the Purchase Agreement. ; the expiration of
      all
      waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976;
      and other customary conditions. </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">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </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">Until
      the
      proposed Closing, the Company has agreed to operate its business in the usual
      and ordinary course of business consistent with past practice and to refrain
      from taking certain actions, without the Purchaser&#8217;s consent. Such actions
      generally include, but are not limited to, creating or increasing debt
      instruments or bank lines for more than $10 million in the aggregate, engaging
      in transactions with affiliates that are not at arms-length or are outside
      the
      ordinary course of business, acquiring or selling any material assets outside
      of
      the ordinary course of business, selling all or substantially all of the assets
      of the Company or participating in a transaction involving a change in control
      and, with certain exceptions, adopting any plan of complete or partial
      liquidation, dissolution, merger, consolidation, restructuring or
      recapitalization. Prior to the proposed Closing, the Company has also agreed,
      subject to certain exceptions, not to solicit or participate in negotiations
      with any third parties relating to the offer or sale of more than $4 million
      of
      equity or equity-linked securities of the Company to a third party other than
      the Purchaser. </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="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Purchase Agreement may be terminated by the Company and the Purchaser at any
      time by mutual agreement. The Purchase Agreement may also be terminated by
      either the Company or the Purchaser (i) in the event the Company&#8217;s shareholders
      do not approve the transactions contemplated by the Purchase Agreement, or
      (ii)
      if the Closing does not close on or before October 31, 2006 (provided that
      the
      right to terminate the Purchase Agreement will not be available to any party
      whose failure to fulfill any obligation under the Purchase Agreement has been
      the primary cause of the failure of the transactions contemplated by this
      Agreement to occur on or before such date). The Purchase Agreement may also
      be
      terminated by the Purchaser if, among other things, the Company breaches certain
      of its covenants under the Agreement or suffers a material adverse effect with
      respect to, its condition (financial or other), business, properties or results
      of operations. In the event the Company or the Purchaser terminates the Purchase
      Agreement based on the Company&#8217;s receipt of a proposal that is more favorable to
      the Company&#8217;s shareholders, the Company will be required to pay the Purchaser
      liquidated damages in the amount of $1.3 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: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em><u>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">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
      <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>Voting
          Rights</u></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      </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">The
      Purchaser is already a significant beneficial holder of the Company&#8217;s common
      stock. Assuming the Purchase Agreement is consummated in accordance with its
      terms, the Purchaser&#8217;s ability to directly or indirectly influence the affairs
      of the Company is expected to increase.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</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 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></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 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 Articles of
      Amendment, 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>
        <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: 54pt;">&#160;</td>
              <td style="width: 18pt;">
                <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%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

            <tr valign="top" style="line-height: 1.25;">
              <td style="width: 54pt;">&#160;</td>
              <td style="width: 18pt;">
                <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">&#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 style="width: 54pt;">&#160;</td>
              <td style="width: 18pt;">
                <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 exceeds
                  $10,000,000.</font></div>
              </td>
            </tr>

        </table>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</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
      description of the foregoing rights, preferences and privileges of the Series
      B
      Preferred Stock is qualified in its entirety by the form of Articles of
      Amendment to the Articles of Incorporation filed as an exhibit to the 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: 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>Lockup
      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">Pursuant
      to the Purchase Agreement, the holders of the Series B Preferred Stock have
      agreed to a lockup with respect to all of the Cash Shares and certain of the
      Exchange Shares (and the underlying common stock). </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      lockup with respect to 33,333.3 of the Cash Shares will expire on each of the
      ninth month, the twelfth month and the fifteenth month after Closing. The lock
      up with respect to 25,712 of the Exchange Shares will expire on December 31,
      2006. The remainder of the Exchange Shares will not be subject to a
      lockup.</font></div>
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      lockup arrangements may expire earlier than indicated above (i) if any
      representation or warranty made by the Company in connection with the 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. </font></div>
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      Rights</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">The
      Company has agreed, upon certain terms and conditions, to register the resale
      of
      the shares underlying the Series B Preferred Stock with the Securities and
      Exchange Commission (the &#8220;SEC&#8221;).</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">If
      a
      registration statement with respect to the resale of such shares has not been
      declared effective by the SEC prior to the expiration of the lock-up period
      or
      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: 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">This
      description of the Purchase Agreement does not purport to be complete and is
      qualified in its entirety by the terms and conditions of the Purchase Agreement,
      a copy of which is attached hereto as Exhibit 4.1 and is incorporated herein
      by
      reference. The Purchase Agreement has been included to provide shareholders
      with
      information regarding its terms. It is not intended to provide any other factual
      information about the Company or the Purchaser. The Purchase Agreement contains
      representations and warranties that the parties to the Purchase Agreement made
      to and solely for the benefit of each other. Information concerning the subject
      matter of such representations and warranties may change after the date of
      the
      Purchase Agreement, which subsequent information may or may not be fully
      reflected in the Company&#8217;s public disclosures.</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 intends to organize a special meeting of the Company&#8217;s shareholders in
      the near future for the purpose of seeking the required shareholder approvals.
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Detailed
      information about the proposals to be presented at the special meeting will
      be
      contained in the proxy statement filed with the SEC and mailed to shareholders
      prior to the meeting. The Company, its Board of Directors, executive officers
      and employees, and certain other persons may be deemed to be participants in
      the
      solicitation of proxies of Company shareholders to approve the transactions
      contemplated by the Purchase Agreement. These individuals may have interests
      in
      the transaction, including interests resulting from their ownership of Common
      Stock or options or other securities of the Company. Information concerning
      these individuals and their interests in the transaction and their participation
      in the solicitation will be contained in the proxy statement to be filed with
      the Securities and Exchange Commission. SHAREHOLDERS OF THE COMPANY ARE ADVISED
      TO READ THE PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE
      SECURITIES AND EXCHANGE COMMISSION WHEN THEY BECOME AVAILABLE BECAUSE THEY
      WILL
      CONTAIN IMPORTANT INFORMATION. The proxy statement will be available free of
      charge at www.sec.gov. In addition, investors and shareholders may obtain free
      copies of the proxy statement and other documents filed with the Securities
      and
      Exchange Commission by writing to:</font></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">
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        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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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">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">777
      Yamato Road, Suite 310</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">Boca
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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">Attention:
      Chief Financial Officer. </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">This
      Form
      8-K contains 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, 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 or negative variations thereof 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. Investors and others are therefore cautioned that a variety
      of factors, including certain risks, may affect our business and cause actual
      results to differ materially from those set forth in the forward-looking
      statements. These risk factors include, without limitation, (i) a slowdown
      of
      expenditures by communication service providers; (ii) increased competition
      from
      alternative communication systems; (iii) the failure of our existing or
      prospective customers to purchase products as projected; (iv) our inability
      to
      successfully implement cost reduction or containment programs and (v) the
      potential loss of Axtel and Yozan as large customers; (vi) the possibility
      that
      Yozan will materially delay or cancel future equipment orders; or (vii) our
      inability to cancel certain component orders and/or use or sell any excess
      inventory we accumulate as a result of the Yozan contract amendment. The Company
      is subject to the risks and uncertainties described in its filings with the
      Securities and Exchange Commission, including its Annual Report on Form 10-K
      for
      the year December 31, 2005 and its Form 10-Q for the quarter ended April 2,
      2006. You should read those factors as being applicable to all related
      forward-looking statements wherever they appear in this press release. We do
      not
      assume any obligation to update any forward-looking statements.</font></div>
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    <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"><strong>Item
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      28, 2006, the Company entered into the Purchase Agreement with the Purchaser
      which provides for the sale by the Company and the purchase by the Purchaser
      of
      up to 200,690 shares of Series B Preferred Stock, as described in further detail
      above under &#8220;Item 1.01. Entry into a Material Definitive Agreement&#8221;.
</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      shares of Series B Preferred Stock are anticipated to be issued pursuant to
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      exemption from registration provided by Section&#160;4(2) of the Securities Act
      of 1933, as amended.</font></div>
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    <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"><strong>Item
      9.01.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 45pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Exhibits</strong></font></div>
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    <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: 54pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(d)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Exhibits</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 108pt; TEXT-INDENT: -108pt; 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 id="TAB1" style="MARGIN-LEFT: 54pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.1</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Preferred
      Stock Purchase Agreement, dated as of July 28, 2006, by and between Airspan
      Networks, Inc. and Oak Investment Partners XI, Limited Partnership, including
      exhibits thereto.</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: 54pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">99.1</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Press
      Release dated July 31, 2006.</font></div>
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        </div>
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    <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="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">&#160;</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, as amended, 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">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
      <table align="center" bgcolor="#ffffff" border="0" cellpadding="0" cellspacing="0" width="100%">

          <tr valign="top" bgcolor="#ffffff">
            <td width="50%"><font size="2">Dated: August 1, 2006</font></td>
            <td width="1%">&#160;</td>
            <td width="49%">&#160;</td>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
            <td width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
            <td width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
            <td width="49%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
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            <td colspan="2"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">AIRSPAN
              NETWORKS,
              INC.</font></td>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
            <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><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">By:&#160;&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">/s/&#160;Peter
              Aronstam</font></td>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
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            <td align="left">
              <hr style="COLOR: black" align="left" noshade size="2" width="80%"><font size="2">Peter
              Aronstam</font></td>
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          <tr valign="top" bgcolor="#ffffff">
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            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">Senior
              Vice President and</font></td>
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          <tr valign="top" bgcolor="#ffffff">
            <td colspan="2">&#160;</td>
            <td><font size="2">Chief Financial Officer</font></td>
          </tr>

      </table>
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    <div>&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        </div>
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        </div>
      </div>
      <div>&#160;</div>
    </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"><strong>INDEX
      TO EXHIBITS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 108pt; TEXT-INDENT: -108pt; 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 id="TAB1" style="MARGIN-LEFT: 54pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.1</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Preferred
      Stock Purchase Agreement, dated as of July 28, 2006, by and between Airspan
      Networks, Inc. and Oak Investment Partners XI, Limited Partnership, including
      exhibits thereto.</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: 108pt; TEXT-INDENT: -108pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 54pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">99.1</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 3pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Press
      Release dated July 31, 2006.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
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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): July 28, 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:
o
Written
      communications pursuant to Rule 425 under the Securities Act (17 CFR
      230.425)
o
Soliciting
      material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
      240.14a-12)
o
Pre-commencement
      communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
      240.14d-2(b))
o
Pre-commencement
      communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
      240.13e-4(c))
Item
      1.01.
Entry
      into a Material Definitive Agreement
Preferred
      Stock Purchase Agreement
On
      July
      28, 2006, Airspan Networks, Inc. (the "Company") entered into a Preferred Stock
      Purchase Agreement (the "Purchase Agreement") with Oak Investment Partners,
      XI,
      Limited Partnership (the "Purchaser").
The
      Purchase Agreement provides for the sale by the Company to the Purchaser of
      up
      to 200,690 shares of a newly designated Series B Preferred Stock (the "Series B
      Preferred Stock") in exchange for $29 million in cash and the Purchaser's
      transfer to the Company of all shares of the Company's Series A Preferred Stock
      owned by the Purchaser on the closing date of the transaction. The Purchaser
      is
      currently the sole registered holder of the Company's Series A Preferred Stock,
      which was issued to the Purchaser in September 2004 for $29 million
.
The
      number of shares of Series B Preferred Stock to be sold to the Purchaser will
      be
      determined as follows:
·
The
                  Purchaser will receive 100,000 shares of Series B Preferred Stock
                  in
                  exchange for the Purchaser's $29 million cash investment (the "Cash
                  Shares"); and
·
The
                  Purchaser will receive approximately 1.379 shares of Series B Preferred
                  Stock in exchange for each share of Series A Preferred Stock transferred
                  to the Company (the "Exchange Shares"). Assuming the Purchaser transfers
                  to the Company 73,000 shares of Series A Preferred Stock held by
                  the
                  Purchaser today, the Purchaser will receive 100,690 shares of Series
                  B
                  Preferred Stock.
The
      Purchaser has agreed to convert into common stock any shares of Series A
      Preferred Stock it elects to transfer to third parties prior to the closing
      of
      the Purchase Agreement (the "Closing").
Each
      share of Series B Preferred Stock will initially be:
·
convertible
                    into 100 shares of the Company's Common Stock,
·
entitled
                    to 81 votes on all matters submitted to a vote of the holders
                    of the
                    Company's Common Stock,
·
entitled
                    to participate in dividends declared with respect to the common
                    stock as
                    if the Series A Preferred Stock was converted into the common
                    stock;
                    and
·
entitled
                    to a liquidation preference equal to $290 per share upon the
                    occurrence of
                    certain events.
The
      Company's Series A Preferred Stock has comparable terms but with a higher
      liquidation preference, $400 per share. See the section below entitled
"
Series
      B Preferred Stock
"
for
      more information regarding the rights, designations and privileges of the Series
      B Preferred Stock.
The
      closing of the transaction is subject to a number of material conditions and
      uncertainties, including: the approval of the transactions contemplated by
      the
      Purchase Agreement by a majority of the holders of the Company's Common Stock
      that vote (excluding any shares held by the Purchaser or its affiliates); there
      being no change to the business, financial condition or operations of the
      Company that is or could have a material adverse effect on the Company's
      condition (financial or other), business, properties or results of operations;
      NASDAQ shall have explicitly or implicitly indicated that it will not object
      to
      the transactions contemplated by the Purchase Agreement. ; the expiration of
      all
      waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976;
      and other customary conditions.
Until
      the
      proposed Closing, the Company has agreed to operate its business in the usual
      and ordinary course of business consistent with past practice and to refrain
      from taking certain actions, without the Purchaser's consent. Such actions
      generally include, but are not limited to, creating or increasing debt
      instruments or bank lines for more than $10 million in the aggregate, engaging
      in transactions with affiliates that are not at arms-length or are outside
      the
      ordinary course of business, acquiring or selling any material assets outside
      of
      the ordinary course of business, selling all or substantially all of the assets
      of the Company or participating in a transaction involving a change in control
      and, with certain exceptions, adopting any plan of complete or partial
      liquidation, dissolution, merger, consolidation, restructuring or
      recapitalization. Prior to the proposed Closing, the Company has also agreed,
      subject to certain exceptions, not to solicit or participate in negotiations
      with any third parties relating to the offer or sale of more than $4 million
      of
      equity or equity-linked securities of the Company to a third party other than
      the Purchaser.
The
      Purchase Agreement may be terminated by the Company and the Purchaser at any
      time by mutual agreement. The Purchase Agreement may also be terminated by
      either the Company or the Purchaser (i) in the event the Company's shareholders
      do not approve the transactions contemplated by the Purchase Agreement, or
      (ii)
      if the Closing does not close on or before October 31, 2006 (provided that
      the
      right to terminate the Purchase Agreement will not be available to any party
      whose failure to fulfill any obligation under the Purchase Agreement has been
      the primary cause of the failure of the transactions contemplated by this
      Agreement to occur on or before such date). The Purchase Agreement may also
      be
      terminated by the Purchaser if, among other things, the Company breaches certain
      of its covenants under the Agreement or suffers a material adverse effect with
      respect to, its condition (financial or other), business, properties or results
      of operations. In the event the Company or the Purchaser terminates the Purchase
      Agreement based on the Company's receipt of a proposal that is more favorable to
      the Company's shareholders, the Company will be required to pay the Purchaser
      liquidated damages in the amount of $1.3 million.
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
The
      Purchaser is already a significant beneficial holder of the Company's common
      stock. Assuming the Purchase Agreement is consummated in accordance with its
      terms, the Purchaser's ability to directly or indirectly influence the affairs
      of the Company is expected to increase.
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 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 Articles of
      Amendment, 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 exceeds
                  $10,000,000.
The
      description of the foregoing rights, preferences and privileges of the Series
      B
      Preferred Stock is qualified in its entirety by the form of Articles of
      Amendment to the Articles of Incorporation filed as an exhibit to the Purchase
      Agreement.
Lockup
      Agreement
Pursuant
      to the Purchase Agreement, the holders of the Series B Preferred Stock have
      agreed to a lockup with respect to all of the Cash Shares and certain of the
      Exchange Shares (and the underlying common stock).
The
      lockup with respect to 33,333.3 of the Cash Shares will expire on each of the
      ninth month, the twelfth month and the fifteenth month after Closing. The lock
      up with respect to 25,712 of the Exchange Shares will expire on December 31,
      2006. The remainder of the Exchange 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 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.
Registration
      Rights
The
      Company has agreed, upon certain terms and conditions, to register the resale
      of
      the shares 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 expiration of the lock-up period
      or
      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.
This
      description of the Purchase Agreement does not purport to be complete and is
      qualified in its entirety by the terms and conditions of the Purchase Agreement,
      a copy of which is attached hereto as Exhibit 4.1 and is incorporated herein
      by
      reference. The Purchase Agreement has been included to provide shareholders
      with
      information regarding its terms. It is not intended to provide any other factual
      information about the Company or the Purchaser. The Purchase Agreement contains
      representations and warranties that the parties to the Purchase Agreement made
      to and solely for the benefit of each other. Information concerning the subject
      matter of such representations and warranties may change after the date of
      the
      Purchase Agreement, which subsequent information may or may not be fully
      reflected in the Company's public disclosures.
The
      Company intends to organize a special meeting of the Company's shareholders in
      the near future for the purpose of seeking the required shareholder approvals.
Detailed
      information about the proposals to be presented at the special meeting will
      be
      contained in the proxy statement filed with the SEC and mailed to shareholders
      prior to the meeting. The Company, its Board of Directors, executive officers
      and employees, and certain other persons may be deemed to be participants in
      the
      solicitation of proxies of Company shareholders to approve the transactions
      contemplated by the Purchase Agreement. These individuals may have interests
      in
      the transaction, including interests resulting from their ownership of Common
      Stock or options or other securities of the Company. Information concerning
      these individuals and their interests in the transaction and their participation
      in the solicitation will be contained in the proxy statement to be filed with
      the Securities and Exchange Commission. SHAREHOLDERS OF THE COMPANY ARE ADVISED
      TO READ THE PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE
      SECURITIES AND EXCHANGE COMMISSION WHEN THEY BECOME AVAILABLE BECAUSE THEY
      WILL
      CONTAIN IMPORTANT INFORMATION. The proxy statement will be available free of
      charge at www.sec.gov. In addition, investors and shareholders may obtain free
      copies of the proxy statement and other documents filed with the Securities
      and
      Exchange Commission by writing to:
Airspan
      Networks Inc
777
      Yamato Road, Suite 310
Boca
      Raton, FL 33431
Attention:
      Chief Financial Officer.
This
      Form
      8-K contains 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, 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 or negative variations thereof 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. Investors and others are therefore cautioned that a variety
      of factors, including certain risks, may affect our business and cause actual
      results to differ materially from those set forth in the forward-looking
      statements. These risk factors include, without limitation, (i) a slowdown
      of
      expenditures by communication service providers; (ii) increased competition
      from
      alternative communication systems; (iii) the failure of our existing or
      prospective customers to purchase products as projected; (iv) our inability
      to
      successfully implement cost reduction or containment programs and (v) the
      potential loss of Axtel and Yozan as large customers; (vi) the possibility
      that
      Yozan will materially delay or cancel future equipment orders; or (vii) our
      inability to cancel certain component orders and/or use or sell any excess
      inventory we accumulate as a result of the Yozan contract amendment. The Company
      is subject to the risks and uncertainties described in its filings with the
      Securities and Exchange Commission, including its Annual Report on Form 10-K
      for
      the year December 31, 2005 and its Form 10-Q for the quarter ended April 2,
      2006. You should read those factors as being applicable to all related
      forward-looking statements wherever they appear in this press release. We do
      not
      assume any obligation to update any forward-looking statements.
Item
      3.02.
Unregistered
      Sales of Securities
On
      July
      28, 2006, the Company entered into the Purchase Agreement with the Purchaser
      which provides for the sale by the Company and the purchase by the Purchaser
      of
      up to 200,690 shares of Series B Preferred Stock, as described in further detail
      above under "Item 1.01. Entry into a Material Definitive Agreement".
The
      shares of Series B Preferred Stock are anticipated to be issued pursuant to
      the
      exemption from registration provided by Section 4(2) of the Securities Act
      of 1933, as amended.
Item
      9.01.
Exhibits
(d)
Exhibits
4.1
Preferred
      Stock Purchase Agreement, dated as of July 28, 2006, by and between Airspan
      Networks, Inc. and Oak Investment Partners XI, Limited Partnership, including
      exhibits thereto.
99.1
Press
      Release dated July 31, 2006.
SIGNATURES
Pursuant
      to the requirements of the Securities Exchange Act of 1934, as amended, the
      Registrant has duly caused this report to be signed on its behalf by the
      undersigned hereunto duly authorized.
Dated: August 1, 2006
AIRSPAN
              NETWORKS,
              INC.
By:
/s/ Peter
              Aronstam
Peter
              Aronstam
Senior
              Vice President and
Chief Financial Officer
INDEX
      TO EXHIBITS
4.1
Preferred
      Stock Purchase Agreement, dated as of July 28, 2006, by and between Airspan
      Networks, Inc. and Oak Investment Partners XI, Limited Partnership, including
      exhibits thereto.
99.1
Press
      Release dated July 31, 2006.