Exhibit 1
EXECUTION VERSION
--------------------------------------------------------------------------------
SECURITIES PURCHASE AGREEMENT
BY AND AMONG
PROXIM CORPORATION
AND
THE PURCHASERS NAMED HEREIN
DATED AS OF JULY 27, 2004
--------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
1. Definitions....................................................................................1
2. Authorization, Purchase and Sale of Notes; Exchange of the Outstanding Notes..................10
2.1. Authorization of Securities...................................................................10
2.2. Issuance of the Notes; Exchange of the Outstanding Notes......................................10
2.3. The Exchange..................................................................................11
2.4. The Closing and the Exchange Closing..........................................................11
2.5. Use of Proceeds...............................................................................12
3. Representations and Warranties of the Company.................................................12
3.1. Incorporation.................................................................................12
3.2. Subsidiaries..................................................................................12
3.3. Capitalization................................................................................12
3.4. Authorization.................................................................................13
3.5. Valid Issuance................................................................................14
3.6. Financial Statements..........................................................................14
3.7. Absence of Certain Changes....................................................................14
3.8. Absence of Litigation.........................................................................14
3.9. Intellectual Property.........................................................................15
3.10. Disclosure Documents..........................................................................15
3.11. Books and Records.............................................................................16
3.12. Consents......................................................................................16
3.13. No Conflict...................................................................................16
3.14. Brokers or Finders............................................................................16
3.15. Nasdaq National Market........................................................................16
3.16. No Manipulation of Stock......................................................................17
3.17. Company Not an "Investment Company"...........................................................17
3.18. Title to Property and Assets..................................................................17
3.19. Labor Relations...............................................................................17
3.20. Employee Benefits.............................................................................17
3.21. Environmental Matters.........................................................................18
3.22. Taxes.........................................................................................19
3.23. Insurance.....................................................................................19
3.24. General Solicitation; No Integration..........................................................20
3.25. Accounting Controls...........................................................................20
3.26. By-Laws.......................................................................................20
3.27. Opinion of the Financial Advisor..............................................................20
i
Page
4. Representations and Warranties of Each Purchaser..............................................20
4.1. Organization..................................................................................20
4.2. Authorization.................................................................................20
4.3. Purchase Entirely for Own Account; Etc........................................................20
4.4. Investor Status; Etc..........................................................................21
4.5. Securities Not Registered.....................................................................21
4.6. No Conflict...................................................................................21
4.7. Brokers.......................................................................................21
4.8. Consents......................................................................................21
4.9. No Manipulation of Stock......................................................................21
4.10. No General Solicitation.......................................................................21
5. Covenants.....................................................................................22
5.1. HSR Act Filings...............................................................................22
5.2. Other Governmental Approvals..................................................................22
5.3. Further Assurances............................................................................22
5.4. Board Designees and Observers.................................................................22
5.5. Series C Preferred Certificate of Designations................................................24
5.6. Covenant Pending the Closing..................................................................24
5.7. Proxy Statement...............................................................................24
5.8. Subscription Right............................................................................25
5.9. Standstill....................................................................................25
5.10. Nominating Committee; Agreement to Vote.......................................................25
5.11. Affirmative Covenants in Connection with the Sale of the Notes................................26
5.12. Negative Covenants in Connection with the Sale of the Notes...................................27
5.13. Exchange of Notes Upon a Qualified Transaction................................................30
5.14. Stock Options.................................................................................31
6. Conditions Precedent..........................................................................31
6.1. Conditions to the Obligation of the Purchasers to Consummate the Closing......................31
6.2. Conditions to the Obligation of the Company to Consummate the Closing.........................32
6.3. Conditions Precedent to the Exchange Closing..................................................33
7. Registration of the Securities; Compliance with the Securities Act............................33
7.1. Securities Law Transfer Restrictions..........................................................33
7.2. Legends.......................................................................................33
7.3. Registration Procedures and Other Matters.....................................................34
7.4. Transfer of Securities; Suspension............................................................35
7.5. Company Registration..........................................................................37
7.6. Indemnification...............................................................................38
7.7. Termination of Conditions and Obligations.....................................................41
7.8. Information Available.........................................................................41
7.9. Delay of Registration.........................................................................42
ii
Page
8. Termination...................................................................................42
8.1. Termination...................................................................................42
8.2. Effect of Termination.........................................................................42
9. Miscellaneous Provisions......................................................................42
9.1. Public Statements or Releases.................................................................42
9.2. Rights Cumulative.............................................................................42
9.3. Pronouns......................................................................................42
9.4. Notices.......................................................................................43
9.5. Captions......................................................................................43
9.6. Severability..................................................................................43
9.7. Confidentiality...............................................................................43
9.8. Governing Law; Injunctive Relief..............................................................44
9.9. Waiver........................................................................................44
9.10. Expenses......................................................................................44
9.11. Assignment....................................................................................44
9.12. Counterparts..................................................................................45
9.13. 2002 Purchase Agreement and 2003 Purchase Agreement...........................................45
9.14. Entire Agreement..............................................................................45
EXHIBITS
Exhibit A -- Schedule of Purchasers
Exhibit B -- Form of Notes
Exhibit C -- Form of Certificate of Designations, Preferences and Rights of the Series C Preferred Stock
Exhibit D -- Form of Pledge and Security Agreement
Exhibit E -- Form of Intercreditor Agreement
iii
This SECURITIES PURCHASE AGREEMENT (this "Agreement") is dated as of
the 27th day of July 2004 by and among Proxim Corporation, a Delaware
corporation with its principal office at 000 Xxxxxxx Xxxxx, Xxxxxxxxx,
Xxxxxxxxxx 00000 (the "Company"), and each of the purchasers named in EXHIBIT A
hereto (each, a "Purchaser" and collectively, the "Purchasers").
WHEREAS, the Company has authorized the issuance of (i) the Notes (as
defined below) and (ii) up to 400,000 shares of its Series C Preferred Stock,
par value $.01 per share (the "Preferred Stock");
WHEREAS, the Company seeks financing for general corporate purposes;
WHEREAS, the Company desires to issue and sell to each Purchaser
pursuant to this Agreement, and each Purchaser, severally, desires to purchase
from the Company the aggregate principal amount of the Notes as is set forth
opposite its respective name in Exhibit A hereto under the heading "Principal
Amount of Notes to be Purchased";
WHEREAS, in connection with the issuance of the Notes, each Purchaser,
severally, desires to exchange the Outstanding Notes (as defined below) held by
such Purchaser in accordance with the terms of such Outstanding Notes and the
2003 Purchase Agreement (as defined below) for the number of shares of Series B
Convertible Preferred Stock, par value $.01 per share, of the Company (the
"Series B Preferred Stock") as is set forth opposite its respective name in
Exhibit A hereto under the heading "Shares of Series B Preferred Stock Issuable
upon Exchange of the Outstanding Notes"; and
WHEREAS, in connection with the issuance of the Notes, each Purchaser,
severally, desires to, immediately upon receipt of Stockholder Approval (as
defined below), exchange (the "Exchange") (i) all shares of Series A Convertible
Preferred Stock, par value $.01 per share, of the Company (the "Series A
Preferred Stock"), (ii) all shares of Series B Preferred Stock and (iii) all
Warrants (as defined below) then held by such Purchaser for the number of shares
of Common Stock and Series C Preferred Stock as is set forth opposite its
respective name in Exhibit A hereto under the headings "Common Stock Issuable
upon Stockholder Approval of the Exchange" and "Series C Preferred Stock
Issuable upon Stockholder Approval of the Exchange."
NOW THEREFORE, in consideration of the mutual agreements,
representations, warranties and covenants herein contained, the parties hereto
agree as follows:
1. Definitions. As used in this Agreement, the following terms shall
have the following respective meanings:
1.1. "Affiliate" means, with respect to any Person, any other Person
controlling, controlled by or under direct or indirect common control with such
Person. For the purposes of this definition "control," when used with respect to
any specified Person, shall mean the power to direct the management and policies
of such Person, directly or indirectly, whether through ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" shall have meanings correlative to the foregoing.
1.2. "Agreement" has the meaning set forth in the preamble herein.
1.3. "Announcement Date" means July 27, 2004.
1.4. "BCP" means BCP Capital, L.P. (formerly Broadview Capital
Partners, L.P.), BCP Capital QPF, L.P. (formerly Broadview Capital Partners
Qualified Purchaser Fund, L.P.) and BCP Affiliates Fund LLC (formerly
Broadview Capital Partners Affiliates Fund L.L.C.)
1.5. "Bear Xxxxxxx" means Bear, Xxxxxxx & Co., Inc., financial adviser
to the Company.
1.6. "Beneficially Owns" or "Beneficially Owned" has the meaning set
forth in Rules 13d-3 and 13d-5 of the Exchange Act, but without taking into
account any contractual restrictions or limitations on voting or other rights.
1.7. "Board Designee" has the meaning set forth in Section 5.4(a)
herein.
1.8. "Board of Directors" has the meaning set forth in Section 3.4
herein.
1.9. "Business Day" means any day except a Saturday or Sunday or day on
which banking institutions are legally authorized to close in the City of New
York.
1.10. "Charter Amendment Proposals" has the meaning set forth in
Section 5.7(b) herein.
1.11. "Class B Common Stock" has the meaning set forth in Section
3.3(a) herein.
1.12. "Closing" has the meaning set forth in Section 2.4(a) herein.
1.13. "Closing Date" has the meaning set forth in Section 2.4(a)
herein.
1.14. "Code" means the Internal Revenue Code of 1986, as amended.
1.15. "Collateral" has the meaning set forth in the Pledge and Security
Agreement.
1.16. "Collateral Agent" means Warburg.
1.17. "Commitment" has the meaning set forth in Section 3.7 herein.
1.18. "Common Stock" means the class A common stock, par value $.01 per
share, of the Company.
1.19. "Company" has the meaning set forth in the Preamble herein.
1.20. "Confidential Information" has the meaning set forth in Section
9.7 herein.
2
1.21. "Control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly, of the power to
direct or cause the direction of the management policies of a Person, whether
through the ownership of voting securities, by contract or credit arrangement,
as trustee or executor, or otherwise.
1.22. "Disclosure Documents" means the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 2003, filed by the Company on March
15, 2004; the Company's Schedule 14A Proxy Statement for its Annual Meeting of
Stockholders, filed by the Company on April 8, 2004; the Company's Quarterly
Report on Form 10-Q for the quarter ended April 2, 2004; and any Current Reports
on Form 8-K filed by the Company on or after January 1, 2004, together in each
case with any documents incorporated by reference therein or exhibits thereto.
1.23. "Disclosing Party" has the meaning set forth in Section 9.7
herein.
1.24. "Disclosure Schedule" has the meaning set forth in Section 3
herein.
1.25. "Employees" has the meaning set forth in Section 3.19 herein.
1.26. "Environmental Laws" has the meaning set forth in Section 3.21(b)
herein.
1.27. "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
1.28. "ERISA Affiliate" has the meaning set forth in Section 3.20(a)
herein.
1.29. "Event of Default" has the meaning ascribed to it in Section 7 of
the Notes.
1.30. "Exchange" has the meaning set forth in the Recitals herein.
1.31. "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and all of the rules and regulations promulgated thereunder.
1.32. "Exchange Closing" has the meaning set forth in Section 2.4(b)
herein.
1.33. "Financial Statements" has the meaning set forth in Section 3.6
herein.
1.34. "Foreign Plans" has the meaning set forth in Section 3.20(h)
herein.
1.35. "Former Employees" means individuals other than Employees who at
any time prior to the date of this Agreement performed services as an Employee
primarily for the Company.
1.36. "GAAP" has the meaning set forth in Section 3.6 herein.
1.37. "Guaranteeing Subsidiaries" means Proxim Wireless Networks, Inc.,
WirelessHome Corporation and Proxim International Holdings, Inc. (formerly
Western Multiplex International Holdings, Inc.).
3
1.38. "Hazardous Material" has the meaning set forth in Section 3.21(a)
herein.
1.39. "Holders" has the meaning set forth in Section 7.4(a) herein.
1.40. "HSR Act" has the meaning set forth in Section 3.12 herein.
1.41. "Independent Directors" means members of the Board of Directors
who are: (i) not officers, directors or affiliates of the Company; (ii)
independent as defined under applicable requirements of federal law, state law
and Nasdaq; and (iii) unaffiliated with any Purchaser.
1.42. "Intellectual Property" has the meaning set forth in Section 3.9
herein.
1.43. "Intercreditor Agreement" means the Intercreditor Agreement by
and among SVB, the Company, the Collateral Agent and the Guaranteeing
Subsidiaries substantially in the form attached hereto as EXHIBIT H.
1.44. "Investment Company Act" has the meaning set forth in Section
3.17 herein.
1.45. "Irreparable Breach" has the meaning set forth in Section 9.8(b)
herein.
1.46. "Liability" means any liability or obligation whether known or
unknown, whether asserted or unasserted, whether absolute or contingent, whether
accrued or unaccrued, whether matured or unmatured, whether liquidated or
unliquidated, whether incurred or consequential and whether due or to become
due, including, without limitation, any obligation that is created, issued,
incurred or assumed by the Company for borrowed money or arising out of any
credit facility or for the deferred purchase price of property or services (such
as any obligation of the Company under any conditional sale or other title
retention agreement; any guaranty by the Company of liabilities or indebtedness
of any other party; the capitalized amount under any capital lease by the
Company as lessee or which is the substantial equivalent of a financing of the
property so leased; and any reimbursement or similar obligation in respect of
any letter of credit or other financial accommodation).
1.47. "Lien" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any
conditional sale or other title retention agreement and any capital lease having
substantially the same economic effect as any of the foregoing).
1.48. "Loan Documents" means this Agreement, the Notes, the Pledge and
Security Agreement, the Intercreditor Agreement and any other agreement,
document or instrument pursuant to which the Company grants, or confirms a grant
of, a Lien on or security interest in any of its assets, properties or rights,
interests as security for the Obligations.
4
1.49. "Material Adverse Change" means (i) any change, event or
occurrence which, individually or in the aggregate, has had a material adverse
effect on, or a material adverse change in (a) the business, operations,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole, that had the effect of reducing revenues or net
income of the Company and its subsidiaries, taken as a whole, by more than $15
million in any quarter compared to published financial statements (if publicly
announced) or consensus analysts estimates (in the case of a quarter for which
financial results have not yet been publicly announced) and that was not
disclosed in any Disclosure Document filed on or prior to the date hereof (and
excluding, in all cases, the effects of any restructuring charges already taken
or otherwise publicly announced, and the effects of terminating the Company's
000 Xxxxxx Xxx lease obligation, as publicly disclosed by the Company), or (b)
the ability of the Company to perform its obligations under this Agreement, in
each case other than any change, event or occurrence (w) resulting from
conditions in the United States or foreign economies or securities markets in
general or any change in the Company's stock price, (x) resulting from
conditions in the industry in which the Company operates in general, except to
the extent that the Company is disproportionately affected thereby, (y)
resulting from the public announcement of the transactions contemplated by this
Agreement or (z) arising out of or resulting from actions of the Purchasers in
connection with this Agreement, (ii) any adverse ruling or judgment in the
pending Symbol patent infringement litigation, other than an adverse ruling or
judgment that is disclosed, or is a confirmation of an existing adverse ruling
or judgment that is disclosed, in Section 3.8 of the Disclosure Schedule, which
ruling or judgment results in the obligation of the Company and/or any of its
subsidiaries under GAAP to establish a reserve in respect of such ruling or
judgment in an amount excess of $5 million, or (iii) any other rulings or
judgments made against the Company and or/any of its subsidiaries in litigations
other than the Symbol patent infringement litigation, the effects of which
rulings or judgments are material and adverse to the Company and its
subsidiaries, taken as a whole.
1.50. "Material Adverse Effect" means, collectively, a material adverse
effect on, or a material adverse change in, or group of such effects on or
changes in, (i) the business, operations, financial condition, results of
operations, assets or liabilities of the Company and its subsidiaries, taken as
a whole or (ii) the ability of the Company to perform its obligations under any
of the Loan Documents, in each case other than any change, event or occurrence
(a) resulting from conditions in the United States or foreign economies or
securities markets in general or any change in the Company's stock price, (b)
resulting from conditions in the industry in which the Company operates in
general, except to the extent that the Company is disproportionately affected
thereby, (c) resulting from the public announcement of the transactions
contemplated by this Agreement, or (d) arising out of or resulting from actions
of the Purchasers in connection with this Agreement.
1.51. "NASD" has the meaning set forth in Section 3.15 herein.
1.52. "Nasdaq" has the meaning set forth in Section 3.15 herein.
1.53. "Notes" means one or more senior secured promissory note(s)
containing the same terms and conditions, and with the same exchange features,
as set forth in the form of note attached hereto as EXHIBIT B.
1.54. "Obligations" has the meaning set forth in the Pledge and
Security Agreement.
5
1.55. "Outstanding Notes" means (i) the $30,000,000 aggregate principal
amount of the Company's Amended and Restated Secured Subordinated Promissory
Notes and (ii) the $10,000,000 aggregate principal amount of the Company's
Senior Secured Promissory Notes, in each case issued to the Purchasers pursuant
to the terms of the 2003 Purchase Agreement.
1.56. "Permitted Lien" means any of the following Liens:
(a) Liens for Taxes or assessments and similar charges, which are
either (i) not delinquent or (ii) being contested diligently and in good faith
by appropriate proceedings and as to which the Company has set aside adequate
reserves on its books;
(b) statutory Liens, such as mechanic's, materialman's, warehouseman's,
carriers or other like Liens, incurred in the ordinary course of business, which
are to be paid in the ordinary course of business or which are being contested
diligently and in good faith by appropriate proceedings and as to which the
Company has set aside adequate reserves on its books;
(c) encumbrances consisting of zoning restrictions, easements,
licenses, reservations, covenants, conditions, waivers, restrictions on the use
of property or minor irregularities of title that do not materially impair the
use of any property which is material in the operation of the Company's
business;
(d) Liens securing purchase money equipment lease (or similar)
obligations, but only in the property which is the subject of such obligations
and only to the extent such obligations are permitted pursuant to the terms
hereof;
(e) Liens arising under or pursuant to the Loan Documents;
(f) Liens in respect of judgments or awards with respect to which the
Company, in good faith, is prosecuting an appeal or proceeding for review and in
respect of which a stay of execution upon such appeal or proceeding for review
shall have been secured, and as to which judgments or awards the Company shall
have established adequate reserves on its books;
(g) pledges or deposits made in the ordinary course of the Company's
business consistent with past practice to secure payment of workers'
compensation or to participate in any fund in connection with workers'
compensation, unemployment insurance, pensions or other social security
programs;
(h) Liens existing on the date hereof, including the Liens granted to
SVB under the SVB Agreements;
(i) nonexclusive licenses and sublicenses granted by the Company in the
ordinary course of its business;
(j) leases or subleases granted in the ordinary course of the Company's
business, including in connection with Company's leased premises or leased
property;
6
(k) deposits to secure the performance of bids, trade contracts (other
than for borrowed money), contracts for the purchase of property, leases,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature, in each case incurred in the ordinary course of
business and not representing an obligation for borrowed money, provided the
total amount of all such outstanding deposits under this clause (k) does not
exceed $250,000 at any time outstanding;
(l) Liens arising by virtue of any contractual, statutory or common law
provision relating to banker's liens, rights of set-off or similar rights and
remedies as to deposit accounts or other funds maintained with a creditor
depository institution;
(m) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
(n) Liens on insurance proceeds securing the payment of financed
insurance premiums; and
(o) Liens incurred in the extension, renewal or refinancing of the
indebtedness secured by Liens described in (d), (e) and (h), but any extension,
renewal or replacement Lien must be limited to the property encumbered by the
existing Lien and the principal amount of the indebtedness may not increase and
maturity may not decrease.
1.57. "Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association or joint venture.
1.58. "Plans" means employee benefit plans as defined in Section 3(3)
of ERISA and all other employee benefit practices or arrangements, including,
without limitation, any such practices or arrangements providing severance pay,
sick leave, vacation pay, salary continuation for disability, retirement
benefits, deferred compensation, bonus pay, incentive pay, stock options or
other stock-based compensation, hospitalization insurance, medical insurance,
life insurance, scholarships or tuition reimbursements, maintained by the
Company or any of its subsidiaries or to which the Company or any of its
subsidiaries is obligated to contribute for Employees or Former Employees.
1.59. "Pledge and Security Agreement" means the Pledge and Security
Agreement by and among the Company, the Collateral Agent and the Purchasers
(with respect to accepting and agreeing to the provisions of Articles X and XI
thereof), in substantially the form attached hereto as EXHIBIT D.
1.60. "Proposed Securities" has the meaning set forth in Section
5.8(a)(i) herein.
1.61. "Proposed Transaction" means the transactions contemplated by the
Transaction Documents.
1.62. "Prospectus" has the meaning set forth in Section 7.3(c) herein.
1.63. "Purchaser" has the meaning set forth in the Preamble herein.
7
1.64. "Qualified Transaction" means a transaction or series of related
transactions occurring after the date hereof in which the Company issues and
sells shares of Common Stock and/or warrants to purchase Common Stock in
exchange for aggregate gross proceeds to the Company of at least $20 million,
which proceeds shall be remitted to the Company on the date of the closing of
such transaction (excluding the principal amount of the Notes exchanged in such
transaction).
1.65. "Recipient" has the meaning set forth in Section 9.7 herein.
1.66. "Registration Statement" has the meaning set forth in Section
7.3(a) herein.
1.67. "SEC" means the Securities and Exchange Commission.
1.68. "Securities" means the Notes, the shares of Series C Preferred
Stock and Common Stock issuable upon the Exchange; provided, that for purposes
of Section 7 (other than Section 7.1 and 7.2), "Securities" shall not include
the Notes or the Series C Preferred Stock; provided, further, that for purposes
of Section 7.3, "Securities" shall also include the shares of Common Stock
issuable upon the Exchange and upon the exchange of the Notes pursuant to
Section 5.13.
1.69. "Securities Act" means the Securities Act of 1933, as amended,
and all of the rules and regulations promulgated thereunder.
1.70. "Series A Preferred Stock" has the meaning set forth in the
Recitals herein.
1.71. "Series A Preferred Certificate of Designations" means the
Certificate of Designations, Preferences and Rights of Series A Convertible
Preferred Stock of the Company, which was filed with the Secretary of State of
the State of Delaware on August 2, 2002, pursuant to the 2002 Purchase
Agreement.
1.72. "Series B Preferred Stock" has the meaning set forth in the
Recitals herein.
1.73. "Series B Preferred Certificate of Designations" means the
Certificate of Designations, Preferences and Rights of Series B Convertible
Preferred Stock of the Company, which was filed with the Secretary of State of
the State of Delaware on December 15, 2003, pursuant to the 2003 Purchase
Agreement.
1.74. "Series C Preferred Stock" has the meaning set forth in the
Recitals herein.
1.75. "Series C Preferred Certificate of Designations" means the
Certificate of Designations, Preferences and Rights of Series C Preferred Stock
of the Company, which will be filed within two Business Days of receipt of
Stockholder Approval with the Secretary of State of the State of Delaware, which
shall contain the same terms and conditions set forth in the copy attached
hereto as Exhibit C.
8
1.76. "Special Meeting" means the special meeting of the stockholders
of the Company called by the Company to vote on the Special Meeting Proposals.
1.77. "Special Meeting Proposal" means (i) the issuance of shares of
Series C Preferred Stock and Common Stock upon exchange of the shares of Series
A Preferred Stock, shares of Series B Preferred Stock and Warrants held by the
Purchasers in accordance with the terms of this Agreement, (ii) the election of
three Class I directors of the Company, (iii) the ratification of the
appointment of PriceWaterhouseCoopers LLP as independent accountants of the
Company for the fiscal year ending December 31, 2004 and (iv) such other
proposals approved by the Company's Board of Directors, including the
affirmative vote of at least one (1) Board Designee.
1.78. "Stockholder Approval" means stockholder approval of the Special
Meeting Proposals.
1.79. "Suspension" has the meaning set forth in Section 7.4(c) herein.
1.80. "Suspension Notice" has the meaning set forth in Section 7.4(c)
herein.
1.81. "SVB" means Silicon Valley Bank.
1.82. "SVB Agreements" means collectively the SVB A/R Financing
Agreement and the SVB Overadvance Agreement.
1.83. "SVB A/R Financing Agreement" means collectively the (a) Loan and
Security Agreement, dated as of December 27, 2002 and as amended on Xxxxx 00,
0000, xxxxxxx XXX xxx xxx Xxxxxxx, (x) the Intellectual Property Security
Agreement, dated as of December 27, 2002, between SVB and the Company, (c) the
Letter Agreement, dated June 13, 2003, between SVB and the Company and (d) the
Accounts Receivable Financing Agreement, dated as of June 13, 2003, between SVB
and the Company and all schedules, exhibits and annexes attached thereto and all
amendments or supplements thereof.
1.84. "SVB Overadvance Agreement" means the Temporary Overadvance
Agreement, dated as of June 23, 2003, between SVB and the Company (as amended or
supplemented from time to time).
1.85. "Symbol" means Symbol Technologies Inc.
1.86. "Tax Returns" means returns, reports, information statements and
other documentation (including any additional or supporting material) filed or
maintained, or required to be filed or maintained, in connection with the
calculation, determination, assessment or collection of any Tax and shall
include any amended returns required as a result of examination adjustments made
by the Internal Revenue Service or other Tax authority.
9
1.87. "Taxes" means any and all federal, state, local, foreign and
other taxes, levies, fees, imposts, duties and charges of whatever kind
(including any interest, penalties or additions to the tax imposed in connection
therewith or with respect thereto), whether or not imposed on the Company,
including, without limitation, taxes imposed on, or measured by, income,
franchise, profits or gross receipts, and also ad valorem, value added, sales,
use, service, real or personal property, capital stock, license, payroll,
withholding, employment, social security, workers' compensation, unemployment
compensation, utility, severance, production, excise, stamp, occupation,
premium, windfall profits, transfer and gains taxes and customs duties.
1.88. "Transaction Documents" means this Agreement, the Notes, the
Pledge and Security Agreement, the Intercreditor Agreement and the Series C
Preferred Certificate of Designations.
1.89. "Transaction Fees" has the meaning set forth in Section 9.10
herein.
1.90. "Transferee" has the meaning set forth in Section 7.4(a) herein.
1.91. "2002 Purchase Agreement" means that certain Securities Purchase
Agreement, dated as of June 16, 2002 and as amended, by and among the Company
and the purchasers named therein.
1.92. "2003 Purchase Agreement" means that certain Amended and Restated
Securities Purchase Agreement, dated as of October 21, 2003 and as amended, by
and among the Company and the purchasers named therein.
1.93. "UCC" means the Uniform Commercial Code (or similar statute) of
any applicable jurisdiction.
1.94. "Voting Stock" has the meaning set forth in Section 5.9 herein.
1.95. "Warburg" means Warburg Pincus Private Equity VIII, L.P. and its
Affiliates.
1.96. "Warrants" means the warrants issued to the Purchasers pursuant
to the 2002 Purchase Agreement and the 2003 Purchase Agreement.
2. Authorization, Purchase and Sale of Notes; Exchange of the
Outstanding Notes.
2.1. Authorization of Securities. The Company has, or on or before the
Closing Date will have, (i) authorized the Notes, (ii) authorized a series of
its preferred stock consisting of 400,000 shares of Series C Preferred Stock
designated as its "Series C Preferred Stock," (iii) authorized the issuance of
the shares of Common Stock issuable upon the Exchange and (iv) authorized the
issuance of the shares of Series B Preferred Stock issuable upon exchange of the
Outstanding Notes in accordance with the terms of such Outstanding Notes and the
2003 Purchase Agreement. The terms, limitations and relative rights and
preferences of the Series C Preferred Stock are set forth in the Series C
Preferred Certificate of Designations.
2.2. Issuance of the Notes; Exchange of the Outstanding Notes.
10
(a) Subject to and upon the terms and conditions set forth in this
Agreement, at the Closing, the Company shall issue and sell to each Purchaser,
and each Purchaser, severally, shall purchase from the Company the aggregate
principal amount of Notes as is set forth opposite such Purchaser's name in
Exhibit A hereto under the heading "Principal Amount of Notes to be Purchased"
at a purchase price equal to the principal amount of Notes purchased by such
Purchaser.
(b) Subject to and upon the terms and conditions set forth in this
Agreement, at the Closing, the Company shall issue to each Purchaser in exchange
for the surrender and cancellation by each Purchaser of the Outstanding Notes
issued to such Purchaser pursuant to the 2003 Purchase Agreement, the number of
shares of Series B Preferred Stock as is set forth opposite such Purchaser's
name in Exhibit A hereto under the heading "Shares of Series B Preferred Stock
Issuable Upon Exchange of the Outstanding Notes."
2.3. The Exchange. Subject to and upon the terms and conditions set
forth in this Agreement, at the Exchange Closing, the Company shall issue to
each Purchaser, in exchange for the surrender and cancellation by each Purchaser
of the shares of Series A Preferred Stock, shares of Series B Preferred Stock
and Warrants then owned by such Purchaser, (i) the number of shares of Common
Stock as is set forth opposite such Purchaser's name in Exhibit A hereto under
the headings "Common Stock Issuable upon Stockholder Approval of the Exchange"
and (ii) the number of shares of Series C Preferred Stock as is set forth
opposite such Purchaser's name in Exhibit A hereto under the headings "Series C
Preferred Stock Issuable upon Stockholder Approval of the Exchange."
2.4. The Closing and the Exchange Closing.
(a) The closing of the transactions contemplated by Section 2.2 (the
"Closing") shall take place at the offices of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
Professional Corporation, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx on the date
hereof or such other date mutually agreed between the parties (the "Closing
Date"). At the Closing, the Company shall deliver to each Purchaser (i) one or
more Note(s) in the principal amount as set forth opposite such Purchaser's name
on EXHIBIT A hereto, against payment to the Company of the purchase price
therefor by wire transfer to the Company of immediately available funds in an
amount equal to the principal amount of Notes to be issued to such Purchaser and
(ii) upon delivery for cancellation by each Purchaser to the Company of the
Outstanding Notes held by such Purchaser, one or more certificate(s) for the
number of shares of Series B Preferred Stock being issued to it, as set forth on
Exhibit A hereto, registered in the name of such Purchaser. Upon cancellation of
all of the Outstanding Notes, the Company shall be forever released from all of
its obligations and liabilities to the Purchasers under the Outstanding Notes.
The Company and the Purchasers shall also deliver all Transaction Documents
deliverable in connection with the Closing.
11
(b) The closing of the transactions contemplated by Section 2.3(the
"Exchange Closing") shall take place at the offices of Xxxxxx Xxxxxxx Xxxxxxxx &
Xxxxxx, Professional Corporation, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx on
the second Business Day following the date of receipt of the Stockholder
Approval. At the Exchange Closing, the Company shall deliver to each Purchaser
upon delivery for cancellation by each Purchaser to the Company of the
certificates evidencing the Series A Preferred Stock, Series B Preferred Stock
and Warrants held by such Purchaser (i) one or more certificate(s) for the
number of shares of Common Stock, registered in the name of such Purchaser, as
is set forth opposite such Purchaser's name in Exhibit A hereto under the
heading "Common Stock Issuable upon Stockholder Approval of the Exchange" and
(ii) one or more certificate(s) for the number of shares of Series C Preferred
Stock, registered in the name of such Purchaser, as is set forth opposite such
Purchaser's name in Exhibit A hereto under the heading "Series C Preferred Stock
Issuable upon Stockholder Approval of the Exchange." The Company and the
Purchasers shall also deliver all Transaction Documents deliverable in
connection with the Exchange Closing. If at the Special Meeting the stockholders
of the Company do not approve the Special Meeting Proposals, then no Exchange
Closing shall occur and the Series A Preferred Stock, Series B Preferred Stock
and Warrants shall remain outstanding in accordance with their respective terms.
2.5. Use of Proceeds. The Company will apply the net proceeds from the
issuance of the Notes for general corporate purposes.
3. Representations and Warranties of the Company. Except as set forth
in any Disclosure Document filed prior to the date hereof or in a corresponding
numbered section of the disclosure schedule delivered to each Purchaser prior to
the execution of this Agreement (the "Disclosure Schedule"), the Company hereby
represents and warrants to each of the Purchasers as follows:
3.1. Incorporation. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and is qualified to do business in each jurisdiction in which the character of
its properties or the nature of its business requires such qualification, except
where the failure to so qualify would not have a Material Adverse Effect. The
Company has all requisite corporate power and authority to carry on its business
as now conducted.
3.2. Subsidiaries. The Company has no material subsidiaries and no
material interests or investments in any partnership, trust or other entity or
organization. No subsidiary of the Company conducts or is engaged in any
business of any kind nor has any material assets. Each subsidiary of the Company
that is a corporation has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
formation, has the corporate power and authority to own its properties and to
conduct its business and is duly registered, qualified and authorized to
transact business and is in good standing in each jurisdiction in which the
conduct of its business or the nature of its properties requires such
registration, qualification or authorization, except where such failure to so
qualify or register would not be reasonably likely to have a Material Adverse
Effect. All of the issued and outstanding capital stock of each subsidiary has
been duly authorized and validly issued, is fully paid and non-assessable, and
is owned by the Company free and clear of any Lien other than any of the
foregoing encumbered pursuant to the SVB Agreements and pursuant to the
Outstanding Notes.
3.3. Capitalization.
12
(a) As of the date of this Agreement, the authorized capital stock of
the Company consists of 390,000,000 shares of Common Stock, 10,000,000 shares of
class B common stock, par value $.01 per share (the "Class B Common Stock"),
3,000,000 shares of Series A Preferred Stock, and 22,000,000 shares of
undesignated preferred stock, par value $.01 per share. As of the date of this
Agreement, there are no shares of Class B Common Stock or Series B Preferred
Stock outstanding and 3,000,000 shares of Series A Preferred Stock are
outstanding. The number of outstanding shares of Common Stock as of July 26,
2004 was 123,420,453 and the total number of shares of Common Stock issuable
pursuant to stock options outstanding at July 26, 2004 was 29,341,392. All such
shares of Common Stock and Series A Preferred Stock have been duly authorized,
and all such issued and outstanding shares of Common Stock and Series A
Preferred Stock have been validly issued, are fully paid and nonassessable. No
such outstanding shares of Common Stock or Series A Preferred Stock were issued
in violation of any preemptive rights, "poison pill" provisions, rights of first
offer or refusal or similar rights.
(b) Except for the issuance of shares of Common Stock pursuant to the
exercise of outstanding options granted pursuant to the Company's option plans
or pursuant to the exercise of warrants to purchase shares of Common Stock,
including any such options granted after March 31, 2004, the Company has not
issued any capital stock since March 31, 2004, except as contemplated by this
Agreement. Except as set forth in or contemplated by the Disclosure Documents,
this Agreement, the 2003 Purchase Agreement or the 2002 Purchase Agreement, and
except for the issuance of options to purchase shares of the Company's Common
Stock pursuant to the Company's option plans, there are no existing options,
warrants, calls, preemptive (or similar) rights, subscriptions or other rights,
agreements, arrangements or commitments of any character obligating the Company
to issue, transfer or sell, or cause to be issued, transferred or sold, any
shares of the capital stock of the Company or other equity interests in the
Company or any securities convertible into or exchangeable for such shares of
capital stock or other equity interests, and there are no outstanding
contractual obligations of the Company to repurchase, redeem or otherwise
acquire any shares of its capital stock or other equity interests.
3.4. Authorization. All corporate action on the part of the Company,
its officers, directors and stockholders necessary for the authorization of the
Securities and the filing of the Series C Preferred Certificate of Designations,
the authorization, execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated herein has been taken, other than
the approvals contemplated at the Special Meeting. When executed and delivered
by the Company, this Agreement, each other Loan Document and each Transaction
Document shall constitute the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as
rights to indemnity and contribution may be limited by state or federal
securities laws or the public policy underlying such laws, and except as may be
limited by bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights generally and by general equitable principles. The Company has
all requisite corporate power to enter into this Agreement, each other Loan
Document and each Transaction Document and to carry out and perform its
obligations hereunder and thereunder. The Board of Directors of the Company (the
"Board of Directors") has taken all action necessary to render inapplicable, as
it relates to Warburg and BCP, the provisions of Section 203 of the General
Corporation Law of the State of Delaware. At or prior to the Exchange Closing,
the Company will have reserved for issuance the shares of Common Stock issuable
upon the Exchange.
13
3.5. Valid Issuance.
(a) Upon their issuance in accordance with the terms of this Agreement,
the Series C Preferred Stock and the shares of Common Stock issuable upon the
Exchange will be duly authorized, validly issued, fully paid and non-assessable,
free of all preemptive or similar rights. Upon their issuance in accordance with
the terms of this Agreement, the 2003 Purchase Agreement and the Outstanding
Notes, the shares of Series B Preferred Stock issuable upon exchange of the
Outstanding Notes will be duly authorized, validly issued, fully paid and
non-assessable shares of Series B Preferred Stock, free of all preemptive or
similar rights.
(b) Subject to the accuracy of the representations made by the
Purchasers in Section 4 herein, the Securities will be issued to the Purchasers
in compliance with applicable exemptions from (i) the registration and
prospectus delivery requirements of the Securities Act and (ii) the registration
and qualification requirements of all applicable securities laws of the states
of the United States. The Company is current in its filings with the SEC under
Section 13(a) of the Exchange Act.
3.6. Financial Statements. The financial statements of the Company
included in the Disclosure Documents (collectively, the "Financial Statements")
fairly present the consolidated financial position of the Company and its
subsidiaries as of the dates indicated, and the results of its operations and
cash flows for the periods therein specified. The Financial Statements fairly
present the consolidated financial position of the Company at the dates thereof
and the consolidated results of operations for the periods then ended in
accordance with generally accepted accounting principles applied on a consistent
basis ("GAAP") throughout the period therein specified (except in the case of
quarterly financial statements for the absence of footnote disclosure and
subject, in the case of interim periods, to normal year-end adjustments which,
individually, and in the aggregate are not expected to be material).
3.7. Absence of Certain Changes. Since December 31, 2003, the Company
and its subsidiaries have conducted their business only in the ordinary course
of such business consistent with past practice and there has not been (i) any
Material Adverse Effect, (ii) any material commitment, contractual obligation,
borrowing, capital expenditure or transaction (each, a "Commitment") entered
into by the Company or any of its subsidiaries, other than (a) Commitments in
the ordinary course of business and (b) this Agreement, (iii) any action taken
which, if taken after the date hereof, would constitute a material breach of any
provision or covenant herein, or (iv) any material change in the Company's
accounting principles, practices or methods other than as required by concurrent
changes in GAAP.
3.8. Absence of Litigation. There is no action, suit, proceeding,
arbitration, claim, investigation or inquiry pending or, to the Company's
knowledge, threatened by or before any governmental body against the Company in
which an unfavorable outcome, ruling or finding in any said matter, or for all
such matters taken as a whole, would reasonably be expected to have a Material
Adverse Effect. The foregoing includes, without limitation, any such action,
suit, proceeding or investigation that questions this Agreement or seeks to
delay or prevent the consummation of the transactions contemplated hereunder or
the right of the Company to execute, deliver and perform under same. The Company
is not a party to or subject to the provisions of any order, writ, injunction,
judgment or decree of any court or government agency or instrumentality. No
action, suit, proceeding, claim, investigation or inquiry by the Company or any
subsidiary is currently pending nor does the Company intend to initiate any
action, suit, proceeding, claim, investigation or inquiry, in each case, that if
resolved in a manner adverse to the Company, is reasonably likely to have a
Material Adverse Effect.
14
3.9. Intellectual Property. (i) The Company owns or, with respect to
licensed Intellectual Property, has sufficient rights to use all (A) material
patents (and any renewals and extensions thereof), patent rights (and any
applications therefor), rights of priority and other rights in inventions; (B)
trademarks, service marks, trade names and trade dress, and all registrations
and applications therefor and all legal or common-law equivalents of any of the
foregoing; (C) copyrights and rights in mask works (and any applications or
registrations for the foregoing, and all renewals and extensions thereof),
common-law copyrights and rights of authorship including all rights to exploit
any of the foregoing in any media and by any manner and means now known or
hereafter devised; (D) industrial design rights, and all registrations and
applications therefor; (E) rights in data, collections of data and databases,
and all legal or common-law equivalents thereof; (F) rights in domain names and
domain name reservations; (G) rights in trade secrets, proprietary information
and know-how (collectively with all licenses and other agreements providing the
Company with the right to use any item of the type referred to in clauses (A)
through (G), "Intellectual Property") that are necessary for the conduct of its
business as now conducted except where the failure to currently own or possess
would not have a Material Adverse Effect; (ii) the Intellectual Property is
valid, subsisting, in proper form and enforceable and all renewal fees and other
maintenance fees have been paid; (iii) the Company is in material compliance
with all contractual obligations relating to the use and protection of such of
the Intellectual Property as is used pursuant to license or other agreement;
(iv) to the knowledge of the Company there is no present or former employee,
officer or director of the Company or agent or outside contractor that holds or
claims any material right, title or interest, directly or indirectly, in or to
any Intellectual Property; and (v) to the Company's knowledge, the present
business activities and products of the Company have not and do not infringe any
known Intellectual Property or other proprietary rights of any third party, the
Company is not making unauthorized use of any confidential information or trade
secrets of any third party, the Company has not received any notice of any
asserted infringement (nor is the Company aware of any reasonable basis for any
third party asserting an infringement) by the Company of, any rights of a third
party with respect to any Intellectual Property that, individually or in the
aggregate, would have a Material Adverse Effect. The Guaranteeing Subsidiaries
own no material registrations or material applications for any Intellectual
Property.
3.10. Disclosure Documents. The information contained or incorporated
by reference in the Disclosure Documents was true and correct in all material
respects as of the respective dates of the filing thereof with the SEC; and, as
of such respective dates, none of the Disclosure Documents contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except to the extent
updated or superseded by any report subsequently filed by the Company with the
SEC. The Company is not party to any material contract, agreement or other
arrangement that was required to have been filed as an exhibit to any Disclosure
Document that was not so filed, other than any of the Loan Documents.
15
3.11. Books and Records. The minute books and other records of the
Company and its subsidiaries contain in all material respects accurate records
of all Company board, committee and stockholders' meetings and accurately
reflect in all material respects all other corporate action of the stockholders
and directors and any committees thereof of the Company and its subsidiaries and
all actions of the directors of the Company's subsidiaries, in each case since
January 1, 2002.
3.12. Consents. All consents, approvals, orders and authorizations
required on the part of the Company in connection with the execution, delivery
or performance of this Agreement and the consummation of the transactions
contemplated herein, other than (i) the filing of the Series C Preferred
Certificate of Designations and (ii) such filings required to be made after the
Closing under applicable federal and state securities laws, have been obtained
and will be effective as of the Closing Date other than those with respect to
which the failure to make or obtain will not have a Material Adverse Effect.
Except for the approvals contemplated at the Special Meeting or required by
Nasdaq, the execution, delivery or performance of this Agreement, the Loan
Documents and the Transaction Documents and the consummation of the transactions
contemplated herein and therein do not require the approval of the Company's
stockholders.
3.13. No Conflict. The execution and delivery of the Loan Documents by
the Company and the consummation of the transactions contemplated thereby will
not conflict with or result in any violation of or default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to a loss of a material
benefit under (i) any provision of the Certificate of Incorporation or By-laws
of the Company or (ii) any agreement or instrument, permit, franchise, license,
judgment, order, statute, law, ordinance, rule or regulations, applicable to the
Company or its properties or assets, except, in the case of clause (ii), as
would not, individually or in the aggregate, be reasonably expected to have a
Material Adverse Effect.
3.14. Brokers or Finders. Other than with respect to Bear Xxxxxxx, the
fees of which will be borne by the Company, the Company has not incurred, and
shall not incur, directly or indirectly, any liability for any brokerage or
finders' fees or agents' commissions or any similar charges in connection with
this Agreement, the other Loan Documents, Transaction Documents or any
transaction contemplated hereby.
3.15. Nasdaq National Market. The Common Stock is registered pursuant
to Section 12(b) of the Exchange Act and is listed on the Nasdaq National Market
("Nasdaq"), and, except as contemplated by this Agreement, the Company has taken
no action designed to, or likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or delisting the Common
Stock from Nasdaq, nor has the Company received any notification that the SEC or
the National Association of Securities Dealers, Inc. ("NASD") is contemplating
terminating such registration or listing.
16
3.16. No Manipulation of Stock. The Company has not taken, in violation
of applicable law, any action designed to or that might reasonably be expected
to cause or result in stabilization or manipulation of the price of the Common
Stock to facilitate the transactions contemplated hereby or the sale or resale
of the shares of Common Stock.
3.17. Company Not an "Investment Company". The Company has been advised
of the rules and requirements under the Investment Company Act of 1940, as
amended (the "Investment Company Act"). The Company is not, and immediately
after receipt of payment for any of the Securities will not be, an "investment
company" or an entity "controlled" by an "investment company" within the meaning
of the Investment Company Act.
3.18. Title to Property and Assets. The Company and each of its
subsidiaries owns or possesses the necessary right to use or title to all
properties, assets, licenses, permits and the like required to operate its
business as currently operated, except for such properties, assets, licenses,
permits and the like, the absence of which would not result in a Material
Adverse Effect. The properties and assets of the Company and each of its
subsidiaries owned by them are owned free and clear of all Liens, except for
Permitted Liens. With respect to the property and assets it leases, the Company
and each of its subsidiaries are in compliance with such leases in all material
respects.
3.19. Labor Relations. Neither the Company nor its subsidiaries is
party to any collective bargaining agreement covering any individual who
performs services as an employee primarily for the Company or any of its
subsidiaries (including such persons who are on an approved leave of absence,
vacation, short-term disability or otherwise treated as an active employee of
the Company or any of its subsidiaries, "Employees"), and there are no
controversies or unfair labor practice proceedings pending or, to the Company's
knowledge, threatened between the Company or any of its subsidiaries and any of
their current or former Employees or any labor or other collective bargaining
unit representing any current or former Employee of the Company or any of its
subsidiaries that would reasonably be expected to result in a labor strike,
dispute, slow-down or work stoppage or otherwise have a Material Adverse Effect.
To the Company's knowledge, no organizational effort is presently being made or,
to the Company's knowledge, threatened by or on behalf of any labor union.
3.20. Employee Benefits.
(a) Neither the Company nor any trade or business (whether or not
incorporated) which has been under common control or treated as a single
employer with the Company under Section 414(b), (c) or (m) of the Code (an
"ERISA Affiliate") has incurred, or is reasonably likely to incur, any liability
under Title IV of ERISA or Section 412 of the Code and none of the Plans is a
Multiemployer Plan, as defined in Section 3(37) of ERISA. Neither the Company
nor any ERISA Affiliate has incurred any liability resulting from a complete or
partial withdrawal from any Multiemployer Plan, and none of them has incurred,
or is reasonably likely to incur, any liability due to the termination or
reorganization of a Multiemployer Plan which has not been satisfied in full, and
to the Company's knowledge, no event has occurred that would subject the Company
or any ERISA Affiliate to any such liability.
17
(b) Each Plan has been administered in material compliance with its
terms, and other applicable laws, rules and regulations including, without
limitation, the provisions of ERISA and the Code, and there are no material
pending or, to Company's knowledge, threatened claims by, on behalf of or
involving any plan administrator or any plan trustee (other than routine claims
for benefits).
(c) No "prohibited transaction" within the meaning of Section 4975 of
the Code has occurred with respect to any Plan.
(d) Each Plan that is intended to qualify under Section 401(a) of the
Code does so qualify.
(e) Except as may be required under Section 4980B of the Code, or
Section 601 of ERISA, neither the Company nor any of its subsidiaries has any
liability for post-retirement medical or life insurance benefits or coverage for
any Employee or Former Employee or any dependent of any such Employee or Former
Employee.
(f) The consummation of the transactions contemplated hereby will not
result in any increase in the amount of compensation or benefits or accelerate
the vesting or timing of payment of any compensation or benefits payable by the
Company to or in respect of any Employee or Former Employee or the beneficiary
or dependent of any such Employee or Former Employee under any Plan.
(g) No amount payable by the Company or any of its subsidiaries to any
Employee or Former Employee will fail to be deductible for Federal income tax
purposes by reason of Section 162(m) or 280G of the Code.
(h) All employee benefits practices or arrangements which are
maintained by the Company or any of its subsidiaries for the benefit of their
non-United States Employees or United States Employees located in a foreign
jurisdiction (collectively, the "Foreign Plans") have been maintained in all
material respects in accordance with the applicable laws of such foreign
jurisdiction, and all Foreign Plans required to be registered with any
governmental agency have been registered and have been maintained in good
standing with such governmental agency.
3.21. Environmental Matters.
(a) Except as would not reasonably be likely to result in a material
liability to the Company, no underground storage tanks and no amount of any
substance that has been designated by any governmental agency or by applicable
federal, state or local law to be radioactive, toxic, hazardous or otherwise a
danger to health or the environment, including without limitation, PCBs,
asbestos, petroleum, urea-formaldehyde and all substances listed as hazardous
substances pursuant to the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended, or defined as a hazardous waste pursuant
to the United States Resource Conservation and Recovery Act of 1976, as amended,
and the regulations promulgated pursuant to said laws, but excluding routine
quantities of office and janitorial supplies (a "Hazardous Material"), are
present as a result of the actions of the Company, or, to the Company's
knowledge, as a result of the actions of a third party, in, on or under any
property, including the land and the improvements, ground water and surface
water thereof, that the Company or any of its subsidiaries currently owns,
operates, occupies or leases, or to the Company's knowledge, has at any time
owned, operated, occupied or leased.
18
(b) Except as would not reasonably be likely to result in a material
liability to the Company (in any individual case or in the aggregate), neither
the Company nor any of its subsidiaries has transported, stored, used,
manufactured, disposed of or arranged for the disposal of, released or exposed
its employees or others to Hazardous Materials in violation of any federal,
state or local law, rule, regulation, treaty or statute in effect before the
Closing Date related to protection of human health, safety, and the environment,
including natural resources (collectively, "Environmental Laws"), or in a manner
that would likely result in any material liability to the Company.
(c) Except as would not reasonably be likely to result in a material
liability to the Company, the Company and its subsidiaries currently hold and
are in compliance with all approvals, permits, licenses, clearances and consents
required under Environmental Laws for the conduct of the Company's and its
subsidiaries' businesses as currently being conducted.
(d) No action, proceeding, revocation proceeding, amendment procedure,
writ, injunction or claim is pending, or to the Company's knowledge, threatened
alleging that the Company and its subsidiaries are in violation of or liable
under any Environmental Law.
(e) To the Company's knowledge, there are no material expenditures
required to maintain or achieve compliance with all applicable Environmental
Laws.
3.22. Taxes.
(a) The Company has filed (or joined in the filing of) when due all Tax
Returns required by applicable law to be filed with respect to the Company and
all Taxes shown to be due on such Tax Returns have been paid. All such Tax
Returns were true, correct and complete in all material respects as of the time
of such filing. Any Liability of the Company for Taxes not yet due and payable,
or which are being contested in good faith, in each case as of December 31,
2003, has been accrued or reserved for on the financial statements of the
Company in accordance with GAAP. Since December 31, 2003, the Company has not
incurred any material Taxes other than in the ordinary course of business.
(b) No current or former subsidiary of the Company has ever been a
member of any "affiliated group" (within the meaning of Section 1504(a) of the
Code) included in any consolidated federal income Tax Return filed with the
Internal Revenue Service other than an affiliated group of which the Company is
the common parent.
3.23. Insurance. All insurance policies carried by, or covering the
Company's properties are in full force and effect, and no notice of cancellation
has been given with respect to any such policy. All premiums due on such
policies have been paid in a timely manner and the Company has complied in all
material respects with the terms and provisions of such policies. The insurance
coverage provided by such policies is provided by insurers that, to the
knowledge of the Company, are solvent and is in such amount and types of
coverage which are adequate and customary for the industries in which the
Company operates.
19
3.24. General Solicitation; No Integration. Neither the Company nor any
other person or entity authorized by the Company to act on its behalf has
engaged in a general solicitation or general advertising (within the meaning of
Regulation D of the Securities Act) of investors with respect to offers or sales
of the Securities. The Company has not, directly or indirectly, sold, offered
for sale, solicited offers to buy or otherwise negotiated in respect of, any
security (as defined in the Securities Act) which, to its knowledge, is or will
be integrated with the Securities sold pursuant to this Agreement.
3.25. Accounting Controls. The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in accordance with GAAP and to maintain
assets accountability, (iii) access to assets is permitted only in accordance
with management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
3.26. By-Laws. The Company's By-Laws provide that all matters submitted
to a meeting of stockholders, including the vote relating to the Special Meeting
Proposal at the Special Meeting, shall require the affirmative vote of a
majority of the total number of votes cast, present in person or by proxy and a
valid quorum.
3.27. Opinion of the Financial Advisor. The Company has received an
opinion of Bear Xxxxxxx a copy of which has been delivered to a Special
Committee of the Board of Directors and to the Purchasers, as to the fairness of
the transactions contemplated hereby.
4. Representations and Warranties of Each Purchaser. Each Purchaser,
severally for itself and not jointly with the other Purchasers, represents and
warrants to the Company as follows:
4.1. Organization. Each Purchaser, if it is a legal entity, is duly and
validly existing under the jurisdiction of its organization.
4.2. Authorization. All action on the part of such Purchaser necessary
for the authorization, execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated herein has been taken. This
Agreement constitutes the legal, valid and binding obligation of such Purchaser,
enforceable against such Purchaser in accordance with its terms, except as such
may be limited by bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights generally and by general equitable principles. Such Purchaser
has all requisite power to enter into this Agreement and to carry out and
perform its obligations under the terms of this Agreement.
4.3. Purchase Entirely for Own Account; Etc. Such Purchaser is
acquiring the Securities for its own account, and not with a view to, or for
sale in connection with, any distribution of the Securities in violation of the
Securities Act. Except as contemplated by this Agreement, such Purchaser has no
present agreement, undertaking, arrangement, obligation or commitment providing
for the disposition of the Securities. Such Purchaser, if it is a legal entity,
has not been organized, reorganized or recapitalized specifically for the
purpose of investing in the Securities.
20
4.4. Investor Status; Etc. Such Purchaser certifies and represents to
the Company that at the time such Purchaser acquires any of the Securities, such
Purchaser will be an "accredited investor" as defined in Rule 501 of Regulation
D promulgated under the Securities Act. Such Purchaser's financial condition is
such that it is able to bear the risk of holding the Securities for an
indefinite period of time and the risk of loss of its entire investment. Such
Purchaser has been afforded the opportunity to ask questions of and receive
answers from the management of the Company concerning this investment and has
sufficient knowledge and experience in investing in companies similar to the
Company in terms of the Company's stage of development so as to be able to
evaluate the risks and merits of its investment in the Company.
4.5. Securities Not Registered. Such Purchaser understands that the
Securities have not been registered under the Securities Act, by reason of their
issuance by the Company in a transaction exempt from the registration
requirements of the Securities Act, and that the Securities must continue to be
held by such Purchaser unless a subsequent disposition thereof is registered
under the Securities Act or is exempt from such registration. Such Purchaser
understands that the exemptions from registration afforded by Rule 144 (the
provisions of which are known to it) promulgated under the Securities Act depend
on the satisfaction of various conditions, and that, if applicable, Rule 144 may
afford the basis for sales only in limited amounts.
4.6. No Conflict. The execution and delivery of this Agreement by such
Purchaser and the consummation of the transactions contemplated hereby will not
conflict with or result in any violation of or default by such Purchaser (with
or without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to a loss of a
material benefit under (i) any provision of the organizational documents of such
Purchaser or (ii) any agreement or instrument, permit, franchise, license,
judgment, order, statute, law, ordinance, rule or regulations, applicable to
such Purchaser or its respective properties or assets.
4.7. Brokers. Such Purchaser has not retained, utilized or been
represented by any broker or finder in connection with the transactions
contemplated by this Agreement.
4.8. Consents. All consents, approvals, orders and authorizations
required on the part of such Purchaser in connection with the execution,
delivery or performance of this Agreement and the consummation of the
transactions contemplated herein have been obtained and will be effective as of
the Closing Date.
4.9. No Manipulation of Stock. The Purchasers have not taken, in
violation of applicable law, any action designed to or that might reasonably be
expected to cause or result in stabilization or manipulation of the price of the
Common Stock to facilitate the transactions contemplated hereby or the sale or
resale of the shares of Common Stock.
21
4.10. No General Solicitation. Purchasers were not offered or sold the
Securities, directly or indirectly, by means of any form of general solicitation
or general advertisement, including the following: (i) any advertisement,
article, notice or other communication published in any newspaper, magazine or
similar medium or broadcast over television or radio or (ii) any seminar or
other meeting whose attendees had been invited by general solicitation or
general advertising.
5. Covenants.
5.1. HSR Act Filings. The Company and each Purchaser shall file with
the proper authorities all forms and other documents necessary to be filed
pursuant to the HSR Act, and the regulations promulgated thereunder, as promptly
as possible and shall cooperate with the each other in promptly producing such
additional information as those authorities may reasonably require to allow
early termination of the notice period provided by the HSR Act or as otherwise
necessary to comply with statutory requirements of the Federal Trade Commission
or the Department of Justice. The Company and each Purchaser shall pay the
filing fee associated with its respective filing of the HSR Act notification.
5.2. Other Governmental Approvals. As soon as practicable after the
execution of this Agreement, the Company and each Purchaser shall file all
applications and reports and take such other action (in addition to any filings
required under the HSR Act) which is reasonably required to be taken or filed
with any governmental authority in connection with the transactions contemplated
by this Agreement. The Company and each Purchaser shall give all additional
notices to third parties and take other action reasonably required to be or
taken by it under any authorization, lease, note, mortgage, indenture, agreement
or other instrument or any law, rule, regulation, demand or court or
administrative order in connection with the transactions contemplated by this
Agreement.
5.3. Further Assurances. Each party agrees to cooperate with each other
and their respective officers, employees, attorneys, accountants and other
agents, and, generally, do such other acts and things in good faith as may be
reasonable or appropriate to timely effectuate the intents and purposes of this
Agreement and the consummation of the transactions contemplated hereby,
including, but not limited to, taking any action to facilitate the filing any
document or the taking of any action to assist the other parties hereto in
complying with the terms of Sections 5.1 and 5.2 herein.
5.4. Board Designees and Observers. Upon the consummation of the
Exchange, the following rights shall be granted to Warburg and BCP and shall
supersede all similar rights granted to Warburg and BCP pursuant to the terms of
the 2002 Purchase Agreement, the 2003 Purchase Agreement, Section 9(e) of the
Series A Preferred Certificate of Designations or Section 9(e) of the Series B
Preferred Certificate of Designations, which similar rights shall then be null
and void and of no further force or effect.
22
(a) Warburg shall have the exclusive right to appoint one (1) director
and BCP shall have the exclusive right to appoint one (1) director (each, a
"Board Designee") to the Board of Directors for so long as Warburg or BCP, as
the case may be, Beneficially Owns shares of Common Stock equal to at least
twenty-five percent (25%) of the number of shares of Common Stock issued to
Warburg or BCP, as the case may be, pursuant to the Exchange. In addition,
Warburg shall have the exclusive right to appoint one (1) additional Board
Designee for so long as Warburg Beneficially Owns shares of Common Stock equal
to at least fifty percent (50%) of the number of shares of Common Stock issued
to Warburg pursuant to the Exchange. The Board Designees shall be duly appointed
in accordance with the Company's By-laws, Certificate of Incorporation and the
General Corporation Law of Delaware. For so long as Warburg retains the right to
appoint two Board Designees, the Warburg Board Designees so elected shall serve
as a Class III Director and a Class II Director, respectively, and BCP's Board
Designee so elected shall serve as a Class II Director (as designated in the
Company's Certificate of Incorporation), each serving until his or her successor
is elected and qualified. If, pursuant to this Section 5.4(a), Warburg should
retain the right to appoint only one Board Designee, Warburg shall elect to
retain either its Class III Board Designee or its Class II Board Designee, in
its sole discretion. For so long as such membership does not conflict with any
applicable law or regulation or listing requirement of Nasdaq (as determined in
good faith by the Board of Directors of the Company), the Board Designees shall
serve as members of the Audit Committee, Compensation Committee and each other
principal committee of the Board of Directors. Any vacancy in the position of
the Board Designees appointed by Warburg or the Board Designee appointed by BCP
may be filled only by Warburg and BCP, respectively. Each of the Board Designees
appointed by Warburg and the Board Designee appointed by BCP may, during his or
her term of office, be removed at any time, with or without cause, by and only
by Warburg and BCP, respectively, at a special meeting called for such purpose
or by written consent of Warburg and BCP, respectively. Any vacancy created by
such removal may also be filled at such meeting or by such consent.
(b) In addition to the Board Designees, Warburg shall have the right to
have one observer (the "Board Observer") attend the meetings of the Board of
Directors. For so long as Warburg and/or BCP have the right to designate Board
Designees or a Board Observer pursuant to Section 5.4(a) herein and this Section
5.4(b), respectively, each Board Designee and the Board Observer shall receive a
copy of all materials distributed to the Board of Directors, whether provided to
the Board of Directors in advance of, during or after any meeting of the Board
of Directors, regardless of whether such Board Designee or the Board Observer
shall be in attendance at any such meeting; provided, however, that the Company
shall have the right to withhold any information from the Board Observer and to
exclude the Board Observer from any meeting or portion thereof if access to such
information or attendance at such meeting could:
(i) in the reasonable judgment of the Company's outside counsel,
adversely affect the attorney client privilege between the company and its
counsel;
(ii) cause the Board of Directors to breach its fiduciary duties; or
(iii) result in a conflict between the interests of the Company, on the
one hand, and those of the Board Observer or any of its Affiliates, on the other
hand.
The Company shall use its reasonable best efforts to ensure that any withholding
of information or any restriction on attendance is strictly limited only to the
extent necessary as set forth in the preceding paragraph.
23
(c) Each Board Designee and the Board Observer shall be reimbursed for
out-of-pocket expenses incurred in connection with participation as a member or
observer, as the case may be, of the Board of Directors in a manner consistent
with the Company's policies for reimbursing other outside members of the Board
of Directors. In addition, each Board Designee shall be entitled to the same
compensation paid to other outside members of the Board of Directors in his or
her capacity as a director, which compensation shall be assignable to Warburg
and BCP, as the case may be.
(d) For so long as Warburg and/or BCP have the rights to appoint the
Board Designees pursuant to Section 5.4(a) herein, there shall be no greater
than nine (9) members on the Board of Directors at all times. The size of the
Board of Directors shall not be increased by any election by Warburg or BCP to
appoint one or more of their respective Board Designees pursuant to Section
5.4(a) herein.
5.5. Series C Preferred Certificate of Designations. The Company shall
file the Series C Preferred Certificate of Designations with the Secretary of
State of the State of Delaware, and satisfactory evidence of such filing shall
be delivered to the Purchasers within one Business Day following receipt of
Stockholder Approval.
5.6. Covenant Pending the Closing. Between the date of this Agreement
and the Closing Date, the Company will promptly advise each Purchaser of any
action or event of which it becomes aware which has the effect of making
incorrect, in any material respect, any of the Company's representations or
warranties or which has the effect of rendering any of the Company's covenants
incapable of performance.
5.7. Proxy Statement.
(a) The Company shall use its reasonable best efforts to prepare and
file with the SEC, as promptly as practicable after the date hereof but in no
event later than twenty (20) Business Days after the Closing Date, preliminary
proxy materials with respect to the meeting of the stockholders for the purpose
of approving the Special Meeting Proposal. Thereafter, the Company shall as
promptly as possible file with the SEC the definitive proxy statement and (i)
call a Special Meeting to be held at the earliest practicable date but in no
event later than forty (40) days after the earlier of (x) receiving notification
that the SEC is not reviewing the preliminary proxy materials and (y) the
conclusion of any SEC review of the preliminary proxy materials, for the sole
purpose of voting upon the Special Meeting Proposal and (ii) include in the
proxy statement the recommendation of its Board of Directors that holders of the
Common Stock approve the Special Meeting Proposal; provided, however, that the
Board of Directors may withdraw or adversely modify their recommendation of the
Special Meeting Proposal if the Board of Directors determines in good faith
(after consultation with its financial advisors and legal counsel) that from a
financial point of view to the stockholders of the Company the Special Meeting
Proposal is not in the best interests of the Company's stockholders. Neither
prior to nor at the Special Meeting shall the Company put forth any matter,
other than the Special Meeting Proposal, to the holders of Common Stock for
their approval without the prior written consent of the Purchasers.
24
(b) The Company shall use its reasonable best efforts to prepare and
file with the SEC, as promptly as reasonably practicable taking into account any
pending material issues or transactions affecting the Company after the Exchange
Closing, preliminary proxy materials with respect to the meeting of the
stockholders for the purpose of approving (i) an increase in the authorized
capital of the Company and (ii) a reverse stock split of the Common Stock
(collectively, the "Charter Amendment Proposals"), in each case on terms to be
determined after consultation with (x) its legal counsel and financial advisors
and (y) the Purchasers. Thereafter, the Company shall as promptly as possible
file with the SEC the definitive proxy statement and acting through its Board of
Directors, (i) call a special meeting of the stockholders of the Company to be
held at the earliest practicable date after the earlier of (x) receiving
notification that the SEC is not reviewing the preliminary proxy materials and
(y) the conclusion of any SEC review of the preliminary proxy materials, for the
purpose of voting upon the Charter Amendment Proposals and (ii) include in the
proxy statement the recommendation of its Board of Directors that holders of the
Common Stock approve the Charter Amendment Proposals; provided, however, that
the Board of Directors may withdraw or adversely modify their recommendation of
the Charter Amendment Proposals if the Board of Directors determines in good
faith (after consultation with its financial advisors and legal counsel) that
the Charter Amendment Proposals are not in the best interests of the Company.
5.8. Subscription Right. Prior to the date of the Exchange Closing, all
subscription rights granted to Warburg and BCP pursuant to the terms of the 2002
Purchase Agreement and the 2003 Purchase Agreement shall be in full force and
effect, and shall remain valid and binding obligations of the Company. From and
after the date of the Exchange Closing, all such subscription rights shall
terminate and the corresponding provisions in the 2002 Purchase Agreement and
the 2003 Purchase Agreement shall be deemed null and void and of no further
force and effect.
5.9. Standstill.
(a) Each of the Company and Warburg hereby agree that effective upon
the Exchange Closing, Section 5.9 of the 2003 Purchase Agreement shall
automatically, and without any further action of any party, be null and void and
of no further force and effect and that the rights of the parties thereunder
shall be governed by the provisions set forth in this Section 5.9.
(b) In the event that at any time following the date of the Exchange
Closing until July 27, 0000, Xxxxxxx and any of its Affiliates own more than
forty-nine percent (49%) of the issued and outstanding voting securities of the
Company (the "Voting Stock"), Warburg agrees that (i) it shall be entitled to
vote (or take action by written consent in respect of) not more than forty-nine
percent (49%) of the issued and outstanding shares of Voting Stock and (ii) it
will abstain from voting any shares in excess of forty-nine percent (49%) of the
Voting Stock; provided, however, that Warburg and its Affiliates shall be
entitled to vote (or take action by written consent in respect of) all shares of
Voting Stock owned by it or its Affiliates in connection with any vote to
approve the Charter Amendment Proposals.
(c) Warburg further agrees that until July 27, 2008, except among
Warburg and any of its Affiliates, it shall not form, join or in any way
participate in a "group" (within the meaning of Section 13(d)(3) of the Exchange
Act) with respect to the Voting Stock.
5.10. Nominating Committee; Agreement to Vote.
25
(a) For so long as a Purchaser is subject to Section 5.8 herein, such
Purchaser and such Purchaser's designees on the Board of Directors shall vote
(i) in favor of the establishment of a nominating committee of the Board of
Directors consisting entirely of Independent Directors and (ii) if necessary to
comply with applicable requirements of federal law, state law, or Nasdaq
relating to the Board of Directors, in favor of an increase in the number of
authorized members of the Board of Directors such that a majority of the members
of the Board of Directors are Independent Directors. At or with respect to any
election of one or more directors (including to fill any vacancy on the Board of
Directors), for so long as a Purchaser is subject to Section 5.8 herein, such
Purchaser shall vote all of its shares of Voting Stock in favor of the election
of any nominee to the Board of Directors whose nomination was approved by the
unanimous consent of the Board of Directors.
(b) Each Purchaser severally agrees to vote all shares of Voting Stock
held by such Purchaser in favor of the Exchange, the Charter Amendment Proposals
and, if required, the exchange of Notes upon a Qualified Transaction at any
meeting(s) of the Company's stockholders called for the purpose of approving
such proposals unless at or prior to such meeting(s) the Board of Directors
shall have withdrawn or adversely modified its recommendation of the Exchange,
the Charter Amendment Proposals or the exchange of Notes upon a Qualified
Transaction in accordance with Section 5.7(b).
5.11. Affirmative Covenants in Connection with the Sale of the Notes.
The Company agrees that, until the earlier of (i) such date that all Notes are
exchanged by the holders thereof in accordance with Section 5.13 or (ii) the
date upon which all Obligations are satisfied in full, the Company will perform
and observe all of the provisions contained in this Section 5.11.
(a) Notice. The Company shall notify the Purchasers promptly, but in
any event within two (2) Business Days of its discovery thereof, (i) whenever
any Event of Default occurs, (ii) whenever any action, suit or proceeding is
commenced by or against the Company which, if adversely determined, would, or
would be reasonably likely to, result in a Material Adverse Effect and (iii)
whenever any Material Adverse Effect occurs.
(b) Continued Existence; Compliance with Law. The Company shall comply
in all respects with its Certificate of Incorporation. The Company shall
preserve, renew and keep in full force and effect its existence as a corporation
and its material rights, licenses, certificates, and permits and shall comply in
all material respects with all laws, rules, regulations, ordinances, orders and
judgments applicable to it. The Company will obtain, renew and extend all of the
foregoing rights, certificates, permits, licenses, certificates of compliance
and the like which may be necessary for the continuation of the operation of its
business as currently conducted and will give prompt written notice to the
Purchasers of (i) any citation or order relating thereto, (ii) any lapse,
suspension, revocation, rescission or other termination thereof, (iii) any
alleged breach or violation thereof by the Company or any other Person, (iv) any
proceeding relating thereto or (v) any refusal of any Person to grant or extend
the same.
26
(c) Maintenance of Property. The Company shall at all times maintain
and preserve its property in good working order, condition and repair, normal
wear and tear excepted, and shall pay and discharge, or cause to be paid and
discharged when due, the cost of repairs to or maintenance of the same unless
such cost of repairs is contested in good faith by appropriate proceedings or
other appropriate actions promptly initiated and diligently conducted and if the
Company shall have set aside on its books such reserves, if any, with respect
thereto as are required by GAAP and deemed appropriate by the Company and its
independent accountants.
(d) Title to Property. All property, whether real or personal, owned by
the Company shall be held in the name of the Company unless otherwise approved
by the Board of Directors and the Purchasers holding at least a majority of the
outstanding aggregate principal amount of the Notes issued pursuant to this
Agreement.
(e) Information and Inspection. The Company shall furnish to the
Purchasers from time to time, upon request, financial statements of the Company
and information pertaining to any covenant, provision or condition hereof. At
all reasonable times and as often as the Purchasers may reasonably request, upon
reasonable notice, the Company shall permit any authorized representative
designated by the Purchasers to visit and inspect any of the properties of the
Company and to take extracts therefrom and to discuss the Company's affairs,
finances and accounts with the management of the Company and the Company's
independent auditors.
(f) Insurance. The Company will maintain or cause to be maintained on
all insurable properties now or hereafter owned by the Company insurance against
loss or damage by fire or other casualty to the extent customary with respect to
like properties of companies conducting similar businesses, and will maintain or
cause to be maintained public liability and workers' compensation insurance
insuring the Company to the extent customary with respect to companies
conducting similar businesses and, upon request, will furnish to the Purchasers
satisfactory evidence of the same. The Company shall also maintain such other
insurance as may be reasonably requested by the Purchasers.
(g) Payment of Taxes. The Company will pay and discharge promptly as
they become due and payable all Taxes, assessments and other governmental
charges or levies imposed upon it or its income or any of its property or
assets, or any part thereof, as well as all lawful claims of any kind (including
claims for labor, materials and supplies) which, if unpaid, might by law become
a Lien upon its property; provided that the Company shall not be required to pay
any Taxes, assessments, charges, levies or claims if the amount, applicability
or validity thereof shall currently be contested in good faith by appropriate
proceedings or other appropriate actions promptly initiated and diligently
conducted and if the Company shall have set aside on its books such reserves, if
any, with respect thereto as are required by GAAP and deemed appropriate by the
Company and its independent accountants.
(h) Payment of Other Indebtedness, Etc. Except as to (i) matters being
contested in good faith and by appropriate proceedings or other appropriate
action or (ii) trade payables, the Company will pay promptly when due, or in
conformance with the Company's customary practices, all other material
indebtedness, liabilities and obligations incident to the conduct of its
business.
27
5.12. Negative Covenants in Connection with the Sale of the Notes. The
Company agrees that, until the earlier of (i) such date that all Notes are
exchanged by the holders thereof in accordance with Section 5.13 or (ii) the
date upon which all Obligations are satisfied in full, the Company shall not,
directly or indirectly, take any of the actions set out in this Section 5.12;
provided, however, that nothing contained in this Section 5.12 shall prohibit
the Company's Board of Directors from engaging in any action in connection with
or directed toward a merger, acquisition or strategic financing transaction,
subject to the Company's obligations under Section 6(b) of the Notes.
(a) Liabilities. The Company shall not incur, create, assume or permit
to exist any Liabilities, except: (i) Liabilities existing on the date hereof;
(ii) Liabilities arising hereunder or any other Liabilities owed to the
Purchasers under the Loan Documents; (iii) trade accounts payable and other
unsecured Liabilities incurred and payable in the ordinary course of business;
(iv) Liabilities for Taxes, assessments, franchise fees, governmental charges,
Liens or similar claims to the extent that payment thereof shall not be required
to be made by the provisions hereof; (v) purchase money Liabilities relating to
the purchase price of equipment to be used in the business of the Company in an
aggregate outstanding amount not to exceed at any one time $1,000,000; (vi) any
renewals, extensions, substitutions, refinancings or replacements of any
Liability otherwise permitted hereunder so long as (1) the aggregate amount of
Liabilities represented thereby is not increased by such renewal, extension,
substitution, refinancing or replacement, (2) the average life and the date such
Liability is scheduled to mature are not shortened, (3) the new Liability shall
not be senior in right of payment to the Liability that is being extended,
renewed, substituted, refinanced or replaced and (4) the terms and conditions of
such Liability are not more onerous to the Company in any material respect than
the terms and conditions of the Liability renewed, extended, substituted,
refinanced or replaced; (vii) any Liabilities the net proceeds of which are used
to repay the Notes in their entirety; or (viii) any Liabilities arising under
the SVB Agreements; (ix) Liabilities owed by the Company to any of its
subsidiaries or owed by any of its subsidiaries to any other of its subsidiaries
or to the Company; (x) Liabilities incurred in connection with the Symbol patent
infringement litigation that do not constitute a Material Adverse Change; or
(xi) Liabilities incurred in connection with any settlement of litigation that
is approved by the Board of Directors and the Purchasers holding at least a
majority of the outstanding aggregate principal amount of the Notes issued
pursuant to this Agreement, which approval by the Purchasers shall not be
unreasonably withheld.
(b) Guaranties. The Company shall not pledge its credit or property in
any manner, or otherwise become responsible, for the payment or other
performance of the Liabilities or other obligations of another Person and shall
not act as a guarantor (whether of payment or of collection), surety, co-maker
or endorser for, or agree conditionally or otherwise to make any purchase, loan
or investment in order thereby to enable, another Person to prevent or correct a
default of any kind, except endorsements of negotiable instruments for
collection in the ordinary course of business.
(c) Notes, Accounts Receivable and Claims. The Company shall not sell,
discount or otherwise dispose of any material note or material account
receivable, with or without recourse, except for collection in the ordinary
course of business or in connection with the SVB Agreements or the Xxxxx Xxxx
indebtedness more fully described in Section 5.12 of the Disclosure Schedule;
fail to assert timely any material claim, cause of action or contract right that
it possesses against any third party; nor agree to settle or compromise any such
claim, cause of action or contract right except for (i) settlements or
compromises made in the reasonable exercise of business judgment in the ordinary
course of business or (ii) in connection with any settlement of litigation that
is approved by Board of Directors and the Purchasers holding at least a majority
of the outstanding aggregate principal amount of the Notes issued pursuant to
this Agreement, which approval by the Purchasers shall not be unreasonably
withheld.
28
(d) Disposal of Assets. The Company shall not sell, lease, transfer,
assign or otherwise dispose of any material part of its assets to any Person,
except for sales, leases, transfers, assignments or other dispositions made: (i)
in the ordinary course of business; (ii) in connection with the restructuring
plans publicly disclosed by the Company, (iii) in connection with the SVB
Agreements; or (iv) in connection with the Xxxxx Xxxx indebtedness more fully
described in Section 5.12 of the Disclosure Schedule.
(e) Amendment of Governing Documents. The Company shall not amend or
modify its Certificate of Incorporation or By-laws in any respect which would
have a material adverse effect upon the Purchasers' rights and remedies under
the Loan Documents.
(f) Reorganizations; Acquisitions. The Company shall not be a party to
any recapitalization or purchase all or a substantial part of the capital stock,
partnership interests or assets of any Person or any division or business unit
of any Person unless such transaction is unanimously approved by the Board of
Directors.
(g) Liens. The Company shall not suffer or permit any property or asset
now owned or hereafter acquired by it to be or become encumbered by any Lien
other than Permitted Liens.
(h) Capital Distributions. The Company shall not make any capital
distributions, or pay or declare any dividend or distribution, except (i) in
connection with a stock split or combination, (ii) in accordance with this
Agreement, the 2003 Purchase Agreement and/or the 2002 Purchase Agreement or
(iii) for dividends or distributions by the subsidiaries of the Company to the
Company.
(i) Transactions with Affiliates. Except in connection with the Loan
Documents, the Company shall not pay any management or other fee to, or, except
in the ordinary course of business with its subsidiaries, enter into any
transaction with, any Affiliate.
(j) Amendments or Waivers. Except with respect to the SVB Agreements,
the Company shall not amend or cancel or consent to the amendment or
cancellation of any contract (or waive a right thereunder) in any manner that
might have the effect of materially and adversely (a) affecting its financial
condition, (b) affecting the rights of the Purchasers under the Loan Documents
or (c) decreasing or adversely affecting the value of the collateral securing
the Obligations.
(k) Accounting Matters. Except upon thirty (30) days' written notice,
the Company shall not change its fiscal year or accounting practices.
(l) Subsidiaries. The Company shall not form or acquire or cause to be
formed or acquired any Subsidiary, except in the ordinary course consistent with
past practice.
29
(m) Investments. The Company shall not make any investments other than
investments in cash equivalents, except in the ordinary course consistent with
past practice or as otherwise approved by the Board of Directors and the
Purchasers holding at least a majority of the outstanding aggregate principal
amount of the Notes issued pursuant to this Agreement.
(n) Issuance of Preferred Stock. Except in connection with the
transactions contemplated by this Agreement, the Company shall not create,
authorize or issue any shares of preferred stock, or any security convertible
into, or exchangeable or exercisable for, shares of preferred stock.
(o) Indirect Actions. The Company shall not permit any of its
subsidiaries to take any of the actions set forth in this Section 5.12 nor
permit any of the conditions set forth in this Section 5.12 to occur with
respect to its subsidiaries; provided, however, that with respect to Section
5.12(b), Purchasers acknowledge and consent to the secured guaranties issued by
certain of the Company's subsidiaries for the benefit of SVB, and consent to any
related arrangements for the benefit of SVB approved by the Board of Directors.
5.13. Exchange of Notes Upon a Qualified Transaction.
(a) Simultaneously with the closing of a Qualified Transaction, the
outstanding principal and accrued but unpaid interest on the Notes shall
immediately and automatically be exchanged for the class of common stock of the
Company as is issued in the Qualified Transaction. The number of shares of
Common Stock to be issued to each Purchaser upon such exchange shall be equal to
the quotient obtained by dividing (a) the outstanding principal and unpaid
accrued interest due on each Note on the date of exchange, by (b) the price per
share of the Common Stock sold to the investors in the Qualified Transaction,
and the issuance of such shares upon exchange of the Notes shall be upon and
subject to substantially the same terms and conditions applicable to the
Qualified Transaction. In addition, in the event that warrants to purchase
shares of Common Stock are issued to the investors in the Qualified Transaction,
each Purchaser shall be entitle to receive from the Company, upon exchange of
the Notes, a number of warrants to purchase Common Stock on a proportionate
basis with the investors in the Qualified Transaction based on the outstanding
principal and unpaid accrued interest on each such Note exchanged. Each
Purchaser hereby agrees to execute all necessary documents in connection with
the exchange of the Notes, including, but not limited to, a definitive stock or
securities purchase agreement.
(b) No fractional shares of Common Stock will be issued upon exchange
of the Notes. In lieu of any fractional share to which the Purchaser would
otherwise be entitled, the Company will pay to the Purchasers in cash the amount
of the unexchanged principal balance plus accrued but unpaid interest then
outstanding on the Notes that would otherwise be exchanged for such fractional
share. Upon exchange of the Notes, the Purchasers shall surrender the Notes,
duly endorsed, at the principal offices of the Company or any transfer agent of
the Company. At its expense, the Company will, as soon as practicable
thereafter, issue and deliver to such Purchasers, at such principal office, a
certificate or certificates for the number of shares to which each such
Purchaser is entitled upon such exchange, together with other securities and
property to which such Purchaser is entitled upon such exchange under the terms
of its Note, including a check payable to such Purchaser for any cash amounts
payable as described herein. Upon exchange of the Notes and payment for
fractional shares as provided above, the Company will be forever released from
all of its payment obligations and liabilities under the Notes with regard to
that portion of the principal and accrued but unpaid interest being exchanged.
30
5.14. Stock Options. From and after the Closing Date, the Company
agrees that in the event the Company grants any stock options, stock grants or
similar rights under the terms of (i) the Company's 1995 Long-Term Incentive
Plan (the "1995 Plan"), (ii) Proxim, Inc.'s 1999 Nonstatutory Stock Option Plan
(the "1999 NSO Plan"), (iii) the 1999 Proxim Corporation Stock Incentive Plan
(the "1999 Plan") or (iv) the Company's 2001 Stock Bonus Plan for Non-Officer
Employees (the "2001 Plan" and collectively with the 1995 Plan, the 1999 NSO
Plan and the 1999 Plan, the "Plans"), the Company shall, and shall cause the
applicable plan administrator to, ensure that the transactions contemplated by
the terms of this Agreement and the other Transaction Documents shall not at any
time constitute a Change of Control (as defined in the 1995 Plan, 1999 NSO Plan,
1999 Plan or 2001 Plan, as the case may be) under the relevant plan or any of
the relevant agreements governing any such stock option, stock grant or similar
right. The Company acknowledges and agrees that the consummation of the
transactions contemplated by this Agreement and the other Transaction Documents
do not, and will not at any time, constitute a Change of Control (as defined in
the 1999 Plan or 2001 Plan, as the case may be) under the terms of the 1999 Plan
or 2001 Plan.
5.15. Qualified Transaction. The Company hereby agrees to use its
reasonable best efforts to market and consummate a Qualified Transaction on
commercially reasonable terms as promptly as reasonably practicable following
the date of the Exchange Closing.
6. Conditions Precedent.
6.1. Conditions to the Obligation of the Purchasers to Consummate the
Closing. The several obligations of each Purchaser to consummate the
transactions to be consummated at the Closing are subject to the satisfaction of
the conditions precedent set forth in this Section 6.1.
(a) The representations and warranties contained herein of the Company
shall be true and correct on and as of the Closing Date with the same force and
effect as though made on and as of the Closing Date (it being understood and
agreed by each Purchaser that for purposes of this Section 6.1(a), in the case
of any representation and warranty of the Company contained herein (i) which is
qualified by application thereto by a Material Adverse Effect standard, such
representation and warranty need be true and correct by application thereto only
of a Material Adverse Change standard, (ii) which is not hereinabove qualified
by application thereto of a materiality standard, such representation and
warranty need be true and correct only in all material respects or (iii) which
is made as of a specific date, such representation and warranty need be true and
correct only as of such specific date).
(b) The Company shall have performed in all material respects all
obligations and conditions herein required to be performed or observed by the
Company on or prior to the Closing Date.
31
(c) Each Purchaser shall have received a certificate, dated the Closing
Date, signed by each of the President and the Chief Financial Officer of the
Company, certifying on behalf of the Company that the conditions specified in
the foregoing Sections 6.1(a) and (b) have been fulfilled.
(d) Each Purchaser shall have received from the Company's counsel,
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, an opinion in form and substance reasonably
satisfactory to the Purchasers.
(e) There shall not have been any Material Adverse Change since the
Announcement Date.
(f) All corporate and other proceedings to be taken by the Company in
connection with the transactions contemplated hereby and all documents incident
thereto shall be reasonably satisfactory in form and substance to the Purchasers
and the Purchasers shall have received all such counterpart originals or
certified or other copies of such documents as it may reasonably request.
(g) The Company and the Collateral Agent, on behalf of the Purchasers,
and the Purchasers with respect to Articles X and XI thereof, shall have entered
into the Pledge and Security Agreement.
(h) The Collateral Agent, on behalf of the Purchasers, SVB, the Company
and the Guaranteeing Subsidiaries shall have entered into the Intercreditor
Agreement and all consents identified in Section 6.1(h) of the Disclosure
Schedule shall have been obtained, including all consents and waivers required
from SVB in connection with the transactions contemplated in the Loan Documents.
(i) All UCC filings and filings shall have been made in the United
States Patent and Trademark Office in connection with the creation and
perfection of the security interests in and Liens on the Collateral granted
pursuant to the Loan Documents.
(j) To the extent the Company and the Purchasers agree is reasonably
required, the waiting period under the HSR Act shall have expired or notice of
early termination of the waiting period shall have been received by the Company
and the Purchasers.
(k) Neither the purchase of and payment for the Notes nor any of the
transactions contemplated by the Exchange shall be prohibited or enjoined by any
law, court order or government regulation.
6.2. Conditions to the Obligation of the Company to Consummate the
Closing. The obligation of the Company to consummate the transactions to be
consummated at the Closing, and to issue and sell to each Purchaser the Notes to
be purchased by it at the Closing pursuant to this Agreement, is subject to the
satisfaction of the conditions precedent set forth in this Section 6.2.
32
(a) The representations and warranties contained herein of such
Purchaser shall be true and correct on and as of the Closing Date, with the same
force and effect as though made on and as of Closing Date (it being understood
and agreed by the Company that, in the case of any representation and warranty
of such Purchaser contained herein which is not hereinabove qualified by
application thereto of a materiality standard, such representation and warranty
need be true and correct only in all material respects).
(b) Such Purchaser shall have performed in all material respects all
obligations and conditions herein required to be performed or observed by such
Purchaser on or prior to the Closing Date.
(c) To the extent the Company and the Purchasers agree is reasonably
required, the waiting period under the HSR Act shall have expired or notice of
early termination of the waiting period shall have been received by the Company
and the Purchasers.
Each Purchaser's obligations under this Section 6.2 shall be several
and independent from the obligations of each other Purchaser; and the failure by
any Purchaser to fulfill or comply with any of the conditions set forth in this
Section 6.2 shall not affect the obligations of the Company to any other
Purchaser to consummate the transactions contemplated by this Agreement.
6.3. Conditions Precedent to the Exchange Closing. The obligation of
the Company and the several obligations of each Purchaser to consummate the
transactions to be consummated at the Exchange Closing shall be subject to the
condition precedent that (i) the Stockholder Approval has been received and (ii)
the Series C Preferred Certificate of Designations has been filed with, and
accepted by, the Secretary of State of the State of Delaware.
7. Registration of the Securities; Compliance with the Securities Act.
7.1. Securities Law Transfer Restrictions. No Purchaser shall sell,
assign, pledge, transfer or otherwise dispose of or encumber any of the
Securities being purchased by it hereunder unless the transferee agrees in
writing to be bound by the terms of this Agreement and except (i) pursuant to an
effective registration statement under the Securities Act or (ii) pursuant to an
available exemption from registration under the Securities Act and applicable
state securities laws and, if requested by the Company, upon delivery by such
Purchaser of an opinion of counsel reasonably satisfactory to the Company to the
effect that the proposed transfer is exempt from registration under the
Securities Act and applicable state securities laws. The Company shall not
register any transfer of the Securities in violation of this Section 7.1. The
Company may, and may instruct any transfer agent for the Company to, place such
stop transfer orders as may be required on the transfer books of the Company in
order to ensure compliance with the provisions of this Section 7.1.
Notwithstanding the foregoing, the Notes shall not be transferable without the
prior written consent of the Company, except for transfers to Affiliates of the
Purchasers that agree not to further transfer the Notes.
7.2. Legends. Each certificate representing any of the Securities shall
be endorsed with the legend set forth below, and each Purchaser covenants that,
except to the extent such restrictions are waived by the Company, it shall not
transfer the shares represented by any such certificate without complying with
the restrictions on transfer described in this Agreement and the legends
endorsed on such certificate:
33
"THE SECURITIES REPRESENTED BY THIS [CERTIFICATE] [NOTE] [AND THE
SECURITIES ISSUABLE UPON ITS EXCHANGE] HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR SECURITIES LAWS OF ANY STATE
AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED TRANSFERRED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN AVAILABLE EXEMPTION FROM
REGISTRATION UNDER THE ACT OR SUCH LAWS AND, IF REQUESTED BY THE COMPANY, UPON
DELIVERY OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT
THE PROPOSED TRANSFER IS EXEMPT FROM THE ACT OR SUCH LAWS."
7.3. Registration Procedures and Other Matters. The Company shall:
(a) upon the request of a majority-in-interest of the Purchasers, use
its reasonable best efforts, subject to receipt of necessary information from
each Purchaser for inclusion in such filing, to prepare and file with the SEC
within 180 days after the closing of a Qualified Transaction or such other time
as shall be mutually agreed to, a registration statement on Form S-3 (the
"Registration Statement") covering the Securities held by each Purchaser, or the
Holders (defined in Section 7.4 below), from time to time, in compliance with
the Securities Act;
(b) use its reasonable best efforts to cause the Registration Statement
to become effective as promptly as practicable after filing, such efforts to
include, without limiting the generality of the foregoing, preparing and filing
with the SEC any financial statements that are required to be filed prior to the
effectiveness of such Registration Statement;
(c) use its reasonable best efforts to prepare and file with the SEC
such amendments and supplements to the Registration Statement and the prospectus
used in connection therewith (the "Prospectus") as may be necessary to keep the
Registration Statement continuously effective and free from any material
misstatement or omission to state a material fact for a period not exceeding,
with respect to each Holder's Securities, the earlier of (i) the date on which
each Holder may sell all Securities then held by such Holder without restriction
by the volume limitations of Rule 144(e) of the Securities Act or (ii) such time
as all Securities purchased by such Holder have been sold pursuant to a
registration statement or are otherwise freely tradeable;
(d) furnish to each Holder with respect to the Securities registered
under the Registration Statement such number of copies of the Registration
Statement, Prospectuses and preliminary prospectuses in conformity with the
requirements of the Securities Act and such other documents as such Holder may
reasonably request, in order to facilitate the public sale or other disposition
of all or any of the Securities by such Holder; provided, however, that the
obligation of the Company to deliver copies of Prospectuses or preliminary
Prospectuses to such Holder shall be subject to the receipt by the Company of
reasonable assurances from such Holder that such Holder will comply with the
applicable provisions of the Securities Act and of such other securities or blue
sky laws as may be applicable in connection with any use of such Prospectuses or
preliminary Prospectuses;
34
(e) file documents required of the Company for normal blue sky
clearance in states specified in writing by each Holder and use its reasonable
best efforts to maintain such blue sky qualifications during the period the
Company is required to maintain the effectiveness of the Registration Statement
pursuant to Section 7.3(c); provided, however, that the Company shall not be
required to qualify to do business or consent to service of process in any
jurisdiction in which it is not now so qualified or has not so consented;
(f) bear all expenses in connection with the procedures in this Section
7.3 and the registration of the Securities pursuant to the Registration
Statement (provided, that the Holders shall bear the cost of all underwriting
discounts and selling commissions and similar fees applicable to the sale of
Securities and all fees and expenses of legal counsel for any Holder and all
transfer Taxes);
(g) advise each Holder promptly after it shall receive notice or obtain
knowledge of the issuance of any stop order by the SEC delaying or suspending
the effectiveness of the Registration Statement or of the initiation or threat
of any proceeding for that purpose; and promptly use its reasonable best efforts
to prevent the issuance of any stop order or to obtain its withdrawal at the
earliest possible moment if such stop order should be issued; and
(h) use its reasonable best efforts to cause the Common Stock to be
issued in connection with the Exchange to be listed on Nasdaq in connection with
the filing of the Registration Statement.
Notwithstanding anything to the contrary herein, the Registration
Statement shall cover only the Securities.
7.4. Transfer of Securities; Suspension.
(a) Each Purchaser agrees that in case of any disposition of its
Securities not made pursuant to the Registration Statement to (i) a third party
who agrees to be bound by the provisions of this Section 7 and makes the
representations to the Company contained in Section 4 herein or (ii) its
partners as part of a distribution of all or part of the Securities (in each
case the "Transferee", and together with the Purchasers, the "Holders"), such
Purchaser will promptly notify the Company of any changes in the information set
forth in the Registration Statement regarding the Holders or their plans of
distribution. The Company agrees, in case of such sale, transfer or distribution
(to the extent made in accordance with Section 7.1), to promptly file one or
more post-effective amendments to the Registration Statement or a supplement to
the related Prospectus, naming each Transferee as a Selling Shareholder in
accordance with the provisions of the Securities Act.
35
(b) Except in the event that paragraph (c) below applies, the Company
shall (i) prepare and file from time to time with the SEC a post-effective
amendment to the Registration Statement or a supplement to the related
Prospectus or a supplement or amendment to any document incorporated therein by
reference or file any other required document so that such Registration
Statement will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, and so that, as thereafter delivered to the
purchasers of Securities being sold thereunder, such Prospectus will not contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; (ii) provide each
Holder copies of any documents filed pursuant to Section 7.4(b)(i); and (iii)
inform each Holder that the Company has complied with its obligations in Section
7.4(b)(i) (or that, if the Company has filed a post-effective amendment to the
Registration Statement which has not yet been declared effective, the Company
will notify each Holder to that effect, will use its reasonable best efforts to
secure the effectiveness of such post-effective amendment as promptly as
possible and will promptly notify each Holder pursuant to Section 7.4(b)(i)
herein when the amendment has become effective).
(c) Subject to paragraph (d) below, in the event (i) of any request by
the SEC or any other federal or state governmental authority during the period
of effectiveness of the Registration Statement for amendments or supplements to
a Registration Statement or related Prospectus or for additional information;
(ii) of the issuance by the SEC or any other federal or state governmental
authority of any stop order suspending the effectiveness of a Registration
Statement or the initiation of any proceedings for that purpose; (iii) of the
receipt by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Securities for sale
in any jurisdiction or the initiation or threatening of any proceeding for such
purpose; (iv) of any event or circumstance which, upon the advice of its
counsel, necessitates the making of any changes in the Registration Statement or
Prospectus, or any document incorporated or deemed to be incorporated therein by
reference, so that, in the case of the Registration Statement, it will not
contain any untrue statement of a material fact or any omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and that in the case of the Prospectus, it will not
contain any untrue statement of a material fact or any omission to state a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; or (v) the Company determines in good faith that offers and sales
pursuant to the Registration Statement should not be made by reason of the
presence of material undisclosed circumstances or developments with respect to
which the disclosure that would be required in such a Registration Statement or
related Prospectus is premature, would have an adverse effect on the Company or
is otherwise inadvisable, then the Company shall deliver a certificate in
writing to each Holder (the "Suspension Notice") to the effect of the foregoing
and, upon receipt of such Suspension Notice, such Holder will refrain from
selling any Securities pursuant to the Registration Statement (a "Suspension")
until such Holder's receipt of copies of a supplemented or amended Prospectus
prepared and filed by the Company, or until it is advised in writing by the
Company that the current Prospectus may be used, and has received copies of any
additional or supplemental filings that are incorporated or deemed incorporated
by reference in any such Prospectus. In the event of any Suspension, the Company
will use its reasonable best efforts to cause the use of the Prospectus so
suspended to be resumed as soon as reasonably practicable after the delivery of
a Suspension Notice to each Holder. In addition to and without limiting any
other remedies (including, without limitation, at law or at equity) available to
such Holder, such Holder shall be entitled to specific performance in the event
that the Company fails to comply with the provisions of this Section 7.4(c).
36
(d) Notwithstanding the foregoing paragraphs of this Section 7.4, no
Holder shall be prohibited from selling Securities under the Registration
Statement as a result of Suspensions on more than three occasions of not more
than 30 days each in any twelve month period unless, in the good faith judgment
of the Board of Directors, upon the written opinion of counsel, the sale of
Securities under the Registration Statement in reliance on this paragraph 7.4(d)
would be reasonably likely to cause a violation of the Securities Act or the
Exchange Act and result in liability to the Company.
(e) Provided that a Suspension is not then in effect, each Holder may
sell Securities under the Registration Statement, provided that it arranges for
delivery of a current Prospectus to the transferee of such Securities. Upon
receipt of a request therefor, the Company will provide an adequate number of
current Prospectuses to such Holder and to supply copies to any other parties
requiring such Prospectuses.
(f) Each Holder acknowledges and agrees that the Securities sold
pursuant to the Registration Statement are not transferable on the books of the
Company unless the stock certificate submitted to the transfer agent evidencing
such Securities is accompanied by a certificate reasonably satisfactory to the
Company to the effect that (i) the Securities have been sold in accordance with
such Registration Statement and (ii) the requirement of delivering a current
Prospectus has been satisfied.
(g) In the event of a sale of Securities by any Holder pursuant to the
Registration Statement, such Holder shall deliver to the Company's transfer
agent an appropriate notification of the sale, so that the Securities may be
properly transferred.
7.5. Company Registration.
(a) If the Company shall determine to register any of its equity
securities either for its own account or for the account of other stockholders
at any time prior to the effectiveness of the Registration Statement, other than
(i) a registration relating solely to employee benefit plans, (ii) a
registration relating solely to a SEC Rule 145 transaction (iii) a registration
relating solely to securities issued in connection with settlement of litigation
otherwise approved in the manner specified in Section 5.12(a)(xii), or (iv) a
registration on any registration form which does not permit secondary sales or
does not include substantially the same information as would be required to be
included in a registration statement covering the sale of Securities, the
Company will:
(i) promptly give to each of the Holders a written notice thereof
(which shall include a list of the jurisdictions in which the Company intends to
attempt to qualify such securities under the applicable blue sky or other state
securities laws); and
(ii) if so requested by the Holders of at least fifty-one percent (51%)
or more of the Securities (on an as-converted, as exercised basis), include in
such registration (and any related qualification under blue sky laws or other
compliance), and in any underwriting involved therein, all the Securities
specified in a written request or requests made by the Holders within fifteen
(15) days after receipt of the written notice from the Company described in
clause (i) above, except as set forth in Section 7.5(b) below. Such written
request may specify all or a part of the Holders' Securities. In the event any
Holder requests inclusion in a registration pursuant to this Section 7.5 in
connection with a distribution of Securities to its partners, the registration
shall provide for the resale by such partners, if requested by such Holder.
37
(b) Underwriting. If the registration of which the Company gives notice
is for a registered public offering involving an underwriting, the Company shall
so advise each of the Holders as a part of the written notice given pursuant to
Section 7.5(a)(i) herein. In such event, the right of each of the Holders to
registration pursuant to this Section 7.5 shall be conditioned upon such
Holders' participation in such underwriting and the inclusion of such Holders'
Securities in the underwriting to the extent provided herein. The Holders whose
shares are to be included in such registration shall (together with the Company
and the other stockholders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
representative of the underwriter or underwriters selected for underwriting by
the Company. Notwithstanding any other provision of this Section 7.5, if the
representative determines that marketing factors require a limitation on the
number of shares to be underwritten, the representative may limit the number of
Securities to be included in the registration and underwriting. The Company
shall so advise all holders of securities requesting registration, and the
number of shares of securities that are entitled to be included in the
registration and underwriting shall be allocated in the following manner: The
securities, including the Securities, of the Company held by stockholders of the
Company (other than securities held by holders who by contractual right demanded
such registration and securities to be offered by the Company) shall be excluded
from such registration and underwriting to the extent required by such
limitation, and, if a limitation on the number of shares permits additional
shares to be included in the registration and underwriting, each of the Holders
and other holders requesting to have their shares included in such registration
will have the right to include such shares in such registration (allocated pro
rata among such Holders and holders on the basis of the relative number of
shares requested to be registered by such Holders and holders up to the
permitted amount). If any of the Holders or any officer, director or other
stockholder disapproves of the terms of any such underwriting, he may elect to
withdraw therefrom by written notice to the Company and the underwriter. Any
Securities or other securities excluded or withdrawn from such underwriting
shall be withdrawn from such registration. Notwithstanding the foregoing, if at
any time after giving written notice referred to above, and prior to the
effective date of the applicable registration statement filed in connection
therewith, the Company determines for any reason not to proceed with the
proposed registration statement, the Company may, at its election, give written
notice of such determination to the Holders that have elected to have their
Securities included in such registration and thereupon will be relieved of its
obligations to register such Securities in connection with such registration.
7.6. Indemnification.
(a) For the purpose of this Section 7.6:
(i) the term "Selling Stockholder" shall include each Holder and any
Affiliate of such Holder; and
38
(ii) the term "Registration Statement" shall include the Prospectus in
the form first filed with the SEC pursuant to Rule 424(b) of the Securities Act
or filed as part of the Registration Statement at the time of effectiveness if
no Rule 424(b) filing is required, exhibit, supplement or amendment included in
or relating to the Registration Statement referred to in Section 7.1.
(b) The Company agrees to indemnify and hold harmless each Selling
Stockholder and its officers, directors, partners, employees and agents and each
underwriter of Securities, if any, and each Person who controls any such
underwriter from and against any losses, claims, damages or liabilities to which
such Person may become subject (under the Securities Act or otherwise) insofar
as such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of, or are based upon (i) any untrue statement of a
material fact contained in the Registration Statement as amended at the time of
effectiveness or any omission of a material fact required to be stated therein
or necessary to make the statements therein not misleading, or (ii) any failure
by the Company to fulfill any undertaking included in the Registration Statement
as amended at the time of effectiveness, and the Company will reimburse such
Selling Stockholder for any reasonable legal or other out-of-pocket expenses
reasonably incurred in investigating, defending or preparing to defend any such
action, proceeding or claim, or preparing to defend any such action, proceeding
or claim; provided, however, that the Company shall not be liable in any such
case to the extent that such loss, claim, damage or liability arises out of, or
is based upon, an untrue statement made in such Registration Statement or any
omission of a material fact required to be stated therein or necessary to make
the statements therein not misleading in reliance upon and in conformity with
written information furnished to the Company by or on behalf of such Selling
Stockholder specifically for use in preparation of the Registration Statement or
the failure of such Selling Stockholder to comply with its covenants and
agreements contained in Section 7.4 herein respecting sale of the Securities or
any statement or omission in any Prospectus that is corrected in any subsequent
Prospectus that was delivered to the Selling Stockholder prior to the pertinent
sale or sales by the Selling Stockholder. The Company shall reimburse each
Selling Stockholder for the amounts provided for herein on demand as such
expenses are incurred.
(c) Each Selling Stockholder, severally and not jointly, agrees to
indemnify and hold harmless the Company (and each Person, if any, who controls
the Company within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act), each of its officers, directors, employees and agents from
and against any losses, claims, damages or liabilities to which the Company (or
any such officer, director, employee, agent or controlling Person) may become
subject (under the Securities Act or otherwise), insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) arise out
of, or are based upon, (i) any failure by a Selling Stockholder to comply with
the covenants and agreements contained in Section 7.4 herein respecting the sale
of the Securities, or (ii) any untrue statement of a material fact contained in
the Registration Statement or any omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading if and
to the extent that such untrue statement or omission was made in reliance upon
and in conformity with written information furnished by or on behalf of any
Selling Stockholder specifically for use in preparation of the Registration
Statement, and each Selling Stockholder, severally and not jointly, will
reimburse the Company (or such officer, director, employee, agent or controlling
Person), as the case may be, for any legal or other out-of-pocket expenses
reasonably incurred in investigating, defending or preparing to defend any such
action, proceeding or claim; provided, however, that the obligation of each
Selling Stockholder to indemnify the Company (or such officer, director,
employee, agent or controlling Person) shall be limited to the net amount
received by such Selling Stockholder from the sale of its Securities pursuant to
such Registration Statement.
39
(d) Promptly after receipt by any indemnified Person of a notice of a
claim or the beginning of any action in respect of which indemnity is to be
sought against an indemnifying Person pursuant to this Section 7.6, such
indemnified Person shall notify the indemnifying Person in writing of such claim
or of the commencement of such action, but the omission to so notify the
indemnifying Person will not relieve it from any liability which it may have to
any indemnified Person under this Section 7.6 (except to the extent that such
omission materially and adversely affects the indemnifying Person's ability to
defend such action) or from any liability otherwise than under this Section 7.6.
Subject to the provisions hereinafter stated, in case any such action shall be
brought against an indemnified Person, the indemnifying Person shall be entitled
to participate therein, and, to the extent that it shall elect by written notice
delivered to the indemnified Person promptly after receiving the aforesaid
notice from such indemnified Person, shall be entitled to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified Person. After
notice from the indemnifying Person to such indemnified Person of its election
to assume the defense thereof, such indemnifying Person shall not be liable to
such indemnified Person for any legal expenses subsequently incurred by such
indemnified Person in connection with the defense thereof; provided, however,
that if there exists or shall exist a conflict of interest that would make it
inappropriate, in the opinion of counsel to the indemnified Person, for the same
counsel to represent both the indemnified Person and such indemnifying Person or
any affiliate or associate thereof, the indemnified Person shall be entitled to
retain its own counsel at the expense of such indemnifying Person; provided,
further, however, that no indemnifying Person shall be responsible for the fees
and expenses of more than one separate counsel (together with appropriate local
counsel) for all indemnified parties. In no event shall any indemnifying Person
be liable in respect of any amounts paid in settlement of any action unless the
indemnifying Person shall have approved the terms of such settlement; provided,
however, that such consent shall not be unreasonably withheld. No indemnifying
Person shall, without the prior written consent of the indemnified Person,
effect any settlement of any pending or threatened proceeding in respect of
which any indemnified Person is or could have been a party and indemnification
could have been sought hereunder by such indemnified Person, unless such
settlement includes an unconditional release of such indemnified Person from all
liability on claims that are the subject matter of such proceeding.
40
(e) If the indemnification provided for in this Section 7.6 is
unavailable to or insufficient to hold harmless an indemnified Person under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying Person shall contribute to the amount paid or payable by
such indemnified Person as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative fault of the Company on the one hand and any Purchaser,
as well as any other Selling Shareholders under such registration statement on
the other in connection with the statements or omissions or other matters which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
fault shall be determined by reference to, among other things, in the case of an
untrue statement, whether the untrue statement relates to information supplied
by the Company on the one hand or any Purchaser or other Selling Shareholder on
the other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement. The Company and each
Purchaser agree that it would not be just and equitable if contribution pursuant
to this subsection (e) were determined by pro rata allocation (even if the
Purchasers and other Selling Shareholders were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to above in this subsection (e). The
amount paid or payable by an indemnified Person as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this subsection (e) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified Person in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (e), no Selling Stockholder shall be required to contribute any
amount in excess of the amount by which the net amount received by such Selling
Stockholder from the sale of the Securities to which such loss relates exceeds
the amount of any damages which such Selling Stockholder has otherwise been
required to pay by reason of such untrue statement (except in the event of fraud
by such Selling Stockholder). No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. The Selling Stockholder's obligations in this subsection to
contribute shall be in proportion to the respective sale of Securities of such
Selling Stockholder and shall not be joint with any other Selling Shareholders.
(f) The parties to this Agreement hereby acknowledge that they are
sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions hereof including, without limitation, the
provisions of this Section 7.6, and are fully informed regarding said
provisions. They further acknowledge that the provisions of this Section 7.6
fairly allocate the risks in light of the ability of the parties to investigate
the Company and its business in order to assure that adequate disclosure is made
in the Registration Statement as required by the Securities Act and the Exchange
Act. The parties are advised that federal or state public policy as interpreted
by the courts in certain jurisdictions may be contrary to certain of the
provisions of this Section 7.6, and the parties hereto hereby expressly waive
and relinquish any right or ability to assert such public policy as a defense to
a claim under this Section 7.6 and further agree not to attempt to assert any
such defense.
7.7. Termination of Conditions and Obligations. The conditions
precedent imposed by this Section 7 upon the transferability of the Securities
shall cease and terminate as to any particular number of the Securities when
such Securities shall have been effectively registered under the Securities Act
and sold or otherwise disposed of in accordance with the intended method of
disposition set forth in the Registration Statement covering such Securities or
at such time as an opinion of counsel reasonably satisfactory to the Company
shall have been rendered to the effect that such conditions are not necessary in
order to comply with the Securities Act.
41
7.8. Information Available. So long as the Registration Statement is
effective covering the resale of Securities owned by each Holder, the Company
will furnish to each Holder, upon the reasonable request of such Holder, an
adequate number of copies of the Prospectuses to supply to any other party
requiring such Prospectuses; and upon the reasonable request of any Purchaser,
the President or the Chief Financial Officer of the Company (or an appropriate
designee thereof) will meet with such Purchaser or a representative thereof at
the Company's headquarters to discuss all information relevant for disclosure in
the Registration Statement covering the Securities and will otherwise cooperate
with any Holder's conducting an investigation for the purpose of reducing or
eliminating such Holder exposure to liability under the Securities Act,
including the reasonable production of information at the Company's
headquarters; provided, that the Company shall not be required to disclose any
confidential information to any holder or meet at its headquarters with any
Purchaser until and unless such Holder or Purchaser shall have entered into a
confidentiality agreement in form and substance reasonably satisfactory to the
Company with the Company with respect thereto.
7.9. Delay of Registration. The Holders shall have no right to take any
action to restrain, enjoin or otherwise delay any registration pursuant to this
Section 7 as a result of any controversy that may arise with respect to the
interpretation or implementation of this Agreement.
8. Termination.
8.1. Termination. Unless the Closing has occurred prior thereto, this
Agreement and, except as herein provided, all the rights of the parties hereto,
shall terminate on August 10, 2004 (unless such date is extended by mutual
written consent of the Purchasers and the Company).
8.2. Effect of Termination. In the event of termination pursuant to
Section 8.1 hereof, this Agreement shall become null and void and have no
effect. Notwithstanding anything to the contrary contained herein, in the event
this Agreement is terminated in accordance with Section 8.1 hereof, all of the
terms and provisions of the 2002 Purchase Agreement and the 2003 Purchase
Agreement shall remain in full force and effect.
9. Miscellaneous Provisions.
9.1. Public Statements or Releases. Neither the Company nor any
Purchaser shall make any public announcement with respect to the existence or
terms of this Agreement or the transactions provided for herein without the
prior approval of the other parties, which shall not be unreasonably withheld or
delayed. Notwithstanding the foregoing, nothing in this Section 9.1 shall
prevent any party from making any public announcement it considers necessary in
order to satisfy its obligations under the law or the rules of any national
securities exchange, provided such party, to the extent practicable, provides
the other parties with an opportunity to review and comment on any proposed
public announcement before it is made.
9.2. Rights Cumulative. Each and all of the various rights, powers and
remedies of the parties shall be considered to be cumulative with and in
addition to any other rights, powers and remedies which such parties may have at
law or in equity in the event of the breach of any of the terms of this
Agreement. The exercise or partial exercise of any right, power or remedy shall
neither constitute the exclusive election thereof nor the waiver of any other
right, power or remedy available to such party.
9.3. Pronouns. All pronouns or any variation thereof shall be deemed to
refer to the masculine, feminine or neuter, singular or plural, as the identity
of the person, persons, entity or entities may require.
42
9.4. Notices.
(a) Any notices, reports or other correspondence (hereinafter
collectively referred to as "correspondence") required or permitted to be given
hereunder shall be sent by postage prepaid first class mail, courier or
facsimile or delivered by hand to the party to whom such correspondence is
required or permitted to be given hereunder. The date of giving any notice shall
be the date of its actual receipt.
(b) All correspondence to the Company shall be addressed as follows:
Proxim Corporation
000 Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Chief Financial Officer
Facsimile: (000) 000-0000
(c) All correspondence to any Purchaser shall be sent to such Purchaser
at the address set forth in EXHIBIT A.
(d) Any Person may change the address to which correspondence to it is
to be addressed by notification as provided for herein.
9.5. Captions. The captions and paragraph headings of this Agreement
are solely for the convenience of reference and shall not affect its
interpretation.
9.6. Severability. Should any part or provision of this Agreement be
held unenforceable or in conflict with the applicable laws or regulations of any
jurisdiction, the invalid or unenforceable part or provisions shall be replaced
with a provision which accomplishes, to the extent possible, the original
business purpose of such part or provision in a valid and enforceable manner,
and the remainder of this Agreement shall remain binding upon the parties
hereto.
9.7. Confidentiality. Except as and to the extent required by law, each
party (the "Recipient") shall not disclose or use, and shall direct its
representatives not to disclose or use to the detriment of the other parties
hereto (the "Disclosing Party"), any Confidential Information furnished, or to
be furnished, by the Disclosing Party or its representatives to the Recipient or
its representatives at any time or in any manner other than in connection with
the Proposed Transaction. For purposes of this paragraph, "Confidential
Information" means any non-public, proprietary or confidential information with
respect to a Disclosing Party, unless (a) such information is already known to
the Recipient or its representatives or to others not bound by a duty of
confidentiality or such other information becomes publicly available through no
fault of the Recipient or its representatives, (b) the use of such information
is necessary or appropriate in making any filing or obtaining any consent or
approval required for the consummation of the Proposed Transaction and the other
parties hereto have consented to such disclosure, (c) the information is
disclosed to an affiliate of the Recipient in connection with the consummation
of the Proposed Transaction or (d) the furnishing of the information is legally
required in connection with legal proceedings or by any governmental agency;
provided, however, that the party seeking to disclose such information must
first provide to the other parties the content of the proposed disclosure, the
reasons that such disclosure is required, and the time and places that the
disclosure will be made. Upon the written request of the Disclosing Party, the
Recipient will promptly return to the Disclosing Party or destroy any
Confidential Information in its possession and certify in writing to the
Disclosing Party that it has done so.
43
9.8. Governing Law; Injunctive Relief.
(a) This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York.
(b) Each of the parties hereto acknowledges and agrees that damages
will not be an adequate remedy for any material breach or violation of this
Agreement if such material breach or violation would cause immediate and
irreparable harm (an "Irreparable Breach"). Accordingly, in the event of a
threatened or ongoing Irreparable Breach, each party hereto shall be entitled to
seek, in any state or federal court in the State of New York, equitable relief
of a kind appropriate in light of the nature of the ongoing or threatened
Irreparable Breach, which relief may include, without limitation, specific
performance or injunctive relief; provided, however, that if the party bringing
such action is unsuccessful in obtaining the relief sought, the moving party
shall pay the non-moving party's reasonable costs, including attorney's fees,
incurred in connection with defending such action. Such remedies shall not be
the parties' exclusive remedies, but shall be in addition to all other remedies
provided in this Agreement.
9.9. Waiver. No waiver of any term, provision or condition of this
Agreement, whether by conduct or otherwise, in any one or more instances, shall
be deemed to be, or be construed as, a further or continuing waiver of any such
term, provision or condition or as a waiver of any other term, provision or
condition of this Agreement.
9.10. Expenses. The Company shall pay all documented fees and expenses
incurred by the Purchasers in connection with the transactions contemplated
hereby including, without limitation, all legal, consulting and accounting fees
incurred under and in connection with the execution and delivery of this
Agreement and the other Transaction Documents ("Transaction Fees"). Payments due
pursuant to this Section 9.10 will be made at the Closing and the Exchange
Closing for all documented fees and expenses incurred but unpaid as of such
date; provided, that in the event each of the Closing and the Exchange Closing
occurs, or if one does not occur then upon termination of this Agreement, and in
any event, any remaining payments will be made not later than 30 days after a
xxxx for such fees and expenses has been sent by the Purchasers to the Company.
The Purchasers will be entitled, at their option, to receive payment of the
Transaction Fees through a reduction in the aggregate purchase price to be paid
by the Purchasers at each Closing.
9.11. Assignment. The rights and obligations of the parties hereto
shall inure to the benefit of and shall be binding upon the authorized
successors and permitted assigns of each party. None of the parties may assign
its rights or obligations under this Agreement or designate another Person (i)
to perform all or part of its obligations under this Agreement or (ii) to have
all or part of its rights and benefits under this Agreement, in each case
without the prior written consent of the other parties, provided, however, that
the Purchasers shall have the right to assign and transfer all or a portion of
its rights and obligations under this Agreement to one or more of their
respective Affiliates. In the event of any assignment in accordance with the
terms of this Agreement, the assignee shall specifically assume and be bound by
the provisions of the Agreement by executing and agreeing to an assumption
agreement reasonably acceptable to the Company.
44
9.12. Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument
9.13. 2002 Purchase Agreement and 2003 Purchase Agreement. Except as
expressly set forth herein, each party acknowledges and agrees that the 2002
Purchase Agreement and the 2003 Purchase Agreement shall remain in full force
and effect.
9.14. Entire Agreement. This Agreement, the Notes and the other Loan
Documents constitute the entire agreement between the parties hereto respecting
the subject matter hereof and supersede all prior agreements, negotiations,
understandings, representations and statements respecting the subject matter
hereof, whether written or oral. No modification, alteration, waiver or change
in any of the terms of this Agreement shall be valid or binding upon the parties
hereto unless made in writing and duly executed by the Company and Purchasers
holding in the aggregate at least a majority of the aggregate principal amount
of the Notes or least a majority of the Securities other than the Notes.
[Signature Page Follows]
45
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal as of the day and year first above written.
PROXIM Corporation
By: /s Xxxxxx Xxxxxxxx
-------------------------------
Name: Xxxxxx Xxxxxxxx
Title: President and Chief
Executive Officer
PURCHASERS:
WARBURG PINCUS PRIVATE EQUITY VIII,
L.P.
By: WARBURG, XXXXXX & CO.,
its General Partner
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Partner
BCP CAPITAL, L.P.
By: BCP General LLC
its General Partner
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
BCP CAPITAL QPF, L.P.
By: BCP General LLC
its General Partner
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
[Signature page to Securities Purchase Agreement]
BCP CAPITAL AFFILIATES FUND LLC
By: BCP Capital Management LLC
its Manager
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
[Signature page to Securities Purchase Agreement]
EXHIBIT A
SCHEDULE OF PURCHASERS
Shares of Series B Preferred Common Stock Issuable upon
Purchaser Principal Amount of Stock Issuable Upon Exchange of Stockholder Approval of the
Name and Address Notes to be Purchased the Outstanding Notes(1) Exchange
--------------------- ------------------------------- ---------------------------
WARBURG PINCUS PRIVATE EQUITY $ 8,666,667 425,186 142,133,339
VIII, L.P.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxx
Fax No. 000-000-0000
with a copy to:
Xxxxxxx Xxxx & Xxxxxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxx
Facsimile: (000) 000-0000
BCP CAPITAL, L.P. 161,996 7,915 2,645,861
Xxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
BCP CAPITAL QPF, L.P. 1,171,337 57,282 19,148,640
Xxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
BCP CAPITAL AFFILIATES FUND LLC -- 216 72,160
Xxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
TOTAL $10,000,000 490,599 164,000,000
Series C Preferred Stock
Purchaser Issuable Upon Stockholder
Name and Address Approval of the Exchange
-------------------------
WARBURG PINCUS PRIVATE EQUITY 346,680
VIII, L.P.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxx
Fax No. 000-000-0000
with a copy to:
Xxxxxxx Xxxx & Xxxxxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxx
Facsimile: (000) 000-0000
BCP CAPITAL, L.P. 6,440
Xxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
BCP CAPITAL QPF, L.P. 46,680
Xxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
BCP CAPITAL AFFILIATES FUND LLC 000
Xxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
TOTAL 400,000
----------
(1) Assumes a Closing Date of July 30, 2004. In the event the Closing
occurs prior to or after July 30, 2004, the number of shares of Series
B to be issued to each Purchaser will be appropriately adjusted.
EXHIBIT B
FORM OF NOTES
EXHIBIT C
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF THE
SERIES C PREFERRED STOCK
EXHIBIT D
FORM OF PLEDGE AND SECURITY AGREEMENT
EXHIBIT E
FORM OF INTERCREDITOR AGREEMENT
