EXHIBIT 2.1
EXECUTION COPY
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SECURITIES PURCHASE AGREEMENT
BY AND AMONG
PROXIM CORPORATION
AND
THE PURCHASERS NAMED HEREIN
DATED AS OF JULY 22, 2003
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TABLE OF CONTENTS
Page
1. Definitions.................................................................................... 1
2. Authorization, Purchase and Sale of Notes, Preferred Stock and Warrants........................ 10
2.1. Authorization of Securities.................................................................... 10
2.2. Purchase and Sale of Notes..................................................................... 10
2.3. Purchase and Sale of Preferred Stock and Issuance of Warrants.................................. 11
2.4. The Closings................................................................................... 12
2.5. Use of Proceeds................................................................................ 13
3. Representations and Warranties of the Company.................................................. 13
3.1. Incorporation.................................................................................. 13
3.2. Subsidiaries................................................................................... 13
3.3. Capitalization................................................................................. 13
3.4. Authorization.................................................................................. 14
3.5. Valid Issuance................................................................................. 14
3.6. Financial Statements........................................................................... 15
3.7. Absence of Certain Changes..................................................................... 15
3.8. Absence of Litigation.......................................................................... 15
3.9. Intellectual Property.......................................................................... 16
3.10. Disclosure Documents........................................................................... 16
3.11. Books and Records.............................................................................. 16
3.12. Consents....................................................................................... 17
3.13. No Conflict.................................................................................... 17
3.14. Brokers or Finders............................................................................. 17
3.15. Nasdaq National Market......................................................................... 17
3.16. No Manipulation of Stock....................................................................... 17
3.17. Company Not an "Investment Company"............................................................ 18
3.18. Title to Property and Assets................................................................... 18
3.19. Labor Relations................................................................................ 18
3.20. Employee Benefits.............................................................................. 18
3.21. Environmental Matters.......................................................................... 19
3.22. Taxes.......................................................................................... 20
3.23. Insurance...................................................................................... 20
3.24. General Solicitation; No Integration........................................................... 20
3.25. Accounting Controls............................................................................ 21
3.26. By-Laws........................................................................................ 21
3.27. CSFB Documents................................................................................. 21
3.28. Opinion of the Financial Advisor............................................................... 21
3.29. Soquel Letter Agreement........................................................................ 21
4. Representations and Warranties of Each Purchaser............................................... 21
4.1. Organization................................................................................... 21
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4.2. Authorization.................................................................................. 21
4.3. Purchase Entirely for Own Account Etc.......................................................... 22
4.4. Investor Status; Etc........................................................................... 22
4.5. Securities Not Registered...................................................................... 22
4.6. No Conflict.................................................................................... 22
4.7. Brokers........................................................................................ 22
4.8. Consents....................................................................................... 22
4.9. No Manipulation of Stock....................................................................... 23
5. Covenants...................................................................................... 23
5.1. HSR Act Filings................................................................................ 23
5.2. Other Governmental Approvals................................................................... 23
5.3. Further Assurances............................................................................. 23
5.4. Board Designees................................................................................ 23
5.5. Series B Preferred Certificate of Designations................................................. 25
5.6. Covenant Pending Each Closing.................................................................. 25
5.7. Proxy Statement................................................................................ 25
5.8. Subscription Right............................................................................. 26
5.9. Standstill..................................................................................... 27
5.10. Nominating Committee; Agreement to Vote........................................................ 27
5.11. Affirmative Covenants in Connection with the Sale of the Notes................................. 27
5.12. Negative Covenants in Connection with the Sale of the Notes.................................... 29
6. Conditions Precedent........................................................................... 32
6.1. Conditions to the Obligation of the Purchasers to Consummate the Initial Closing............... 32
6.2. Conditions to the Obligation of the Company to Consummate the Initial Closing.................. 33
6.3. Conditions to the Obligation of the Purchasers to Consummate the Second Closing................ 33
6.4. Conditions to the Obligation of the Company to Consummate the Second Closing................... 34
6.5. Conditions to the Obligations of the Purchasers to consummate each Subsequent Closing.......... 34
7. Registration of the Securities; Compliance with the Securities Act............................. 35
7.1. Securities Law Transfer Restrictions........................................................... 35
7.2. Legends........................................................................................ 35
7.3. Registration Procedures and Other Matters...................................................... 36
7.4. Transfer of Securities; Suspension............................................................. 37
7.5. Company Registration........................................................................... 39
7.6. Indemnification................................................................................ 40
7.7. Termination of Conditions and Obligations...................................................... 43
7.8. Information Available.......................................................................... 43
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7.9. Delay of Registration.......................................................................... 44
8. Termination.................................................................................... 44
8.1. Conditions of Termination...................................................................... 44
8.2. Effect of Termination.......................................................................... 44
9. Miscellaneous Provisions....................................................................... 44
9.1. Public Statements or Releases.................................................................. 44
9.2. Rights Cumulative.............................................................................. 44
9.3. Pronouns....................................................................................... 44
9.4. Notices........................................................................................ 45
9.5. Captions....................................................................................... 45
9.6. Severability................................................................................... 45
9.7. Governing Law; Injunctive Relief............................................................... 45
9.8. Waiver......................................................................................... 46
9.9. Expenses....................................................................................... 46
9.10. Assignment..................................................................................... 46
9.11. Counterparts................................................................................... 46
9.12. 2002 Purchase Agreement........................................................................ 46
9.13. Entire Agreement............................................................................... 46
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This SECURITIES PURCHASE AGREEMENT (this "Agreement") is dated
as of the 22nd day of July 2003 by and among Proxim Corporation, a Delaware
corporation with its principal office at 000 Xxxxxxx Xxxxx, Xxxxxxxxx, XX 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) up to
450,000 shares of its Series B Convertible Preferred Stock, par value $.01 per
share (the "Preferred Stock"), which shares are, or will be, upon issuance,
convertible into authorized but unissued shares of class A common stock, $.01
par value per share, of the Company (the "Common Stock") and (ii) the Warrants
(as defined below);
WHEREAS, the Company seeks financing for general corporate
purposes; and
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 (i) the aggregate principal amount of the Notes (as
defined below) as is set forth opposite its respective name on EXHIBIT A hereto;
(ii) the total number of shares of Preferred Stock issuable upon exchange of the
Notes at the Second Closing (as defined below); and (iii) the Warrants to
purchase the number of shares of Common Stock as is set forth opposite its
respective name in EXHIBIT A hereto; and
WHEREAS, if the Company determines that additional equity
capital is required for the operation of its business, the Company shall have
the right, subject to the conditions to set forth, to require each Purchaser to
purchase the total number of shares of Preferred Stock from time to time, as is
set forth opposite its respective name on EXHIBIT A hereto under the heading
"Maximum Commitment Under the Call Right."
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. "Adjustment Value" means an amount equal to the
average closing price of the Common Stock for the fifteen (15) Business Days
subsequent to, but not including, the Announcement Date; subject to adjustment
for any stock split, stock dividend or reclassification.
1.2. "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.
1.3. "Agreement" has the meaning set forth in the first
paragraph herein.
1.4. "Announcement Date" means July 22, 2003.
1.5. "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.
1.6. "Board Designee" has the meaning set forth in Section
5.4(a) herein.
1.7. "Board Observer" has the meaning set forth in Section
5.4(b) herein.
1.8. "Board of Directors" has the meaning set forth in
Section 3.4 herein.
1.9. "Broadview" means Broadview Capital Partners, L.P.,
Broadview Capital Partners Qualified Purchaser Fund L.P. and Broadview Capital
Partners Affiliates Fund L.L.C.
1.10. "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.
1.11. "Call Right" has the meaning set forth in Section
2.3(b) herein.
1.12. "Class B Common Stock" has the meaning set forth in
Section 3.3(a) herein.
1.13. "Closing" and "Closings" have the meanings set forth
in Section 2.4(d) herein.
1.14. "Code" means the Internal Revenue Code of 1986, as
amended.
1.15. "Collateral Agent" means Warburg.
1.16. "Commitment" has the meaning set forth in Section 3.7
herein.
1.17. "Common Stock" has the meaning set forth in the
Recitals herein.
1.18. "Company" has the meaning set forth in the first
paragraph herein.
1.19. "Confidential Information" has the meaning set forth
in Section 5.11 herein.
1.20. "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.
1.21. "Conversion Price" has the meaning set forth in the
Series B Preferred Certificate of Designations.
1.22. "Credit Suisse First Boston" means CSFB.
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1.23. "CSFB Collateral" has the meaning given to the term
"Collateral" in the CSFB Documents.
1.24. "CSFB Documents" means (i) the Security Agreement,
dated November 1, 1999, by and between the Company and CSFB, (ii) the
Intellectual Property Security Agreement, dated November 1, 1999, between the
Company and CSFB and (iii) 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 its CSFB Secured Obligations.
1.25. "CSFB Liens" has the meaning given to the term
"Liens" in the CSFB Documents.
1.26. "CSFB Secured Obligations" has the meaning given to
the term "Secured Obligations" in the CSFB Documents.
1.27. "Disclosure Documents" means the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 2002, filed by the
Company on March 31, 2003; the Company's Schedule 14A Proxy Statement for its
Annual Meeting of Stockholders, dated April 29, 2003; the Company's Quarterly
Report on Form 10-Q for the quarter ended March 28, 2003; and any Current
Reports on Form 8-K filed by the Company on or after March 28, 2003, together in
each case with any documents incorporated by reference therein or exhibits
thereto.
1.28. "Disclosure Schedule" has the meaning set forth in
Section 3 herein.
1.29. "Disclosing Party" has the meaning set forth in
Section 5.11(i) herein.
1.30. "Employees" has the meaning set forth in Section 3.19
herein.
1.31. "Environmental Laws" has the meaning set forth in
Section 3.21(b) herein.
1.32. "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
1.33. "ERISA Affiliate" has the meaning set forth in
Section 3.20(a) herein.
1.34. "Event of Default" has the meaning ascribed to it in
Section 7 of the Notes.
1.35. "Exchange Act" means the Securities Exchange Act of
1934, as amended, and all of the rules and regulations promulgated thereunder.
1.36. "Existing Warrants" means the warrants issued to the
Purchasers pursuant to the 2002 Purchase Agreement.
1.37. "Financial Statements" has the meaning set forth in
Section 3.6 herein.
1.38. "Foreign Plans" has the meaning set forth in Section
3.20(h) herein.
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1.39. "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.
1.40. "GAAP" has the meaning set forth in Section 3.6
herein.
1.41. "Hazardous Material" has the meaning set forth in
Section 3.21(a) herein.
1.42. "HLHZ" means Xxxxxxxx Xxxxx Xxxxxx & Xxxxx Financial
Advisors, Inc.
1.43. "Holders" has the meaning set forth in Section 7.4(a)
herein.
1.44. "HSR Act" has the meaning set forth in Section 3.12
herein.
1.45. "Incremental Interest" has the meaning given to it in
the Notes.
1.46. "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.
1.47. "Initial Closing" has the meaning set forth in
Section 2.4(a) herein.
1.48. "Initial Closing Date" has the meaning set forth in
Section 2.4(a) herein.
1.49. "Intellectual Property" has the meaning set forth in
Section 3.9 herein.
1.50. "Intercreditor Agreement" means the Intercreditor
Agreement by and among SVB and the Collateral Agent substantially in the form
attached hereto as Exhibit F.
1.51. "Investment Company Act" has the meaning set forth in
Section 3.17 herein.
1.52. "Irreparable Breach" has the meaning set forth in
Section 9.7(b) herein.
1.53. "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 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).
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1.54. "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).
1.55. "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.
1.56. "Material Adverse Change" means any change, event or
occurrence which, individually or in the aggregate, has had a material adverse
effect on, or a material adverse change in, (i) 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 (ii)
the ability of the Company to perform its obligations under this Agreement, 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.
1.57. "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.
1.58. "Nasdaq" has the meaning set forth in Section 3.15
herein.
1.59. "Note" means one or more secured promissory note(s)
containing the same terms and conditions, and with the same exchange features
and definition of Incremental Interest, as set forth in the form of note
attached hereto as EXHIBIT B.
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1.60. "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;
(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
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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.
1.61. "Person" means an individual, partnership,
corporation, limited liability company, business trust, joint stock company,
trust, unincorporated association or joint venture.
1.62. "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.
1.63. "Pledge and Security Agreement" means the Pledge and
Security Agreement by and between the Company and the Collateral Agent, in
substantially the form attached hereto as EXHIBIT E.
1.64. "Preferred Stock" has the meaning set forth in the
Recitals herein.
1.65. "Proposed Securities" has the meaning set forth in
Section 5.8(a) herein.
1.66. "Prospectus" has the meaning set forth in Section
7.3(c) herein.
1.67. "Purchase Price" means the total aggregate principal
amount of the Notes to be purchased at the Initial Closing and the total
principal amount paid by the Purchasers at each Subsequent Closing upon the
Company's exercise of its Call Right.
1.68. "Purchaser" has the meaning set forth in the first
paragraph herein.
1.69. "Purchaser Group" has the meaning set forth in
Section 5.9 herein.
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1.70. "Recipient" has the meaning set forth in Section 5.11
herein.
1.71. "Registration Statement" has the meaning set forth in
Section 7.3(a) herein.
1.72. "SEC" means the Securities and Exchange Commission.
1.73. "Second Closing" has the meaning set forth in Section
2.4(b) herein.
1.74. "Second Closing Date" has the meaning set forth in
Section 2.4(b) herein.
1.75. "Securities" means the Notes, the Warrants, the
shares of Preferred Stock issuable upon exchange of the Notes and the Company's
exercise of its Call Right and the shares of Common Stock issuable upon
conversion of the shares of Preferred Stock and exercise of the Warrants;
provided, that for purposes of Section 7 (other than Section 7.1 and 7.2),
"Securities" shall not include the Notes, the Warrants or the Preferred Stock;
provided, further, that for purposes of Section 7.3, "Securities" shall include
the shares of Common Stock issuable upon conversion of the Series A Preferred
and exercise of the Existing Warrants.
1.76. "Securities Act" means the Securities Act of 1933, as
amended, and all of the rules and regulations promulgated thereunder.
1.77. "Series A Preferred" means the Series A Convertible
Preferred Stock of the Company, par value $0.01 per share.
1.78. "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.
1.79. "Series B Preferred Certificate of Designations"
means the Certificate of Designations, Preferences and Rights of Series B
Convertible Preferred Stock of the Company, which will have been filed on or
before the Second Closing Date 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. The initial Conversion Price of the Preferred
Stock shall be $1.15. Prior to filing the Series B Preferred Certificate of
Designations, the initial Conversion Price shall be revised as follows: (i) in
the event the Adjustment Value is greater than $2.00, then the Conversion Price
shall be increased by an amount equal to the difference of the Adjustment Value
less $2.00; provided, however, that in no event shall the Conversion Price be
increased by more than fifteen cents ($0.15); and (ii) in the event one hundred
thirty percent (130%) of the Adjustment Value is less than $1.15, then the
Conversion Price shall be decreased to such amount; provided, however, that in
no event shall the Conversion Price be decreased by more than fifteen cents
($0.15).
1.80. "Soquel Letter Agreement" means the binding letter of
intent, dated July 21, 2003, between the Company and the Xxxxx Family Revocable
Living Trust relating to the settlement of a landlord-tenant dispute relating to
the premises located at 000 Xxxxxx Xxx, Xxxxxxxxx, Xxxxxxxxxx 00000, pursuant to
which the Company has agreed to (i) pay rents owing
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through completion of the lease in a single lump-sum payment of $6 million, plus
expenses, (ii) assume the mortgage on the premises for approximately $3.2
million and (iii) pay certain reasonable costs related thereto.
1.81. "Special Meeting" has the meaning set forth in
Section 2.4(b) herein.
1.82. "Special Meeting Proposals" means the issuance of (i)
shares of Preferred Stock upon (x) exchange of the Notes in accordance with the
terms of this Agreement and (y) the Company's exercise of its Call Right (as
defined below), (ii) the Warrants as contemplated by this Agreement and (iii)
the Common Stock initially issuable upon conversion of the Preferred Stock and
exercise of the Warrants.
1.83. "Stockholder Approval" has the meaning set forth in
Section 2.3(b).
1.84. "Subsequent Closing Date" has the meaning set forth
in Section 2.4(c) herein.
1.85. "SVB" means Silicon Valley Bank.
1.86. "SVB Agreements" means collectively the SVB A/R
Financing Agreement and the SVB Overadvance Agreement.
1.87. "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.
1.88. "SVB Overadvance Agreement" means the Temporary
Overadvance Agreement, dated as of June 23, 2003, between SVB and the Company.
1.89. "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.
1.90. "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.
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1.91. "Transaction Documents" means this Agreement , the
Notes, the Warrants, the Pledge and Security Agreement, the Intercreditor
Agreement and the Certificate of Designations.
1.92. "Transferee" has the meaning set forth in Section
7.4(a) herein.
1.93. "UCC" means the Uniform Commercial Code (or similar
statute) of any applicable jurisdiction.
1.94. "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.
1.95. "Warburg" means Warburg Pincus Private Equity VIII,
L.P. and its Affiliates.
1.96. "Warrants" means warrants to purchase 18,000,000
shares of Common Stock which shall contain the same terms and conditions and the
same exercise features as the form attached hereto as EXHIBIT D. The exercise
price of the warrant shall be equal to $1.46.
2. Authorization, Purchase and Sale of Notes, Preferred
Stock and Warrants.
2.1. Authorization of Securities. The Company has, or on
or before the Initial Closing Date will have, (i) authorized the Notes, (ii)
authorized a series of its preferred stock consisting of 450,000 shares of
Preferred Stock designated as its "Series B Convertible Preferred Stock," (iii)
authorized the Warrants, (iv) authorized the issuance of the shares of Common
Stock issuable upon conversion of the Preferred Stock and exercise of the
Warrants and (v) authorized the issuance of the shares of Preferred Stock
issuable upon exchange of the Notes and upon exercise of the Company's Call
Right. The terms, limitations and relative rights and preferences of the
Preferred Stock are set forth in the Series B Certificate of Designations.
2.2. Purchase and Sale of Notes.
(a) Subject to and upon the terms and conditions set
forth in this Agreement, at the Initial 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 set forth opposite the name of
such Purchaser under the heading "Principal Amount of Notes to be Purchased" on
EXHIBIT A hereto at a purchase price equal to the principal amount of Notes
purchased.
(b) Exchange of Notes.
(i) On the Second Closing Date, all outstanding principal
and all accrued but unpaid interest then outstanding on the Notes shall
immediately and automatically be exchanged for such number of shares of
Preferred Stock as shall be equal to the quotient obtained by dividing the
aggregate outstanding principal balance plus any accrued but unpaid interest
then outstanding on the Notes on the Second Closing Date by $100.00.
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(ii) If at the time of exchange of the Notes for shares of
Preferred Stock there are insufficient authorized shares of Preferred Stock to
permit exchange of the Notes in full, then the Company shall take all corporate
action necessary to authorize a sufficient number of shares of Preferred Stock
to permit such exchange in full. No fractional shares of the Preferred 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.
2.3. Purchase and Sale of Preferred Stock and Issuance of
Warrants.
(a) Subject to the terms and conditions set forth in this
Agreement, at the Second Closing, the Company hereby agrees to issue to each
Purchaser, as part of its inducement to purchase the Notes being purchased by
such Purchaser and upon delivery by each Purchaser to the Company of the Notes
held by such Purchaser for cancellation (i) the shares of Preferred Stock that
are issuable upon exchange of the Notes and (ii) a Warrant entitling it to
purchase the number of shares of Common Stock as set forth opposite its name
under the heading "Warrant Coverage Issuable at the Second Closing" on EXHIBIT A
hereto.
(b) Call Right.
(i) Subject to the terms and conditions set forth in this
Agreement, in the event that following the receipt of stockholder approval of
the Special Meeting Proposals ("Stockholder Approval"), the Company determines
that additional equity capital is required for the operation of its business,
the Company shall have the right, at any time and from time to time until the
date that is 180 days from the Announcement Date, to exercise the right to
require the Purchasers to purchase up to one hundred thousand (100,000) shares
of Preferred Stock, in one or two tranches, at a cash purchase price of $100.00
per share, each individual tranche having an aggregate purchase price of not
less than five million dollars ($5,000,000) and all such tranches having an
aggregate purchase price not to exceed ten million dollars ($10,000,000)
(collectively, the "Call Right").
(ii) The Company shall exercise its Call Right by
providing written notice to the Purchasers, which notice shall set forth the
number of shares of Preferred Stock the Company desires to sell to the
Purchasers and the proposed date of the Closing of the sale (each, a "Subsequent
Closing"), which date shall be no more than sixty (60) days nor less than ten
(10) Business Days after the date of the giving of such notice. At each
Subsequent Closing, the
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aggregate number of shares to be purchased by each Purchaser shall be in the
same proportion as the total aggregate principal amount of the Notes being
purchased by such Purchaser bears to $30,000,000.
2.4. The Closings.
(a) The initial closing (the "Initial Closing") shall
take place at the offices of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional
Corporation, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, XX on the second Business Day
following satisfaction or waiver of the conditions specified in Sections 6.1 and
6.2 herein or such other date mutually agreed to by the Company and the
Purchasers (the "Initial Closing Date"). At the Initial Closing, the Company
shall deliver to each Purchaser 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 set forth opposite the name of such
Purchaser on EXHIBIT A hereto under the caption "Purchase Price Payable at the
Initial Closing" by wire transfer to the Company of immediately available funds.
The Company and the Purchasers shall also deliver all Transaction Documents
applicable to such Initial Closing.
(b) The second closing (the "Second Closing") shall take
place at the offices of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional
Corporation, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, XX on the first Business Day
following the date of the special meeting of stockholders of the Company (the
"Special Meeting"), if at the Special Meeting the Special Meeting Proposals are
approved by a majority of the votes cast (the "Second Closing Date"). At the
Second Closing, the Company shall deliver to each Purchaser upon delivery by
each Purchaser to the Company of the Notes held by such Purchaser for
cancellation (i) a certificate for the number of shares of Preferred Stock
issuable upon exchange of the Notes held by such Purchaser, or its Affiliates if
so designated, and (ii) a Warrant registered in the name of such Purchaser, or
its Affiliates if so designated, representing the right to purchase the number
of shares of Common Stock as set forth opposite its name under the heading
"Warrant Coverage Issuable at the Second Closing" on EXHIBIT A hereto. Upon
compliance by the Company with the preceding sentence, the Company shall be
forever released from all of its obligations and liabilities under the Notes. If
at the Special Meeting, Stockholder Approval is not obtained, then no Second
Closing shall occur, and the Notes shall remain outstanding in accordance with
their terms and the Company will not be permitted to exercise the Call Right.
The Company and the Purchasers shall also deliver all Transaction Documents
applicable to such Second Closing.
(c) Each Subsequent Closing shall take place at the
offices of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation, 000 Xxxx
Xxxx Xxxx, Xxxx Xxxx, XX on the day set forth in the Company's notice to the
Purchasers pursuant to Section 2.3(b)(ii) herein or such other date mutually
agreed to by the Company and the Purchasers (the "Subsequent Closing Date"). At
each Subsequent Closing, the Company shall deliver to each Purchaser a
certificate for the number of shares of Preferred Stock being purchased by it,
registered in the name of such Purchaser or its Affiliates if so designated, and
each Purchaser shall pay to the Company the purchase price therefor by wire
transfer to the Company of immediately available funds. The Company and the
Purchasers shall also deliver all Transaction Documents, as applicable to such
Subsequent Closing(s).
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(d) The Initial Closing, the Second Closing and each
Subsequent Closing are each individually referred to as a "Closing" where the
context requires and collectively referred to as the "Closings." If at the
Special Meeting, Stockholder Approval is not obtained, then no Subsequent
Closing shall occur and the provisions set forth in Section 2.3 herein shall
have no further force or effect.
2.5. Use of Proceeds. The Company will apply the net
proceeds from the sale of the Notes and the shares of Preferred Stock issuable
upon the Company's exercise of the Call Right, if any, 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. 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.
3.3. Capitalization.
(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, 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 outstanding and
3,000,000 shares of Series A Preferred are outstanding. The number of
outstanding shares of Common Stock as of July 21, 2003 was 121,800,330 and the
total number of shares of Common Stock issuable pursuant to stock options
outstanding at July 21, 2003 was 28,578,503. All such shares of Common Stock and
Series A Preferred have been duly
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authorized, and all such issued and outstanding shares of Common Stock and
Series A Preferred have been validly issued, are fully paid and nonassessable.
No such outstanding shares of Common Stock or Series A Preferred 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, 2003,
the Company has not issued any capital stock since March 31, 2003, except as
contemplated by this Agreement. Except as set forth in or contemplated by the
Disclosure Documents, this 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 B 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
Broadview, the provisions of Section 203 of the General Corporation Law of the
State of Delaware. At or prior to the Initial Closing, the Company will have
reserved for issuance (i) the shares of Common Stock initially issuable upon
conversion of the Preferred Stock and upon exercise of the Warrants and (ii) the
shares of Preferred Stock issuable upon exchange of the Notes and upon exercise
of the Company's Call Right.
3.5. Valid Issuance.
(a) Upon their issuance in accordance with the terms of
the Preferred Stock or Warrants, as the case may be, the shares of Common Stock
issued upon conversion of the shares of the Preferred Stock or exercise of the
Warrants, as the case may be, will be duly authorized, validly issued, fully
paid and non-assessable shares of Common Stock, free of all preemptive or
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similar rights. Upon their issuance in accordance with the terms of the Notes,
the shares of Preferred Stock issued upon exchange of the Notes will be duly
authorized, validly issued, fully paid and non-assessable shares of Preferred
Stock, free of all preemptive or similar rights. Upon their issuance in
accordance with the terms of this Agreement, the shares of Preferred stock
issued upon the Company's exercise of the Call Right pursuant to the terms
hereof and upon payment therefor will be duly authorized and validly issued,
fully paid and non-assessable shares of Preferred Stock, free of 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, 2002,
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, (b) this Agreement and (c) the
SVB Agreements, (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
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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.
3.9. Intellectual Property. (i) The Company owns or
possesses 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.
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.
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,
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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) in connection with the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR Act")
and the regulations promulgated thereunder, (ii) the filing of the Series B
Certificate of Designations and (iii) such filings required to be made after the
Initial Closing under applicable federal and state securities laws, have been
obtained and will be effective as of the Initial 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 CSFB
and HLHZ, 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 NASD, Inc. is contemplating terminating such
registration or listing.
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.
-17-
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.
(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).
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(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 set forth on Schedule 3.20(e) of the
Disclosure Schedule or 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) Except as set forth on Schedule 3.20(g) of the
Disclosure Schedule, 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.
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(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 Initial 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) Except as otherwise disclosed in Schedule 3.22(a),
(i) 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; (ii) all such Tax Returns
were true, correct and complete in all material respects as of the time of such
filing; or (iii) 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,
2002, has been accrued or reserved for on the financial statements of the
Company in accordance with GAAP. Since December 31, 2002, 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.
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
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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 Proposals 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. CSFB Documents. As of the date hereof, (a) the
Company has (i) repaid all amounts outstanding under the CSFB Documents and the
CSFB Documents have been terminated and (ii) satisfied all of its CSFB Secured
Obligations, and (b) the CSFB Collateral has been released from the CSFB Liens
created thereby.
3.28. Opinion of the Financial Advisor. The Company has
received an opinion of HLHZ, 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.
3.29. Soquel Letter Agreement. The Soquel Letter Agreement
has been executed by each party thereto and constitutes a valid and legally
binding obligation of the Company.
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.
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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.
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. Except in connection with the HSR Act, 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 Initial Closing Date.
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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.
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 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.
(a) In addition to the rights granted to Warburg pursuant
to the 2002 Purchase Agreement and Section 9(e) of the Series A Preferred
Certificate of Designations, and as shall be provided for in Section 9(e) of the
Series B Preferred Certificate of Designations, so long as (i) the Notes are
outstanding or (ii) each of Warburg and Broadview Beneficially Own at least 25%
of the shares of the Preferred Stock issued to each Purchaser pursuant to this
Agreement (including as owned and outstanding for this purpose shares of Common
Stock issuable upon conversion of the Preferred Stock and exercise of the
Warrants issued hereunder but excluding the shares of Preferred Stock issuable
upon the Company's Call Right), Warburg and Broadview shall each have the
exclusive right to appoint one (1) director (each, a "Board Designee") to the
Board of Directors. 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.
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Xxx Xxxxxxx Board Designee and the Broadview Board Designee so elected shall
serve as a Class III Director and Class II Director, respectively (each as
designated in the Company's Certificate of Incorporation), and until their
respective successor is elected and qualified. For so long as such membership
does not conflict with any applicable law or regulation or listing requirement
of the Nasdaq National Market (as determined in good faith by the Board of
Directors of the Company), the Board Designees shall serve as a member of the
Audit Committee, Compensation Committee and each other principal committee of
the Board of Directors. Any vacancy in the position of the Board Designee
appointed by Warburg and the Board Designee appointed by Broadview may be filled
only by Warburg and Broadview, respectively. Each of the Board Designee
appointed by Warburg and the Board Designee appointed by Broadview may, during
his or her term of office, be removed at any time, with or without cause, by and
only by Warburg and Broadview, respectively, at a special meeting called for
such purpose or by written consent of Warburg and Broadview, respectively. Any
vacancy created by such removal may also be filled at such meeting or by such
consent.
(b) In addition to the Board Designee, each party hereby
agrees that following the Initial Closing, Warburg shall have the right to have
one observer (the "Board Observer") attend the meetings of the Board of
Directors as provided in Section 5.4(b) of the 2002 Purchase Agreement.
(c) Warburg hereby designates Xxxxxxx X. Xxxxxx as its
initial Board Designee to commence his term in accordance with Section 5.4(a)
herein. Broadview hereby designates Xxxxxx Xxxxxx as its initial Board Designee
to commence his term in accordance with Section 5.4(a) hereof.
(d) For so long as Warburg and Broadview have the right
to designate a Board Designee pursuant to Section 5.4(a) herein, 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 Board Observer shall be in
attendance at any such meeting, provided, however; that the Company has 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 will 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 set forth in the preceding sentence.
(e) 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
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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 Broadview.
(f) For so long as Warburg and Broadview have the rights
to appoint the Board Designees pursuant to (i) Section 5.4(a) herein and Section
9(e) of the Series B Preferred Certificate of Designations or (ii) Section
5.4(a) of the 2002 Purchase Agreement and Section 9(e) of the Series A Preferred
Certificate of Designations, 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 and Broadview to appoint their
respective Board Designees pursuant to Section 5.4(a) herein or Section 5.4(a)
of the 2002 Purchase Agreement and Section 9(e) of the Series A Preferred
Certificate of Designations.
5.5. Series B Preferred Certificate of Designations. The
Company shall file the Series B 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 at the Special Meeting.
5.6. Covenant Pending Each Closing. Between the date of
this Agreement and the date of each Closing, 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. 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 sixteen (16) Business Days after the
Initial Closing, preliminary proxy materials with respect to a meeting of the
stockholders for the purpose of approving the Special Meeting Proposals.
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 to be held at the earliest practicable date but in no event
later than forty-five (45) 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 Proposals and (ii) include in the
proxy statement the recommendation of its Board of Directors that holders of the
Common Stock approve the Special Meeting Proposals; provided, however, that the
Board of Directors may withdraw or adversely modify their recommendation of the
Special Meeting Proposals 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, based solely on
facts or conditions arising after the date hereof, that the issuances referred
to in clause (i) above are not in the best interests of the Company's
stockholders. In the event that the Board of Directors withdraws or adversely
modifies its recommendation of the Special Meeting Proposals, the Company shall
pay to the Purchasers, based upon their pro rata percentage of the aggregate
Purchase Price and in immediately available funds, the Incremental Interest as
liquidated damages, payable within two (2) Business Days of such withdrawal or
modification, as set forth
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in Section 7(b) of the Notes. Neither prior to nor at the Special Meeting shall
the Company put forth any matter, other than the Special Meeting Proposals, to
the holders of Common Stock for their approval without the prior written consent
of the Purchasers.
5.8. Subscription Right.
(a) If at any time after the date hereof, and for so long
as a Purchaser Beneficially Owns at least twenty-five percent (25%) of the
shares of Common Stock issuable to such Purchaser pursuant to this Agreement and
the 2002 Purchase Agreement (including upon conversion of the shares of the
Preferred Stock and the Series A Preferred and upon exercise of the Warrants and
Existing Warrants but excluding the shares of Preferred Stock issuable upon the
Company's Call Right), the Company proposes to issue equity securities of any
kind (the term "equity securities" shall include for these purposes any
warrants, options or other rights to acquire equity securities and debt
securities convertible into equity securities) of the Company, other than (i)
shares of Common Stock issuable upon conversion of the shares of the Preferred
Stock or Series A Preferred or exercise of the Warrants or the Existing
Warrants, (ii) shares of Preferred Stock issuable upon exchange of the Notes,
(iii) the Warrants, (iv) shares of Common Stock issued to the public in a firm
commitment underwriting pursuant to a registration statement filed under the
Securities Act with anticipated gross proceeds to the Company of at least $20
million, (v) shares of Common Stock issued in connection with bona fide
acquisitions, mergers, joint venture or similar transactions, the terms of which
are approved by the Board of Directors, (vi) shares of Common Stock issued
pursuant to any stock option, stock purchase or similar plan or arrangement for
the benefit of the employees of the Company or its subsidiaries, duly adopted by
the Board of Directors, or (vii) pursuant to the terms of this Agreement, then,
as to each Purchaser, the Company shall:
(i) give written notice to such Purchaser (no less than
ten (10) Business Days prior to the closing of such issuance) setting forth in
reasonable detail (A) the designation and all of the terms and provisions of the
securities proposed to be issued (the "Proposed Securities"), including, where
applicable, the voting powers, preferences and relative participating, optional
or other special rights, and the qualification, limitations or restrictions
thereof and interest rate and maturity; (B) the price and other terms of the
proposed sale of such securities; (C) the amount of the Proposed Securities; and
(D) such other information as such Purchaser may reasonably request in order to
evaluate the proposed issuance; and
(ii) offer to issue and sell to such Purchaser, on such
terms as the Proposed Securities are issued and upon full payment by such
Purchaser, a portion of the Proposed Securities equal to a percentage determined
by dividing (A) the number of shares of Common Stock Beneficially Owned by such
Purchaser by (B) the total number of shares of Common Stock then outstanding,
including for purposes of this calculation all shares of Common Stock issuable
upon conversion or exercise in full of any convertible or exercisable securities
(other than employee stock options) then outstanding.
(b) Each Purchaser must exercise its purchase rights
hereunder within ten (10) Business Days after receipt of such notice from the
Company. To the extent that the Company offers two or more securities in units,
each Purchaser must purchase such units as a whole and will not be given the
opportunity to purchase only one of the securities making up such unit. The
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closing of the exercise of such subscription right shall take place
simultaneously with the closing of the sale of the Proposed Securities giving
rise to such subscription right.
(c) Upon the expiration of the 10-Business Day offering
period described above, the Company will be free to sell such Proposed
Securities that the Purchasers have not elected to purchase during the ninety
(90) days following such expiration on terms and conditions no more favorable to
the purchasers thereof than those offered to the Purchasers. Any Proposed
Securities offered or sold by the Company after such 90 day period must be
reoffered to the Purchasers pursuant to this Section 5.8.
(d) The election by any Purchaser not to exercise its
subscription rights under this Section 5.8 in any one instance shall not affect
its right (other than in respect of a reduction in its percentage holdings) as
to any subsequent proposed issuance. Any sale of such securities by the Company
without first giving each Purchaser the rights described in this Section 5.8
shall be void and of no force and effect.
(e) Each of the Company, Warburg and Broadview hereby
agree that, effective as of the date hereof, Section 5.7 of the 2002 Purchase
Agreement shall 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 5.8.
5.9. Standstill. In the event that at any time following
the date hereof until July 22, 0000, Xxxxxxx and any of its Affiliates own more
than 45% 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 45% of the issued and
outstanding shares of Voting Stock and (ii) it will abstain from voting any
shares in excess of 45% of the Voting Stock. Warburg further agrees that until
July 22, 2007, 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. For so long
as a Purchaser is subject to Section 5.9 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 5.9 herein, such Purchaser shall
vote all of its shares of Common Stock and/or shares of Series A Preferred
and/or shares of Preferred 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.
5.11. Affirmative Covenants in Connection with the Sale of
the Notes. The Company agrees that, until the earlier of (i) the Second Closing
Date or (ii) the date upon which
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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.
(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.
(d) Title to Property. All property, whether real or
personal, owned by the Company shall be held in the name of the Company.
(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.
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(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
matters being contested in good faith and by appropriate proceedings or other
appropriate action, 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.
(i) 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.
5.12. Negative Covenants in Connection with the Sale of the
Notes. The Company agrees that, until the earlier of (i) the Second Closing Date
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
Note.
(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
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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 $250,000; (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; or (x) Liabilities incurred in
connection with restructuring plans publicly disclosed by the Company, including
Liabilities associated with terminating the Company's Soquel lease obligation.
(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; 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 settlements or compromises made in the reasonable exercise of business
judgment in the ordinary course of business.
(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, including the
termination of the Company's 000 Xxxxxx Xxx lease obligation; (iii) in
connection with the SVB Agreements; or (iv) in connection with the Xxxxx Xxxx
indebtedness, more fully described on Schedule 5.12(d).
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(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.
(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 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.
(m) Investments. The Company shall not make any
investments other than investments in cash equivalents, except in the ordinary
course consistent with past practice.
(i) 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.
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6. Conditions Precedent.
6.1. Conditions to the Obligation of the Purchasers to
Consummate the Initial Closing. The several obligations of each Purchaser to
consummate the transactions to be consummated at the Initial Closing, and to
purchase and pay for the Notes being purchased by it at such Closing pursuant to
this Agreement, 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 Initial Closing Date
with the same force and effect as though made on and as of the Initial 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 Initial Closing Date.
(c) Each Purchaser shall have received a certificate,
dated the Initial 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) The purchase of and payment for the Notes by each
Purchaser shall not be prohibited or enjoined by any law or governmental or
court order or regulation.
(e) 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.
(f) There shall not have been any Material Adverse Change
since the Announcement Date.
(g) 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.
(h) The Company and the Collateral Agent, on behalf of
the Purchasers, shall have entered into the Pledge and Security Agreement.
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(i) The Collateral Agent, on behalf of the Purchasers,
and SVB shall have entered into the Intercreditor Agreement and all consents
identified on Schedule 6.1(i) 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.
(j) All UCC filings and filings 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.
(k) Nasdaq shall have approved of and consented to the
transactions contemplated hereby.
6.2. Conditions to the Obligation of the Company to
Consummate the Initial Closing. The obligation of the Company to consummate the
transactions to be consummated at the Initial Closing, and to issue and sell to
each Purchaser the Notes to be purchased by it at the Initial Closing pursuant
to this Agreement, is subject to the satisfaction of the conditions precedent
set forth in this Section 6.2.
(a) The representations and warranties contained herein
of such Purchaser shall be true and correct on and as of the Initial Closing
Date, with the same force and effect as though made on and as of Initial 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 Initial Closing Date.
(c) The sale of the Notes by the Company shall not be
prohibited or enjoined by any law or governmental or court order or regulation.
(d) Nasdaq shall have approved of and consented to the
transactions contemplated hereby.
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 to the Obligation of the Purchasers to
Consummate the Second Closing. The several obligations of each Purchaser to
consummate the transactions to be consummated at the Second Closing, including
without limitation to exchange the Notes for shares of Preferred Stock of the
Company pursuant to this Agreement, are subject to the satisfaction of the
conditions precedent set forth in this Section 6.3.
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(a) At the Special Meeting, all of the Special Meeting
Proposals shall have been approved by the Company's stockholders.
(b) The Series B Preferred Certificate of Designations shall
have been filed by the Company with the Secretary of State of the State of
Delaware, and satisfactory evidence of such filing shall have been delivered to
the Purchasers.
(c) To the extent required, any applicable waiting period
under the HSR Act shall have expired or notice of early termination of such
waiting period shall have been received by the Company and the Purchasers.
(d) The consents set forth on Schedule 6.3(d) shall have
been obtained.
6.4. Conditions to the Obligation of the Company to
Consummate the Second Closing. The obligations of the Company to consummate the
transactions to be consummated at the Second Closing, and to exchange for each
Purchaser the Notes for Preferred Stock of the Company pursuant to this
Agreement, are subject to the satisfaction of the conditions precedent set forth
in this Section 6.4.
(a) At the Special Meeting, all of the Special Meeting
Proposals shall have been approved by the Company's stockholders.
(b) To the extent 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.
6.5. Conditions to the Obligations of the Purchasers to
consummate each Subsequent Closing. The several obligations of each Purchaser to
consummate the transactions to be consummated at each Subsequent Closing, and to
purchase and pay for the shares of Preferred Stock being purchased by it at each
such Subsequent Closing pursuant to this Agreement, are subject to the
satisfaction of the conditions precedent set forth in this Section 6.5.
(a) The representations and warranties contained herein of
the Company shall be true and correct on and as of each Subsequent Closing Date
with the same force and effect as though made on and as of each Subsequent
Closing Date (it being understood and agreed by each Purchaser that for purposes
of this Section 6.5(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 each Subsequent Closing Date.
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(c) Each Purchaser shall have received a certificate,
dated the Subsequent 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 6.5(a) and (b) have been
fulfilled.
(d) At the Special Meeting, the Company's stockholders
shall have approved all of the Special Meeting Proposals.
(e) To the extent 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.
(f) There shall not have been any Material Adverse Change
since the Initial Closing.
(g) The Company shall not have (i) commenced any voluntary
proceeding under any provision of Title 11 of the United States Code, as now or
hereafter amended, or any other proceeding, under any law, now or hereafter in
force, relating to bankruptcy, insolvency, reorganization, liquidation, or
otherwise to the relief of debtors or the readjustment of indebtedness; (ii)
made any assignment for the benefit of creditors or a composition or similar
arrangement with such creditors; (iii) appointed a receiver, trustee or similar
judicial officer or agent to take charge of or liquidate any of its property or
assets; and (iv) shall not have had any involuntary proceeding of the kind
described in subsections (i)-(iv) of this Section 6.5(g) commenced against it.
(h) The purchase of and payment for the Preferred Stock to
be issued as of such Subsequent Closing shall not be prohibited or enjoined by
any law, court order or government regulation.
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 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
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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:
"THE SECURITIES REPRESENTED BY THIS [CERTIFICATE] [NOTE] [WARRANT] [AND THE
SECURITIES ISSUABLE UPON ITS [CONVERSION] [EXCHANGE] [EXERCISE]] 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) use its reasonable best efforts, subject to receipt of
necessary information from each Purchaser for inclusion in such filing, prepare
and file with the SEC within 30 days following the filing of its annual report
on the Form 10-K with the SEC for 2003, a registration statement on Form S-1, or
if available, 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 and shall amend the Registration
Statement upon the exercise by the Company of the Call Right in accordance with
the terms set forth herein;
(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
-36-
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;
(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 underlying the shares of Preferred Stock and the Warrants to be listed on
the Nasdaq National Market 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.
(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
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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
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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).
(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 or
(iii) 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 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'
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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.
(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
(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
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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
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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.
(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.
(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
-42-
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.
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
-43-
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. Conditions of Termination. Notwithstanding anything to
the contrary contained herein, this Agreement may be terminated at any time (a)
by mutual consent of the Company and the Purchasers, or (b) before the Initial
Closing by either party hereto if the Initial Closing shall not have occurred on
or prior to August 10, 2003.
8.2 Effect of Termination. In the event of termination
pursuant to Section 8.1 herein, this Agreement shall become null and void and
have no effect, with no liability on the part of the Company or the Purchasers,
or their directors, officers, agents or stockholders, with respect to this
Agreement, except for the (i) liability of a party for expenses pursuant to
Section 9.9 herein and (ii) liability for any breach of this Agreement or the
Loan Documents.
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.
-44-
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. 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,
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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.
9.8. 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.
9.9. Expenses. The Company shall pay the documented fees
and expenses incurred by the Purchasers in connection with the transactions
contemplated hereby including, without limitation, legal, consulting and
accounting fees ("Transaction Fees"). Payments due pursuant to this Section 9.9
will be made at each Closing for all documented fees and expenses incurred but
unpaid as of such Closing; provided, that in the event each applicable Closing
occurs, or if a Closing 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.
9.10. 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.
9.11. 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
9.12. 2002 Purchase Agreement. Except as expressly set
forth herein, each party acknowledges and agrees that the 2002 Purchase
Agreement shall remain in full force and effect.
9.13. 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 supersedes 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 shares of Preferred
Stock issued or to be issued pursuant to this Agreement.
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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 & CEO
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
BROADVIEW CAPITAL PARTNERS L.P.
By: Broadview Capital Partners
Management LLC its General Partner
By: /s/ Xxxxxx X. Xxxxxx
_________________________
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
BROADVIEW CAPITAL PARTNERS QUALIFIED
PURCHASER FUND L.P.
By: Broadview Capital Partners
Management LLC its General Partner
By: /s/ Xxxxxx X. Xxxxxx
_________________________
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
[Signature Page to Securities Purchase Agreement]
BROADVIEW CAPITAL PARTNERS AFFILIATES
FUND LLC
By: Broadview Capital LLC
its Manger
By: /s/ Xxxxxx X. Xxxxxx
_________________________
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
[Signature Page to Securities Purchase Agreement]
EXHIBIT A
PURCHASERS
Purchaser Principal Amount Warrant Coverage Issuable at the Maximum Commitment Under
Name and Address of Notes to be Purchased Second Closing the Call Right
------------------------- -------------------------------- ------------------------
WARBURG PINCUS PRIVATE
EQUITY VIII, L.P. $ 26,000,000 15,600,000 $ 8,666,667
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxx
Fax No. 000-000-0000
with a copy to:
Xxxxxxx Xxxx & Xxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxx
Facsimile: (000) 000-0000
BROADVIEW CAPITAL $ 484,000 290,400 $ 161,333
PARTNERS L.P.
BROADVIEW CAPITAL $ 3,502,800 2,101,680 $ 1,167,600
PARTNERS QUALIFIED
PURCHASER FUND L.P.
BROADVIEW CAPITAL PARTNERS $ 13,200 7,920 $ 4,400
AFFILIATES FUND LLC ------- ----- ------
TOTAL $30,000,000.00 18,000,000.00 $10,000,000.00
EXHIBIT B
THE SECURITIES REPRESENTED BY THIS 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.
THIS NOTE IS SUBJECT TO THE TERMS AND CONDITIONS OF AN INTERCREDITOR AGREEMENT
DATED AS OF JULY __, 2003, BY AND BETWEEN SILICON VALLEY BANK AND WARBURG PINCUS
PRIVATE EQUITY VIII, L.P., IN ITS CAPACITY AS COLLATERAL AGENT.
SECURED PROMISSORY NOTE
$____________ July __, 2003
FOR VALUE RECEIVED, Proxim Corporation, a Delaware corporation
(the "Maker"), hereby unconditionally promises to pay to the order of
__________________ (the "Holder" or the "Lender"), having an address at
____________________, at such address or at such other place as may be
designated in writing by the Holder, or its permitted assigns, the original
aggregate principal sum of ______________ ($________.00), together with interest
on the unpaid principal balance of this Note outstanding at a rate per annum
equal to twenty-five percent (25%) (computed on the basis of the actual number
of days elapsed in a 365-day year) per annum and continuing on the outstanding
principal until this Note is exchanged or paid in full. All payments of
principal and interest by the Maker under this Note, including without
limitation amounts payable pursuant to Section 7(b), shall be made in cash in
immediately available funds on the Maturity Date (as defined in Section 1
below).
From and after the Maturity Date, every amount due and owing
under this Note shall bear interest at an annual rate of thirty percent (30%)
(the "Default Interest Rate"). Commencing after the Maturity Date, any accrued
but unpaid interest on this Note shall be payable on demand and shall accrue
until the obligation of the Maker with respect to the payment of such interest
has been discharged (whether before or after judgment). In no event shall any
interest charged, collected or reserved under this Note exceed the maximum rate
then permitted by applicable law and if any such payment is paid by the Maker,
then such excess sum shall be credited by the Holder as a payment of principal.
1. Definitions. Unless the context otherwise requires, when used
herein the following terms shall have the meaning indicated:
"Business Day" shall mean any day except a Saturday or Sunday
or day on which banking institutions are legally authorized to close in the City
of New York.
"Call Right" shall have the meaning ascribed to such term in
the Purchase Agreement.
"Change of Control" shall have the meaning ascribed to such
term in the Form of Certificate of Designations, Preferences and Rights of the
Series B Convertible Preferred Stock, attached as Exhibit C to the Purchase
Agreement.
"Collateral" shall have the meaning ascribed to such term in
the Pledge and Security Agreement.
"Collateral Agent" shall mean Warburg Pincus Private Equity
VIII, L.P.
"Common Stock" shall mean the class A common stock, par value
$.01 per share, of the Maker.
"Default Interest Rate" shall have the meaning ascribed to
such term in the second paragraph herein.
"Event of Default" shall have the meaning ascribed to such
term in Section 6(a) herein.
"Exchange Date" shall mean the Second Closing Date (as defined
in the Purchase Agreement).
"Holder" shall have the meaning ascribed to such term in the
first paragraph herein.
"Incremental Interest" shall have the meaning ascribed to such
term in Section 6(b) herein.
"Lender" shall have the meaning ascribed to such term in the
first paragraph herein.
"Loan Document" shall have the meaning ascribed to such term
in the Purchase Agreement.
"Maker" shall have the meaning ascribed to such term in the
first paragraph herein.
"Material Adverse Change" shall have the meaning ascribed to
such term in the Purchase Agreement.
"Maturity Date" shall mean the earliest of (i) the date on
which any Event of Default shall have occurred and be continuing, (ii) any date,
occurring at least 30 days after the Negative Vote Date, on which the Holder
shall have demanded payment of this Note and (iii) December 31, 2003.
"Negative Vote Date" shall mean the date on which the Maker's
stockholders reject or fail to approve for any reason the Special Meeting
Proposals at the Special Meeting.
-2-
"Note" and "Notes" shall have the meaning ascribed to such
term in Section 2 herein.
"Obligations" shall have the meaning ascribed to such term in
the Purchase Agreement.
"Pledge and Security Agreement" shall mean the Pledge and
Security Agreement, dated as of July __, 2003, between the Maker and the
Collateral Agent.
"Preferred Stock" shall mean the shares of Series B
Convertible Preferred Stock, par value $.01 per share, of the Maker.
"Pro Rata Percentage" shall have the meaning ascribed to such
term in Section 6(b) herein.
"Purchase Agreement" shall mean the Securities Purchase
Agreement, dated as of July 22, 2003 and as amended, between the Maker and the
other parties named therein.
"Special Meeting" shall have the meaning ascribed to such term
in the Purchase Agreement.
"Special Meeting Proposals" shall have the meaning ascribed to
such term in the Purchase Agreement.
"Warrants" shall have the meaning ascribed to such term in the
Purchase Agreement.
2. Securities Purchase Agreement. This Secured Promissory Note
(this "Note") is one of the several secured promissory notes of the Maker (the
"Notes") referred to in the Purchase Agreement. The Note is subject to the terms
and conditions of, and entitled to the benefit of, the provisions of the
Purchase Agreement. The Note is transferable and assignable to any person to
whom such transfer is permissible under applicable law. The Maker agrees to
issue from time to time replacement Notes in the form hereof to facilitate such
transfers and assignments. In addition, after delivery of an indemnity in form
and substance satisfactory to the Maker, the Maker also agrees to issue a
replacement Note if the Note is lost, stolen, mutilated or destroyed.
3. Security. As collateral for the satisfaction of and payment in
full of the Maker's Obligations, including the repayment in full of the
principal of premium, if any, and interest (including Incremental Interest, if
any) on this Note, and all costs of enforcement hereof and thereof, the Maker
has granted to the Holder, pursuant to the Pledge and Security Agreement and any
intellectual property security agreement executed by the Maker and the
Collateral Agent, security interests in the Collateral. As further set forth in
the Pledge and Security Agreement, the security interests created thereunder are
continuing security interests and shall remain in effect until the earlier of
(i) the indefeasible payment in full of the Obligations and (ii) the date this
Note is exchanged for shares of Preferred Stock and Warrants pursuant to the
Purchase Agreement.
4. Payments. This Note may be prepaid in whole or in part at any
time or from time to time without premium or penalty after, and only after, the
Negative Vote Date; provided,
-3-
however, that if a Change of Control occurs prior to the Exchange Date, then
this Note shall not be prepayable in whole or in part. Any voluntary or
mandatory prepayment of this Note shall be applied first to the payment of
interest accrued and unpaid on this Note and second to the payment of principal.
All payments by the Maker under this Note shall be made without set-off, defense
or counterclaim and be free and clear and without any deduction or withholding
for any taxes or fees of any nature whatever, unless the obligation to make such
deduction or withholding is imposed by law. The principal balance and all
accrued but unpaid interest on this Note shall be paid in full on the Maturity
Date.
5. Waiver. No delay or omission on the part of the Holder in
exercising any right under this Note shall operate as a waiver of such right or
of any other right of the Holder, nor shall any delay, omission or waiver on any
one occasion be deemed a bar to or waiver of the same or any other right on any
future occasion. The Maker hereby forever waives presentment, demand,
presentment for payment, protest, notice of protest, notice of dishonor of this
Note and all other demands and notices in connection with the delivery,
acceptance, performance and enforcement of this Note.
6. Event of Default.
(a) The Maker agrees that:
(i) upon the failure to pay when due the principal
balance and accrued interest hereunder;
(ii) if the Maker shall fail or omit to perform, observe
or satisfy any agreement, covenant or other provision contained or referred to
in Section 5.11(a)(i), 5.11(b) (as to corporate existence) or 5.12 of the
Purchase Agreement;
(iii) if the Maker shall fail or omit to perform, observe
or satisfy any agreement, covenant or other provision (other than those referred
to in Section 6(a)(i) or 6(a)(ii) herein) contained or referred to in any other
Section of this Note or any other Loan Document and such failure shall not have
been fully corrected within ten (10) days after the Maker's receipt from the
Holder of written notice that the specified possible default is to be remedied
or ten days after the Maker shall become aware thereof or if the failure cannot
be cured within ten (10) days after the Maker's attempts in such ten (10)-day
period, and the failure may be cured within a reasonable time, then the Maker
shall have an additional period of not more than ten (10) days to attempt to
cure the failure;
(iv) if any representation, warranty or statement made by
Maker in or pursuant to this Note or any other Loan Document shall be false or
incorrect in any material respect when made;
(v) if the Maker (1) commences any voluntary proceeding
under any provision of Title 11 of the United States Code, as now or hereafter
amended, or commences any other proceeding, under any law, now or hereafter in
force, relating to bankruptcy, insolvency, reorganization, liquidation, or
otherwise to the relief of debtors or the readjustment of indebtedness, (2)
makes any assignment for the benefit of creditors or a composition or similar
arrangement with such creditors, or (3) appoints a receiver, trustee or similar
judicial officer or
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agent to take charge of or liquidate any of its property or assets or upon the
commencement against the Maker of any involuntary proceeding of the kind
described in this paragraph;
(vi) upon the acceleration of any other indebtedness of
the Maker for borrowed money that has an outstanding principal amount in excess
of $1,000,000;
(vii) upon the rendering of a judgment or judgments
involving an amount in excess of $2,500,000 and such judgment or judgments shall
not have been vacated, discharged, stayed or bonded pending appeal within 30
days from the entry thereof;
(viii) subject to Section 6(b)(ii), upon a Change of
Control;
(ix) if prior to the Special Meeting, the Maker shall
issue, or agree to issue, in a transaction exempt from registration under the
Act shares of Common Stock, or Common Stock equivalents, in an amount in excess
of 15% of the shares of Common Stock then outstanding, other than pursuant to
the Purchase Agreement;
(x) upon the occurrence of a Material Adverse Change;
(xi) if any lien created by the Loan Documents shall cease
to be effective; or
(xii) if the Maker's Board of Directors or a special
committee thereof withdraws or adversely modifies its recommendation relating to
the Special Meeting Proposals in accordance with Section 5.7 of the Purchase
Agreement,
(any of (i) through (xii), an "Event of Default"), all unpaid principal and
accrued interest under this Note shall become immediately due and payable
without presentment, demand, protest or notice of any kind, all of which are
hereby waived by the Maker.
(b) In addition to the remedies set forth in Section 6(a)
above: (i) if the Maker's Board of Directors withdraws or adversely modifies its
recommendation relating to the Special Meeting Proposals, the Maker shall pay to
the Holder in immediately available funds, in addition to any other amounts,
whether principal or interest, due hereon, incremental interest as liquidated
damages in an amount in cash equal to the Holder's Pro Rata Percentage of
$1,000,000 ("Incremental Interest"), payable within two (2) Business Days of
such withdrawal or modification; and (ii) upon the occurrence of a Change of
Control, one hundred fifty percent (150%) of all unpaid principal and accrued
but unpaid interest under this Note shall become immediately due and payable
upon demand by the Holder and presentment by the Holder of the Note to the
Maker. For purposes hereof, the term "Pro Rata Percentage" shall mean with
respect to the Holder a percentage equal to a fraction, the numerator of which
is the aggregate principal amount of this Note and the denominator of which is
the aggregate principal amount of all of the Notes then outstanding.
(c) As further set forth in the Pledge and Security
Agreement, and in addition to the remedies set forth in Section 6(a) and Section
6(b) above, upon the occurrence and continuance of an Event of Default, the
Collateral Agent shall have all the rights and remedies as a secured party under
the Uniform Commercial Code of the State of New York.
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7. Additional Remedies Upon Default. Notwithstanding anything to
the contrary contained herein, upon an Event of Default hereunder, and during
the continuation thereof, and subject to the provisions of the Loan Documents,
the Holder may exercise any other right, power or remedy as may be provided
herein or in any other Loan Document or as may be provided at law or in equity,
including, without limitation, the right to recover judgment against the Maker
for any amount due either before, during or after any proceedings for the
enforcement of any of the Collateral or any realization upon any of the
foregoing.
8. Amendment. None of the terms or provisions of this Note may be
excluded, modified or amended except by a written instrument duly executed by
the Holder and the Maker expressly referring to this Note and setting forth the
provision so excluded, modified or amended.
9. Costs. If action is instituted to collect on this Note, the
Maker promises to pay all costs and expenses, including reasonable attorney's
fees, incurred in connection with such action.
10. Governing Law. This Note shall be governed by, and construed
in accordance with, the laws of the State of New York.
11. Notices. All notices hereunder shall be given in writing and
shall be deemed delivered when received by the other party hereto at the address
set forth in the Purchase Agreement or at such other address as may be specified
by such party from time to time in accordance with the Purchase Agreement.
[Remainder of Page Intentionally Left Blank]
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This Note shall be binding upon the successors or assigns of
the Maker and shall inure to the benefit of the successors and assigns of the
Holder.
PROXIM CORPORATION
By: ___________________________
Name:
Title:
[Note Signature Page]
EXHIBIT C
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF SERIES B
CONVERTIBLE PREFERRED STOCK OF PROXIM CORPORATION
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
The undersigned, pursuant to the provisions of Section 151 of
the General Corporation Law of the State of Delaware, does hereby certify that,
pursuant to the authority expressly vested in the Board of Directors of Proxim
Corporation, a Delaware corporation (the "CORPORATION"), by the Corporation's
Certificate of Incorporation, the Board of Directors of the Corporation (the
"BOARD OF DIRECTORS") has duly provided for the issuance of and created a series
of Preferred Stock (the "PREFERRED STOCK") of the Corporation, par value $.01
per share, and in order to fix the designation and amount and the voting powers,
designations, preferences and relative, participating, optional and other
special rights, and the qualifications, limitations and restrictions, of a
series of Preferred Stock, has duly adopted this "Certificate of Designations,
Preferences and Rights of Series B Convertible Preferred Stock of Proxim
Corporation" (the "CERTIFICATE"). All capitalized terms not defined above or in
Sections 1 through 9 below are defined in Section 10 herein.
Each share of such series of Preferred Stock shall rank
equally in all respects and shall be subject to the following provisions:
1. NUMBER OF SHARES AND DESIGNATION. 450,000 shares of
Preferred Stock of the Corporation shall constitute a series of Preferred Stock
designated as Series B Convertible Preferred Stock (the "SERIES B PREFERRED
STOCK"). The number of shares of Series B Preferred Stock may be increased (to
the extent of the Corporation's authorized and unissued Preferred Stock) or
decreased (but not below the number of shares of Series B Preferred Stock then
outstanding) by further resolution duly adopted by the Board of Directors and
the filing of a certificate reflecting such increase or decrease, as the case
may be, with the Secretary of State of the State of Delaware.
2. RANK. The Series B Preferred Stock shall, with
respect to payment of dividends, redemption payments, rights upon liquidation,
dissolution or winding up of the affairs of the Corporation, or otherwise (i)
rank senior and prior to the Common Stock (as defined below), the Series A
Preferred Stock and each other class or series of equity securities of the
Corporation, whether currently issued or issued in the future, that by its terms
ranks junior to the Series B Preferred Stock (whether with respect to payment of
dividends, redemption payments, rights upon liquidation, dissolution or winding
up of the affairs of the Corporation, or otherwise)
(all of such equity securities, including the Series A Preferred Stock and
Common Stock, are collectively referred to herein as the "JUNIOR SECURITIES"),
(ii) rank on a parity with each other class or series of equity securities of
the Corporation, whether currently issued or issued in the future, that does not
by its terms expressly provide that it ranks senior to or junior to the Series B
Preferred Stock (whether with respect to payment of dividends, redemption
payments, rights upon liquidation, dissolution or winding up of the affairs of
the Corporation, or otherwise) (all of such equity securities are collectively
referred to herein as the "PARITY SECURITIES"), and (iii) rank junior to each
other class or series of equity securities of the Corporation, whether currently
issued or issued in the future, that by its terms ranks senior to the Series B
Preferred Stock (whether with respect to payment of dividends, redemption
payments, rights upon liquidation, dissolution or winding up of the affairs of
the Corporation, or otherwise) (all of such equity securities are collectively
referred to herein as the "SENIOR SECURITIES"). The respective definitions of
Junior Securities, Parity Securities and Senior Securities shall also include
any rights or options exercisable or exchangeable for or convertible into any of
the Junior Securities, Parity Securities or Senior Securities, as the case may
be.
3. DIVIDENDS.
(a) The holders of shares of Series B Preferred Stock
shall be entitled to receive dividends, when and as declared by the Board of
Directors, out of funds legally available for the payment of dividends. The
holders of shares of Series B Preferred Stock shall be entitled to participate
equally and ratably with the holders of shares of Common Stock in all dividends
and distributions paid (whether in the form of cash, stock or otherwise) on the
shares of Common Stock as if immediately prior to each record date for the
Common Stock, shares of Series B Preferred Stock then outstanding were converted
into shares of Common Stock (in the manner described in Section 7); provided,
however, that the holders of shares of Series B Preferred Stock shall not be
entitled to participate in such dividend or distribution if an adjustment to the
Conversion Price (as defined below) shall be required with respect to such
dividends or distributions pursuant to Section 7(c) hereof. Dividends payable
pursuant to this Section 3(a) shall be payable on the same date that such
dividends are payable to holders of shares of Common Stock (each such payment
date being a "DIVIDEND PAYMENT DATE").
(b) Each dividend shall be payable to the holders of
record of shares of Series B Preferred Stock as they appear on the stock records
of the Corporation at the close of business on such record dates (each, a
"DIVIDEND PAYMENT RECORD DATE"), which shall be not more than 60 days nor less
than 10 days preceding the Dividend Payment Date thereof, as shall be fixed by
the Board of Directors.
(c) From and after the time, if any, if the Corporation
fails to pay to the holder of any shares of Series B Preferred Stock, on the
date specified for redemption in accordance with Section 5 or on the date
specified for repurchase in accordance with Section 6, the redemption price
calculated pursuant to Section 5 or the Change of Control Price (as defined
below) after such holder has delivered notice to the Corporation pursuant to
Section 6 of its intention to exercise its repurchase rights under Section 6,
then (i) no dividends shall be declared or paid or set apart for payment, or
other distribution declared or made, upon any Junior Securities, nor shall any
Junior Securities be redeemed, purchased or otherwise acquired (other than a
redemption, purchase or other acquisition of shares of Common Stock expressly
required and made for purposes of any employee incentive or benefit plans or
arrangements of the Corporation or any subsidiary of the Corporation or the
payment of cash in lieu of fractional shares in connection therewith) for any
consideration (nor shall any moneys be paid to or made available for a sinking
fund for the redemption of any shares of any such Junior Securities) by the
Corporation, directly or indirectly (except by conversion into or exchange for
Junior Securities or the payment of cash in lieu of fractional shares in
connection therewith) and (ii) the
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Corporation shall not, directly or indirectly, make any payment on account of
any purchase, redemption, retirement or other acquisition of any Parity
Securities (other than for consideration payable solely in Junior Securities or
the payment of cash in lieu of fractional shares in connection therewith);
provided, however, that this Section 3(c) shall not be applicable at any time
that (A) the Corporation has paid, in accordance with Section 5, the redemption
price to each holder of Series B Preferred Stock or (B) the Corporation has
paid, in accordance with Section 6, the Change of Control Price (as defined
below) to each holder that has exercised its repurchase right pursuant to
Section 6.
4. LIQUIDATION PREFERENCE.
(a) The initial liquidation preference for the shares of
Series B Preferred Stock shall be $100.00 per share (the "STATED VALUE"), which
amount shall accrete from the Original Issue Date (as defined below) at an
annual rate of 12%, compounded quarterly, computed on the basis of a 360-day
year of twelve 30-day months (such accreted amount being the "LIQUIDATION
VALUE"). Notwithstanding the foregoing, in the event of a Change of Control (as
defined below), the Liquidation Value upon such Change of Control shall be
increased by the amount, if any, by which (i) the amount of the Liquidation
Value if it had fully accreted from the Change of Control Date (as defined
below) through the sixth anniversary of the Original Issue Date (the "MAXIMUM
LIQUIDATION VALUE") exceeds (ii) the Liquidation Value in effect prior to the
adjustment pursuant to this Section 4(a); provided, however, that if a Change of
Control Date occurs within nine (9) months after the Original Issue Date, the
Maximum Liquidation Value for purposes of the foregoing equation shall be an
amount equal to the sum of (i) the Stated Value and (ii) an amount equal to 80%
of the Maximum Liquidation Value less the Stated Value.
(b) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, the holders of shares
of Series B Preferred Stock shall be entitled to receive the greater of (i) the
Liquidation Value of such shares in effect on the date of such liquidation,
dissolution or winding up, plus an amount equal to the unrecognized accretion,
if any, from the end of the most recent quarter ending _________, ________,
_______, or _______ [COMMENCE WITH THE MONTH AND DAY THE COD IS FILED] up to but
not including the date of such liquidation, dissolution or winding up or (ii)
the payment such holders would have received had such holders, immediately prior
to such liquidation, dissolution or winding up, converted their shares of Series
B Preferred Stock into shares of Common Stock (pursuant to, and at a conversion
rate described in, Section 7 herein).
(c) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, the holders of shares
of Series B Preferred Stock (i) shall not be entitled to receive the Liquidation
Value of such shares until payment in full or provision has been made for the
payment in full of all claims of creditors of the Corporation and the
liquidation preferences for all Senior Securities, and (ii) shall be entitled to
receive the Liquidation Value of such shares before any payment or distribution
of any assets of the Corporation shall be made or set apart for holders of any
Junior Securities. Subject to clause (i) above, if the assets of the Corporation
are not sufficient to pay in full the Liquidation Value payable to the holders
of shares of Series B Preferred Stock and the liquidation preference payable to
the holders of any Parity Securities, then such assets, or the proceeds thereof,
shall be distributed among the holders
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of shares of Series B Preferred Stock and any such other Parity Securities
ratably in accordance with the Liquidation Value for the Series B Preferred
Stock and the liquidation preference for the Parity Securities, respectively.
(d) Neither a consolidation or merger of the Corporation
with or into any other entity, nor a merger of any other entity with or into the
Corporation, nor a sale or transfer of all or any part of the Corporation's
assets for cash, securities or other property shall be considered a liquidation,
dissolution or winding up of the Corporation within the meaning of this Section
4.
5. REDEMPTION; PROCEDURES FOR REDEMPTION.
(a) On ______ ___, 2009 [SIXTH ANNIVERSARY OF ORIGINAL
ISSUE DATE], the Corporation shall redeem all outstanding shares of Series B
Preferred Stock, if any, at a cash redemption price equal to the Liquidation
Value in effect on the Redemption Date (as defined below), plus an amount equal
to the dividends accrued and unpaid thereon, whether or not declared, up to but
not including the Redemption Date (such amount being referred to herein as the
"REDEMPTION PRICE"). In the event that the Corporation does not pay the
Redemption Price on the Redemption Date, the Redemption Price shall be
calculated as if the Redemption Date were the later of the Redemption Date and
the date on which such payment is made. If the Corporation is unable at the
Redemption Date to redeem any or all shares of Series B Preferred Stock then to
be redeemed because such redemption would violate the applicable laws of the
State of Delaware, then the Corporation shall redeem such shares as soon
thereafter as redemption would not violate such laws. In the event of any
redemption of only a part of the then outstanding Series B Preferred Stock, the
Corporation shall effect such redemption pro rata among the holders thereof
(based on the number of shares of Series B Preferred Stock held on the date of
notice of redemption).
(b) In the event of a redemption of shares of Series B
Preferred Stock pursuant to Section 5(a), notice of such redemption shall be
given by the Corporation, by first class mail, postage prepaid, mailed not less
than 15 days nor more than 45 days prior to the Redemption Date, to each holder
of Series B Preferred Stock at the address appearing in the Corporation's
records. Such notice shall state: (i) the date on which the holder is to
surrender to the Corporation the certificates for any shares to be redeemed
(such date, or if such date is not a Business Day, the first Business Day
thereafter, the "REDEMPTION DATE") and (ii) the number of shares of Series B
Preferred Stock to be redeemed and, if fewer than all the shares held by such
holder are to be redeemed, the number of shares to be redeemed from such holder
(such notice being referred to as the "REDEMPTION NOTICE"). On or prior to the
Redemption Date, each holder of Series B Preferred Stock to be redeemed shall
surrender his, her or its certificate or certificates representing such shares
to the Corporation, in the manner and at the place designated in the Redemption
Notice, and thereupon the Redemption Price of such shares shall be payable to
the order of the person whose name appears on such certificate or certificates
as the owner thereof and each surrendered certificate shall be canceled. In the
event less than all the shares represented by any such certificate are redeemed,
a new certificate shall be issued representing the unredeemed shares. From and
after the Redemption Date, unless there shall have been a default in payment of
the Redemption Price, all rights of the holders of the Series B Preferred Stock
(except the right to receive the Redemption Price without interest upon
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surrender of their certificate or certificates) shall cease with respect to such
shares, and such shares shall not thereafter be transferred on the books of the
Corporation or deemed to be outstanding for any purpose whatsoever.
(c) Except as provided in Section 5(a), the Corporation
shall have no right to redeem the shares of Series B Preferred Stock. Any shares
of Series B Preferred Stock so redeemed shall be permanently retired, shall no
longer be deemed outstanding and shall not under any circumstances be reissued,
and the Corporation may from time to time take such appropriate corporate action
as may be necessary to reduce the authorized Series B Preferred Stock
accordingly.
6. CHANGE OF CONTROL; PROCEDURES UPON CHANGE OF CONTROL.
(a) If the Corporation undergoes a Change of Control that
is a Qualifying Change of Control (as defined below), each holder of shares of
Series B Preferred Stock shall have the right to require the Corporation to
convert any such shares of Series B Preferred Stock, in whole or in part, into
fully-paid and non-assessable shares of Common Stock at the Conversion Price (as
defined below) then in effect; provided, that in the event of a Change of
Control the Corporation may, at its option, reduce the Conversion Price
appropriately in order to effect a Qualifying Change of Control (as defined
below). In the event that the Corporation undergoes a Change of Control that is
not a Qualifying Change of Control (the date of such occurrence being the
"Change of Control Date"), the Corporation shall be required to make an offer
(the "Change of Control Offer") to each holder of shares of Series B Preferred
Stock to repurchase such holder's shares of Series B Preferred Stock, in whole
or in part, at such holder's option, at a cash redemption price (the "Change of
Control Price") equal to 101% of the Liquidation Value in effect on the Change
of Control Repurchase Date (as defined below) (after taking into account any
adjustment thereto pursuant to Section 4(a), plus an amount equal to the
unrecognized accretion, if any, from the end of the immediately preceding
quarter ending ______, ______, ______ or _______ to but not including the Change
of Control Repurchase Date and (ii) any dividends accrued and unpaid thereon,
whether or not declared, up to but not including the Change of Control
Repurchase Date.
(b) The Corporation shall send notice to each holder of
Series B Preferred Stock of the Change of Control Offer within 30 days of the
Change of Control Date, which notice shall specify the date on which the Change
of Control Offer shall be consummated (the "CHANGE OF CONTROL REPURCHASE DATE").
The Change of Control Repurchase Date shall be no more than 60 days after the
Change of Control Date. Any holder wishing to submit its shares of Series B
Preferred Stock for repurchase pursuant to a Change of Control Offer shall
submit its certificates representing any such shares to be repurchased by the
Corporation for repurchase no later than the third Business Day immediately
preceding the Change of Control Repurchase Date.
(c) Upon surrender in accordance with the notice of the
Change of Control Offer of the certificates for any shares to be repurchased,
such shares shall be repurchased by the Corporation on the Change of Control
Repurchase Date at the Change of Control Price. In case
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fewer than all the shares represented by any such certificate are to be
repurchased, a new certificate shall be issued representing the unpurchased
shares without cost to the holder thereof.
7. CONVERSION.
(a) Right to Convert; Mandatory Conversion.
(i) Subject to the provisions of this Section 7, each
holder of shares of Series B Preferred Stock shall have the right, at
any time and from time to time, at such holder's option, to convert any
or all of such holder's shares of Series B Preferred Stock, in whole or
in part, into fully paid and non-assessable shares of Common Stock at
the conversion price equal to the Initial Conversion Price (as defined
below) per share of Common Stock, subject to adjustment as described in
Section 7(c) (as adjusted, the "CONVERSION PRICE"). The number of
shares of Common Stock into which a share of the Series B Preferred
Stock shall be convertible (calculated as to each conversion to the
nearest 1/100th of a share) shall be determined by dividing the
Liquidation Value in effect at the time of conversion by the Conversion
Price in effect at the time of conversion. The "INITIAL CONVERSION
PRICE" shall be $___ per share.
(ii) From and after the fourth anniversary of the Original
Issue Date, subject to the provisions of this Section 7, the
Corporation shall have the right to require the holder of shares of
Series B Preferred Stock, from time to time, at the Corporation's
option, to convert any or all of such holder's shares of Series B
Preferred Stock, in whole or in part, into fully paid and
non-assessable shares of Common Stock at the Conversion Price then in
effect; provided that the Market Price of the Common Stock has exceeded
300% of the Conversion Price then in effect for the 30 consecutive
trading days prior to the Corporation's delivery of the notice required
by Section 7(b)(i)(B).
(b) Mechanics of Conversion.
(i) A holder of shares of Series B Preferred Stock or the
Corporation, as the case may be, that elects to exercise its conversion
rights pursuant to Section 7(a) shall provide notice to the other party
as follows:
(A) Holder's Notice and Surrender. To exercise its
conversion right pursuant to Section 7(a)(i), the holder of shares of
Series B Preferred Stock to be converted shall surrender the
certificate or certificates representing such shares at the office of
the Corporation (or any transfer agent of the Corporation previously
designated by the Corporation to the holders of Series B Preferred
Stock for this purpose) with a written notice of its election to
convert, completed and signed, specifying the number of shares to be
converted.
(B) Corporation's Notice. To exercise its conversion
right pursuant to Section 7(a)(ii), the Corporation shall deliver
written notice to such holder, at least 10 days and no more than 60
days prior to the Conversion Date (as defined below), specifying: (i)
the number of shares of Series B Preferred Stock to be converted and,
if fewer than all the shares held by such holder are to be converted,
the number of shares to be held by such holder; (ii) the Conversion
Date; (iii) the Conversion Price then in effect; (iv) the number
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of shares of Common Stock to be issued in respect of each share of
Series B Preferred Stock that is converted; and (v) the place or places
where certificates for such shares are to be surrendered for issuance
of certificates representing shares of Common Stock.
Unless the shares issuable upon conversion are to be issued in
the same name as the name in which such shares of Series B Preferred Stock are
registered, each share surrendered for conversion shall be accompanied by
instruments of transfer, in form reasonably satisfactory to the Corporation,
duly executed by the holder or the holder's duly authorized attorney and an
amount sufficient to pay any transfer or similar tax in accordance with Section
7(b)(v). As promptly as practicable after the surrender by the holder of the
certificates for shares of Series B Preferred Stock as aforesaid, the
Corporation shall issue and shall deliver to such holder, or on the holder's
written order to the holder's transferee, a certificate or certificates for the
whole number of shares of Common Stock issuable upon the conversion of such
shares and a check payable in an amount corresponding to any fractional interest
in a share of Common Stock as provided in Section 7(b)(vi).
(ii) Each conversion shall be deemed to have been effected
immediately prior to the close of business on (x) in the case of
conversion pursuant to Section 7(a)(i), the first Business Day on which
the certificates for shares of Series B Preferred Stock shall have been
surrendered and such notice received by the Corporation as aforesaid or
(y) in the case of conversion pursuant to Section 7(a)(ii), the date
specified as the Conversion Date in the Corporation's notice of
conversion delivered to each holder pursuant to Section 7(b)(i)(B) (in
each case, the "CONVERSION DATE"). At such time on the Conversion Date:
(A) the person in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon such
conversion shall be deemed to have become the holder of record of the
shares of Common Stock represented thereby at such time; and
(B) such shares of Series B Preferred Stock so converted
shall no longer be deemed to be outstanding, and all rights of a holder
with respect to such shares (x) in the event of conversion pursuant to
Section 7(a)(i) surrendered for conversion and (y) in the event of
conversion pursuant to Section 7(a)(ii), covered by the Corporation's
notice of conversion, shall immediately terminate except the right to
receive the Common Stock, and other amounts payable pursuant to this
Section 7.
All shares of Common Stock delivered upon conversion of the Series B
Preferred Stock will, upon delivery, be duly and validly authorized and
issued, fully paid and nonassessable, free from all preemptive rights
and free from all taxes, liens, security interests and charges (other
than liens or charges created by or imposed upon the holder or taxes in
respect of any transfer occurring contemporaneously therewith).
(iii) Holders of shares of Series B Preferred Stock at the
close of business on a Dividend Payment Record Date shall be entitled
to receive the dividend payable on such shares on the corresponding
Dividend Payment Date notwithstanding the conversion thereof following
such Dividend Payment Record Date and prior to such Dividend
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Payment Date. A holder of shares of Series B Preferred Stock on a
Dividend Payment Record Date who (or whose transferee) tenders any such
shares for conversion into shares of Common Stock on before the
corresponding Dividend Payment Date will receive the dividend payable
by the Corporation on such shares of Series B Preferred Stock if and
when paid, and the converting holder need not include payment of the
amount of such dividend upon surrender of shares of Series B Preferred
Stock for conversion.
(iv) The Corporation will at all times reserve and keep
available, free from preemptive rights, out of its authorized but
unissued Common Stock, solely for the purpose of effecting conversions
of the Series B Preferred Stock, the aggregate number of shares of
Common Stock issuable upon conversion of the Series B Preferred Stock.
The Corporation will procure, at its sole expense, the listing of the
shares of Common Stock, subject to issuance or notice of issuance on
the principal domestic stock exchange or inter-dealer quotation system
on which the Common Stock is then listed or traded. The Corporation
will take all commercially reasonable action as may be necessary to
ensure that the shares of Common Stock may be issued without violation
of any applicable law or regulation or of any requirement of any
securities exchange or inter-dealer quotation system on which the
shares of Common Stock are listed or traded.
(v) Issuances of certificates for shares of Common Stock
upon conversion of the Series B Preferred Stock shall be made without
charge to the holder of shares of Series B Preferred Stock for any
issue or transfer tax (other than taxes in respect of any transfer
occurring contemporaneously therewith or as a result of the holder
being a non-U.S. person) or other incidental expense in respect of the
issuance of such certificates, all of which taxes and expenses shall be
paid by the Corporation; provided, however, that the Corporation shall
not be required to pay any tax which may be payable in respect of any
transfer involved in the issuance or delivery of shares of Common Stock
in a name other than that of the holder of the Series B Preferred Stock
to be converted, and no such issuance or delivery shall be made unless
and until the person requesting such issuance or delivery has paid to
the Corporation the amount of any such tax or has established, to the
satisfaction of the Corporation, that such tax has been paid.
(vi) In connection with the conversion of any shares of
Series B Preferred Stock, no fractions of shares of Common Stock shall
be issued, but in lieu thereof the Corporation shall pay a cash
adjustment in respect of such fractional interest in an amount equal to
such fractional interest multiplied by the Market Price per share of
Common Stock on the Conversion Date.
(vii) If fewer than all of the outstanding shares of Series
B Preferred Stock are to be converted pursuant to Section 7(a)(ii), the
shares shall be converted on a pro rata basis (according to the number
of shares of Series B Preferred Stock held by each holder, with any
fractional shares rounded to the nearest whole share or in such other
manner as the Board of Directors may determine, as may be prescribed by
resolution of the Board of Directors).
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(viii) Notwithstanding anything to the contrary in this
Certificate, if a notice of conversion has been given by the
Corporation pursuant to Section 7(b)(ii) and any holder of shares of
Series B Preferred Stock shall, prior to the close of business on the
Business Day preceding the Conversion Date, give written notice to the
Corporation pursuant to Section 6 as to the repurchase of any or all of
the shares to be converted held by the holder that would otherwise be
converted on such Conversion Date, then such conversion shall not
become effective as to such shares to be repurchased and such shares
shall be repurchased as provided in Section 6.
(c) Adjustments to Conversion Price. The Conversion Price
shall be adjusted from time to time as follows:
(i) Common Stock Issued at Less than Conversion Price. If
after the Original Issuance Date the Corporation issues or sells any
Common Stock (including any securities exercisable, exchangeable or
convertible into Common Stock) other than Excluded Stock (as defined
below) without consideration or for consideration per share (as
determined below) less than the Conversion Price in effect as of the
date of such issuance or sale, the Conversion Price in effect
immediately prior to each such issuance or sale will immediately be
reduced to the price determined by multiplying (A) the Conversion Price
at which shares of Series B Preferred Stock were theretofore
convertible by (B) a fraction of which the numerator shall be the sum
of (1) the number of shares of Common Stock Outstanding immediately
prior to such issuance or sale plus ---- (2) the number of additional
shares of Common Stock that the aggregate consideration received by the
Corporation for the number of shares of Common Stock (or the number of
shares of Common Stock issuable upon exercise, exchange or conversion)
so issued or sold would purchase at the Conversion Price per share of
Common Stock (or the number of shares of Common Stock issuable upon
exercise, exchange or conversion) in effect on the last trading day
immediately preceding such issuance or sale, and of which the
denominator shall be the sum of (3) the number of shares of Common
Stock Outstanding immediately prior to such issuance or sale, plus (4)
the number of additional shares of Common Stock (or the number ---- of
shares of Common Stock issuable upon exercise, exchange or conversion)
so issued. For the purposes of any adjustment of the Conversion Price
pursuant to this Section 7(c), the following provisions shall be
applicable:
(A) In the case of the issuance of Common Stock for cash,
the amount of the consideration received by the Corporation shall be
deemed to be the amount of the cash proceeds received by the
Corporation for such Common Stock before deducting therefrom any
discounts or commissions allowed, paid or incurred by the Corporation
for any underwriting or otherwise in connection with the issuance and
sale thereof.
(B) In the case of the issuance of Common Stock
(otherwise than upon the conversion of shares of Capital Stock or other
securities of the Corporation) for a consideration in whole or in part
other than cash, including securities acquired in exchange therefor
(other than securities by their terms so exchangeable), the
consideration other than cash shall be deemed to be the fair value
thereof as determined by the Board of Directors, provided, however,
that such fair value as determined by the Board of Directors shall not
exceed the aggregate Market Price of the shares of Common
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Stock being issued as of the date the Board of Directors authorizes the
issuance of such shares.
(C) In the case of the issuance of (I) options, warrants
or other rights to purchase or acquire Common Stock (whether or not at
the time exercisable) or (II) securities by their terms convertible
into or exchangeable for Common Stock (whether or not at the time so
convertible or exchangeable) or options, warrants or rights to purchase
such convertible or exchangeable securities (whether or not at the time
exercisable):
(1) the aggregate maximum number of shares of
Common Stock deliverable upon exercise of such options,
warrants or other rights to purchase or acquire Common Stock
shall be deemed to have been issued at the time such options,
warrants or rights are issued and for a consideration equal to
the consideration (determined in the manner provided in
Section 7(c)(i) (A) and (B), if any, received by the
Corporation upon the issuance of such options, warrants or
rights plus the minimum purchase price provided in such
options, warrants or rights for the Common Stock covered
thereby;
(2) the aggregate maximum number of shares of
Common Stock deliverable upon conversion of or in exchange for
any such convertible or exchangeable securities, or upon the
exercise of options, warrants or other rights to purchase or
acquire such convertible or exchangeable securities and the
subsequent conversion or exchange thereof, shall be deemed to
have been issued at the time such securities were issued or
such options, warrants or rights were issued and for a
consideration equal to the consideration, if any, received by
the Corporation for any such securities and related options,
warrants or rights (excluding any cash received on account of
accrued interest or accrued dividends), plus the additional
consideration (determined in the manner provided in Section
7(c)(i) (A) and (B), if any, to be received by the Corporation
upon the conversion or exchange of such securities, or upon
the exercise of any related options, warrants or rights to
purchase or acquire such convertible or exchangeable
securities and the subsequent conversion or exchange thereof;
(3) on any change in the number of shares of
Common Stock deliverable upon exercise of any such options,
warrants or rights or conversion or exchange of such
convertible or exchangeable securities or any change in the
consideration to be received by the Corporation upon such
exercise, conversion or exchange, but excluding changes
resulting from the anti-dilution provisions thereof (to the
extent comparable to the anti-dilution provisions contained
herein), the Conversion Price as then in effect shall
forthwith be readjusted to such Conversion Price as would have
been obtained had an adjustment been made upon the issuance of
such options, warrants or rights not exercised prior to such
change, or of such convertible or exchangeable securities not
converted or exchanged prior to such change, upon the basis of
such change;
(4) on the expiration or cancellation of any
such options, warrants or rights (without exercise), or the
termination of the right to convert or exchange
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such convertible or exchangeable securities (without
exercise), if the Conversion Price shall have been adjusted
upon the issuance thereof, the Conversion Price shall
forthwith be readjusted to such Conversion Price as would have
been obtained had an adjustment been made upon the issuance of
such options, warrants, rights or such convertible or
exchangeable securities on the basis of the issuance of only
the number of shares of Common Stock actually issued upon the
exercise of such options, warrants or rights, or upon the
conversion or exchange of such convertible or exchangeable
securities; and
(5) if the Conversion Price shall have been
adjusted upon the issuance of any such options, warrants,
rights or convertible or exchangeable securities, no further
adjustment of the Conversion Price shall be made for the
actual issuance of Common Stock upon the exercise, conversion
or exchange thereof.
(ii) Stock Splits, Subdivisions, Reclassifications or
Combinations. If the Corporation shall (A) declare a dividend or make a
distribution on its Common Stock in shares of Common Stock, (B)
subdivide or reclassify the outstanding shares of Common Stock into a
greater number of shares, or (C) combine or reclassify the Outstanding
Common Stock into a smaller number of shares, the Conversion Price in
effect at the time of the record date for such dividend or distribution
or the effective date of such subdivision, combination or
reclassification shall be adjusted to the number obtained by
multiplying the Conversion Price at which the shares of Series B
Preferred Stock were theretofore convertible by a fraction, the
numerator of which shall be the number of shares of Common Stock
Outstanding immediately prior to such action, and the denominator of
which shall be the number of shares of Common Stock Outstanding
immediately following such action.
(iii) Other Distributions. In case the Corporation shall
fix a record date for the making of a distribution to all holders of
shares of its Common Stock (A) of shares of any class or of any Person
(as defined below) other than shares of Common Stock or (B) of evidence
of indebtedness of the Corporation or any Subsidiary (as defined below)
or (C) of assets (excluding Ordinary Cash Dividends (as defined below),
and dividends or distributions referred to in Section 7(c)(ii)), or (D)
of rights or warrants (excluding any rights or warrants referred to in
Section 7(c)(i)), in each such case the Conversion Price in effect
immediately prior thereto shall be reduced immediately thereafter to
the price determined by multiplying (1) the Conversion Price in effect
immediately prior thereto by (2) a fraction, the numerator of which
shall be the Market Price per share of Common Stock on such record date
less the then fair market value (as determined by the Board of
Directors, whose good faith determination shall be conclusive) as of
such record date of the shares, assets, evidences of indebtedness,
rights or warrants so paid with respect to one share of Common Stock,
and the denominator of which shall be the Market Price per share of
Common Stock on such record date; provided, however, that in the event
the then fair market value (as so determined) so paid with respect to
one share of Common Stock is equal to or greater than the Market Price
per share of Common Stock on such record date, in lieu of the foregoing
adjustment, adequate provision shall be made so that each holder of
shares of Series B Preferred Stock shall have the right to receive the
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amount and kind of shares, assets, evidences of indebtedness, rights or
warrants such holder would have received had such holder converted each
such share of Series B Preferred Stock immediately prior to record date
for such distribution. In the event that such distribution is not so
made, the Conversion Price then in effect shall be readjusted,
effective as of the date when the Board of Directors determines not to
distribute such shares, evidences of indebtedness, assets, rights or
warrants, as the case may be, to the Conversion Price that would then
be in effect if such record date had not been fixed.
(iv) Business Combinations. In case of any Business
Combination or reclassification of Common Stock (other than a
reclassification of Common Stock referred to in Section 7(c)(ii)),
lawful provision shall be made as part of the terms of such Business
Combination or reclassification whereby the holder of each share of
Series B Preferred Stock then outstanding shall have the right
thereafter to convert such share only into the kind and amount of
securities, cash and other property receivable upon the Business
Combination or reclassification by a holder of the number of shares of
Common Stock of the Corporation into which a share of Series B
Preferred Stock would have been convertible immediately prior to the
Business Combination or reclassification. The Corporation, the Person
formed by the consolidation or resulting from the merger or which
acquires such assets or which acquires the Corporation's shares, as the
case may be, shall make provisions in its certificate or articles of
incorporation or other constituent documents to establish such rights
and to ensure that the dividend, voting and other rights of the holders
of Series B Preferred Stock established herein are unchanged, except as
permitted by Section 9 or as required by applicable law, rule or
regulation. The certificate or articles of incorporation or other
constituent documents shall provide for adjustments, which, for events
subsequent to the effective date of the certificate or articles of
incorporation or other constituent documents, shall be as nearly
equivalent as may be practicable to the adjustments provided for in
this Section 7. Notwithstanding the provisions of this Section
7(c)(iv), in the event of a Business Combination that also constitutes
a Change of Control, the provisions of Section 6 shall apply to such
Business Combination and the provisions of this Section 7(c)(iv) shall
not apply.
(v) Successive Adjustments. Successive adjustments in the
Conversion Price shall be made, without duplication, whenever any event
specified in Sections 7(c)(i), (ii), (iii) and (iv) shall occur.
(vi) Rounding of Calculations; Minimum Adjustments. All
calculations under this Section 7(c) shall be made to the nearest
one-tenth (1/10th) of a cent. No adjustment in the Conversion Price is
required if the amount of such adjustment would be less than $0.01;
provided, however, that any adjustments which by reason of this Section
7(c)(vi) are not required to be made will be carried forward and given
effect in any subsequent adjustment.
(vii) Adjustment for Unspecified Actions. If the
Corporation takes any action affecting the Common Stock, other than
action described in this Section 7(c), which in the opinion of the
Board of Directors would materially adversely affect the conversion
rights of the holders of shares of Series B Preferred Stock, the
Conversion Price may be adjusted, to the extent permitted by law, in
such manner, if any, and at such time, as such
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Board of Directors may determine in good faith to be equitable in the
circumstances; provided, however, that in no event shall adjustment
have the effect of increasing the Conversion Price as otherwise
determined pursuant to any of the provisions of this Section 7(c),
except in the case of a combination of shares of a type contemplated in
Section 7(c)(ii), and then in no event to an amount more than the
Conversion Price as adjusted pursuant to Section 7(c)(ii). Failure of
the Board of Directors to provide for any such adjustment prior to the
effective date of any such action by the Corporation affecting the
Common Stock will be evidence that the Board of Directors has
determined that it is equitable to make no adjustments in the
circumstances.
(viii) Voluntary Adjustment by the Corporation. The
Corporation may at its option, at any time during the term of the
Series B Preferred Stock, reduce the then current Conversion Price to
any amount deemed appropriate by the Board of Directors; provided,
however, that if the Corporation elects to make such adjustment, such
adjustment will remain in effect for at least a 15-day period, after
which time the Corporation may, at its option, reinstate the Conversion
Price in effect prior to such reduction, subject to any interim
adjustments pursuant to this Section 7(c).
(ix) Statement Regarding Adjustments. Whenever the
Conversion Price shall be adjusted as provided in this Section 7(c),
the Corporation shall forthwith file, at the principal office of the
Corporation, a statement showing in reasonable detail the facts
requiring such adjustment and the Conversion Price that shall be in
effect after such adjustment and the Corporation shall also cause a
copy of such statement to be sent by mail, first class postage prepaid,
to each holder of shares of Series B Preferred Stock at the address
appearing in the Corporation's records.
(x) Notices. In the event that the Corporation shall give
notice or make a public announcement to the holders of Common Stock of
any action of the type described in this Section 7(c) (but only if the
action of the type described in this Section 7(c) would result in an
adjustment in the Conversion Price or a change in the type of
securities or property to be delivered upon conversion of the Series B
Preferred Stock), the Corporation shall, at the time of such notice or
announcement, and in the case of any action which would require the
fixing of a record date, at least 10 days prior to such record date,
give notice to the holder of shares of Series B Preferred Stock, in the
manner set forth in Section 7(c)(ix), which notice shall specify the
record date, if any, with respect to any such action and the
approximate date on which such action is to take place. Such notice
shall also set forth the facts with respect thereto as shall be
reasonably necessary to indicate the effect on the Conversion Price and
the number, kind or class of shares or other securities or property
which shall be deliverable upon conversion of the Series B Preferred
Stock. Failure to give such notice, or any defect therein, shall not
affect the legality or validity of any such action.
(xi) Purchase Rights. If at any time or from to time after
the Original Issuance Date, the Corporation shall grant, issue or sell
any (I) options, warrants or other rights to purchase or acquire Common
Stock (other than Excluded Stock), (II) securities by their terms
convertible into or exchangeable for Common Stock (other than Excluded
Stock) or options, warrants or other rights to purchase or acquire such
convertible or
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exchangeable securities or (III) rights to purchase property
(collectively, the "PURCHASE RIGHTS") pro rata to the record holders of
any class of Common Stock and such grants, issuance or sales do not
result in an adjustment of the Conversion Price under Section 7(c),
then each holder of Series B Preferred Stock shall be entitled to
acquire (within thirty (30) days after the later to occur of the
initial exercise date of such Purchase Rights or receipt by such holder
of the notice concerning Purchase Rights to which such holder shall be
entitled under Section 7(c)(x)) and upon the terms applicable to such
Purchase Rights either:
(A) the aggregate Purchase Rights which such holder could
have acquired if it had held the number of shares of Common Stock
acquirable upon conversion of the Series B Preferred Stock immediately
before the grant, issuance or sale of such Purchase Rights; provided
that if any Purchase Rights were distributed to holders of Common Stock
without the payment of additional consideration by such holders,
corresponding Purchase Rights shall be distributed to the exercising
holders of the Series B Preferred Stock as soon as possible after such
exercise and it shall not be necessary for the exercising holder of the
Series B Preferred Stock specifically to request delivery of such
rights; or
(B) in the event that any such Purchase Rights shall have
expired or shall expire prior to the end of said thirty (30) day
period, the number of shares of Common Stock or the amount of property
which such holder could have acquired upon such exercise at the time or
times at which the Corporation granted, issued or sold such expired
Purchase Rights.
(xii) Miscellaneous. Except as provided in Section 7(c), no
adjustment in respect of any dividends or other payments or
distributions made to holders of Series B Preferred Stock of securities
issuable upon the conversion of the Series B Preferred Stock will be
made during the term of the Series B Preferred Stock or upon the
conversion of the Series B Preferred Stock. In addition,
notwithstanding any of the foregoing, no such adjustment will be made
for the issuance or exercise of the Warrants (as defined below).
8. STATUS OF SHARES. All shares of Series B Preferred
Stock that are at any time redeemed pursuant to Section 5, repurchased pursuant
to Section 6 or converted pursuant to Section 7 and all shares of Series B
Preferred Stock that are otherwise reacquired by the Corporation shall (upon
compliance with any applicable provisions of the laws of the State of Delaware)
have the status of authorized but unissued shares of Preferred Stock, without
designation as to series, subject to reissuance by the Board of Directors as
shares of any one or more other series.
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9. VOTING RIGHTS.
(a) The holders of record of shares of Series B Preferred
Stock shall not be entitled to any voting rights except as hereinafter provided
in this Section 9 or as otherwise provided by law.
(b) The holders of the shares of Series B Preferred Stock
(i) shall be entitled to vote with the holders of the Common Stock on all
matters submitted for a vote of holders of Common Stock (voting together with
the holders of Common Stock as one class), (ii) shall be entitled to a number of
votes equal to the number of votes to which shares of Common Stock issuable upon
conversion of such shares of Series B Preferred Stock would have been entitled
if such shares of Common Stock had been outstanding at the time of the
applicable vote and related record date and (iii) shall be entitled to notice of
any stockholders' meeting in accordance with the certificate of incorporation
and bylaws of the Corporation; provided, however, that solely for purposes of
subsection (ii) above, the Conversion Price used to determine the number of
shares of Common Stock issuable upon conversion of such shares of Series B
Preferred Stock shall be deemed to be $_[an amount equal to the lesser of (a)
$1.26 (the Market Price on the date the Purchase Agreement was executed) and
(b)(i) in the event the Market Price on the Original Issue Date is greater than
$1.15, then such Market Price or (ii) in the event the Market Price on the
Original Issue Date is less than or equal to $1.15, then the initial Conversion
Price (as revised in accordance with the formula set forth in the definition of
"Series B Preferred Certificate of Designations" in the Purchase Agreement)]
(the "Deemed Conversion Price"), subject to adjustment as provided in Section
7(c), provided, further, however, that the Deemed Conversion Price shall not be
adjusted pursuant to Section 7(c)(i) below the Market Price on the Original
Issue Date. For the avoidance of doubt, the Deemed Conversion Price shall not
affect any other provision of this Certificate and shall have no application
following the conversion of shares of Series B Preferred Stock pursuant to
Section 7 hereof.
(c) So long as any shares of Series B Preferred Stock are
outstanding, the Corporation shall not, without the written consent or
affirmative vote at a meeting called for that purpose by holders of at least a
majority of the outstanding shares of Series B Preferred Stock, voting as a
single class:
(i) amend, alter or repeal any provision of the
Corporation's certificate of incorporation (by merger or otherwise) or
bylaws so as to adversely affect the preferences, rights or powers of
the Series B Preferred Stock; provided that any such amendment,
alteration or repeal to create, authorize or issue any Junior
Securities, or any security convertible into, or exchangeable or
exercisable for, shares of Junior Securities, shall not be deemed to
have any such adverse effect;
(ii) create, authorize or issue any Senior Securities or
Parity Securities, or any security convertible into, or exchangeable or
exercisable for, shares of Senior Securities or Parity Securities;
(iii) repurchase or redeem any of its equity securities or
rights to acquire equity securities (other an from an employee,
director or consultant following the termination of employment or
service with the Corporation of such Person);
(iv) declare or pay any dividend on the Common Stock; or
(v) for so long as the Corporation is entitled to
exercise its Call Right pursuant to Section 2.3 of the Purchase
Agreement, sell or offer to sell any equity security, any security
convertible into or exercisable for such class or series of equity
securities or any right to purchase or otherwise acquire any of the
foregoing, the price of which, on an as-converted and as-exercised
basis, is an amount equal to or less than 65% of the Conversion Price
in effect on either the date of the sale or of the offer to sell;
provided that no such consent or vote of the holders of Series B Preferred Stock
shall be required if at or prior to the time when such amendment, alteration or
repeal is to take effect, or when the issuance of any such securities is to be
made, as the case may be, all shares of Series B Preferred Stock at the time
outstanding shall have been called for redemption by the Corporation or
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submitted for repurchase by the holders thereof in accordance with Section 5 or
Section 6, as the case may be, and the funds necessary for such redemption or
repurchase shall have been set aside.
(d) The consent or votes required in Section 9(c) shall
be in addition to any approval of stockholders of the Corporation which may be
required by law or pursuant to any provision of the Corporation's certificate of
incorporation or bylaws, which approval shall be obtained by vote of the
stockholders of the Corporation in the manner provided in Section 9(b).
(e) As provided in Section 5.4 of the Purchase Agreement,
so long as each Warburg and Broadview Beneficially Owns at least twenty-five
percent (25%) of the shares of the Series B Preferred Stock issued to it each
Purchaser pursuant to the Purchase Agreement (including as owned and outstanding
for this purpose shares of Common Stock issuable upon conversion of the shares
of Series B Preferred Stock and upon exercise of the Warrants issued hereunder
but excluding the shares of Series B Preferred Stock issuable upon the Company's
Call Right), Warburg and Broadview shall each have the exclusive right to
appoint one (1) director (each, a "BOARD DESIGNEE") to the Board of Directors.
The Board Designees shall be duly appointed in accordance with the Corporation's
bylaws, Certificate of Incorporation and the General Corporation Law of
Delaware. Each of the Board Designees so elected shall serve for a term of three
years as a Class [II] Director (as designated in the Corporation's Certificate
of Incorporation) and until his or her successor is elected and qualified. For
so long as such membership does not conflict with any applicable law or
regulation or listing requirement of the Nasdaq National Market (as determined
in good faith by the Board of Directors of the Corporation), each Board Designee
shall serve as a member of the Audit Committee, Compensation Committee and each
other principal committee of the Board of Directors for so long as such
membership does not conflict with any applicable law or regulation or listing
requirement of the Nasdaq National Market (as determined in good faith by the
Corporation's Board of Directors). Any vacancy in the position of the Board
Designee appointed by Warburg and the Board Designee appointed by Broadview may
be made only by Warburg or Broadview, respectively. The Board Designee appointed
by Warburg and the Board Designee appointed by Broadview may, during his or her
term of office, be removed at any time, with or without cause, by and only by
Warburg and Broadview, respectively, at a special meeting called for such
purpose or by written consent of Warburg or Broadview, respectively. Any vacancy
created by such removal may also be filled at such meeting or by such consent.
Warburg's entitlement to appoint its Board Designee pursuant to this Section
9(e) shall be in addition to Warburg's rights under Section 9(e) of the
"Certificate of Designations, Preferences and Rights of Series A Convertible
Preferred Stock of Proxim Corporation" filed with the Secretary of State of the
State of Delaware on August 5, 2002.
10. DEFINITIONS.
Unless the context otherwise requires, when used herein the
following terms shall have the meaning indicated.
"Affiliate" means with respect to any Person, any other Person
directly, or indirectly through one or more intermediaries, controlling,
controlled by or under common control with such Person. For purposes of this
definition, the term "control" (and correlative
-16-
terms "controlling," "controlled by" and "under common control with") means
possession of the power, whether by contract, equity ownership or otherwise, to
direct the policies or management of a Person.
"Beneficially Own" or "Beneficial Ownership" is defined 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.
"Broadview" means Broadview Capital Partners, L.P., Broadview
Capital Partners Qualified Purchaser Fund L.P. and Broadview Capital Partners
Affiliates Fund L.L.C.
"Business Combination" means (a) any reorganization,
consolidation, merger, share exchange or similar business combination
transaction involving the Corporation with any Person or (b) the sale,
assignment, conveyance, transfer, lease or other disposition by the Corporation
of all or substantially all of its assets.
"Business Day" means any day except a Saturday, Sunday or day
on which the institutions are legally authorized to close in the City of New
York.
"Call Right" has the meaning ascribed to it in the Purchase
Agreement.
"Capital Stock" means (a) with respect to any Person that is a
corporation or company, any and all shares, interests, participations or other
equivalents (however designated) of capital or capital stock of such Person and
(b) with respect to any Person that is not a corporation or company, any and all
partnership or other equity interests of such Person.
"Change of Control " means the happening of any of the
following events:
(a) The acquisition by any Person of Beneficial Ownership
of 50% or more of either (i) the then-outstanding shares of Common Stock (the
"Outstanding Corporation Common Stock") or (ii) the combined voting power of the
then-outstanding voting securities of the Corporation entitled to vote generally
in the election of directors (the "Outstanding Corporation Voting Securities");
provided, however, that, for purposes of this definition, the following
acquisitions shall not constitute a Change of Control: (A) any acquisition by
any employee benefit plan (or related trust) sponsored or maintained by the
Corporation or any company that is an Affiliate of the Corporation or (B) any
acquisition by any corporation pursuant to a transaction that complies with
(c)(i) and (c)(ii) in this definition; or
(b) Individuals who, as of the date hereof and including
the designees of Warburg and Broadview, constitute the Board of Directors (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board of Directors; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Corporation's shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board; or
(c) Consummation of a Business Combination, in each case,
unless, following such Business Combination, (i) all or substantially all of the
Persons that were the Beneficial
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Owners of the Outstanding Corporation Common Stock and the Outstanding
Corporation Voting Securities immediately prior to such Business Combination
Beneficially Own, directly or indirectly, more than 50% of the then-outstanding
shares of common stock and the combined voting power of the then-outstanding
voting securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation that, as a result of such
transaction, owns the Corporation or all or substantially all of the
Corporation's assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership immediately prior to such
Business Combination of the Outstanding Corporation Common Stock and the
Outstanding Corporation Voting Securities, as the case may be, and (ii) no
Person (excluding any Person resulting from such Business Combination or any
employee benefit plan (or related trust) of the Corporation or such corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, 50% or more of, respectively, the then-outstanding shares of common
stock of the corporation resulting from such Business Combination or the
combined voting power of the then-outstanding voting securities of such
corporation; or
(d) Approval by the shareholders of the Corporation of a
complete liquidation or dissolution of the Corporation.
"Common Stock" means the Class A Common Stock of the
Corporation, par value $.01 per share.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute, and the rules and regulations promulgated
thereunder.
"Excluded Stock" means (a) shares of Common Stock issued by
the Corporation as a stock dividend payable in shares of Common Stock, or upon
any subdivision or split-up of the outstanding shares of Capital Stock, in each
case which is subject to the provisions of Section 7(c)(ii), or upon conversion
of shares of Capital Stock (but not the issuance of such Capital Stock which
will be subject to the provisions of Section 7(c)(i)(C)), (b) the issuance of
shares of Common Stock in any Qualified Public Offering, (c) the issuance of
shares of Common Stock (including upon exercise of options, warrants or other
securities) to directors, advisors, employees or consultants of the Corporation
pursuant to a stock option plan, restricted stock plan or other agreement
approved by the Board of Directors, (d) the issuance of shares of Common Stock
in connection with acquisitions of assets or securities of another Person, (e)
the issuance of shares of Common Stock upon exercise of the Series B Preferred
Stock and the Warrants and (f) the issuance of any additional Warrants.
"Market Price" means, with respect to a particular security,
on any given day, the average of the highest and lowest reported sale prices
regular way or, in case no such reported sales takes place on such day, the
average of the highest asked and lowest bid prices regular way, in either case
on the principal national securities exchange on which the applicable securities
are listed or admitted to trading, or if not listed or admitted to trading on
any national securities exchange, (a) the average of the highest and lowest sale
prices for such day reported by the Nasdaq Stock Market if such security is
traded over-the-counter and quoted in the Nasdaq Stock Market, or (b) if such
security is so traded, but not so quoted, the average of the highest reported
asked and lowest reported bid prices of such security as reported by the Nasdaq
Stock Market or
-18-
any comparable system, or (c) if such security is not listed on the Nasdaq Stock
Market or any comparable system, the average of the highest asked and lowest bid
prices as furnished by two members of the National Association of Securities
Dealers, Inc. selected from time to time by the Corporation for that purpose. If
such security is not listed and traded in a manner that the quotations referred
to above are available for the period required hereunder, the Market Price per
share of Common Stock shall be deemed to be the fair value per share of such
security as determined in good faith by the Board of Directors.
"Ordinary Cash Dividends" means any cash dividend or cash
distribution which, when combined on a per share of Common Stock basis with the
per share amounts of all other cash dividends and cash distributions paid on the
Common Stock during the 365-day period ending on the Dividend Payment Record
Date of such dividend or distribution (as adjusted to appropriately reflect any
of the events referred to in Section 7(c) and excluding (i) cash dividends or
cash distributions that resulted in an adjustment to the Conversion Price, (ii)
cash dividends paid on the Common Stock in which the Preferred Stock
participates, and (iii) cash dividends or cash distributions paid on the Series
B Preferred Stock), does not exceed 15% of the Market Price of a share of Common
Stock on the trading day immediately preceding the date of declaration of such
dividend or distribution.
"Original Issue Date" means the date upon which the initial
shares of Series B Preferred Stock were originally issued by the Corporation.
"Outstanding" means, at any time, the number of shares of
Common Stock then outstanding calculated on a fully diluted basis, assuming the
exercise, exchange or conversion into Common Stock of all outstanding securities
exercisable, exchangeable or convertible into shares of Common Stock (whether or
not then exercisable, exchangeable or convertible).
"Person" means an individual, corporation, partnership, other
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act).
"Purchase Agreement" means the Purchase Agreement, dated as of
July 22,2003, among the Corporation and the purchasers named therein, including
all schedules and exhibits thereto.
"Purchaser" has the meaning ascribed to it in the Purchase
Agreement.
"Qualifying Change of Control" means a Change of Control
following the consummation of which the value of the consideration (in the form
of cash or liquid securities) that would be received upon conversion of one
share of Series B Preferred Stock (the "As-Converted Consideration") would equal
or exceed 110% of the Liquidation Value then in effect (after taking into
account any increase in the Liquidation Value as a result of such Change of
Control ) (the "Value Threshold"); provided, that a Change of Control will also
constitute a Qualifying Change of Control if the Corporation, at its option,
reduces the Conversion Price then in effect in order to make the As-Converted
Consideration equal or exceed the Value Threshold.
"Qualified Public Offering" means a public or private offering
of the shares of Common Stock pursuant to an effective registration statement,
pursuant to which the gross proceeds to the Corporation are not less than
$20,000,000.
-19-
"Series A Preferred Stock" means the Series A Convertible
Preferred Stock of the Corporation, par value $.01 per share.
"Subsidiary" of a Person means (a) a corporation, a majority
of whose stock with voting power, under ordinary circumstances, to elect
directors is at the time of determination, directly or indirectly, owned by such
Person or by one or more Subsidiaries of such Person, or (b) any other entity
(other than a corporation) in which such Person or one or more Subsidiaries of
such Person, directly or indirectly, at the date of determination thereof has at
least a majority ownership interest.
"Warburg" means Warburg Pincus Private Equity VIII, L.P. and
its Affiliates
"Warrants" means collectively the warrants which are issuable
to the purchasers named in the Purchase Agreement pursuant to the Purchase
Agreement.
11. NO OTHER RIGHTS.
The shares of Series B Preferred Stock shall not have any
relative, optional or other special rights and powers except as set forth herein
or as may be required by law.
This Certificate shall become effective at 8:30 a.m. Eastern
Standard Time on _________ ___, 2003.
[Signature Page Follows]
-20-
IN WITNESS WHEREOF, the Corporation has caused this
Certificate to be duly executed and acknowledged by its undersigned duly
authorized officer this __ day of _________, 2003.
PROXIM CORPORATION
By: ____________________________________
Name:
Title:
EXHIBIT D
THE SECURITIES REPRESENTED BY THIS WARRANT AND THE SECURITIES ISSUABLE UPON
EXERCISE 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 EXEMPTION FROM REGISTRATION UNDER SUCH 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.
WARRANT
No. ___ _________, 2003
TO PURCHASE SHARES OF CLASS A COMMON STOCK, PAR VALUE $.01
PER SHARE, OF PROXIM CORPORATION
1. Definitions. Unless the context otherwise requires,
when used herein the following terms shall have the meaning indicated.
"Acquiror" has the meaning given to it in Exhibit A hereto.
"Acquiror's Share Price" has the meaning given to it in
Exhibit A hereto.
"Affiliate" means with respect to any Person, any other Person
directly, or indirectly through one or more intermediaries, controlling,
controlled by or under common control with such Person. For purposes of this
definition, the term "control" (and correlative terms "controlling," "controlled
by" and other "under common control with") means possession of the power,
whether by contract, equity ownership or otherwise, to direct the policies or
management of a Person.
"Board" means the Board of Directors of the Company.
"Business Combination" means (a) any reorganization,
consolidation, merger, share exchange or similar business combination
transaction involving the Company with any Person or (b) the sale, assignment,
conveyance, transfer, lease or other disposition by the Company of all or
substantially all of its assets.
"Business Day" means any day except Saturday, Sunday and any
day which shall be a legal holiday or a day on which banking institutions in New
York City, New York generally are authorized or required by law or other
governmental actions to close.
"Capital Stock" means (a) with respect to any Person that is a
corporation or company, any and all shares, interests, participations or other
equivalents (however designated) of capital or capital stock of such Person and
(b) with respect to any Person that is not a corporation or company, any and all
partnership or other equity interests of such Person.
"Cashless Exercise" has the meaning given to it in Section
3(A)(b)(ii).
"Certificate of Designations" means the Certificate of
Designations, Preferences and Rights of Series B Convertible Preferred Stock of
the Company, filed with the Secretary of State of the State of Delaware on
____________ ___, 2003.
"Change of Control" has the meaning given to it in the
Certificate of Designations.
"Common Stock" means the Company's Class A Common Stock, par
value $.01 per share.
"Company" means Proxim Corporation, a Delaware corporation.
"Company's Share Price" has the meaning given to it in Exhibit
A hereto.
"Company's Stock Price" has the meaning given to it in Exhibit
A hereto.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute, and the rules and regulations promulgated
thereunder.
"Excluded Stock" means (a) shares of Common Stock issued by
the Company as a stock dividend payable in shares of Common Stock, or upon any
subdivision or split-up of the outstanding shares of Capital Stock, in each case
which is subject to Section 13(B), or upon conversion of shares of Capital Stock
(but not the issuance of such Capital Stock which will be subject to the
provisions of Section 13(A) (iii)), (b) the issuance of shares of Common Stock
in any Qualified Public Offering, (c) the issuance of shares of Common Stock
(including upon exercise of options, warrants or other securities) to directors,
advisors, employees or consultants of the Company pursuant to a stock option
plan, employee stock purchase plan, restricted stock plan or other agreement
approved by the Board, (d) the issuance of shares of Common Stock in connection
with acquisitions of assets or securities of another Person (other than
issuances to Affiliates of the Company), (e) the issuance of shares of Common
Stock upon conversion of the Preferred Stock or the Series A Preferred Stock,
(f) the issuance of shares of Common Stock upon exercise of the Existing
Warrants (as defined in the Purchase Agreement)or the Warrants (including
Warrants issued after the date hereof) and (g) the issuance of any Warrants
issued after the date hereof.
"Exercise Price" has the meaning given to it in Section 2
herein.
"Expiration Date" has the meaning given to it in Section 3(A)
herein.
"Initiation Date" has the meaning given to it in Exhibit A
hereto.
"Market Price" means, with respect to a particular security,
on any given day, the average of the highest and lowest reported sale prices
regular way or, in case no such reported sales takes place on such day, the
average of the highest asked and lowest bid prices regular way, in either case
on the principal national securities exchange on which the applicable securities
are listed or admitted to trading, or if not listed or admitted to trading on
any national securities exchange, (a) the average of the highest and lowest sale
prices for such day reported by the Nasdaq Stock Market if such security is
traded over-the-counter and quoted in the Nasdaq Stock Market, or (b) if such
security is so traded, but not so quoted, the average of the highest reported
asked and lowest reported bid prices of such security as reported by the Nasdaq
Stock Market or any comparable system, or (c) if such security is not listed on
the Nasdaq Stock Market or any comparable system, the average of the highest
asked and lowest bid prices as furnished by two members of the National
Association of Securities Dealers, Inc. selected from time to time by the
Company for that purpose. If such security is not listed and traded in a manner
that the quotations referred to above are available for the period required
hereunder, the Market Price per share of Common Stock shall be deemed to be the
fair value per share of such security as determined in good faith by the Board.
"Nasdaq" has the meaning given to it in the Purchase
Agreement.
"Ordinary Cash Dividends" means any cash dividend or cash
distribution which, when combined on a per share of Common Stock basis with the
per share amounts of all other cash dividends and cash distributions paid on the
Common Stock during the 365-day period ending on the date of declaration of such
dividend or distribution (as adjusted to appropriately reflect any of the events
referred to in Section 13 and excluding (i) cash dividends or cash distributions
that resulted in an adjustment to the Exercise Price, (ii) cash dividends paid
on the Common Stock in which the Preferred Stock participates pursuant to
Section 3 of the Certificate of Designations and (ii) cash dividends or cash
distributions paid on the Preferred Stock), does not exceed 15% of the Market
Price of a share of Common Stock on the trading day immediately preceding the
date of declaration of such dividend or distribution.
"Original Issue Date" means the date on which the Warrants
were first issued.
"Outstanding" means, at any time, the number of shares of
Common Stock then outstanding calculated on a fully diluted basis, assuming the
exercise, exchange or conversion into Common Stock of all securities
exercisable, exchangeable or convertible into shares of Common Stock (whether or
not then exercisable, exchangeable or convertible).
"Qualified Public Offering" means a public or private offering
of the shares of Common Stock pursuant to an effective registration statement,
pursuant to which the gross proceeds to the Company are not less than
$20,000,000.
"Person" means an individual, corporation, partnership, other
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act).
"Preferred Stock" means the Series B Convertible Preferred
Stock of the Company or successor preferred stock as contemplated by the
Certificate of Designations.
"Purchase Agreement" means the Securities Purchase Agreement,
dated as of July __, 2003, among the Company and the purchasers named therein,
including all schedules and exhibits thereto.
"Securities Act" means the Securities Act of 1933, as amended,
or any successor statute, and the rules and regulations promulgated thereunder.
"Series A Preferred Stock" means the Series A Convertible
Preferred Stock of the Company, par value $0.01 per share.
"Shares" has the meaning given to it in Section 2 herein.
"Subsidiary" of a Person means (a) a corporation, a majority
of whose stock with voting power, under ordinary circumstances, to elect
directors is at the time of determination, directly or indirectly, owned by such
Person or by one or more Subsidiaries of such Person, or (b) any other entity
(other than a corporation) in which such Person or one or more Subsidiaries of
such Person, directly or indirectly, at the date of determination thereof has at
least a majority ownership interest.
"Trigger Date" has the meaning given to it in Exhibit A
hereto.
"Warrantholder" has the meaning given to it in Section 2
herein.
"Warrants" means collectively the warrants represented hereby
(and by any instrument replacing, in whole or in part, this instrument) which
were issued to the purchasers named in the Purchase Agreement pursuant to the
Purchase Agreement.
2. Number of Shares; Exercise Price. This certifies
that, for value received, [ ] or its registered assigns (the
"Warrantholder") is entitled, upon the terms and subject to the conditions
hereinafter set forth, to acquire from the Company, in whole or in part, up to
an aggregate of _________ fully paid and nonassessable shares of Common Stock
(the "Shares") of the Company, at a per Share purchase price (the "Exercise
Price") equal to $1.46. The number and type of Shares and the Exercise Price are
subject to adjustment as provided herein, and all references to "Shares,"
"Common Stock" and "Exercise Price" herein shall be deemed to include any such
adjustment or series of adjustments.
3. Exercise Rights.
(A) Exercise of Warrant; Term. The right to purchase the
Shares represented by this Warrant is exercisable, in whole or in part, by the
Warrantholder, at any time or from time to time but in no event later than 11:59
p.m. New York City Time, on ____________ ___, ______ [sixth anniversary of the
Second Closing Date] (the "Expiration Date"), by (a) the surrender of this
Warrant and Notice of Exercise annexed hereto, duly completed and executed on
behalf of the Warrantholder, at the office of the Company in Sunnyvale,
California (or such other office or agency of the Company in the United States
as it may designate by notice in writing to the Warrantholder at the address of
the Warrantholder appearing on the books of the Company), and (b) payment of the
Exercise Price for the Shares thereby purchased at the election of the
Warrantholder in one or a combination of the following manners:
(i) by tendering in cash, by certified or cashier's check
or by wire transfer payable to the order of the Company; or
(ii) by having the Company withhold shares of Common Stock
issuable upon exercise of this Warrant equal in value to the aggregate
Exercise Price as to which this Warrant is so exercised based on the
Market Price of the Common Stock on the trading day prior to the date
on which this Warrant and the Notice of Exercise are delivered to the
Company (a "Cashless Exercise").
(B) Replacement of Warrant. If the exercising (or
selling, as the case may be) Warrantholder does not exercise (or sell, as the
case may be) this Warrant in its entirety, the Warrantholder will be entitled to
receive from the Company within a reasonable time, not exceeding five (5)
Business Days, a new warrant in substantially identical form for the purchase of
that number of Shares equal to the difference between the number of Shares
subject to this Warrant and the number of Shares as to which this Warrant is so
exercised (or sold, as the case may be).
(C) Notwithstanding anything to the contrary contained
herein, if the Holder shall have given the Company written notice or its
intention to exercise this Warrant on or before 11:59 p.m., New York City time
on the Expiration Date, the Holder may exercise this Warrant at any time through
(and including) the Business Day next following the date that all applicable
required regulatory holding periods have expired and all applicable required
governmental approvals have been obtained in connection with such exercise of
this Warrant.
(D) Notwithstanding anything to the contrary contained
herein, this Warrant shall be automatically exercised on the Expiration Date,
without action required on the part of the Warrantholder (except as hereinafter
provided), for the Shares in the event the Market Price exceeds the Exercise
Price on the close of business on the Expiration Date. Upon notice by the
Company, the Warrantholder shall immediately surrender the Warrant at the office
of the Company in Sunnyvale, California (or such other office or agency of the
Company in the United States as it may designate by notice in writing to the
Warrantholder at the address of the Warrantholder appearing on the books of the
Company). Any such exercise of the Warrant shall be made through a Cashless
Exercise.
4. Issuance of Shares; Authorization; Listing. The
Company hereby represents and warrants that any Shares issued upon the exercise
of this Warrant in accordance with the provisions of Section 3 will, upon
issuance and payment therefor, be duly and validly authorized and issued, fully
paid and nonassessable, free from all preemptive rights and free from all taxes,
liens, security interests and charges (other than liens or charges created by or
imposed upon the Warrantholder or taxes in respect of any transfer occurring
contemporaneously therewith). Subject to the next sentence, certificates for
Shares issued upon exercise of this Warrant will be issued in such name or names
as the Warrantholder may designate and will be delivered to such named Person or
Persons within a reasonable time, not to exceed five (5) Business Days after the
date on which this Warrant has been duly exercised in accordance with the terms
of this Warrant. The Company agrees that the Shares so issued will be deemed to
have been issued to the Warrantholder as of the close of business on the date on
which this Warrant
and payment of the Exercise Price are delivered (or deemed delivered upon a
cashless exercise) to the Company in accordance with the terms of this Warrant,
notwithstanding that the stock transfer books of the Company may then be closed
or certificates representing such Shares may not be actually delivered on such
date. The Company will at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued Common Stock, solely for
the purpose of providing for the exercise of this Warrant, the aggregate number
of shares of Common Stock issuable upon exercise of this Warrant. The Company
will procure, at its sole expense, the listing of the Shares, subject to
issuance or notice of issuance on the principal domestic stock exchange or
inter-dealer quotation system on which the Common Stock is then listed or
traded. The Company will take all commercially reasonable action as may be
necessary to ensure that the Shares may be issued without violation of any
applicable law or regulation or of any requirement of any securities exchange on
which the Shares are listed or traded.
5. No Fractional Shares or Scrip. No fractional Shares
or scrip representing fractional Shares shall be issued upon any exercise of
this Warrant. In lieu of any fractional Share to which the Warrantholder would
otherwise be entitled, the Warrantholder shall be entitled to receive a cash
payment equal to the Market Price per share of Common Stock computed as of the
trading day immediately preceding the date the Warrant is presented for
exercise, multiplied by such fraction of a Share.
6. No Rights as Shareholders. This Warrant does not
entitle the Warrantholder to any voting rights or other rights as a shareholder
of the Company prior to the date of exercise hereof.
7. Charges, Taxes and Expenses. Issuance of certificates
for shares of Common Stock upon the exercise of this Warrant shall be made
without charge to the Warrantholder or such designated Persons for any issue or
transfer tax (other than taxes in respect of any transfer occurring
contemporaneously therewith or as a result of the holder being a non-U.S.
person) or other incidental expense in respect of the issuance of such
certificates, all of which taxes and expenses shall be paid by the Company;
provided, however, that the Company shall not be required to pay any tax which
may be payable in respect of any transfer involved in the issuance or delivery
of shares of Common Stock in a name other than that of the Warrantholder or such
designated Persons, and no such issuance or delivery shall be made unless and
until the person requesting such issuance or delivery has paid to the Company
the amount of any such tax or has established, to the satisfaction of the
Company, that such tax has been paid.
8. Transfer/Assignment. This Warrant and any rights
hereunder are not transferable by the Warrantholder, in whole or in part, in the
absence of any effective registration statement related to this Warrant or an
opinion of counsel, satisfactory in form and substance to the Company, that such
registration is not required under the Securities Act and any applicable state
securities laws. Subject to compliance with the preceding sentence, this Warrant
and all rights hereunder are transferable to an accredited investor, in whole or
in part, upon the books of the Company by the registered holder hereof in person
or by duly authorized attorney, and a new warrant shall be made and delivered by
the Company, of the same tenor as this Warrant but registered in the name of the
transferee, upon surrender of this Warrant, duly endorsed, to the office or
agency of the Company described in Section 3. All expenses, taxes (other than
stock transfer taxes or taxes imposed because the transferee is a non-U.S.
Person) and other charges
payable in connection with the preparation, execution and delivery of the new
warrants pursuant to this Section 8 shall be paid by the Company. The
restrictions imposed by the first sentence of this Section 8 shall terminate as
to the Warrant (i) when such security has been effectively registered under the
Securities Act and disposed of in accordance with the registration statement
covering such security, except with respect to securities held following such
disposition by Affiliates of the Company, or (ii) when, in the opinion of
counsel for the Company, such restrictions are no longer required in order to
achieve compliance with the Securities Act.
9. Exchange and Registry of Warrant. This Warrant is
exchangeable, upon the surrender hereof by the Warrantholder at the office or
agency of the Company described in Section 3, for a new warrant or warrants of
like tenor representing the right to purchase in the aggregate a like number of
Shares. The Company shall maintain at the office or agency described in Section
3 a registry showing the name and address of the Warrantholder as the registered
holder of this Warrant. This Warrant may be surrendered for exchange or
exercise, in accordance with its terms, at the office of the Company, and the
Company shall be entitled to rely in all respects, prior to written notice to
the contrary, upon such registry.
10. Loss, Theft, Destruction or Mutilation of Warrant. If
this Warrant is mutilated, lost, stolen or destroyed, the Company will issue and
deliver in substitution for and upon cancellation of the mutilated Warrant, or
in substitution for the Warrant lost, stolen or destroyed, a new warrant or
warrants of like tenor and representing an equivalent right or interest, but
only upon, in the case of a lost, stolen or destroyed certificate, receipt of
evidence satisfactory to the Company of such loss, theft or destruction. If
required by the Company, the Warrantholder shall furnish an indemnity bond
sufficient to protect the Company from any out-of-pocket loss which it may
suffer if a Warrant is replaced. The Company may charge the Warrantholder for
its reasonable expenses in replacing a Warrant.
11. Saturdays, Sundays, Holidays, etc. If the last or
appointed day for the taking of any action or the expiration of any right
required or granted herein shall not be a Business Day, then such action may be
taken or such right may be exercised on the next succeeding day that is a
Business Day.
12. Rule 144 Information. The Company covenants that it
will file the reports required to be filed by it under the Securities Act and
the Exchange Act and the rules and regulations promulgated thereunder (or, if
the Company is not required to file such reports, it will, upon the request of
any Warrantholder, make publicly available such information as is described in
Rule 144(c)(2) under the Securities Act). Upon the request of any Warrantholder,
the Company will deliver to such Warrantholder a written statement that it has
complied with such requirements.
13. Adjustments and Other Rights. The Exercise Price and
the number of Shares issuable upon exercise of this Warrant shall be subject to
adjustment from time to time as follows:
(A) Common Stock Issued at Less than Exercise Price. If
the Company issues or sells any Common Stock (including any securities
exercisable, exchangeable or convertible into Common Stock) other than Excluded
Stock without consideration or for consideration per
share (as determined below) less than the Exercise Price in effect as of the day
of such issuance or sale, the Exercise Price in effect immediately prior to each
such issuance or sale will immediately be reduced to the price determined by
multiplying the Exercise Price in effect immediately prior to such issuance or
sale, by a fraction, (1) the numerator of which shall be the sum of (w) the
number of shares of Common Stock Outstanding immediately prior to such issuance
or sale plus (x) the number of additional shares of Common Stock which the
aggregate consideration received by the Company for the total number of such
shares of Common Stock (or shares of Common Stock issuable upon exercise,
exchange or conversion) so issued or sold would purchase at the Exercise Price
in effect on the last trading day immediately preceding such issuance or sale,
and (2) the denominator of which shall be the sum of (y) the number of shares of
Common Stock Outstanding immediately prior to such issuance or sale plus (z) the
number of additional shares of Common Stock (or shares of Common Stock issuable
upon exercise, exchange or conversion) so issued or sold. In such event, the
number of shares of Common Stock issuable upon the exercise of this Warrant
shall be increased to the number obtained by dividing (i) the product of (a) the
number of Shares issuable upon the exercise of this Warrant before such
adjustment, and (b) the Exercise Price in effect immediately prior to the
issuance giving rise to this adjustment by (ii) the new Exercise Price
determined in accordance with the immediately preceding sentence. For the
purposes of any adjustment of the Exercise Price and the number of Shares
issuable upon exercise of this Warrant pursuant to this Section 13(A), the
following provisions shall be applicable:
(i) In the case of the issuance of Common Stock for cash,
the amount of the consideration received by the Company shall be deemed
to be the amount of the cash proceeds received by the Company for such
Common Stock before deducting therefrom any discounts or commissions
allowed, paid or incurred by the Company for any underwriting or
otherwise in connection with the issuance and sale thereof.
(ii) In the case of the issuance of Common Stock
(otherwise than upon the conversion of shares of Capital Stock or other
securities of the Company) for a consideration in whole or in part
other than cash, including securities acquired in exchange therefor
(other than securities by their terms so exchangeable), the
consideration other than cash shall be deemed to be the fair value
thereof as determined by the Board, provided, however, that such fair
value as determined by the Board shall not exceed the aggregate Market
Price of the shares of Common Stock being issued as of the date the
Board authorizes the issuance of such shares.
(iii) In the case of the issuance of (a) options, warrants
or other rights to purchase or acquire Common Stock (whether or not at
the time exercisable) or (b) securities by their terms convertible into
or exchangeable for Common Stock (whether or not at the time so
convertible or exchangeable) or options, warrants or rights to purchase
such convertible or exchangeable securities (whether or not at the time
exercisable):
(a) the aggregate maximum number of shares of Common
Stock deliverable upon exercise of such options, warrants or other
rights to purchase or acquire Common Stock shall be deemed to have been
issued at the time such options, warrants or rights are issued and for
a consideration equal to the consideration (determined in the manner
provided in Section 13(A)(i) and (ii)), if any, received by the Company
upon the issuance
of such options, warrants or rights plus the minimum purchase price
provided in such options, warrants or rights for the Common Stock
covered thereby;
(b) the aggregate maximum number of shares of Common
Stock deliverable upon conversion of or in exchange for any such
convertible or exchangeable securities, or upon the exercise of
options, warrants or other rights to purchase or acquire such
convertible or exchangeable securities and the subsequent conversion or
exchange thereof, shall be deemed to have been issued at the time such
securities were issued or such options, warrants or rights were issued
and for a consideration equal to the consideration, if any, received by
the Company for any such securities and related options, warrants or
rights (excluding any cash received on account of accrued interest or
accrued dividends), plus the additional consideration (determined in
the manner provided in Section 13(A)(i) and (ii)), if any, to be
received by the Company upon the conversion or exchange of such
securities, or upon the exercise of any related options, warrants or
rights to purchase or acquire such convertible or exchangeable
securities and the subsequent conversion or exchange thereof;
(c) on any change in the number of shares of Common Stock
deliverable upon exercise of any such options, warrants or rights or
conversion or exchange of such convertible or exchangeable securities
or any change in the consideration to be received by the Company upon
such exercise, conversion or exchange, but excluding changes resulting
from the anti-dilution provisions thereof (to the extent comparable to
the anti-dilution provisions contained herein), the Exercise Price and
the number of Shares issuable upon exercise of this Warrant as then in
effect shall forthwith be readjusted to such Exercise Price and number
of Shares as would have been obtained had an adjustment been made upon
the issuance of such options, warrants or rights not exercised prior to
such change, or of such convertible or exchangeable securities not
converted or exchanged prior to such change, upon the basis of such
change;
(d) on the expiration or cancellation of any such
options, warrants or rights (without exercise), or the termination of
the right to convert or exchange such convertible or exchangeable
securities (without exercise), if the Exercise Price and the number of
Shares issuable upon exercise of this Warrant shall have been adjusted
upon the issuance thereof, the Exercise Price and the number of Shares
issuable upon exercise of this Warrant shall forthwith be readjusted to
such Exercise Price and number of Shares as would have been obtained
had an adjustment been made upon the issuance of such options,
warrants, rights or such convertible or exchangeable securities on the
basis of the issuance of only the number of shares of Common Stock
actually issued upon the exercise of such options, warrants or rights,
or upon the conversion or exchange of such convertible or exchangeable
securities; and
(e) if the Exercise Price and the number of Shares
issuable upon exercise of this Warrant shall have been adjusted upon
the issuance of any such options, warrants, rights or convertible or
exchangeable securities, no further adjustment of the Exercise Price
and the number of Shares issuable upon exercise of this Warrant shall
be made for the actual issuance of Common Stock upon the exercise,
conversion or exchange thereof.
(B) Stock Splits, Subdivisions, Reclassifications or
Combinations. If the Company shall (1) declare a dividend or make a distribution
on its Common Stock in shares of Common Stock, (2) subdivide or reclassify the
outstanding shares of Common Stock into a greater number of shares, or (3)
combine or reclassify the outstanding Common Stock into a smaller number of
shares, the number of Shares issuable upon exercise of this Warrant at the time
of the record date for such dividend or distribution or the effective date of
such subdivision, combination or reclassification shall be proportionately
adjusted so that the Warrantholder after such date shall be entitled to purchase
the number of shares of Common Stock which such holder would have owned or been
entitled to receive after such date had this Warrant been exercised immediately
prior to such date. In such event, the Exercise Price in effect at the time of
the record date for such dividend or distribution or the effective date of such
subdivision, combination or reclassification shall be adjusted to the number
obtained by dividing (i) the product of (a) the number of Shares issuable upon
the exercise of this Warrant before such adjustment and (b) the Exercise Price
in effect immediately prior to the issuance giving rise to this adjustment by
(ii) the new number of Shares issuable upon exercise of the Warrant determined
pursuant to the immediately preceding sentence.
(C) Other Distributions. In case the Company shall fix a
record date for the making of a distribution to all holders of shares of its
Common Stock (i) of shares of any class or of any Person other than shares of
the Common Stock or (ii) of evidence of indebtedness of the Company or any
Subsidiary or (iii) of assets (excluding Ordinary Cash Dividends, and dividends
or distributions referred to in Section 13(B)), or (iv) of rights or warrants,
in each such case the number of Shares issuable upon exercise of this Warrant
shall be multiplied by a fraction, the numerator of which is the Market Price
per share of Common Stock on such record date and the denominator of which is
the Market Price per share of Common Stock on such record date less the fair
market value (as reasonably determined by the Board, whose good faith
determination shall be conclusive) of said shares or evidences of indebtedness
or assets or rights or warrants to be so distributed per share of Common Stock;
such adjustment shall take effect on the record date for such distribution. In
such event, the Exercise Price shall be multiplied by a fraction, the numerator
of which is the number of Shares issuable upon the exercise of this Warrant
before such adjustment, and the denominator of which is the new number of Shares
issuable upon exercise of this Warrant determined in accordance with the
immediately preceding sentence. Notwithstanding the foregoing, in the event that
the fair market value (as determined above) of the shares or evidences of
indebtedness or assets or rights or warrants to be so distributed with respect
to one share of Common Stock is equal to or greater than the Market Price per
share of Common Stock on such record date, then proper provision shall be made
such that upon exercise of the Warrant, the holder shall receive the amount and
kind of such shares, assets, evidences of indebtedness, rights or warrants such
holders would have received had such holders exercised this Warrant immediately
prior to such record date. In the event that such distribution is not so made,
the Exercise Price and the number of Shares issuable upon exercise of this
Warrant then in effect shall be readjusted, effective as of the date when the
Board determines not to distribute such shares, evidences of indebtedness,
assets, rights or warrants, as the case may be, to the Exercise Price that would
then be in effect and the number of Shares that would then be issuable upon
exercise of this Warrant if such record date had not been fixed.
(D) Business Combinations. In case of any Business
Combination or reclassification of Common Stock (other than a reclassification
of Common Stock referred to in
Section 13(B)), this Warrant after the date of such Business Combination or
reclassification will be exercisable solely for the number of shares of stock or
other securities or property (including cash) to which the Common Stock issuable
(at the time of such Business Combination or reclassification) upon exercise of
this Warrant immediately prior to such Business Combination or reclassification
would have been entitled upon such Business Combination or reclassification; and
in any such case, if necessary, the provisions set forth herein with respect to
the rights and interests thereafter of the Warrantholder shall be appropriately
adjusted so as to be applicable, as nearly as may reasonably be, to any shares
of stock or other securities or property thereafter deliverable on the exercise
of this Warrant. In determining the kind and amount of stock, securities or the
property receivable upon consummation of such Business Combination or
reclassification, if the holders of Common Stock have the right to elect the
kind or amount of consideration receivable upon consummation of such Business
Combination, then the Warrantholder shall have the right to make a similar
election upon exercise of this Warrant with respect to the number of shares of
stock or other securities or property which the Warrantholder will receive upon
exercise of this Warrant.
(E) Successive Adjustments. Successive adjustments in the
Exercise Price and the number of shares of Common Stock issuable upon exercise
of this Warrant shall be made, without duplication, whenever any event specified
in Sections 13(A), (B), (C) and (D) shall occur.
(F) Rounding of Calculations; Minimum Adjustments. All
calculations under this Section 13 shall be made to the nearest one-tenth
(1/10th) of a cent or to the nearest one-hundredth (1/100th) of a share, as the
case may be. No adjustment in the Exercise Price or the number of Shares into
which this Warrant is exercisable is required if the amount of such adjustment
would be less than $0.01 or one-tenth (1/10th) of a share of Common Stock, as
the case may be; provided, however, that any adjustments which by reason of this
Section 13(F) are not required to be made will be carried forward and given
effect in any subsequent adjustment.
(G) Adjustment for Unspecified Actions. If the Company
takes any action affecting the Common Stock, other than action described in this
Section 13, which in the opinion of the Board would materially adversely affect
the exercise rights of the Warrantholders, the Exercise Price for the Warrants
and/or the number of Shares received upon exercise of the Warrant may be
adjusted, to the extent permitted by law, in such manner, if any, and at such
time, as such Board may determine in good faith to be equitable in the
circumstances; provided, however, that in no event shall any adjustment have the
effect of increasing the Exercise Price as otherwise determined pursuant to any
of the provisions of this Section 13 except in the case of a combination of
shares of a type contemplated in Section 13(B) and then in no event to an amount
larger than the Exercise Price as adjusted pursuant to Section 13(B). Failure of
the Board to provide for any such adjustment prior to the effective date of any
such action by the Company affecting the Common Stock will be evidence that the
Board has determined that it is equitable to make no adjustments in the
circumstances.
(H) Voluntary Adjustment by the Company. The Company may
at its option, at any time during the term of the Warrants, reduce the then
current Exercise Price or increase the number of Shares for which the Warrant
may be exercised to any amount deemed appropriate by the Board; provided,
however, that if the Company elects to make such adjustment, such
adjustment will remain in effect for at least a 15-day period, after which time
the Company may, at its option, reinstate the Exercise Price or number of Shares
in effect prior to such reduction, subject to any interim adjustments pursuant
to this Section 13.
(I) Statement Regarding Adjustments. Whenever the
Exercise Price or the number of Shares into which this Warrant is exercisable
shall be adjusted as provided in this Section 13, the Company shall forthwith
file, at the principal office of the Company a statement showing in reasonable
detail the facts requiring such adjustment and the Exercise Price that shall be
in effect and the number of Shares into which this Warrant shall be exercisable
after such adjustment and the Company shall also cause a copy of such statement
to be sent by mail, first class postage prepaid, to each Warrantholder at the
address appearing in the Company's records.
(J) Notices. In the event that the Company shall give
notice or make a public announcement to the holders of Common Stock of any
action of the type described in this Section 13 (but only if the action of the
type described in this Section 13 would result in an adjustment in the Exercise
Price or the number of Shares into which this Warrant is exercisable or a change
in the type of securities or property to be delivered upon exercise of this
Warrant), the Company shall, at the time of such notice or announcement, and in
the case of any action which would require the fixing of a record date, at least
10 days prior to such record date, give notice to the Warrantholder, in the
manner set forth in Section 13(I), which notice shall specify the record date,
if any, with respect to any such action and the approximate date on which such
action is to take place. Such notice shall also set forth the facts with respect
thereto as shall be reasonably necessary to indicate the effect on the Exercise
Price and the number, kind or class of shares or other securities or property
which shall be deliverable upon exercise of this Warrant. Failure to give such
notice, or any defect therein, shall not affect the legality or validity of any
such action.
(K) Miscellaneous. Except as provided in Section 13, no
adjustment in respect of any dividends or other payments or distributions made
to Warrantholders of securities issuable upon exercise of Warrants will be made
during the term of a Warrant or upon the exercise of a Warrant. In addition,
notwithstanding any of the foregoing, no such adjustment will be made for the
issuance or conversion of the Preferred Stock.
(L) No Impairment. The Company will not, by amendment of
its Articles or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company, but will at all times in good
faith assist in the carrying out of all the provisions of this Warrant and in
taking of all such action as may be necessary or appropriate in order to protect
the rights of the Warrantholder.
14. GOVERNING LAW. THIS WARRANT SHALL BE BINDING UPON ANY
SUCCESSORS OR ASSIGNS OF THE COMPANY. THIS WARRANT SHALL CONSTITUTE A CONTRACT
UNDER THE LAWS OF THE STATE OF DELAWARE AND FOR ALL PURPOSES SHALL BE CONSTRUED
IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE.
15. Amendments. This Warrant may be amended and the
observance of any term of this Warrant may be waived only with the written
consent of the Company and the Warrantholder.
16. Notice. All notices hereunder shall be in writing and
shall be effective (a) on the day on which delivered if delivered personally or
transmitted by telex or telegram or telecopier with evidence of receipt, (b) one
Business Day after the date on which the same is delivered to a nationally
recognized overnight courier service with evidence of receipt, or (c) five
Business Days after the date on which the same is deposited, postage prepaid, in
the U.S. mail, sent by certified or registered mail, return receipt requested,
and addressed to the party to be notified at the address indicated below for the
Company, or at the address for the Warrantholder set forth in the registry
maintained by the Company pursuant to Section 9, or at such other address and/or
telecopy or telex number and/or to the attention of such other person as the
Company or the Warrantholder may designate by ten-day advance written notice.
17. Change of Control. Upon the occurrence of a Change of
Control, the Warrantholder may elect at any time for so long as it holds the
Warrant, by delivering written notice thereof to the Company, to cause the
Company to purchase at any time after the occurrence of such Change of Control
the Warrant, in whole or in part, at a valuation based on a computation of the
option value of the Warrant using Black-Scholes calculation methods and making
the assumptions described in the Black-Scholes methodology described in Exhibit
A hereto. At the election of the Company, all or any portion of such purchase
price may be paid in Common Stock (valued at the then current Market Price of
the Common Stock as of the time of such payment) so long as such payment does
not cause the Company to fail to comply with applicable Nasdaq requirements or
the requirements of any other governmental entity.
18. Entire Agreement. This Warrant, the exhibit and the
forms attached hereto contain the entire agreement between the parties with
respect to the subject matter hereof and supersede all prior and contemporaneous
arrangements or undertakings with respect thereto.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by a duly authorized officer.
Dated: __________, 2003
PROXIM CORPORATION
By:__________________________________
Name:
Title:
EXHIBIT A
In the event of a Change of Control as a result of a merger or
acquisition of the Company, the entering into definitive documentation in
respect of such event or the recommendation by the Board that stockholders of
the Company tender their shares into a tender or exchange offer that would
result in a Change of Control shall be referred to as a "Trigger Date."
The third-party that has entered into such definitive documentation
with the Company or that has commenced such a tender or exchange offer shall be
referred to as "Acquiror."
The average of the Acquiror's closing stock prices for the ten (10)
trading day period immediately preceding the later of (x) the receipt of
regulatory approval or (y) thirty (30) days prior to the Initiation Date (as
defined below), shall be referred to as "Acquiror's Share Price."
The average of the Company's closing stock prices for the same ten (10)
trading day period shall be referred to as "Company's Share Price."
The computation of the value of each Warrant shall use the
Black-Scholes calculation method for valuing options using the following
assumptions:
1) Volatility equal to the previous one hundred eighty (180)
trading days as shown on Bloomberg;
2) Dividend yield of 0.0%;
3) Interest rate equal to the then published LIBOR rate;
4) Exercise price will be the Exercise Price as adjusted and then
in effect for the Warrant at the time of the Trigger Date;
5) Term of the Warrant will be the remaining term of the Warrant
from the Trigger Date to the Expiration Date; and
6) The underlying security price for purposes of the
Black-Scholes model will be calculated as follows: (a) In the
event of an "all cash" deal, the cash per share offered to the
Company's shareholders by the Acquiror; (b) in the event of an
"all stock" deal:(x) in the event of a fixed exchange ratio
transaction, the price per share of Common Stock arrived at by
multiplying the Acquiror's Share Price by the number of
Acquiror's shares being offered for one (1) share of Common
Stock; and (y) in the event of a fixed value transaction, the
value offered by the Acquiror for one (1) share of Common
Stock. In the event of a transaction contemplating various
forms of consideration for each share of Common Stock, the
cash portion, if any, shall be valued as described in (a)
above; the stock portion shall be valued as (b) above; and any
other forms of consideration shall be valued by the Company in
good faith, without applying any discounts to such
consideration.
In the event the Warrantholder decides to exchange the Warrants for
shares of Common Stock, the Warrantholder will receive that number of shares of
Common Stock arrived at by dividing the value of the Warrants, as determined
above, by the Company's Stock Price (as defined below). The Warrantholder can
initiate such exchange only after the Company has received both regulatory and
shareholder approval (such notice to be provided by the Company to the
Warrantholder immediately upon receipt of such approvals) or in the case of a
tender or exchange offer referenced above after the minimum tender condition and
all other material conditions to such offer have been satisfied (the later of
such dates being the "Initiation Date"), and may execute the exchange with the
Company within the ten (10) Business Day period immediately after the receipt of
the latter of regulatory approval or stockholder approval (it being agreed that
in the context of such a tender or exchange offer, shareholder approval shall be
deemed to have occurred upon the satisfaction of the minimum tender condition
along with all other material conditions). The Company covenants it will not
close the Change of Control transaction or otherwise facilitate the closing of a
tender or exchange offer as referenced above until giving the Warrantholder at
least five (5) Business Days to sell or distribute the Common Stock to be
received in an exchange, such five (5)-day period to be included in the ten
(10)-day period above, and will cooperate with the Warrantholder to ensure to
the extent reasonably practicable that there is an effective registration
statement available to facilitate such a sale during such five (5)-day period or
an effective opportunity is provided in the case of a tender or exchange offer
as referenced above to tender such shares into the offer.
In all other Change of Control events, the computation of the option
value of each Warrant shall use the Black-Scholes calculation method for valuing
options using the following assumptions:
1) Volatility equal to the previous one hundred eighty (180)
trading days as shown on Bloomberg;
2) Dividend yield of 0.0%;
3) Interest rate equal to the then published LIBOR rate;
4) Exercise price will be the Exercise Price as adjusted and then
in effect for the Warrant at the time of the Change of Control
event;
5) Term of the Warrant will be the remaining term of the Warrant
from the date of the Change of Control to the stated
Expiration Date; and
6) The underlying security price for purposes of the
Black-Scholes model will be calculated using the five (5)-day
average of the closing Market Price of the Company's Common
Stock immediately after the Change of Control event date
("Company's Stock Price").
Upon a calculation of the value of the Warrant based on the
Black-Scholes computations above, such value will not be discounted in any way.
If the Warrantholder disputes the valuation
of the Warrant, the Company and the Warrantholder will choose a
mutually-agreeable firm to compute the valuation of the Warrant using the
guidelines above, and such valuation shall be final. The fees and expenses of
such firm shall be borne equally by the Company and the Warrantholder. In the
event the Warrantholder decides to exchange the Warrants for shares of Common
Stock, the Warrantholder will receive that number of shares of Common Stock
arrived at by dividing the value of the Warrants, as determined above, by the
Company's Stock Price.
In all circumstances above, the calculation of the Warrant value will
be based on the assumption that all Warrants have been converted into Common
Stock based on the applicable formula for conversion contained herein (and
giving effect to any adjustments which have occurred under Section 13 herein),
and no discount will be applied with respect to any still pending restrictions
on such conversion rights.
NOTICE OF EXERCISE
The undersigned hereby elects to purchase, pursuant to the provisions
of the Warrant to purchase Shares of Common Stock, par value $0.01 per share,
issued by Proxim Corporation and held by the undersigned, the original of which
is attached hereto, and (check the applicable box):
[ ] Tenders herewith payment of the Exercise Price (as defined in the
Warrant) in full in the form of cash, certified check or official bank
check in the amount of $__________________ for _______________ of such
Shares.
[ ] Confirms that payment of the Exercise Price (as defined in the Warrant)
in full by means of a wire transfer in the amount of
$__________________ for _______________ of such securities has been
made to the Company.
[ ] Elects to surrender to the Company for cancellation securities of the
Company having a Market Price (as defined in the Warrant) on the date
hereof equal to the Exercise Price.
[ ] Elects to receive a payment equal to the difference between the Market
Price (as defined in the Warrant), multiplied by the number of shares
as to which the Warrant is being exercised, and the Exercise Price (as
defined in the Warrant) with respect to such shares, payable in shares
of Common Stock valued at the Market Price of the Common Stock on the
trading day prior to the date hereof.
[To be signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto__________________________ the right represented by the within Warrant to
purchase _________ shares of the Common Stock of Proxim Corporation to which the
within Warrant relates, and appoints_______________ attorney to transfer said
right on the books of Proxim Corporation with full power of substitution in the
premises.
Dated:
________________________
(Signature must conform in all respects to
name of Holder as specified on the face of
the Warrant)
__________________________________________
Address
In the presence of
_________________________________
EXHIBIT E
PLEDGE AND SECURITY AGREEMENT
PLEDGE AND SECURITY AGREEMENT, dated as of July __, 2003 (as
amended, restated, modified or supplemented from time to time, this "Agreement")
by and between PROXIM CORPORATION, a Delaware corporation (the "Grantor"), and
WARBURG PINCUS PRIVATE EQUITY VIII, L.P., as collateral agent for the
Noteholders (as herein defined) (in such capacity, the "Collateral Agent").
W I T N E S S E T H:
WHEREAS, reference is made to that certain Securities Purchase
Agreement, dated as of July 22, 2003 the ("Purchase Agreement"), by and among
the Grantor and the purchasers named therein (the "Purchasers") pursuant to
which the Grantor, subject to the conditions set forth therein, has agreed to
issue secured promissory notes (the "Notes") to the Noteholders in an aggregate
original principal amount of $30 million (the Purchasers and the other holders
from time to time of the Notes being referred to herein collectively as the
"Noteholders");
WHEREAS, the parties hereto desire to provide for the grant of
security interests in favor of the Collateral Agent for the benefit of the
Noteholders and the Collateral Agent to secure the payment and performance when
due of all Obligations (as herein defined); and
WHEREAS, in consideration of the execution and delivery of the
Purchase Agreement and the issuance and acceptance of the Notes thereunder, the
Grantor hereby agrees, subject to the terms and conditions hereof, to secure the
Grantor's Obligations as set forth herein.
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the Grantor and the
Collateral Agent agree as follows:
ARTICLE I.
DEFINED TERMS
SECTION 1.1 DEFINED TERMS.
Capitalized terms used herein without definition that are
defined in the Purchase Agreement or the UCC are used herein as so defined. The
following terms have the respective meanings set forth below:
"Collateral" means all of the assets, properties, rights and
interests of the Grantor, whether tangible or intangible, real or personal, now
existing or hereafter acquired, and wherever located, together with all proceeds
thereof, including, without limitation, all intellectual property listed or
referred to in any intellectual property security agreement, all "Collateral"
and "Intellectual Property Collateral," as those terms are defined in the SVB
Agreements, all assets set forth on Schedule A hereto and all assets provided
for in the definition of the term "SVB Collateral" in the Intercreditor
Agreement.
"Collateral Documents" means this Agreement, any intellectual
property security agreement and any and all other security agreements, pledge
agreements, deeds of trust, security deeds and like instruments establishing or
otherwise giving effect to the liens on and security interests in the Collateral
to the Collateral Agent and the Noteholders, including UCC financing statements
and notice filings in respect of intellectual property, in each case as amended
or modified.
"Collateral Records" means all books, Records, ledger cards,
files, correspondence, customer lists, blueprints, technical specifications,
manuals, computer software, computer printouts, tapes, disks and related data
processing software and similar items that at any time evidence or contain
information relating to any of the Collateral or are otherwise necessary or
helpful in the collection thereof or realization thereupon.
"Collateral Support" means all property (real or personal)
assigned, hypothecated or otherwise securing obligations constituting Collateral
and shall include any security agreement or other agreement granting a lien or
security interest in such real or personal property.
"Event of Default" means any Event of Default as that term is
defined in the Notes.
"Intercreditor Agreement" means the Intercreditor Agreement,
dated as of even date herewith, by and between the Collateral Agent and SVB and
all schedules, exhibits and annexes attached thereto.
"Obligations" means all obligations of the Grantor under or in
respect of the Notes, this Agreement or any of the other Collateral Documents,
including without limitation obligations for principal, premium, interest,
incremental interest, purchase price, fees, costs and expenses, indemnities and
reimbursement of advances.
"Permitted Sale" means those sales, transfers or assignments
of Collateral permitted by the Purchase Agreement.
"Person" or "Persons" means an individual, corporation,
partnership, other entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended).
"Preferred Stock" means the Series B Convertible Preferred
Stock of the Grantor, $0.01 par value per share.
"Records" has the meaning specified in Article 9 of the UCC.
"Receivables" means all rights to payment, whether or not
earned by performance, for goods or other property sold, leased, licensed,
assigned or otherwise disposed of, or services rendered or to be rendered.
"Receivable Records" means: (i) all original copies of all
documents, instruments or other writings or electronic Records or other Records
evidencing the Receivables, (ii) all
2
books, correspondence, credit or other files, Records, ledger sheets or cards,
invoices, and other papers relating to Receivables, including, without
limitation, all tapes, cards, computer tapes, computer discs, computer runs,
record keeping systems and other papers and documents relating to the
Receivables, whether in the possession or under the control of the Grantor or
any computer bureau or agent from time to time acting for the Grantor or
otherwise, (iii) all evidences of the filing of financing statements and the
registration of other instruments in connection therewith, and amendments,
supplements or other modifications thereto, notices to other creditors or
secured parties, and certificates, acknowledgments, or other writings,
including, without limitation, lien search reports, from filing or other
registration officers, (iv) all credit information, reports and memoranda
relating thereto and (v) all other written or non-written forms of information
related in any way to the foregoing or any Receivable.
"Requisite Holders" means the Noteholders holding in the
aggregate at least a majority of the aggregate principal amount of the Notes.
"SVB" means Silicon Valley Bank.
"SVB Agreements" means collectively (a) the 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 Grantor, (c) the Letter
Agreement, dated June 13, 2003, between SVB and the Grantor, (d) the Accounts
Receivable Financing Agreement, dated as of June 13, 2003, between SVB and the
Grantor and (e) the Temporary Overadvance Agreement, dated as of June 23, 2003,
between SVB and the Company and all schedules, exhibits and annexes attached
thereto.
"UCC" means the Uniform Commercial Code (or similar statute)
of any applicable jurisdiction.
ARTICLE II.
GRANT OF SECURITY INTERESTS
SECTION 2.1 GRANT OF SECURITY INTEREST IN COLLATERAL. The
Grantor, as collateral security for the full, prompt and complete payment and
performance when due of the Obligations, hereby collaterally assigns, mortgages,
pledges and hypothecates to the Collateral Agent, and grants to the Collateral
Agent a lien on and security interest in, all the Grantor's right, title and
interest in, to and under the Collateral, the ranking and priority of which,
relative to those of the security interests and liens granted by the Grantor to
SVB, shall be as set forth in the Intercreditor Agreement.
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ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE GRANTOR
SECTION 3.1 The Grantor hereby represents and warrants that:
(a) The Grantor owns the Collateral purported to be owned
by it and otherwise has the rights it purports to have in each item of
Collateral and, as to all Collateral, whether now existing or hereafter
acquired, will continue to own or have such rights in each item of the
Collateral, except after giving effect to and solely as a direct result of
Permitted Sales, in each case free and clear of any and all liens, rights or
claims of all other Persons, including without limitation liens arising as a
result of the Grantor becoming bound (as a result of merger or otherwise) as a
debtor under a security agreement entered into by another Person, other than
Permitted Liens;
(b) The security interests granted to the Collateral
Agent hereunder constitute valid security interests in the Collateral;
(c) The Grantor's chief executive office or its sole
place of business is, and has been for the four (4) month period preceding the
date hereof, located at 000 Xxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000;
(d) The Grantor is a Delaware corporation;
(e) The full legal name of the Grantor is Proxim
Corporation and it has not in the last five (5) years done and does not
currently do business under any other name (including any trade-name or
fictitious business name) except Western Multiplex Corporation and Wireless
Access, Inc.;
(f) The Grantor has not within the last five (5) years
become bound (whether as a result of merger or otherwise) as debtor under a
security agreement entered into by another Person, except for the SVB
Agreements;
(g) All filings, registrations and recordings necessary
to create and perfect the liens granted to the Collateral Agent hereunder in the
Collateral with respect to which perfection can occur by the filing of a UCC-1
financing statement or by the filing of any documents regarding the intellectual
property of the Grantor, or for the exercise by the Collateral Agent of the
rights provided for in this Agreement or the exercise of remedies in respect of
the Collateral, have been made;
(h) The Grantor has delivered to the Collateral Agent
evidence and copies of all such filings, notices, registrations and recordings;
(i) Other than financing statements and other filings
made in favor of the Collateral Agent, no effective UCC financing statement,
filing made for any intellectual property, fixture filing or other instrument
similar in effect under any applicable law covering all or any part of the
Collateral is on file in any filing or recording office except for (x) financing
statements for which proper termination statements have been filed and copies of
which have
4
been delivered to the Collateral Agent and (y) financing statements or other
instruments filed in connection with Permitted Liens;
(j) No authorization, approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required for either (i) the pledge or grant by any Grantor of the liens
purported to be created in favor of the Collateral Agent hereunder or (ii) the
exercise by Collateral Agent of any rights or remedies in respect of any
Collateral, except (x) for the filings referred to in the preceding clauses (g)
and (h), and (y) as may be required by laws generally affecting the offering and
sale of securities; and
(k) All information supplied by the Grantor with respect
to any of the Collateral is accurate in all material respects.
ARTICLE IV.
ACCESS; RIGHT OF INSPECTION AND FURTHER ASSURANCES
SECTION 4.1 ACCESS; RIGHT OF INSPECTION. The Collateral Agent
shall at all times have full and free access during normal business hours, upon
reasonable prior notice, all of the books, correspondence and Records and the
Collateral Records of the Grantor, and the Collateral Agent and its
representatives may examine the same, take extracts therefrom and make
photocopies thereof, and the Grantor agrees to render to the Collateral Agent,
at the Grantor's cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto. The Collateral Agent and its
representatives shall, during normal business hours, upon reasonable prior
notice, also have the right to enter any premises of the Grantor and inspect any
property of the Grantor where any of the Collateral is located for the purpose
of inspecting the same, observing its use or otherwise protecting its interests
therein.
SECTION 4.2 FURTHER ASSURANCES.
(a) The Grantor agrees that from time to time, at its own
expense, it shall promptly execute and deliver all further instruments and
documents (including any agreements relating to the grant or confirmation of the
security interests in and liens on the intellectual property of the Grantor),
and take all further action, that may be necessary or desirable, or that the
Collateral Agent may reasonably request, in order to create and/or maintain the
validity, perfection or priority of and protect any security interest granted or
purported to be granted hereby or to enable the Collateral Agent to exercise and
enforce its rights and remedies hereunder with respect to any Collateral.
Without limiting the generality of the foregoing, the Grantor shall:
(i) execute and file such financing or
continuation statements, or amendments thereto, and execute and deliver such
other agreements, instruments, endorsements, powers of attorney or notices, as
may be necessary or desirable, or as the Collateral Agent may reasonably
request, in order to perfect and preserve the security interests granted or
purported to be granted hereby; and
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(ii) at the Collateral Agent's request, appear in
and defend any action or proceeding that may affect the Grantor's title to or
the Collateral Agent's security interest in all or any part of the Collateral.
(b) The Grantor hereby authorizes the Collateral Agent to
file (with or without signatures of any party) any Record or Records, including
without limitation financing or continuation statements, and amendments thereto,
in all jurisdictions and with all filing offices as the Collateral Agent may
determine, in its sole discretion, are necessary or advisable to perfect the
security interests granted to the Collateral Agent herein. Such financing
statements may describe the Collateral in the same manner as described herein or
may contain an indication or description of collateral that describes such
property in any other manner as the Collateral Agent may determine, in its sole
discretion, is necessary, advisable or prudent to ensure the perfection of the
security interests in the Collateral, including without limitation describing
such property as "all assets" or "all personal property." To the extent
permitted under applicable law, the Grantor hereby agrees that it will not file
any Record or Records, including without limitation financing or continuation
statements, and amendments thereto, relating to the Collateral, in any
jurisdiction or filing office (other than Records that may reflect any Permitted
Liens on the Collateral, and other than Records that must be filed in the
ordinary course of business), without the prior written consent of the
Collateral Agent.
ARTICLE V.
COVENANTS
As long as any of the Obligations remains outstanding, the
Grantor agrees with the Collateral Agent that:
SECTION 5.1 GENERALLY. The Grantor shall (a) except for the
Permitted Liens, not create or suffer to exist any lien or security interest
upon or with respect to any of the Collateral; (b) not use or permit any
Collateral to be used unlawfully or in violation of any provision of the
Collateral Documents or any requirement of law; and (c) not sell, transfer or
assign (by operation of law or otherwise) any Collateral except as permitted by
the Purchase Agreement.
SECTION 5.2 MAINTENANCE OF PERFECTED SECURITY INTERESTS;
FURTHER DOCUMENTATION.
(a) The Grantor will maintain the security interests
created by this Agreement as perfected security interests and shall defend such
security interests against the claims and demands of all Persons.
(b) Upon request, the Grantor will furnish to the
Collateral Agent statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as the
Collateral Agent may reasonably request.
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SECTION 5.3 CHANGES IN LOCATIONS, NAME, ETC.
(a) Except upon 15 days' prior written notice to the
Collateral Agent and delivery to the Collateral Agent of all additional
financing statements and other documents requested by the Collateral Agent to
maintain the validity, perfection and priority of the security interests
provided for herein, the Grantor will not:
(i) change its state of incorporation or the
location of its chief executive office or sole place of business from those in
effect on the date hereof; or
(ii) change its name, identity or corporate
structure, not including dissolution, to such an extent that any financing
statement filed by the Grantor in connection with this Agreement would become
misleading.
(b) The Grantor will keep and maintain at its own cost
and expense satisfactory and complete Records of the Collateral, including a
Record of all payments received and all credits granted with respect to the
Collateral and all other dealings in or with the Collateral.
ARTICLE VI.
USE OF PROCEEDS
SECTION 6.1 PROCEEDS. Except as expressly provided elsewhere
in this Agreement or in the Intercreditor Agreement, all proceeds received by
the Collateral Agent in respect of any sale, any collection from, or other
realization upon all or any part of the Collateral shall be applied in full or
in part by the Collateral Agent against the Obligations in the following order
of priority: first, to the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to the
Collateral Agent and its agents and counsel, and all other expenses, liabilities
and advances made or incurred by the Collateral Agent in connection therewith,
and all amounts for which the Collateral Agent is entitled to indemnification
hereunder (in its capacity as the Collateral Agent and not as a Noteholder) and
all advances made by the Collateral Agent for the account of the Grantor, and to
the payment of all costs and expenses paid or incurred by the Collateral Agent
in connection with the exercise of any right or remedy hereunder or under the
Notes or the other Collateral Documents, all in accordance with the terms hereof
or thereof; second, to the extent of any excess, to the payment of all other
Obligations for the ratable benefit of the Noteholders; and third, to the extent
of any excess of such proceeds, to the payment to or upon the order of the
Grantor or to whosoever may be lawfully entitled to receive the same or as a
court of competent jurisdiction may direct.
ARTICLE VII.
STANDARD OF CARE; COLLATERAL AGENT MAY PERFORM
SECTION 7.1 STANDARD OF CARE. The powers conferred on the
Collateral Agent hereunder and under the other Collateral Documents are solely
to protect its interest, for the benefit and on behalf of the Noteholders, in
the Collateral and shall not impose any duty upon it to exercise any such
powers. Except for the exercise of reasonable care in the custody of any
7
Collateral in its possession and the accounting for moneys actually received by
it hereunder or thereunder, the Collateral Agent shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Collateral. The Collateral
Agent shall be deemed to have exercised reasonable care in the custody and
preservation of Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which the Collateral Agent accords its own
property. Neither the Collateral Agent nor any of its directors, officers,
employees or agents shall be liable for failure to demand, collect or realize
upon all or any part of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of the Grantor or otherwise. If the Grantor fails to perform any
agreement contained herein, the Collateral Agent may itself perform, or cause
performance of, such agreement, and the expenses of the Collateral Agent
incurred in connection therewith shall be paid by the Grantor. The provisions of
this Section 7.1 are subject to the limitations set forth in the Intercreditor
Agreement.
ARTICLE VIII.
ADDITIONAL RIGHTS OF THE COLLATERAL AGENT
SECTION 8.1 THE COLLATERAL AGENT APPOINTMENT AS
ATTORNEY-IN-FACT.
(a) The Grantor hereby irrevocably constitutes and
appoints the Collateral Agent and any officer or agent thereof, with full power
of substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of the Grantor and in the name of the
Grantor or in its own name, for the purpose of carrying out the terms of this
Agreement, to take any and all appropriate and lawful action and to execute any
and all documents and instruments which may be necessary or desirable to
accomplish the purposes of this Agreement; provided that the Collateral Agent
agrees that it will not exercise any rights under such power of attorney and
pursuant to this Section 8.1 unless an Event of Default, shall exist and be
continuing.
(b) The expenses of the Collateral Agent incurred in
connection with actions undertaken as provided in this Section 8.1, together
with interest thereon at a rate per annum equal to the prime commercial lending
rate of Citibank, N.A. (or its successor) from the date of payment by the
Collateral Agent to the date reimbursed by the Grantor, shall be payable by the
Grantor to the Collateral Agent on demand.
(c) The Grantor hereby ratifies all that said attorney
shall lawfully do or cause to be done by virtue hereof. All powers,
authorizations and agencies contained in this Agreement are coupled with an
interest and are irrevocable until this Agreement is terminated, and the
security interest created hereby is released, by the Collateral Agent.
SECTION 8.2 NO DUTY ON THE PART OF COLLATERAL AGENT OR SECURED
PARTIES. The powers conferred on the Collateral Agent hereunder are solely to
protect the interests of the Noteholders in the Collateral and shall not impose
any duty upon the Collateral Agent or any of the Noteholders to exercise any
such powers. The Collateral Agent and the Noteholders shall be accountable only
for amounts that they actually receive as a result of the exercise of such
8
powers, and neither they nor any of their affiliates, officers, directors,
employees or agents shall be responsible to the Grantor for any act or failure
to act hereunder, except for their own gross negligence or willful misconduct.
ARTICLE IX.
REMEDIAL PROVISIONS
SECTION 9.1 UCC AND OTHER Remedies. During the continuance of
an Event of Default, the Collateral Agent may exercise, in addition to all other
rights and remedies granted to it in this Agreement, all rights and remedies of
a secured party under the UCC or any other applicable law. Without limiting the
generality of the foregoing, the Collateral Agent, without demand of performance
or other demand, presentment, protest, advertisement or notice of any kind
(except any notice required by law) to or upon the Grantor or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give option or options to purchase or otherwise dispose of and
deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, at any
office of the Collateral Agent or elsewhere, upon such terms and conditions as
it may deem advisable and at such prices as it may deem best, for cash or on
credit or for future delivery without assumption of any credit risk. To the
extent permitted by applicable law, the Grantor waives all claims, damages and
demands it may acquire against the Collateral Agent arising out of the exercise
by it of any rights hereunder. If any notice of a proposed sale or other
disposition of Collateral shall be required by law, such notice shall be deemed
reasonable and proper if given at least 10 days before such sale or other
disposition.
SECTION 9.2 NO LIABILITY OF COLLATERAL AGENT. Anything herein
to the contrary notwithstanding, the Grantor shall remain liable under and in
respect of any agreement or instrument that constitutes part of the Collateral
to observe and perform all the conditions and obligations to be observed and
performed by it thereunder, all in accordance with the terms of any such
agreement or instrument. The Collateral Agent shall have no obligation or
liability under any such agreement or instrument by reason of or arising out of
this Agreement or the receipt by the Collateral Agent of any payment relating
thereto, nor shall the Collateral Agent be obligated in any manner to perform
any of the obligations of the Grantor under or pursuant to any such agreement or
instrument to make any payment, to make any inquiry as to the nature or the
sufficiency of any payment received by it or as to the sufficiency of any
performance by any party thereunder, to present or file any claim, to take any
action to enforce any performance or to collect the payment of any amounts which
may have been assigned to it or to which it may be entitled at any time or
times.
ARTICLE X.
COLLATERAL AGENT
SECTION 10.1 APPOINTMENT OF COLLATERAL AGENT. By its execution
of this Agreement, each Noteholder appoints Warburg Pincus Private Equity VIII,
L.P. as Collateral
9
Agent hereunder and under the other Collateral Documents. The Collateral Agent
hereby agrees to act upon the express conditions contained herein and in the
other Collateral Documents, as applicable. The provisions of this Article 10 are
solely for the benefit of the Collateral Agent and the Noteholders, and the
Grantor shall not have any rights as third party beneficiary of any of the
provisions of this Article 10. In performing its functions and duties hereunder,
the Collateral Agent shall act solely as agent of the Noteholders and does not
assume and shall not be deemed to have assumed any obligation towards or
relationship of agency or trust with or for the Grantor or any affiliate thereof
(other than a Noteholder). Each Noteholder hereby authorizes the Collateral
Agent to act as such for its benefit and for the benefit of the other
Noteholders hereunder and under the other Collateral Documents.
SECTION 10.2 POWERS AND DUTIES. Each Noteholder irrevocably
authorizes the Collateral Agent to take such action on such Noteholder's behalf
and to exercise such powers, rights and remedies hereunder and under the other
Collateral Documents as are specifically delegated or granted to the Collateral
Agent by the terms hereof and thereof, together with such powers, rights and
remedies as are reasonably incidental thereto. The Collateral Agent shall have
only those duties and responsibilities that are expressly specified herein and
in the other Collateral Documents. The Collateral Agent may exercise such
powers, rights and remedies and perform such duties by or through its agents or
employees. The Collateral Agent shall not have, by reason hereof or any of the
other Collateral Documents, a fiduciary relationship in respect of any
Noteholder, and nothing herein or in any of the other Collateral Documents,
expressed or implied, is intended to or shall be construed as to impose upon the
Collateral Agent any obligations in respect hereof or any of the other
Collateral Documents except as expressly set forth herein or therein.
SECTION 10.3 GENERAL IMMUNITY.
(a) No Responsibility for Certain Matters. The Collateral
Agent shall not be responsible to any Noteholder for the execution,
effectiveness, genuineness, validity, enforceability, collectibility or
sufficiency hereof or of any other Collateral Document or for any
representations, warranties, recitals or statements made herein or therein or
made in any written or oral statements or in any financial or other statements,
instruments, reports or certificates or other documents furnished or made by the
Collateral Agent to any Noteholder or by or on behalf of the Grantor to the
Collateral Agent or any Noteholder in connection with the Collateral Documents
or the transactions contemplated hereby or thereby or for the financial
condition or business affairs of the Grantor or any other Person liable for the
payment of any Obligations, nor shall the Collateral Agent be required to
ascertain or inquire as to the performance or observance of any of the terms,
conditions, provisions, covenants or agreements contained in any of the
Collateral Documents or as to the use of the proceeds of the Notes or as to the
existence or possible existence of any Event of Default.
(b) Exculpatory Provisions. Neither the Collateral Agent
nor any of its partners, members, officers, directors, employees or agents shall
be liable to any Noteholder for any action taken or omitted by the Collateral
Agent under or in connection with any of the Collateral Documents, except to the
extent caused by such Collateral Agent's gross negligence or willful misconduct.
The Collateral Agent shall be entitled to refrain from any act or the taking of
any action in connection with any of the Collateral Documents or from the
exercise of any
10
power, discretion or authority vested in it hereunder or thereunder unless and
until the Collateral Agent shall have received instructions in respect thereof
from the Requisite Holders and, upon receipt of such instructions from the
Requisite Holders, the Collateral Agent shall be entitled to act or (where so
instructed) refrain from acting, or to exercise such power, discretion or
authority, in accordance with such instructions. Without prejudice to the
generality of the foregoing, (i) the Collateral Agent shall be entitled to rely,
and shall be fully protected in relying, upon any communication, instrument or
document believed by it to be genuine and correct and to have been signed or
sent by the proper Person or Persons and shall be entitled to rely and shall be
protected in relying on opinions and judgments of attorneys (who may be in-house
attorneys or attorneys for the Grantor), accountants, experts and other
professional advisors selected it; and (ii) no Noteholder shall have any right
of action whatsoever against the Collateral Agent as a result of the Collateral
Agent's acting or (where so instructed) refraining from acting hereunder or any
of the other Collateral Documents in accordance with the instructions of the
Requisite Holders.
SECTION 10.4 COLLATERAL AGENT ENTITLED TO ACT AS NOTEHOLDER.
The agency hereby created shall in no way impair or affect any of the rights and
powers of, or impose any duties or obligations upon, the Collateral Agent in its
individual capacity as a Noteholder. With respect to its holding of Notes, the
Collateral Agent, in its individual capacity, shall have the same rights and
powers hereunder as any other Noteholder and may exercise the same as if it were
not performing the duties and functions delegated to it hereunder, and the term
"Noteholder" shall, unless the context otherwise indicates, include the
Collateral Agent in its individual capacity. The Collateral Agent, in its
individual capacity, and its affiliates, may invest in the securities of and
generally engage in any type of business with the Grantor or any of its
affiliates as if it were not performing the duties specified herein, and may
accept consideration from the Grantor or its affiliates without having to
account for the same to the Noteholders.
SECTION 10.5 NOTEHOLDERS' REPRESENTATIONS, WARRANTIES AND
ACKNOWLEDGMENTS. Each Noteholder represents and warrants to the Collateral Agent
and to each other Noteholder that it has made its own independent investigation
of the financial condition and affairs of the Grantor and its subsidiaries in
connection with the Notes and that it has made and shall continue to make its
own appraisal of the creditworthiness of the Grantor and its subsidiaries. The
Collateral Agent shall have no duty or responsibility, either initially or on a
continuing basis, to make any such investigation or any appraisal on behalf of
Noteholders or to provide any Noteholder with any credit or other information
with respect thereto, whether coming into its possession before the issuance of
the Notes or at any time thereafter, and the Collateral Agent shall have no
responsibility with respect to the accuracy of or the completeness of any
information provided to Noteholders.
SECTION 10.6 RIGHT TO INDEMNITY. Each Noteholder, in
proportion to its percentage ownership of the outstanding Notes, severally
agrees to indemnify the Collateral Agent, to the extent that the Collateral
Agent shall not have been reimbursed by the Grantor, for and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including reasonable counsel fees and disbursements) and
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by or asserted against the Collateral Agent in exercising its powers, rights and
remedies or performing its duties hereunder or under the other Collateral
Documents or otherwise in its capacity as the Collateral Agent in
11
any way relating to or arising out of this Agreement or the other Collateral
Documents; provided, that no Noteholder shall be liable for any portion or such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Collateral Agent's gross
negligence or willful misconduct. If any indemnity furnished to the Collateral
Agent for any purpose shall, in the opinion of the Collateral Agent, be
insufficient or become impaired, the Collateral Agent may call for additional
indemnity and cease, or not commence, to do the acts indemnified against until
such additional indemnity is furnished; provided that in no event shall this
sentence require any Noteholder to indemnify the Collateral Agent against any
liability, obligation, loss, damage, penalty, action, judgment, suit, cost,
expense or disbursement in excess of such Noteholder's percentage ownership of
the outstanding Notes and provided further that this sentence shall not be
deemed to require any Noteholder to indemnify the Collateral Agent against any
liability, obligation, loss, damage, penalty, action, judgment, suit, cost,
expense or disbursement described in the proviso in the immediately preceding
sentence.
SECTION 10.7 SUCCESSOR COLLATERAL AGENT. The Collateral Agent
may resign at any time by giving at least thirty (30) days' prior written notice
thereof to the Noteholders and the Grantor, and the Collateral Agent may be
removed at any time with or without cause by an instrument or concurrent
instruments in writing delivered to the Grantor and the Collateral Agent and
signed by the Requisite Holders. Upon any such notice of resignation or any such
removal, the Requisite Holders shall have the right, upon five (5) Business
Days' notice to the Grantor, to appoint a successor Collateral Agent. Upon the
acceptance of any appointment as Collateral Agent hereunder by a successor
Collateral Agent, that successor Collateral Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the retiring
or removed Collateral Agent, and the retiring or removed Collateral Agent shall
promptly (i) transfer to such successor Collateral Agent all sums, securities
and other items of Collateral held under the Collateral Documents, together with
all Records and other documents necessary or appropriate in connection with the
performance of the duties of the successor Collateral Agent under the Collateral
Documents, and (ii) execute and deliver to such successor Collateral Agent such
amendments to financing statements, and take such other actions, as may be
necessary or appropriate in connection with the assignment to such successor
Collateral Agent of the security interests created under the Collateral
Documents, whereupon such retiring or removed Collateral Agent shall be
discharged from its duties and obligations hereunder and under the other
Collateral Documents.
SECTION 10.8 COLLATERAL DOCUMENTS.
(a) Agent under Collateral Document. Each Noteholder
hereby further authorizes the Collateral Agent, on behalf of and for the benefit
of the Noteholders, to be the agent for and representative of the Noteholders
with respect to the Collateral and the Collateral Documents. Without further
consent or authorization from the Noteholders, the Collateral Agent may execute
any documents or instruments necessary to release any lien encumbering any item
of Collateral (i) that is the subject of a Permitted Sale or (ii) to which the
Requisite Holders have otherwise consented.
(b) Right to Realize on Collateral. Anything contained in
any of the Collateral Documents to the contrary notwithstanding, the Grantor,
the Collateral Agent and each
12
Noteholder hereby agree that no Noteholder shall have any right individually to
realize upon any of the Collateral, it being understood and agreed that all
powers, rights and remedies hereunder may be exercised solely by the Collateral
Agent for the benefit of the Noteholders in accordance with the terms hereof,
and all powers, rights and remedies under the Collateral Documents may be
exercised solely by the Collateral Agent, and in the event of a foreclosure by
the Collateral Agent on any of the Collateral pursuant to a public or private
sale, the Collateral Agent or any Noteholder may be the purchaser of any or all
of such Collateral at any such sale, and the Collateral Agent, as agent for and
representative of the Noteholders (but not any Noteholder or Noteholders in its
or their respective individual capacities unless the Requisite Holders shall
otherwise agree in writing) shall be entitled, for the purpose of bidding and
making settlement or payment of the purchase price for all or any portion of the
Collateral sold at any such sale, to use and apply any of the Obligations as a
credit on account of the purchase price for any Collateral at such sale.
SECTION 10.9 INTERCREDITOR AGREEMENT. Each Noteholder hereby
acknowledges that it has reviewed the terms and provisions of the Intercreditor
Agreement and hereby authorizes the Collateral Agent to enter into the
Intercreditor Agreement on behalf of such Noteholder.
ARTICLE XI.
INTERCREDITOR AGREEMENT
SECTION 11.1 INTERCREDITOR AGREEMENT CONTROLS. The rights and
obligations of the parties hereto are subject to the provisions of the
Intercreditor Agreement, and in the event of any conflict or inconsistency
between the provisions of the Intercreditor Agreement and the provisions of this
Agreement or any of the other Collateral Documents, the provisions of the
Intercreditor Agreement shall control.
ARTICLE XII.
MISCELLANEOUS
SECTION 12.1 AMENDMENTS IN WRITING. None of the terms or
provisions of this Agreement may be waived, amended, supplemented or otherwise
modified except with the written agreement of the Grantor and the Collateral
Agent.
SECTION 12.2 NO WAIVER BY COURSE OF CONDUCT; CUMULATIVE
REMEDIES. The Collateral Agent shall not by any act (except by a written
instrument pursuant to Section 12.1) of delay, indulgence, omission or otherwise
be deemed to have waived any right or remedy hereunder or to have acquiesced in
any Event of Default. No failure to exercise, nor any delay in exercising, on
the part of the Collateral Agent any right, power or privilege hereunder shall
operate as a waiver thereof. No single or partial exercise of any right, power
or privilege hereunder shall preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. A waiver by the Collateral
Agent of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Collateral Agent would
otherwise have on any future occasion. The rights and remedies herein provided
are
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cumulative, may be exercised singly or concurrently and are not exclusive of any
other rights or remedies provided by law.
SECTION 12.3 INDEMNIFICATION. Notwithstanding the Initial
Closing or the delivery of the Notes, and regardless of any investigation at any
time made by or on behalf of the Noteholders or of any knowledge or information
that the Collateral Agent or the Noteholders may have, the Grantor shall
indemnify and agrees to fully defend, save and hold the Collateral Agent and the
Noteholders and their affiliates harmless if any such party shall at any time or
from time to time suffer any damage, liability, loss, cost, expense (including
all reasonable attorneys', consultants' and experts' fees, including such fees
incurred in any action or proceeding between the Grantor and the Collateral
Agent on behalf of the Noteholders or involving any third party), or in
connection with the execution, delivery or performance of the Collateral
Documents, or any of the transactions contemplated thereby, except for any
matters resulting from the gross negligence or willful misconduct of the
Collateral Agent or the Noteholders.
SECTION 12.4 SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon, and shall inure to the benefit of, the Collateral Agent and the
Grantor and their successors and assigns; provided, that the Grantor may not
assign, transfer or delegate any of its rights or obligations under this
Agreement without the prior written consent of the Collateral Agent.
SECTION 12.5 COUNTERPARTS. This Agreement may be executed by
one or more of the parties to this Agreement on any number of separate
counterparts (including by telecopy), and all of said counterparts taken
together shall be deemed to constitute one and the same agreement.
SECTION 12.6 SEVERABILITY. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 12.7 TERMINATION AND RELEASE.
(a) At the earlier of the (i) date the Obligations shall
have been paid in cash and otherwise performed in full and (ii) the date the
Notes are exchanged for shares of Preferred Stock pursuant to the Purchase
Agreement, this Agreement shall terminate (other than the provisions (x) of the
first sentence of Section 10.6 hereof and (y) of Section 12.3 hereof) and the
Collateral shall be released from the liens created hereby (all without delivery
of any instrument or performance of any act by any party), and all rights to the
Collateral shall revert to the Grantor. At the request and sole expense of the
Grantor following any such termination, the Collateral Agent shall deliver to
the Grantor any Collateral held by the Collateral Agent hereunder, and execute
and deliver to the Grantor such documents as the Grantor shall reasonably
request to evidence such termination.
(b) If any of the Collateral shall be sold, transferred
or otherwise disposed of by the Grantor in a manner permitted by the Collateral
Documents, the Collateral Agent at the
14
request and sole expense of the Grantor, shall execute and deliver to the
Grantor all releases or other documents reasonably requested for the release of
the liens created hereby on such Collateral.
(c) This Agreement, the other Collateral Documents and
the security interests granted herein shall remain in full force and effect and
continue to be effective if at any time payment and performance of the
Obligations, or any part thereof, is, pursuant to applicable law, avoided,
rescinded or reduced in amount, or must otherwise be restored or returned by the
Collateral Agent or any Noteholder, whether as a "voidable preference,"
"fraudulent conveyance" or otherwise, all as though such payment or performance
had not been made. In the event that any payment, or any part thereof, is
avoided, rescinded, reduced, restored or returned, the Obligations and the
security interests granted herein shall be reinstated and the Obligations shall
be deemed reduced only by such amount paid and not so avoided, rescinded,
reduced, restored or returned.
SECTION 12.8 GOVERNING LAW. This Agreement and the rights and
obligations of the parties hereto shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New York.
SECTION 12.9 ENTIRE AGREEMENT. This Agreement, together with
the schedule attached hereto and any applicable provisions of the Purchase
Agreement, the Collateral Documents and the Intercreditor Agreement, represents
the entire agreement of the parties and supercedes all prior agreements and
understandings relating to the subject matter hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
15
IN WITNESS WHEREOF, each of the undersigned has caused this
Pledge and Security Agreement to be duly executed and delivered as of the date
first above written.
PROXIM CORPORATION
By: __________________________________
Name:
Title:
WARBURG PINCUS PRIVATE EQUITY VIII,
L.P. as Collateral Agent
By: WARBURG, XXXXXX & CO.
its General Partner
By: __________________________________
Name: Xxxxxxx X. Xxxxxx
Title: Partner
The undersigned Noteholders join in the execution of this Agreement for
the purpose of accepting and agreeing to the provisions of Articles X and XI
hereof.
WARBURG PINCUS PRIVATE EQUITY VIII, L.P.
By: WARBURG, XXXXXX & CO.,
its General Partner
By: __________________________________
Name: Xxxxxxx X. Xxxxxx
Title: Partner
BROADVIEW CAPITAL PARTNERS L.P.
By: Broadview Capital Partners Management LLC
its General Partner
By: __________________________________
Name:
Title:
BROADVIEW CAPITAL PARTNERS
QUALIFIED PURCHASER FUND L.P.
By: Broadview Capital Partners Management LLC
its General Partner
By: ___________________________________
Name:
Title:
BROADVIEW CAPITAL PARTNERS
AFFILIATES FUND LLC
By: Broadview Capital LLC
its Manger
By: ___________________________________
Name:
Title:
[Signature Page to the Pledge and Security Agreement]
SCHEDULE A
COLLATERAL
The Collateral includes, without limitation, all of the
Grantor's right, title and interest in and to the following assets, properties,
rights and interests. All terms used herein have the meanings set forth in
Article 9 of the UCC (as those definitions may be amended from time to time
under the UCC), except as otherwise set forth below.
All goods and equipment now owned or hereafter acquired,
including, without limitation, all machinery, fixtures, vehicles (including
motor vehicles and trailers), and any interest in any of the foregoing, and all
attachments, accessories, accessions, replacements, substitutions, additions and
improvements to any of the foregoing, wherever located;
All inventory, now owned or hereafter acquired, including,
without limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products, including such
inventory as is temporarily out of the Grantor's custody or possession or in
transit and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the
foregoing and any documents of title representing any of the above;
All contract rights and general intangibles, now owned or
hereafter acquired, including, without limitation, goodwill, trademarks,
servicemarks, trade styles, trade names, patents, patent applications, leases,
license agreements, franchise agreements, blueprints, drawings, purchase orders,
customer lists, route lists, infringements, claims, commercial tort claims,
computer programs, computer discs, computer tapes, literature, reports,
catalogs, design rights, income tax refunds, payments of insurance and rights to
payment of any kind;
All now existing and hereafter arising accounts, contract
rights, royalties, license rights and all other forms of obligations owing to
the Grantor arising out of the sale or lease of goods, the licensing of
technology or the rendering of services by the Grantor, whether or not earned by
performance, and any and all credit insurance, insurance (including refund)
claims and proceeds, insurance policies covering the Collateral and key man life
insurance, guaranties, and other security therefor, as well as all merchandise
returned to or reclaimed by the Grantor;
All documents, cash, money, Receivables, deposit accounts,
securities, securities entitlements, securities accounts, investment property
(including, without limitation, all shares of capital stock, limited liability
company interests, partnership interests, interests in Delaware business trusts
or other trusts), financial assets, letters of credit, letter of credit rights,
certificates of deposit, instruments, chattel paper, electronic chattel paper
and tangible chattel paper now owned or hereafter acquired;
All copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and derivative
work thereof, whether published or unpublished, now owned or hereafter acquired;
all trade secret rights, including all rights to unpatented inventions,
know-how, operating manuals, license rights and agreements and confidential
information, now owned or hereafter acquired; all mask work or similar rights
available for the protection of semiconductor chips, now owned or hereafter
acquired; all claims for damages by way of any past, present and future
infringement of any of the foregoing; and
To the extent not otherwise included above, all Collateral
Records, Receivable Records, supporting obligations and Collateral Support
related to the foregoing.
A-2
EXHIBIT F
INTERCREDITOR AGREEMENT
THIS INTERCREDITOR AGREEMENT dated as of July __, 2003 (this
"Agreement") is by and among SILICON VALLEY BANK ("SVB"), WARBURG PINCUS PRIVATE
EQUITY VIII, L.P., as collateral agent for the Noteholders (as herein defined)
(in such capacity, the "Collateral Agent"), and PROXIM CORPORATION (the
"Company").
W I T N E S S E T H:
WHEREAS, reference is made to those certain SVB Agreements (as herein
defined) pursuant to which the Company has granted a security interest in and
lien on the SVB Collateral (as herein defined) to SVB;
WHEREAS, reference is made to that certain Securities Purchase
Agreement, dated as of July 22, 2003 (the "Purchase Agreement"), by and among
the Company and the purchasers identified therein (the "Purchasers") pursuant to
which the Company, subject to the conditions set forth therein, has agreed to
issue promissory notes (the "Notes") to the Purchasers in an aggregate original
principal amount of $30 million (the Purchasers and the other holders from time
to time of the Notes being referred to herein collectively as the
"Noteholders");
WHEREAS, pursuant to the Pledge and Security Agreement, dated as of
even date herewith, between the Collateral Agent and the Company, and all
schedules, exhibits and annexes attached thereto (the "Pledge and Security
Agreement"), the Company has granted to the Collateral Agent, for the benefit of
the Noteholders, security interests in and liens on the Noteholder Collateral
(as herein defined); and
WHEREAS, the Pledge and Security Agreement provides that the ranking
and priority of the security interests and liens granted thereunder shall be
governed in accordance with the provisions set forth herein.
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
SECTION 1 Definitions.
1.1 Definitions. Terms used but not otherwise defined herein shall have
the meanings provided in the Purchase Agreement. As used herein:
"Bankruptcy Code" means the United States Bankruptcy Code.
"Bankruptcy Event" means any voluntary or involuntary bankruptcy,
insolvency, receivership or other statutory or common law proceeding or
arrangement involving the Company or the readjustment of its liabilities or any
assignment for the benefit of its creditors or any marshalling of its assets or
liabilities.
"Event of Default" has the meaning given to it in the Notes.
"Noteholder Collateral" means "Collateral," as defined in the Pledge
and Security Agreement.
"Noteholder Collateral Documents" means the Pledge and Security
Agreement, any intellectual property security agreement and any and all other
security agreements, pledge agreements, deeds of trust, security deeds and like
instruments establishing or otherwise giving effect to the liens on and security
interests in the Noteholder Collateral, including Uniform Commercial Code
financing statements and notice filings in respect of intellectual property, in
each case as amended or modified.
"SVB Agreements" means collectively the following (as the same have
been previously modified or amended and as the same may hereafter be modified or
amended from time to time): (a) the Loan and Security Agreement, dated as of
December 27, 2002 and as amended on March 18, 2003, between SVB and the Company;
(b) 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; (d) the Accounts Receivable Financing Agreement,
dated as of June 13, 2003, between SVB and the Company; (e) the Temporary
Overadvance Agreement, dated as of June 23, 2003, between SVB and the Company;
(f) all present and future documents, instruments and agreements relating to the
foregoing, and (g) all schedules, exhibits and annexes attached to the
foregoing.
"SVB Collateral" means "Collateral," as defined in the SVB Agreements,
including without limitation the assets described on Exhibit A hereto.
"SVB Obligations" means all present and future indebtedness,
liabilities, guarantees and other obligations of the Company to SVB, including
without limitation, those relating to cash management services, letters of
credit and foreign exchange contracts, and interest accruing before or after any
bankruptcy or insolvency proceeding is commenced by or against the Company,
provided, that the aggregate principal amount thereof does not exceed
$20,000,000.
SECTION 2 Priority Provisions and Consent.
2.1 Priority. (a) The parties hereto agree that, as between SVB, on the
one hand, and the Collateral Agent and the Noteholders, on the other hand:
(i) the security interests and liens of SVB in the SVB Collateral
shall be first priority security interests and liens;
(ii) the security interests and liens of the Collateral Agent and
the Noteholders in the SVB Collateral shall be junior and subordinate
to the security interests and liens therein of SVB; and
(iii) the provisions of clauses (i) and (ii) above shall be
effective regardless of the times of creation, attachment or perfection
of any of such security interests and liens or of the order of
execution of any agreements or instruments relating thereto or of the
order of filing or recording of any financing statement, notice of lien
or other document with respect thereto.
2
(b) SVB hereby consents to: (i) the issuance of the Notes by the
Company to the Noteholders; (ii) the issuance of the Preferred Stock (1) upon
exchange of the Notes and (2) upon the Company's exercise of its Call Right;
(iii) the issuance of the Warrants; (iv) the issuance of the Common Stock
issuable upon the conversion of the Preferred Stock and upon exercise of the
Warrants; and (v) the creation and grant of the security interests in and liens
on the Noteholder Collateral to the Collateral Agent, on behalf of Noteholders,
pursuant to the Loan Documents.
2.2 Proceeds of SVB Collateral. Without limiting the provisions of
Section 2.3 hereof, any amounts received by the Collateral Agent or any
Noteholder on or as a result of any exercise of remedies under the Noteholder
Collateral Documents with respect to, or otherwise from the proceeds of a sale
or transfer or other disposition of, the SVB Collateral, or otherwise, shall be
paid over to SVB for application to the SVB Obligations in the manner provided
in the SVB Agreements.
2.3 Limitations on Rights and Remedies. Neither the Collateral Agent
nor any Noteholder shall be entitled to exercise any rights or remedies with
respect to the SVB Collateral, including any right to (a) enforce any liens
thereon or sell or otherwise foreclose on any portion of the SVB Collateral or
(b) request any action, institute proceedings, give any instructions, make any
election, give any notice to account debtors or make collections with respect to
any portion of the SVB Collateral. The Collateral Agent will execute and deliver
any and all releases and other documents that SVB may reasonably request to give
effect to any such sale of or foreclosure upon SVB Collateral (subject to the
rights of the Collateral Agent and the Noteholders to any SVB Collateral or
proceeds thereof if such sale or foreclosure shall result in a termination of
this Agreement pursuant to Section 4.4 hereof).
2.4 No Other Beneficiaries of Lien Subordination. This Agreement and
the provisions contained herein are intended only for the benefit of SVB and not
for the benefit of the Company or any other creditor of the Company. The Company
will not publish or give to any creditor or prospective creditor of the Company
any copy, statement or summary (or acquiesce in the publication or giving of any
such copy, statement or summary) as to the subordination hereunder of the lien
rights of the Collateral Agent, on behalf of the Noteholders, without also
stating or causing to be stated (in a conspicuous manner in the case of any
document) that such subordination is solely for the benefit of SVB and not for
the benefit of any other creditor of the Company or the Company.
2.5 Rights of SVB Not to be Impaired. No right of SVB to enforce the
provisions hereof shall at any time in any way be prejudiced or impaired by any
act or omission in good faith by SVB or by any noncompliance by any other party
to this Agreement with the terms and provisions hereof or of any documents or
instruments relating to the Noteholder Obligations, regardless of any knowledge
thereof that SVB may have or otherwise be charged with.
2.6 Waivers. SVB shall not have any liability or duty of any kind to
the Collateral Agent or the Noteholders with respect to the SVB Collateral,
except as set forth in this Agreement. The Collateral Agent and the Noteholders
hereby waive and release any claim that any of them may now or hereafter have
against SVB arising out of any and all actions which it, in good faith, takes or
omits to take with respect to the SVB Collateral, including (a) actions with
respect to the creation, perfection or continuation of liens on or security
interests in such
3
Collateral, (b) actions with respect to the foreclosure upon, sale, release or
disposition of, or failure to realize upon, any of such Collateral or (c) any
other action with respect to the enforcement of any provision with respect to
the SVB Collateral or the valuation, use, protection or disposition of such
Collateral. Notwithstanding the foregoing, SVB shall give the Collateral Agent
reasonable prior notice of any foreclosure upon or disposition of any SVB
Collateral by SVB.
2.7 Remedies. The rights and remedies of SVB under the SVB Agreements
shall be cumulative and not exclusive of any rights or remedies which it would
otherwise have. No failure or delay by SVB in exercising any such right shall
operate as a waiver of such right, nor shall any partial or single exercise of
any such right preclude its other or further exercise or the exercise of any
other right.
2.8 SVB's Rights. This is a continuing agreement of subordination of
Collateral Agent's and the Noteholders' security interests, and SVB may
continue, without notice to the Collateral Agent and the Noteholders, to extend
credit or other accommodations or benefits, and loan monies, to or for the
account of the Company in reliance hereon. SVB may at any time, in its
discretion, renew or extend the time of payment of all or any SVB Obligations,
amend or modify the SVB Obligations and any terms or provisions thereof
(including without limitation the rate of interest thereon) or of any agreement
securing the same or otherwise relating thereto, waive or release any SVB
Collateral which may be held therefor at any time, and make and enter into any
such agreement or agreements as SVB may deem proper or desirable relating to the
SVB Obligations, without notice to or further consent from the Collateral Agent
and the Noteholders; provided, however, that the aggregate principal amount of
the SVB Obligations shall not exceed $20,000,000 (plus interest and reasonable
costs, fees and expenses, including without limitation reasonable attorneys
fees) without the consent of the Collateral Agent. The Collateral Agent and the
Noteholders waive notice of acceptance hereof, notice of the creation of any SVB
Obligations, the giving or extension of any credit by SVB to the Company, or the
taking, waiving or releasing of any security therefor, or the making of any
modifications to any SVB Agreements (except as provided in the second sentence
of this Section 2.8), and the Collateral Agent and the Noteholders waive
presentment, demand, protest, notice of protest, notice of default, and all
other notices to which the Collateral Agent and the Noteholders might otherwise
be entitled, except as herein expressly set forth.
2.9 Agreement Not to Transfer Notes Without Consent. Each Noteholder
agrees that it will not transfer any Note held by it without causing the
transferee or assignee to execute a written acknowledgment accepting the terms
and conditions of this Agreement.
2.10 Receipt in Trust. In the event that, notwithstanding the
foregoing, any payment shall be made to the Collateral Agent or a Noteholder
that is not permitted by Section 2.2 hereof, such payment shall be received and
held in trust for SVB and shall be paid over and delivered forthwith to SVB or
its representative for application to the SVB Obligations in the manner provided
in the SVB Agreements.
2.11 Company Agreement. The Company agrees that any Event of Default
shall constitute a default and an event of default under the SVB Agreements.
4
SECTION 3 Intercreditor Arrangements in Bankruptcy.
(a) This Agreement shall remain in full force and effect and
enforceable pursuant to its terms in accordance with Section 510(a) of the
Bankruptcy Code, and all references herein to the Company shall be deemed to
apply to such entity as debtor in possession and to any trustee in bankruptcy
for the estate of such entity.
(b) Except as otherwise specifically permitted in this Section 3, until
the SVB Obligations have been paid in full and all financing commitments under
the SVB Agreements have expired or been terminated, the Collateral Agent will
not assert, without the written consent of SVB, any claim, motion or objection
in respect of the SVB Collateral or the Noteholder Collateral in connection with
any Bankruptcy Event (other than a claim or assertion that SVB has acted in bad
faith or in violation of law) which could otherwise be asserted or raised in
connection with such Bankruptcy Event by the Collateral Agent or a Noteholder as
a creditor of the Company, including without limitation any claim, motion or
objection seeking or opposing adequate protection or relief from the automatic
stay in respect of the SVB Collateral or the Noteholder Collateral.
(c) Without limiting the generality of the foregoing, the Collateral
Agent agrees that if a Bankruptcy Event occurs, (i) SVB may consent to the use
of cash collateral on such terms and conditions and in such amounts as it shall
in good faith determine without seeking or obtaining the consent of the
Collateral Agent or the Noteholders as holders of an interest in the Noteholder
Collateral; (ii) SVB may provide postpetition financing for the Company pursuant
to Section 364 of the Bankruptcy Code or other applicable law and on such terms
and conditions and in such amounts as it shall in good faith determine without
seeking or obtaining the consent of the Collateral Agent or the Noteholders as
holders of an interest in the Noteholder Collateral, and neither the Collateral
Agent nor the Noteholders shall oppose such financing; (iii) neither the
Collateral Agent nor the Noteholders shall oppose the Company's use of cash
collateral on the basis that their interest in the Noteholder Collateral is
impaired by such use or inadequately protected by such use to the extent such
use has been approved by SVB in good faith; and (iv) neither the Collateral
Agent nor the Noteholders shall oppose any sale or other disposition of any
assets comprising part of the Noteholder Collateral free and clear of security
interests and liens of any party, including the Noteholders, under Section 363
of the Bankruptcy Code on the basis that the interest of the Noteholders in the
Noteholder Collateral is impaired by such sale or inadequately protected as a
result of such sale if SVB has consented in good faith to such sale or
disposition of such assets.
(d) The Collateral Agent agrees that it will not initiate or prosecute
any claim, action or other proceeding (i) challenging the validity or
enforceability of the SVB Agreements, (ii) challenging the validity,
enforceability or unavoidability of any claim of SVB with respect to the SVB
Collateral, (iii) challenging the perfection, enforceability or unavoidability
of any liens securing the SVB Collateral or (iv) asserting any such claims which
the Company may hold with respect to SVB or the SVB Obligations.
(e) To the extent that SVB receives payments or transfers on the SVB
Obligations or proceeds of the SVB Collateral which are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver or any other party under
5
any bankruptcy or other applicable law, then, to the extent of such payment or
proceeds received, the SVB Obligations, or part thereof, intended to be
satisfied shall be revived and continue in full force and effect enjoying all
rights and benefits of this Agreement as if such payments or proceeds had not
been received by SVB.
(f) Notwithstanding any other provision of this Section 3, the
3Collateral Agent and each Noteholder shall be entitled to file any necessary
responsive or defensive pleadings in opposition to any motion, claim, adversary
proceeding or other pleading made by any person objecting to or otherwise
seeking the disallowance of the claims of the Noteholders, including without
limitation any claims secured by the Noteholder Collateral, or challenging the
perfection, enforceability or unavoidability of any liens securing the
Noteholder Collateral.
SECTION 4 Miscellaneous.
4.1 Successors. This Agreement is being entered into for the benefit of
SVB, the Collateral Agent and the Noteholders and shall be binding upon all of
the parties hereto.
4.2 Further Assurances. The Company and the Collateral Agent will, at
the Company's expense, and at any time and from time to time, promptly execute
and deliver all further instruments and documents, and take all further action,
that SVB may reasonably request in order to perfect or otherwise protect any
right or interest granted or purported to be granted hereby or to enable SVB to
exercise and enforce its rights and remedies hereunder. The Company and SVB
will, at the Company's expense and as soon as practical after the payment in
full of the SVB Obligations and expiration or termination of the financing
commitments under the SVB Agreements, promptly execute, deliver and file any and
all further instruments and documents necessary to evidence the termination of
liens granted under the SVB Agreements.
4.3 Notices; Amendments etc.
(a) All notices, requests and demands to or upon the parties to this
Agreement to be effective shall be in writing (including by facsimile or
telecopy transmission) and shall be deemed to have been duly given or made (i)
when delivered by hand or (ii) three business days after being deposited in the
mail, postage prepaid or (iii) one business day after being sent by priority
overnight mail with an internationally recognized overnight delivery carrier or
(iv) if by telecopy or facsimile, when received, at the addresses or
transmission numbers for notices set forth as follows or to such other address
or transmission number as may be hereafter notified in writing by the respective
parties hereto:
6
SVB: SILICON VALLEY BANK
0000 Xxxx Xxxx
Xxxxx 000, Xxxx Xxxx XX 00000
Attention: Xxxx Xxxxx
Facsimile: (000) 000-0000
COLLATERAL AGENT AND NOTEHOLDERS: C/O WARBURG PINCUS PRIVATE EQUITY
VIII, L.P.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxx
Facsimile: (000) 000-0000
COMPANY: PROXIM CORPORATION
000 Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Chief Financial Officer
Facsimile: (000) 000-0000
(b) This Agreement may be amended and the terms hereof may be waived
only with the written consent of each of SVB and the Collateral Agent and, in
the case of any such amendment or waiver that would adversely affect the
Company, the Company.
4.4 Termination. This Agreement shall terminate upon payment in full of
the SVB Obligations and expiration or termination of the financing commitments
under the SVB Agreements.
4.5 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction, shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or invalidity without invalidating
the remaining portions hereof or affecting the validity or enforceability of
such provision in any other jurisdiction.
4.6 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
4.7 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA. At
SVB's option, all actions and proceedings, to which SVB is a party, based upon,
arising out of or relating to, this Agreement shall be litigated exclusively in
courts located within Santa Xxxxx County, California, and the Collateral Agent
consents to the jurisdiction of any such court and consents to the service of
process in any such action or proceeding by personal delivery, first-class mail,
or any other method permitted by law, and waives any and all rights to transfer
or change the venue of any such action or proceeding to any court located
outside Santa Xxxxx County, California.
7
4.8 Counterparts. This Agreement may be executed in any number of
counterparts (including by facsimile), and each such counterpart shall be deemed
to be an original instrument, but all such counterparts together shall
constitute one agreement.
[Remainder of this page intentionally left blank.]
8
IN WITNESS WHEREOF, the undersigned have entered into this Agreement as
of the date shown above.
SILICON VALLEY BANK
By:_________________________________
Name:
Title:
WARBURG PINCUS PRIVATE EQUITY VIII,
L.P., as Collateral Agent
By: Warburg, Xxxxxx & Co.
its General Partner
By:_________________________________
Name: Xxxxxxx X. Xxxxxx
Title: Partner
PROXIM CORPORATION
By:_________________________________
Name:
Title:
Signature Page to Intercreditor Agreement
EXHIBIT "A"
All right, title and interest of Company in and to the following,
whether now owned or hereafter arising or acquired and wherever located: all
Accounts; all Inventory; all Equipment; all Deposit Accounts; all General
Intangibles (including without limitation all Intellectual Property); all
Investment Property; all Other Property; and any and all claims, rights and
interests in any of the above, and all guaranties and security for any of the
above, and all substitutions and replacements for, additions, accessions,
attachments, accessories, and improvements to, and proceeds (including proceeds
of any insurance policies, proceeds of proceeds and claims against third
parties) of, all of the above, and all Company's books relating to any of the
above.
As used above in this Exhibit A, the following terms have the following
meanings:
"Accounts" means all present and future "accounts" as defined in the
California Uniform Commercial Code in effect on the date hereof with such
additions to such term as may hereafter be made, and includes without limitation
all accounts receivable and other sums owing to Company.
"Deposit Accounts" means all present and future "deposit accounts" as
defined in the California Uniform Commercial Code in effect on the date hereof
with such additions to such term as may hereafter be made, and includes without
limitation all general and special bank accounts, demand accounts, checking
accounts, savings accounts and certificates of deposit.
"Equipment" means all present and future "equipment" as defined in the
California Uniform Commercial Code in effect on the date hereof with such
additions to such term as may hereafter be made, and includes without limitation
all machinery, fixtures, goods, vehicles (including motor vehicles and
trailers), and any interest in any of the foregoing.
"General Intangibles" means all present and future "general
intangibles" as defined in the California Uniform Commercial Code in effect on
the date hereof with such additions to such term as may hereafter be made, and
includes without limitation all Intellectual Property, payment intangibles,
royalties, contract rights, goodwill, franchise agreements, purchase orders,
customer lists, route lists, telephone numbers, domain names, claims, income tax
refunds, security and other deposits, options to purchase or sell real or
personal property, rights in all litigation presently or hereafter pending
(whether in contract, tort or otherwise), insurance policies (including without
limitation key man, property damage, and business interruption insurance),
payments of insurance and rights to payment of any kind.
"Intellectual Property" means all present and future (a) copyrights,
copyright rights, copyright applications, copyright registrations and like
protections in each work of authorship and derivative work thereof, whether
published or unpublished, (b) trade secret rights, including all rights to
unpatented inventions and know-how, and confidential information; (c) mask work
or similar rights available for the protection of semiconductor chips; (d)
patents, patent applications and like protections including without limitation
improvements, divisions, continuations, renewals, reissues, extensions and
continuations-in-part of the same; (e) trademarks, servicemarks, trade styles,
and trade names, whether or not any of the foregoing are registered, and all
applications to register and registrations of the same and like protections, and
the entire goodwill of the business of Company connected with and symbolized by
any such trademarks; (f) computer software and computer software products; (g)
designs and design
rights; (h) technology; (i) all claims for damages by way of past, present and
future infringement of any of the rights included above; (j) all licenses or
other rights to use any property or rights of a type described above.
"Inventory" means all present and future "inventory" as defined in the
California Uniform Commercial Code in effect on the date hereof with such
additions to such term as may hereafter be made, and includes without limitation
all merchandise, raw materials, parts, supplies, packing and shipping materials,
work in process and finished products, including without limitation such
inventory as is temporarily out of Company's custody or possession or in transit
and including any returned goods and any documents of title representing any of
the above.
"Investment Property" means all present and future investment property,
securities, stocks, bonds, debentures, debt securities, partnership interests,
limited liability company interests, options, security entitlements, securities
accounts, commodity contracts, commodity accounts, and all financial assets held
in any securities account or otherwise, wherever located, and all other
securities of every kind, whether certificated or uncertificated.
"Other Property" means the following as defined in the California
Uniform Commercial Code in effect on the date hereof with such additions to such
term as may hereafter be made, and all rights relating thereto: all present and
future "commercial tort claims", "documents", "instruments", "promissory notes",
"chattel paper", "letters of credit", "letter-of-credit rights", "fixtures",
"farm products" and "money"; and all other goods and personal property of every
kind, tangible and intangible, whether or not governed by the California Uniform
Commercial Code.
