YDI Merges With Terabeam

Broadband wireless systems provider Terabeam has agreed to merge with microwave radio systems provider YDI Wireless

April 14, 2004

3 Min Read

FALLS CHURCH, Va. -- Wireless systems providers YDI Wireless, Inc. (OTCBB: YDIW) and Terabeam Corporation today announced the signing of a definitive merger agreement. Under the terms of the agreement, Terabeam will become a wholly owned subsidiary of YDI and will remain focused on providing high capacity wireless systems to telecommunications carriers.

YDI, headquartered in Falls Church, Virginia, is a leading provider of point-to-point and point-to-multipoint microwave radio systems as well as high capacity point-to-point millimeter wave (MMW) systems.

Terabeam of Redmond, Washington, is a leading provider of broadband wireless systems using high frequency MMW and free space optics (FSO) technologies.

Under the terms of the agreement, each share of Terabeam's common stock will be exchanged for 0.22 shares of YDI's common stock. This ratio would be reduced to 0.20 shares of YDI's common stock for each Terabeam share if YDI's average stock price before closing is higher than $5.40. If all Terabeam options and warrants that have exercise prices (as adjusted by the exchange ratio) below YDI's current stock price are exercised prior to closing, YDI stockholders would own approximately 53% of the combined entity and Terabeam stockholders would own approximately 47% using the 0.22 exchange ratio. The relative ownership percentages will change if fewer Terabeam options and warrants are exercised prior to closing.

Robert Fitzgerald will be the CEO of the combined company, and in general the combined company will be managed by the current YDI management team. The board of directors of the combined company will consist of four YDI designees and three Terabeam designees, including Dan Hesse, Terabeam's Chairman and Chief Executive Officer.

"Not only will we consolidate the two companies' 60 GHz MMW product lines into what we believe will make us a world leader in the production of 'E-Band' (60-90 GHz) wireless systems", said Robert Fitzgerald, Chief Executive Officer of YDI, "but by combining our diverse license-free product lines into a larger product portfolio, the new company will have a more complete set of solutions to meet our customers' varying capacity, range, security and cost requirements. Additional synergies should be gained by combining YDI's WISP, municipal, and enterprise sales channels with Terabeam's telecom carrier and government sales activities. Adding Dan Hesse to our board of directors as well as enhancing our shareholder base with the addition of Terabeam investors Mobius Venture Capital and Softbank should improve our profile in the financial community."

"The new company is expected to be a leader in current and emerging license-free carrier-grade wireless systems at the 2.4, 5.8, 24 and 60 GHz frequencies. Our very high capacity (100 - 1422 Mbps) point-to-point solutions are an ideal complement to point-to-multi-point "Wi-Fi" systems," said Terabeam's Chairman and CEO Dan Hesse. "The talents that the two teams bring plus Rob at the helm provides for a strong combination," added Hesse.

Terabeam Corp.

YDI Wireless Inc.

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