EXHIBIT 2.1
EXECUTION VERSION
SECURITIES PURCHASE AGREEMENT
BY AND AMONG
PROXIM CORPORATION
AND
THE PURCHASERS NAMED HEREIN
DATED AS OF JULY 27, 2004
TABLE OF CONTENTS
Page
1. Definitions............................................................................... 1
2. Authorization, Purchase and Sale of Notes; Exchange of the Outstanding Notes.............. 10
2.1. Authorization of Securities............................................................... 10
2.2. Issuance of the Notes; Exchange of the Outstanding Notes.................................. 10
2.3. The Exchange.............................................................................. 11
2.4. The Closing and the Exchange Closing...................................................... 11
2.5. Use of Proceeds........................................................................... 12
3. Representations and Warranties of the Company............................................. 12
3.1. Incorporation............................................................................. 12
3.2. Subsidiaries.............................................................................. 12
3.3. Capitalization............................................................................ 12
3.4. Authorization............................................................................. 13
3.5. Valid Issuance............................................................................ 14
3.6. Financial Statements...................................................................... 14
3.7. Absence of Certain Changes................................................................ 14
3.8. Absence of Litigation..................................................................... 14
3.9. Intellectual Property..................................................................... 15
3.10. Disclosure Documents...................................................................... 15
3.11. Books and Records......................................................................... 16
3.12. Consents.................................................................................. 16
3.13. No Conflict............................................................................... 16
3.14. Brokers or Finders........................................................................ 16
3.15. Nasdaq National Market.................................................................... 16
3.16. No Manipulation of Stock.................................................................. 17
3.17. Company Not an "Investment Company"....................................................... 17
3.18. Title to Property and Assets.............................................................. 17
3.19. Labor Relations........................................................................... 17
3.20. Employee Benefits......................................................................... 17
3.21. Environmental Matters..................................................................... 18
3.22. Taxes..................................................................................... 19
3.23. Insurance................................................................................. 19
3.24. General Solicitation; No Integration...................................................... 20
3.25. Accounting Controls....................................................................... 20
3.26. By-Laws................................................................................... 20
3.27. Opinion of the Financial Advisor.......................................................... 20
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4. Representations and Warranties of Each Purchaser.......................................... 20
4.1. Organization.............................................................................. 20
4.2. Authorization............................................................................. 20
4.3. Purchase Entirely for Own Account; Etc.................................................... 20
4.4. Investor Status; Etc...................................................................... 21
4.5. Securities Not Registered................................................................. 21
4.6. No Conflict............................................................................... 21
4.7. Brokers................................................................................... 21
4.8. Consents.................................................................................. 21
4.9. No Manipulation of Stock.................................................................. 21
4.10. No General Solicitation................................................................... 21
5. Covenants................................................................................. 22
5.1. HSR Act Filings........................................................................... 22
5.2. Other Governmental Approvals.............................................................. 22
5.3. Further Assurances........................................................................ 22
5.4. Board Designees and Observers............................................................. 22
5.5. Series C Preferred Certificate of Designations............................................ 24
5.6. Covenant Pending the Closing.............................................................. 24
5.7. Proxy Statement........................................................................... 24
5.8. Subscription Right........................................................................ 25
5.9. Standstill................................................................................ 25
5.10. Nominating Committee; Agreement to Vote................................................... 25
5.11. Affirmative Covenants in Connection with the Sale of the Notes............................ 26
5.12. Negative Covenants in Connection with the Sale of the Notes............................... 27
5.13. Exchange of Notes Upon a Qualified Transaction............................................ 30
5.14. Stock Options............................................................................. 31
6. Conditions Precedent...................................................................... 31
6.1. Conditions to the Obligation of the Purchasers to Consummate the Closing.................. 31
6.2. Conditions to the Obligation of the Company to Consummate the Closing..................... 32
6.3. Conditions Precedent to the Exchange Closing.............................................. 33
7. Registration of the Securities; Compliance with the Securities Act........................ 33
7.1. Securities Law Transfer Restrictions...................................................... 33
7.2. Legends................................................................................... 33
7.3. Registration Procedures and Other Matters................................................. 34
7.4. Transfer of Securities; Suspension........................................................ 35
7.5. Company Registration...................................................................... 37
7.6. Indemnification........................................................................... 38
7.7. Termination of Conditions and Obligations................................................. 41
7.8. Information Available..................................................................... 41
7.9. Delay of Registration..................................................................... 42
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8. Termination............................................................................... 42
8.1. Termination............................................................................... 42
8.2. Effect of Termination..................................................................... 42
9. Miscellaneous Provisions.................................................................. 42
9.1. Public Statements or Releases............................................................. 42
9.2. Rights Cumulative......................................................................... 42
9.3. Pronouns.................................................................................. 42
9.4. Notices................................................................................... 43
9.5. Captions.................................................................................. 43
9.6. Severability.............................................................................. 43
9.7. Confidentiality........................................................................... 43
9.8. Governing Law; Injunctive Relief.......................................................... 44
9.9. Waiver.................................................................................... 44
9.10. Expenses.................................................................................. 44
9.11. Assignment................................................................................ 44
9.12. Counterparts.............................................................................. 45
9.13. 2002 Purchase Agreement and 2003 Purchase Agreement....................................... 45
9.14. Entire Agreement.......................................................................... 45
EXHIBITS
Exhibit A -- Schedule of Purchasers
Exhibit B -- Form of Notes
Exhibit C -- Form of Certificate of Designations, Preferences and Rights of the
Series C Preferred Stock
Exhibit D -- Form of Pledge and Security Agreement
Exhibit E -- Form of Intercreditor Agreement
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This SECURITIES PURCHASE AGREEMENT (this "Agreement") is dated as of
the 27th day of July 2004 by and among Proxim Corporation, a Delaware
corporation with its principal office at 000 Xxxxxxx Xxxxx, Xxxxxxxxx,
Xxxxxxxxxx 00000 (the "Company"), and each of the purchasers named in Exhibit A
hereto (each, a "Purchaser" and collectively, the "Purchasers").
WHEREAS, the Company has authorized the issuance of (i) the Notes (as
defined below) and (ii) up to 400,000 shares of its Series C Preferred Stock,
par value $.01 per share (the "Preferred Stock");
WHEREAS, the Company seeks financing for general corporate purposes;
WHEREAS, the Company desires to issue and sell to each Purchaser
pursuant to this Agreement, and each Purchaser, severally, desires to purchase
from the Company the aggregate principal amount of the Notes as is set forth
opposite its respective name in Exhibit A hereto under the heading "Principal
Amount of Notes to be Purchased";
WHEREAS, in connection with the issuance of the Notes, each Purchaser,
severally, desires to exchange the Outstanding Notes (as defined below) held by
such Purchaser in accordance with the terms of such Outstanding Notes and the
2003 Purchase Agreement (as defined below) for the number of shares of Series B
Convertible Preferred Stock, par value $.01 per share, of the Company (the
"Series B Preferred Stock") as is set forth opposite its respective name in
Exhibit A hereto under the heading "Shares of Series B Preferred Stock Issuable
upon Exchange of the Outstanding Notes"; and
WHEREAS, in connection with the issuance of the Notes, each Purchaser,
severally, desires to, immediately upon receipt of Stockholder Approval (as
defined below), exchange (the "Exchange") (i) all shares of Series A Convertible
Preferred Stock, par value $.01 per share, of the Company (the "Series A
Preferred Stock"), (ii) all shares of Series B Preferred Stock and (iii) all
Warrants (as defined below) then held by such Purchaser for the number of shares
of Common Stock and Series C Preferred Stock as is set forth opposite its
respective name in Exhibit A hereto under the headings "Common Stock Issuable
upon Stockholder Approval of the Exchange" and "Series C Preferred Stock
Issuable upon Stockholder Approval of the Exchange."
NOW THEREFORE, in consideration of the mutual agreements,
representations, warranties and covenants herein contained, the parties hereto
agree as follows:
1. Definitions. As used in this Agreement, the following terms shall
have the following respective meanings:
1.1. "Affiliate" means, with respect to any Person, any other Person
controlling, controlled by or under direct or indirect common control with such
Person. For the purposes of this definition "control," when used with respect to
any specified Person, shall mean the power to direct the management and policies
of such Person, directly or indirectly, whether through ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" shall have meanings correlative to the foregoing.
1.2. "Agreement" has the meaning set forth in the preamble
herein.
1.3. "Announcement Date" means July 27, 2004.
1.4. "BCP" means BCP Capital, L.P. (formerly Broadview Capital
Partners, L.P.), BCP Capital QPF, L.P. (formerly Broadview Capital Partners
Qualified Purchaser Fund, L.P.) and BCP Affiliates Fund LLC (formerly Broadview
Capital Partners Affiliates Fund L.L.C.)
1.5. "Bear Xxxxxxx" means Bear, Xxxxxxx & Co., Inc., financial
adviser to the Company.
1.6. "Beneficially Owns" or "Beneficially Owned" has the
meaning set forth in Rules 13d-3 and 13d-5 of the Exchange Act, but without
taking into account any contractual restrictions or limitations on voting or
other rights.
1.7. "Board Designee" has the meaning set forth in Section
5.4(a) herein.
1.8. "Board of Directors" has the meaning set forth in Section
3.4 herein.
1.9. "Business Day" means any day except a Saturday or Sunday
or day on which banking institutions are legally authorized to close in the City
of New York.
1.10. "Charter Amendment Proposals" has the meaning set forth
in Section 5.7(b) herein.
1.11. "Class B Common Stock" has the meaning set forth in
Section 3.3(a) herein.
1.12. "Closing" has the meaning set forth in Section 2.4(a)
herein.
1.13. "Closing Date" has the meaning set forth in Section
2.4(a) herein.
1.14. "Code" means the Internal Revenue Code of 1986, as
amended.
1.15. "Collateral" has the meaning set forth in the Pledge and
Security Agreement.
1.16. "Collateral Agent" means Warburg.
1.17. "Commitment" has the meaning set forth in Section 3.7
herein.
1.18. "Common Stock" means the class A common stock, par value
$.01 per share, of the Company.
1.19. "Company" has the meaning set forth in the Preamble
herein.
1.20. "Confidential Information" has the meaning set forth in
Section 9.7 herein.
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1.21. "Control" (including the terms "controlled by" and
"under common control with") means the possession, directly or indirectly, of
the power to direct or cause the direction of the management policies of a
Person, whether through the ownership of voting securities, by contract or
credit arrangement, as trustee or executor, or otherwise.
1.22. "Disclosure Documents" means the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 2003, filed by the Company
on March 15, 2004; the Company's Schedule 14A Proxy Statement for its Annual
Meeting of Stockholders, filed by the Company on April 8, 2004; the Company's
Quarterly Report on Form 10-Q for the quarter ended April 2, 2004; and any
Current Reports on Form 8-K filed by the Company on or after January 1, 2004,
together in each case with any documents incorporated by reference therein or
exhibits thereto.
1.23. "Disclosing Party" has the meaning set forth in Section
9.7 herein.
1.24. "Disclosure Schedule" has the meaning set forth in
Section 3 herein.
1.25. "Employees" has the meaning set forth in Section 3.19
herein.
1.26. "Environmental Laws" has the meaning set forth in
Section 3.21(b) herein.
1.27. "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
1.28. "ERISA Affiliate" has the meaning set forth in Section
3.20(a) herein.
1.29. "Event of Default" has the meaning ascribed to it in
Section 7 of the Notes.
1.30. "Exchange" has the meaning set forth in the Recitals
herein.
1.31. "Exchange Act" means the Securities Exchange Act of
1934, as amended, and all of the rules and regulations promulgated thereunder.
1.32. "Exchange Closing" has the meaning set forth in Section
2.4(b) herein.
1.33. "Financial Statements" has the meaning set forth in
Section 3.6 herein.
1.34. "Foreign Plans" has the meaning set forth in Section
3.20(h) herein.
1.35. "Former Employees" means individuals other than
Employees who at any time prior to the date of this Agreement performed services
as an Employee primarily for the Company.
1.36. "GAAP" has the meaning set forth in Section 3.6 herein.
1.37. "Guaranteeing Subsidiaries" means Proxim Wireless
Networks, Inc., WirelessHome Corporation and Proxim International Holdings, Inc.
(formerly Western Multiplex International Holdings, Inc.).
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1.38. "Hazardous Material" has the meaning set forth in
Section 3.21(a) herein.
1.39. "Holders" has the meaning set forth in Section 7.4(a)
herein.
1.40. "HSR Act" has the meaning set forth in Section 3.12
herein.
1.41. "Independent Directors" means members of the Board of
Directors who are: (i) not officers, directors or affiliates of the Company;
(ii) independent as defined under applicable requirements of federal law, state
law and Nasdaq; and (iii) unaffiliated with any Purchaser.
1.42. "Intellectual Property" has the meaning set forth in
Section 3.9 herein.
1.43. "Intercreditor Agreement" means the Intercreditor
Agreement by and among SVB, the Company, the Collateral Agent and the
Guaranteeing Subsidiaries substantially in the form attached hereto as Exhibit
H.
1.44. "Investment Company Act" has the meaning set forth in
Section 3.17 herein.
1.45. "Irreparable Breach" has the meaning set forth in
Section 9.8(b) herein.
1.46. "Liability" means any liability or obligation whether
known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether matured or unmatured, whether
liquidated or unliquidated, whether incurred or consequential and whether due or
to become due, including, without limitation, any obligation that is created,
issued, incurred or assumed by the Company for borrowed money or arising out of
any credit facility or for the deferred purchase price of property or services
(such as any obligation of the Company under any conditional sale or other title
retention agreement; any guaranty by the Company of liabilities or indebtedness
of any other party; the capitalized amount under any capital lease by the
Company as lessee or which is the substantial equivalent of a financing of the
property so leased; and any reimbursement or similar obligation in respect of
any letter of credit or other financial accommodation).
1.47. "Lien" means any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other), charge
or other security interest or any preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including any conditional sale or other title retention agreement and any
capital lease having substantially the same economic effect as any of the
foregoing).
1.48. "Loan Documents" means this Agreement, the Notes, the
Pledge and Security Agreement, the Intercreditor Agreement and any other
agreement, document or instrument pursuant to which the Company grants, or
confirms a grant of, a Lien on or security interest in any of its assets,
properties or rights, interests as security for the Obligations.
1.49. "Material Adverse Change" means (i) any change, event or
occurrence which, individually or in the aggregate, has had a material adverse
effect on, or a material adverse change in (a) the business, operations,
financial condition or results of operations of the
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Company and its subsidiaries, taken as a whole, that had the effect of reducing
revenues or net income of the Company and its subsidiaries, taken as a whole, by
more than $15 million in any quarter compared to published financial statements
(if publicly announced) or consensus analysts estimates (in the case of a
quarter for which financial results have not yet been publicly announced) and
that was not disclosed in any Disclosure Document filed on or prior to the date
hereof (and excluding, in all cases, the effects of any restructuring charges
already taken or otherwise publicly announced, and the effects of terminating
the Company's 000 Xxxxxx Xxx lease obligation, as publicly disclosed by the
Company), or (b) the ability of the Company to perform its obligations under
this Agreement, in each case other than any change, event or occurrence (w)
resulting from conditions in the United States or foreign economies or
securities markets in general or any change in the Company's stock price, (x)
resulting from conditions in the industry in which the Company operates in
general, except to the extent that the Company is disproportionately affected
thereby, (y) resulting from the public announcement of the transactions
contemplated by this Agreement or (z) arising out of or resulting from actions
of the Purchasers in connection with this Agreement, (ii) any adverse ruling or
judgment in the pending Symbol patent infringement litigation, other than an
adverse ruling or judgment that is disclosed, or is a confirmation of an
existing adverse ruling or judgment that is disclosed, in Section 3.8 of the
Disclosure Schedule, which ruling or judgment results in the obligation of the
Company and/or any of its subsidiaries under GAAP to establish a reserve in
respect of such ruling or judgment in an amount excess of $5 million, or (iii)
any other rulings or judgments made against the Company and or/any of its
subsidiaries in litigations other than the Symbol patent infringement
litigation, the effects of which rulings or judgments are material and adverse
to the Company and its subsidiaries, taken as a whole.
1.50. "Material Adverse Effect" means, collectively, a
material adverse effect on, or a material adverse change in, or group of such
effects on or changes in, (i) the business, operations, financial condition,
results of operations, assets or liabilities of the Company and its
subsidiaries, taken as a whole or (ii) the ability of the Company to perform its
obligations under any of the Loan Documents, in each case other than any change,
event or occurrence (a) resulting from conditions in the United States or
foreign economies or securities markets in general or any change in the
Company's stock price, (b) resulting from conditions in the industry in which
the Company operates in general, except to the extent that the Company is
disproportionately affected thereby, (c) resulting from the public announcement
of the transactions contemplated by this Agreement, or (d) arising out of or
resulting from actions of the Purchasers in connection with this Agreement.
1.51. "NASD" has the meaning set forth in Section 3.15 herein.
1.52. "Nasdaq" has the meaning set forth in Section 3.15
herein.
1.53. "Notes" means one or more senior secured promissory
note(s) containing the same terms and conditions, and with the same exchange
features, as set forth in the form of note attached hereto as Exhibit B.
1.54. "Obligations" has the meaning set forth in the Pledge
and Security Agreement.
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1.55. "Outstanding Notes" means (i) the $30,000,000 aggregate
principal amount of the Company's Amended and Restated Secured Subordinated
Promissory Notes and (ii) the $10,000,000 aggregate principal amount of the
Company's Senior Secured Promissory Notes, in each case issued to the Purchasers
pursuant to the terms of the 2003 Purchase Agreement.
1.56. "Permitted Lien" means any of the following Liens:
(a) Liens for Taxes or assessments and similar charges, which
are either (i) not delinquent or (ii) being contested diligently and in good
faith by appropriate proceedings and as to which the Company has set aside
adequate reserves on its books;
(b) statutory Liens, such as mechanic's, materialman's,
warehouseman's, carriers or other like Liens, incurred in the ordinary course of
business, which are to be paid in the ordinary course of business or which are
being contested diligently and in good faith by appropriate proceedings and as
to which the Company has set aside adequate reserves on its books;
(c) encumbrances consisting of zoning restrictions, easements,
licenses, reservations, covenants, conditions, waivers, restrictions on the use
of property or minor irregularities of title that do not materially impair the
use of any property which is material in the operation of the Company's
business;
(d) Liens securing purchase money equipment lease (or similar)
obligations, but only in the property which is the subject of such obligations
and only to the extent such obligations are permitted pursuant to the terms
hereof;
(e) Liens arising under or pursuant to the Loan Documents;
(f) Liens in respect of judgments or awards with respect to
which the Company, in good faith, is prosecuting an appeal or proceeding for
review and in respect of which a stay of execution upon such appeal or
proceeding for review shall have been secured, and as to which judgments or
awards the Company shall have established adequate reserves on its books;
(g) pledges or deposits made in the ordinary course of the
Company's business consistent with past practice to secure payment of workers'
compensation or to participate in any fund in connection with workers'
compensation, unemployment insurance, pensions or other social security
programs;
(h) Liens existing on the date hereof, including the Liens
granted to SVB under the SVB Agreements;
(i) nonexclusive licenses and sublicenses granted by the
Company in the ordinary course of its business;
(j) leases or subleases granted in the ordinary course of the
Company's business, including in connection with Company's leased premises or
leased property;
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(k) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), contracts for the purchase of
property, leases, statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature, in each case incurred in the
ordinary course of business and not representing an obligation for borrowed
money, provided the total amount of all such outstanding deposits under this
clause (k) does not exceed $250,000 at any time outstanding;
(l) Liens arising by virtue of any contractual, statutory or
common law provision relating to banker's liens, rights of set-off or similar
rights and remedies as to deposit accounts or other funds maintained with a
creditor depository institution;
(m) Liens in favor of customs and revenue authorities arising
as a matter of law to secure payment of customs duties in connection with the
importation of goods;
(n) Liens on insurance proceeds securing the payment of
financed insurance premiums; and
(o) Liens incurred in the extension, renewal or refinancing of
the indebtedness secured by Liens described in (d), (e) and (h), but any
extension, renewal or replacement Lien must be limited to the property
encumbered by the existing Lien and the principal amount of the indebtedness may
not increase and maturity may not decrease.
1.57. "Person" means an individual, partnership, corporation,
limited liability company, business trust, joint stock company, trust,
unincorporated association or joint venture.
1.58. "Plans" means employee benefit plans as defined in
Section 3(3) of ERISA and all other employee benefit practices or arrangements,
including, without limitation, any such practices or arrangements providing
severance pay, sick leave, vacation pay, salary continuation for disability,
retirement benefits, deferred compensation, bonus pay, incentive pay, stock
options or other stock-based compensation, hospitalization insurance, medical
insurance, life insurance, scholarships or tuition reimbursements, maintained by
the Company or any of its subsidiaries or to which the Company or any of its
subsidiaries is obligated to contribute for Employees or Former Employees.
1.59. "Pledge and Security Agreement" means the Pledge and
Security Agreement by and among the Company, the Collateral Agent and the
Purchasers (with respect to accepting and agreeing to the provisions of Articles
X and XI thereof), in substantially the form attached hereto as Exhibit D.
1.60. "Proposed Securities" has the meaning set forth in
Section 5.8(a)(i) herein.
1.61. "Proposed Transaction" means the transactions
contemplated by the Transaction Documents.
1.62. "Prospectus" has the meaning set forth in Section 7.3(c)
herein.
1.63. "Purchaser" has the meaning set forth in the Preamble
herein.
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1.64. "Qualified Transaction" means a transaction or series of
related transactions occurring after the date hereof in which the Company issues
and sells shares of Common Stock and/or warrants to purchase Common Stock in
exchange for aggregate gross proceeds to the Company of at least $20 million,
which proceeds shall be remitted to the Company on the date of the closing of
such transaction (excluding the principal amount of the Notes exchanged in such
transaction).
1.65. "Recipient" has the meaning set forth in Section 9.7
herein.
1.66. "Registration Statement" has the meaning set forth in
Section 7.3(a) herein.
1.67. "SEC" means the Securities and Exchange Commission.
1.68. "Securities" means the Notes, the shares of Series C
Preferred Stock and Common Stock issuable upon the Exchange; provided, that for
purposes of Section 7 (other than Section 7.1 and 7.2), "Securities" shall not
include the Notes or the Series C Preferred Stock; provided, further, that for
purposes of Section 7.3, "Securities" shall also include the shares of Common
Stock issuable upon the Exchange and upon the exchange of the Notes pursuant to
Section 5.13.
1.69. "Securities Act" means the Securities Act of 1933, as
amended, and all of the rules and regulations promulgated thereunder.
1.70. "Series A Preferred Stock" has the meaning set forth in
the Recitals herein.
1.71. "Series A Preferred Certificate of Designations" means
the Certificate of Designations, Preferences and Rights of Series A Convertible
Preferred Stock of the Company, which was filed with the Secretary of State of
the State of Delaware on August 2, 2002, pursuant to the 2002 Purchase
Agreement.
1.72. "Series B Preferred Stock" has the meaning set forth in
the Recitals herein.
1.73. "Series B Preferred Certificate of Designations" means
the Certificate of Designations, Preferences and Rights of Series B Convertible
Preferred Stock of the Company, which was filed with the Secretary of State of
the State of Delaware on December 15, 2003, pursuant to the 2003 Purchase
Agreement.
1.74. "Series C Preferred Stock" has the meaning set forth in
the Recitals herein.
1.75. "Series C Preferred Certificate of Designations" means
the Certificate of Designations, Preferences and Rights of Series C Preferred
Stock of the Company, which will be filed within two Business Days of receipt of
Stockholder Approval with the Secretary of State of the State of Delaware, which
shall contain the same terms and conditions set forth in the copy attached
hereto as Exhibit C.
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1.76. "Special Meeting" means the special meeting of the
stockholders of the Company called by the Company to vote on the Special Meeting
Proposals.
1.77. "Special Meeting Proposal" means (i) the issuance of
shares of Series C Preferred Stock and Common Stock upon exchange of the shares
of Series A Preferred Stock, shares of Series B Preferred Stock and Warrants
held by the Purchasers in accordance with the terms of this Agreement, (ii) the
election of three Class I directors of the Company, (iii) the ratification of
the appointment of PriceWaterhouseCoopers LLP as independent accountants of the
Company for the fiscal year ending December 31, 2004 and (iv) such other
proposals approved by the Company's Board of Directors, including the
affirmative vote of at least one (1) Board Designee.
1.78. "Stockholder Approval" means stockholder approval of the
Special Meeting Proposals.
1.79. "Suspension" has the meaning set forth in Section 7.4(c)
herein.
1.80. "Suspension Notice" has the meaning set forth in Section
7.4(c) herein.
1.81. "SVB" means Silicon Valley Bank.
1.82. "SVB Agreements" means collectively the SVB A/R
Financing Agreement and the SVB Overadvance Agreement.
1.83. "SVB A/R Financing Agreement" means collectively the (a)
Loan and Security Agreement, dated as of December 27, 2002 and as amended on
Xxxxx 00, 0000, xxxxxxx XXX xxx xxx Xxxxxxx, (x) the Intellectual Property
Security Agreement, dated as of December 27, 2002, between SVB and the Company,
(c) the Letter Agreement, dated June 13, 2003, between SVB and the Company and
(d) the Accounts Receivable Financing Agreement, dated as of June 13, 2003,
between SVB and the Company and all schedules, exhibits and annexes attached
thereto and all amendments or supplements thereof.
1.84. "SVB Overadvance Agreement" means the Temporary
Overadvance Agreement, dated as of June 23, 2003, between SVB and the Company
(as amended or supplemented from time to time).
1.85. "Symbol" means Symbol Technologies Inc.
1.86. "Tax Returns" means returns, reports, information
statements and other documentation (including any additional or supporting
material) filed or maintained, or required to be filed or maintained, in
connection with the calculation, determination, assessment or collection of any
Tax and shall include any amended returns required as a result of examination
adjustments made by the Internal Revenue Service or other Tax authority.
1.87. "Taxes" means any and all federal, state, local, foreign
and other taxes, levies, fees, imposts, duties and charges of whatever kind
(including any interest, penalties or additions to the tax imposed in connection
therewith or with respect thereto), whether or not imposed on the Company,
including, without limitation, taxes imposed on, or measured by,
9
income, franchise, profits or gross receipts, and also ad valorem, value added,
sales, use, service, real or personal property, capital stock, license, payroll,
withholding, employment, social security, workers' compensation, unemployment
compensation, utility, severance, production, excise, stamp, occupation,
premium, windfall profits, transfer and gains taxes and customs duties.
1.88. "Transaction Documents" means this Agreement, the Notes,
the Pledge and Security Agreement, the Intercreditor Agreement and the Series C
Preferred Certificate of Designations.
1.89. "Transaction Fees" has the meaning set forth in Section
9.10 herein.
1.90. "Transferee" has the meaning set forth in Section 7.4(a)
herein.
1.91. "2002 Purchase Agreement" means that certain Securities
Purchase Agreement, dated as of June 16, 2002 and as amended, by and among the
Company and the purchasers named therein.
1.92. "2003 Purchase Agreement" means that certain Amended and
Restated Securities Purchase Agreement, dated as of October 21, 2003 and as
amended, by and among the Company and the purchasers named therein.
1.93. "UCC" means the Uniform Commercial Code (or similar
statute) of any applicable jurisdiction.
1.94. "Voting Stock" has the meaning set forth in Section 5.9
herein.
1.95. "Warburg" means Warburg Pincus Private Equity VIII, L.P.
and its Affiliates.
1.96. "Warrants" means the warrants issued to the Purchasers
pursuant to the 2002 Purchase Agreement and the 2003 Purchase Agreement.
2. Authorization, Purchase and Sale of Notes; Exchange of the
Outstanding Notes.
2.1. Authorization of Securities. The Company has, or on or
before the Closing Date will have, (i) authorized the Notes, (ii) authorized a
series of its preferred stock consisting of 400,000 shares of Series C Preferred
Stock designated as its "Series C Preferred Stock," (iii) authorized the
issuance of the shares of Common Stock issuable upon the Exchange and (iv)
authorized the issuance of the shares of Series B Preferred Stock issuable upon
exchange of the Outstanding Notes in accordance with the terms of such
Outstanding Notes and the 2003 Purchase Agreement. The terms, limitations and
relative rights and preferences of the Series C Preferred Stock are set forth in
the Series C Preferred Certificate of Designations.
2.2. Issuance of the Notes; Exchange of the Outstanding Notes.
10
(a) Subject to and upon the terms and conditions set forth in
this Agreement, at the Closing, the Company shall issue and sell to each
Purchaser, and each Purchaser, severally, shall purchase from the Company the
aggregate principal amount of Notes as is set forth opposite such Purchaser's
name in Exhibit A hereto under the heading "Principal Amount of Notes to be
Purchased" at a purchase price equal to the principal amount of Notes purchased
by such Purchaser.
(b) Subject to and upon the terms and conditions set forth in
this Agreement, at the Closing, the Company shall issue to each Purchaser in
exchange for the surrender and cancellation by each Purchaser of the Outstanding
Notes issued to such Purchaser pursuant to the 2003 Purchase Agreement, the
number of shares of Series B Preferred Stock as is set forth opposite such
Purchaser's name in Exhibit A hereto under the heading "Shares of Series B
Preferred Stock Issuable Upon Exchange of the Outstanding Notes."
2.3. The Exchange. Subject to and upon the terms and
conditions set forth in this Agreement, at the Exchange Closing, the Company
shall issue to each Purchaser, in exchange for the surrender and cancellation by
each Purchaser of the shares of Series A Preferred Stock, shares of Series B
Preferred Stock and Warrants then owned by such Purchaser, (i) the number of
shares of Common Stock as is set forth opposite such Purchaser's name in Exhibit
A hereto under the headings "Common Stock Issuable upon Stockholder Approval of
the Exchange" and (ii) the number of shares of Series C Preferred Stock as is
set forth opposite such Purchaser's name in Exhibit A hereto under the headings
"Series C Preferred Stock Issuable upon Stockholder Approval of the Exchange."
2.4. The Closing and the Exchange Closing.
(a) The closing of the transactions contemplated by Section
2.2 (the "Closing") shall take place at the offices of Xxxxxx Xxxxxxx Xxxxxxxx &
Xxxxxx, Professional Corporation, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx on
the date hereof or such other date mutually agreed between the parties (the
"Closing Date"). At the Closing, the Company shall deliver to each Purchaser (i)
one or more Note(s) in the principal amount as set forth opposite such
Purchaser's name on Exhibit A hereto, against payment to the Company of the
purchase price therefor by wire transfer to the Company of immediately available
funds in an amount equal to the principal amount of Notes to be issued to such
Purchaser and (ii) upon delivery for cancellation by each Purchaser to the
Company of the Outstanding Notes held by such Purchaser, one or more
certificate(s) for the number of shares of Series B Preferred Stock being issued
to it, as set forth on Exhibit A hereto, registered in the name of such
Purchaser. Upon cancellation of all of the Outstanding Notes, the Company shall
be forever released from all of its obligations and liabilities to the
Purchasers under the Outstanding Notes. The Company and the Purchasers shall
also deliver all Transaction Documents deliverable in connection with the
Closing.
(b) The closing of the transactions contemplated by Section
2.3 (the "Exchange Closing") shall take place at the offices of Xxxxxx Xxxxxxx
Xxxxxxxx & Xxxxxx, Professional Corporation, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx,
Xxxxxxxxxx on the second Business Day following the date of receipt of the
Stockholder Approval. At the Exchange Closing, the Company shall deliver to each
Purchaser upon delivery for cancellation by each Purchaser to the
11
Company of the certificates evidencing the Series A Preferred Stock, Series B
Preferred Stock and Warrants held by such Purchaser (i) one or more
certificate(s) for the number of shares of Common Stock, registered in the name
of such Purchaser, as is set forth opposite such Purchaser's name in Exhibit A
hereto under the heading "Common Stock Issuable upon Stockholder Approval of the
Exchange" and (ii) one or more certificate(s) for the number of shares of Series
C Preferred Stock, registered in the name of such Purchaser, as is set forth
opposite such Purchaser's name in Exhibit A hereto under the heading "Series C
Preferred Stock Issuable upon Stockholder Approval of the Exchange." The Company
and the Purchasers shall also deliver all Transaction Documents deliverable in
connection with the Exchange Closing. If at the Special Meeting the stockholders
of the Company do not approve the Special Meeting Proposals, then no Exchange
Closing shall occur and the Series A Preferred Stock, Series B Preferred Stock
and Warrants shall remain outstanding in accordance with their respective terms.
2.5. Use of Proceeds. The Company will apply the net proceeds
from the issuance of the Notes for general corporate purposes.
3. Representations and Warranties of the Company. Except as
set forth in any Disclosure Document filed prior to the date hereof or in a
corresponding numbered section of the disclosure schedule delivered to each
Purchaser prior to the execution of this Agreement (the "Disclosure Schedule"),
the Company hereby represents and warrants to each of the Purchasers as follows:
3.1. Incorporation. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is qualified to do business in each jurisdiction in which the
character of its properties or the nature of its business requires such
qualification, except where the failure to so qualify would not have a Material
Adverse Effect. The Company has all requisite corporate power and authority to
carry on its business as now conducted.
3.2. Subsidiaries. The Company has no material subsidiaries
and no material interests or investments in any partnership, trust or other
entity or organization. No subsidiary of the Company conducts or is engaged in
any business of any kind nor has any material assets. Each subsidiary of the
Company that is a corporation has been duly incorporated, is validly existing as
a corporation in good standing under the laws of the jurisdiction of its
formation, has the corporate power and authority to own its properties and to
conduct its business and is duly registered, qualified and authorized to
transact business and is in good standing in each jurisdiction in which the
conduct of its business or the nature of its properties requires such
registration, qualification or authorization, except where such failure to so
qualify or register would not be reasonably likely to have a Material Adverse
Effect. All of the issued and outstanding capital stock of each subsidiary has
been duly authorized and validly issued, is fully paid and non-assessable, and
is owned by the Company free and clear of any Lien other than any of the
foregoing encumbered pursuant to the SVB Agreements and pursuant to the
Outstanding Notes.
3.3. Capitalization.
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(a) As of the date of this Agreement, the authorized capital
stock of the Company consists of 390,000,000 shares of Common Stock, 10,000,000
shares of class B common stock, par value $.01 per share (the "Class B Common
Stock"), 3,000,000 shares of Series A Preferred Stock, and 22,000,000 shares of
undesignated preferred stock, par value $.01 per share. As of the date of this
Agreement, there are no shares of Class B Common Stock or Series B Preferred
Stock outstanding and 3,000,000 shares of Series A Preferred Stock are
outstanding. The number of outstanding shares of Common Stock as of July 26,
2004 was 123,420,453 and the total number of shares of Common Stock issuable
pursuant to stock options outstanding at July 26, 2004 was 29,341,392. All such
shares of Common Stock and Series A Preferred Stock have been duly authorized,
and all such issued and outstanding shares of Common Stock and Series A
Preferred Stock have been validly issued, are fully paid and nonassessable. No
such outstanding shares of Common Stock or Series A Preferred Stock were issued
in violation of any preemptive rights, "poison pill" provisions, rights of first
offer or refusal or similar rights.
(b) Except for the issuance of shares of Common Stock pursuant
to the exercise of outstanding options granted pursuant to the Company's option
plans or pursuant to the exercise of warrants to purchase shares of Common
Stock, including any such options granted after March 31, 2004, the Company has
not issued any capital stock since March 31, 2004, except as contemplated by
this Agreement. Except as set forth in or contemplated by the Disclosure
Documents, this Agreement, the 2003 Purchase Agreement or the 2002 Purchase
Agreement, and except for the issuance of options to purchase shares of the
Company's Common Stock pursuant to the Company's option plans, there are no
existing options, warrants, calls, preemptive (or similar) rights, subscriptions
or other rights, agreements, arrangements or commitments of any character
obligating the Company to issue, transfer or sell, or cause to be issued,
transferred or sold, any shares of the capital stock of the Company or other
equity interests in the Company or any securities convertible into or
exchangeable for such shares of capital stock or other equity interests, and
there are no outstanding contractual obligations of the Company to repurchase,
redeem or otherwise acquire any shares of its capital stock or other equity
interests.
3.4. Authorization. All corporate action on the part of the
Company, its officers, directors and stockholders necessary for the
authorization of the Securities and the filing of the Series C Preferred
Certificate of Designations, the authorization, execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein has been taken, other than the approvals contemplated at the
Special Meeting. When executed and delivered by the Company, this Agreement,
each other Loan Document and each Transaction Document shall constitute the
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as rights to indemnity and
contribution may be limited by state or federal securities laws or the public
policy underlying such laws, and except as may be limited by bankruptcy,
insolvency, reorganization or other laws affecting creditors' rights generally
and by general equitable principles. The Company has all requisite corporate
power to enter into this Agreement, each other Loan Document and each
Transaction Document and to carry out and perform its obligations hereunder and
thereunder. The Board of Directors of the Company (the "Board of Directors") has
taken all action necessary to render inapplicable, as it relates to Warburg and
BCP, the provisions of Section 203 of the General Corporation Law of the State
of Delaware. At or prior to the Exchange Closing, the
13
Company will have reserved for issuance the shares of Common Stock issuable upon
the Exchange.
3.5. Valid Issuance.
(a) Upon their issuance in accordance with the terms of this
Agreement, the Series C Preferred Stock and the shares of Common Stock issuable
upon the Exchange will be duly authorized, validly issued, fully paid and
non-assessable, free of all preemptive or similar rights. Upon their issuance in
accordance with the terms of this Agreement, the 2003 Purchase Agreement and the
Outstanding Notes, the shares of Series B Preferred Stock issuable upon exchange
of the Outstanding Notes will be duly authorized, validly issued, fully paid and
non-assessable shares of Series B Preferred Stock, free of all preemptive or
similar rights.
(b) Subject to the accuracy of the representations made by the
Purchasers in Section 4 herein, the Securities will be issued to the Purchasers
in compliance with applicable exemptions from (i) the registration and
prospectus delivery requirements of the Securities Act and (ii) the registration
and qualification requirements of all applicable securities laws of the states
of the United States. The Company is current in its filings with the SEC under
Section 13(a) of the Exchange Act.
3.6. Financial Statements. The financial statements of the
Company included in the Disclosure Documents (collectively, the "Financial
Statements") fairly present the consolidated financial position of the Company
and its subsidiaries as of the dates indicated, and the results of its
operations and cash flows for the periods therein specified. The Financial
Statements fairly present the consolidated financial position of the Company at
the dates thereof and the consolidated results of operations for the periods
then ended in accordance with generally accepted accounting principles applied
on a consistent basis ("GAAP") throughout the period therein specified (except
in the case of quarterly financial statements for the absence of footnote
disclosure and subject, in the case of interim periods, to normal year-end
adjustments which, individually, and in the aggregate are not expected to be
material).
3.7. Absence of Certain Changes. Since December 31, 2003, the
Company and its subsidiaries have conducted their business only in the ordinary
course of such business consistent with past practice and there has not been (i)
any Material Adverse Effect, (ii) any material commitment, contractual
obligation, borrowing, capital expenditure or transaction (each, a "Commitment")
entered into by the Company or any of its subsidiaries, other than (a)
Commitments in the ordinary course of business and (b) this Agreement, (iii) any
action taken which, if taken after the date hereof, would constitute a material
breach of any provision or covenant herein, or (iv) any material change in the
Company's accounting principles, practices or methods other than as required by
concurrent changes in GAAP.
3.8. Absence of Litigation. There is no action, suit,
proceeding, arbitration, claim, investigation or inquiry pending or, to the
Company's knowledge, threatened by or before any governmental body against the
Company in which an unfavorable outcome, ruling or finding in any said matter,
or for all such matters taken as a whole, would reasonably be expected to have a
Material Adverse Effect. The foregoing includes, without limitation, any such
action, suit, proceeding or investigation that questions this Agreement or seeks
to delay or prevent the
14
consummation of the transactions contemplated hereunder or the right of the
Company to execute, deliver and perform under same. The Company is not a party
to or subject to the provisions of any order, writ, injunction, judgment or
decree of any court or government agency or instrumentality. No action, suit,
proceeding, claim, investigation or inquiry by the Company or any subsidiary is
currently pending nor does the Company intend to initiate any action, suit,
proceeding, claim, investigation or inquiry, in each case, that if resolved in a
manner adverse to the Company, is reasonably likely to have a Material Adverse
Effect.
3.9. Intellectual Property. (i) The Company owns or, with
respect to licensed Intellectual Property, has sufficient rights to use all (A)
material patents (and any renewals and extensions thereof), patent rights (and
any applications therefor), rights of priority and other rights in inventions;
(B) trademarks, service marks, trade names and trade dress, and all
registrations and applications therefor and all legal or common-law equivalents
of any of the foregoing; (C) copyrights and rights in mask works (and any
applications or registrations for the foregoing, and all renewals and extensions
thereof), common-law copyrights and rights of authorship including all rights to
exploit any of the foregoing in any media and by any manner and means now known
or hereafter devised; (D) industrial design rights, and all registrations and
applications therefor; (E) rights in data, collections of data and databases,
and all legal or common-law equivalents thereof; (F) rights in domain names and
domain name reservations; (G) rights in trade secrets, proprietary information
and know-how (collectively with all licenses and other agreements providing the
Company with the right to use any item of the type referred to in clauses (A)
through (G), "Intellectual Property") that are necessary for the conduct of its
business as now conducted except where the failure to currently own or possess
would not have a Material Adverse Effect; (ii) the Intellectual Property is
valid, subsisting, in proper form and enforceable and all renewal fees and other
maintenance fees have been paid; (iii) the Company is in material compliance
with all contractual obligations relating to the use and protection of such of
the Intellectual Property as is used pursuant to license or other agreement;
(iv) to the knowledge of the Company there is no present or former employee,
officer or director of the Company or agent or outside contractor that holds or
claims any material right, title or interest, directly or indirectly, in or to
any Intellectual Property; and (v) to the Company's knowledge, the present
business activities and products of the Company have not and do not infringe any
known Intellectual Property or other proprietary rights of any third party, the
Company is not making unauthorized use of any confidential information or trade
secrets of any third party, the Company has not received any notice of any
asserted infringement (nor is the Company aware of any reasonable basis for any
third party asserting an infringement) by the Company of, any rights of a third
party with respect to any Intellectual Property that, individually or in the
aggregate, would have a Material Adverse Effect. The Guaranteeing Subsidiaries
own no material registrations or material applications for any Intellectual
Property.
3.10. Disclosure Documents. The information contained or
incorporated by reference in the Disclosure Documents was true and correct in
all material respects as of the respective dates of the filing thereof with the
SEC; and, as of such respective dates, none of the Disclosure Documents
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, except
to the extent updated or superseded by any report subsequently filed by the
Company with the SEC. The Company is not party to any material contract,
agreement or other arrangement that was required to have been
15
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, committee and stockholders' meetings and
accurately reflect in all material respects all other corporate action of the
stockholders and directors and any committees thereof of the Company and its
subsidiaries and all actions of the directors of the Company's subsidiaries, in
each case since January 1, 2002.
3.12. Consents. All consents, approvals, orders and
authorizations required on the part of the Company in connection with the
execution, delivery or performance of this Agreement and the consummation of the
transactions contemplated herein, other than (i) the filing of the Series C
Preferred Certificate of Designations and (ii) such filings required to be made
after the Closing under applicable federal and state securities laws, have been
obtained and will be effective as of the Closing Date other than those with
respect to which the failure to make or obtain will not have a Material Adverse
Effect. Except for the approvals contemplated at the Special Meeting or required
by Nasdaq, the execution, delivery or performance of this Agreement, the Loan
Documents and the Transaction Documents and the consummation of the transactions
contemplated herein and therein do not require the approval of the Company's
stockholders.
3.13. No Conflict. The execution and delivery of the Loan
Documents by the Company and the consummation of the transactions contemplated
thereby will not conflict with or result in any violation of or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to a loss of a
material benefit under (i) any provision of the Certificate of Incorporation or
By-laws of the Company or (ii) any agreement or instrument, permit, franchise,
license, judgment, order, statute, law, ordinance, rule or regulations,
applicable to the Company or its properties or assets, except, in the case of
clause (ii), as would not, individually or in the aggregate, be reasonably
expected to have a Material Adverse Effect.
3.14. Brokers or Finders. Other than with respect to Bear
Xxxxxxx, the fees of which will be borne by the Company, the Company has not
incurred, and shall not incur, directly or indirectly, any liability for any
brokerage or finders' fees or agents' commissions or any similar charges in
connection with this Agreement, the other Loan Documents, Transaction Documents
or any transaction contemplated hereby.
3.15. Nasdaq National Market. The Common Stock is registered
pursuant to Section 12(b) of the Exchange Act and is listed on the Nasdaq
National Market ("Nasdaq"), and, except as contemplated by this Agreement, the
Company has taken no action designed to, or likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act or
delisting the Common Stock from Nasdaq, nor has the Company received any
notification that the SEC or the National Association of Securities Dealers,
Inc. ("NASD") is contemplating terminating such registration or listing.
16
3.16. No Manipulation of Stock. The Company has not taken, in
violation of applicable law, any action designed to or that might reasonably be
expected to cause or result in stabilization or manipulation of the price of the
Common Stock to facilitate the transactions contemplated hereby or the sale or
resale of the shares of Common Stock.
3.17. Company Not an "Investment Company". The Company has
been advised of the rules and requirements under the Investment Company Act of
1940, as amended (the "Investment Company Act"). The Company is not, and
immediately after receipt of payment for any of the Securities will not be, an
"investment company" or an entity "controlled" by an "investment company" within
the meaning of the Investment Company Act.
3.18. Title to Property and Assets. The Company and each of
its subsidiaries owns or possesses the necessary right to use or title to all
properties, assets, licenses, permits and the like required to operate its
business as currently operated, except for such properties, assets, licenses,
permits and the like, the absence of which would not result in a Material
Adverse Effect. The properties and assets of the Company and each of its
subsidiaries owned by them are owned free and clear of all Liens, except for
Permitted Liens. With respect to the property and assets it leases, the Company
and each of its subsidiaries are in compliance with such leases in all material
respects.
3.19. Labor Relations. Neither the Company nor its
subsidiaries is party to any collective bargaining agreement covering any
individual who performs services as an employee primarily for the Company or any
of its subsidiaries (including such persons who are on an approved leave of
absence, vacation, short-term disability or otherwise treated as an active
employee of the Company or any of its subsidiaries, "Employees"), and there are
no controversies or unfair labor practice proceedings pending or, to the
Company's knowledge, threatened between the Company or any of its subsidiaries
and any of their current or former Employees or any labor or other collective
bargaining unit representing any current or former Employee of the Company or
any of its subsidiaries that would reasonably be expected to result in a labor
strike, dispute, slow-down or work stoppage or otherwise have a Material Adverse
Effect. To the Company's knowledge, no organizational effort is presently being
made or, to the Company's knowledge, threatened by or on behalf of any labor
union.
3.20. Employee Benefits.
(a) Neither the Company nor any trade or business (whether or
not incorporated) which has been under common control or treated as a single
employer with the Company under Section 414(b), (c) or (m) of the Code (an
"ERISA Affiliate") has incurred, or is reasonably likely to incur, any liability
under Title IV of ERISA or Section 412 of the Code and none of the Plans is a
Multiemployer Plan, as defined in Section 3(37) of ERISA. Neither the Company
nor any ERISA Affiliate has incurred any liability resulting from a complete or
partial withdrawal from any Multiemployer Plan, and none of them has incurred,
or is reasonably likely to incur, any liability due to the termination or
reorganization of a Multiemployer Plan which has not been satisfied in full, and
to the Company's knowledge, no event has occurred that would subject the Company
or any ERISA Affiliate to any such liability.
17
(b) Each Plan has been administered in material compliance
with its terms, and other applicable laws, rules and regulations including,
without limitation, the provisions of ERISA and the Code, and there are no
material pending or, to Company's knowledge, threatened claims by, on behalf of
or involving any plan administrator or any plan trustee (other than routine
claims for benefits).
(c) No "prohibited transaction" within the meaning of Section
4975 of the Code has occurred with respect to any Plan.
(d) Each Plan that is intended to qualify under Section 401(a)
of the Code does so qualify.
(e) Except as may be required under Section 4980B of the Code,
or Section 601 of ERISA, neither the Company nor any of its subsidiaries has any
liability for post-retirement medical or life insurance benefits or coverage for
any Employee or Former Employee or any dependent of any such Employee or Former
Employee.
(f) The consummation of the transactions contemplated hereby
will not result in any increase in the amount of compensation or benefits or
accelerate the vesting or timing of payment of any compensation or benefits
payable by the Company to or in respect of any Employee or Former Employee or
the beneficiary or dependent of any such Employee or Former Employee under any
Plan.
(g) No amount payable by the Company or any of its
subsidiaries to any Employee or Former Employee will fail to be deductible for
Federal income tax purposes by reason of Section 162(m) or 280G of the Code.
(h) All employee benefits practices or arrangements which are
maintained by the Company or any of its subsidiaries for the benefit of their
non-United States Employees or United States Employees located in a foreign
jurisdiction (collectively, the "Foreign Plans") have been maintained in all
material respects in accordance with the applicable laws of such foreign
jurisdiction, and all Foreign Plans required to be registered with any
governmental agency have been registered and have been maintained in good
standing with such governmental agency.
3.21. Environmental Matters.
(a) Except as would not reasonably be likely to result in a
material liability to the Company, no underground storage tanks and no amount of
any substance that has been designated by any governmental agency or by
applicable federal, state or local law to be radioactive, toxic, hazardous or
otherwise a danger to health or the environment, including without limitation,
PCBs, asbestos, petroleum, urea-formaldehyde and all substances listed as
hazardous substances pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, or defined as a hazardous
waste pursuant to the United States Resource Conservation and Recovery Act of
1976, as amended, and the regulations promulgated pursuant to said laws, but
excluding routine quantities of office and janitorial supplies (a "Hazardous
Material"), are present as a result of the actions of the Company, or, to the
Company's knowledge, as a result of the actions of a third party, in, on or
under any property, including the land and the improvements, ground water and
surface water thereof, that
18
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.
(b) Except as would not reasonably be likely to result in a
material liability to the Company (in any individual case or in the aggregate),
neither the Company nor any of its subsidiaries has transported, stored, used,
manufactured, disposed of or arranged for the disposal of, released or exposed
its employees or others to Hazardous Materials in violation of any federal,
state or local law, rule, regulation, treaty or statute in effect before the
Closing Date related to protection of human health, safety, and the environment,
including natural resources (collectively, "Environmental Laws"), or in a manner
that would likely result in any material liability to the Company.
(c) Except as would not reasonably be likely to result in a
material liability to the Company, the Company and its subsidiaries currently
hold and are in compliance with all approvals, permits, licenses, clearances and
consents required under Environmental Laws for the conduct of the Company's and
its subsidiaries' businesses as currently being conducted.
(d) No action, proceeding, revocation proceeding, amendment
procedure, writ, injunction or claim is pending, or to the Company's knowledge,
threatened alleging that the Company and its subsidiaries are in violation of or
liable under any Environmental Law.
(e) To the Company's knowledge, there are no material
expenditures required to maintain or achieve compliance with all applicable
Environmental Laws.
3.22. Taxes.
(a) The Company has filed (or joined in the filing of) when
due all Tax Returns required by applicable law to be filed with respect to the
Company and all Taxes shown to be due on such Tax Returns have been paid. All
such Tax Returns were true, correct and complete in all material respects as of
the time of such filing. Any Liability of the Company for Taxes not yet due and
payable, or which are being contested in good faith, in each case as of December
31, 2003, has been accrued or reserved for on the financial statements of the
Company in accordance with GAAP. Since December 31, 2003, the Company has not
incurred any material Taxes other than in the ordinary course of business.
(b) No current or former subsidiary of the Company has ever
been a member of any "affiliated group" (within the meaning of Section 1504(a)
of the Code) included in any consolidated federal income Tax Return filed with
the Internal Revenue Service other than an affiliated group of which the Company
is the common parent.
3.23. Insurance. All insurance policies carried by, or
covering the Company's properties are in full force and effect, and no notice of
cancellation has been given with respect to any such policy. All premiums due on
such policies have been paid in a timely manner and the Company has complied in
all material respects with the terms and provisions of such policies. The
insurance coverage provided by such policies is provided by insurers that, to
the knowledge of the Company, are solvent and is in such amount and types of
coverage which are adequate and customary for the industries in which the
Company operates.
19
3.24. General Solicitation; No Integration. Neither the
Company nor any other person or entity authorized by the Company to act on its
behalf has engaged in a general solicitation or general advertising (within the
meaning of Regulation D of the Securities Act) of investors with respect to
offers or sales of the Securities. The Company has not, directly or indirectly,
sold, offered for sale, solicited offers to buy or otherwise negotiated in
respect of, any security (as defined in the Securities Act) which, to its
knowledge, is or will be integrated with the Securities sold pursuant to this
Agreement.
3.25. Accounting Controls. The Company maintains a system of
internal accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in accordance with GAAP and to maintain
assets accountability, (iii) access to assets is permitted only in accordance
with management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
3.26. By-Laws. The Company's By-Laws provide that all matters
submitted to a meeting of stockholders, including the vote relating to the
Special Meeting Proposal at the Special Meeting, shall require the affirmative
vote of a majority of the total number of votes cast, present in person or by
proxy and a valid quorum.
3.27. Opinion of the Financial Advisor. The Company has
received an opinion of Bear Xxxxxxx a copy of which has been delivered to a
Special Committee of the Board of Directors and to the Purchasers, as to the
fairness of the transactions contemplated hereby.
4. Representations and Warranties of Each Purchaser. Each
Purchaser, severally for itself and not jointly with the other Purchasers,
represents and warrants to the Company as follows:
4.1. Organization. Each Purchaser, if it is a legal entity, is
duly and validly existing under the jurisdiction of its organization.
4.2. Authorization. All action on the part of such Purchaser
necessary for the authorization, execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated herein has been
taken. This Agreement constitutes the legal, valid and binding obligation of
such Purchaser, enforceable against such Purchaser in accordance with its terms,
except as such may be limited by bankruptcy, insolvency, reorganization or other
laws affecting creditors' rights generally and by general equitable principles.
Such Purchaser has all requisite power to enter into this Agreement and to carry
out and perform its obligations under the terms of this Agreement.
4.3. Purchase Entirely for Own Account; Etc. Such Purchaser is
acquiring the Securities for its own account, and not with a view to, or for
sale in connection with, any distribution of the Securities in violation of the
Securities Act. Except as contemplated by this Agreement, such Purchaser has no
present agreement, undertaking, arrangement, obligation or commitment providing
for the disposition of the Securities. Such Purchaser, if it is a legal entity,
20
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. All consents, approvals, orders and
authorizations required on the part of such Purchaser in connection with the
execution, delivery or performance of this Agreement and the consummation of the
transactions contemplated herein have been obtained and will be effective as of
the Closing Date.
4.9. No Manipulation of Stock. The Purchasers have not taken,
in violation of applicable law, any action designed to or that might reasonably
be expected to cause or result in stabilization or manipulation of the price of
the Common Stock to facilitate the transactions contemplated hereby or the sale
or resale of the shares of Common Stock.
4.10. No General Solicitation. Purchasers were not offered or
sold the Securities, directly or indirectly, by means of any form of general
solicitation or general
21
advertisement, including the following: (i) any advertisement, article, notice
or other communication published in any newspaper, magazine or similar medium or
broadcast over television or radio or (ii) any seminar or other meeting whose
attendees had been invited by general solicitation or general advertising.
5. Covenants.
5.1. HSR Act Filings. The Company and each Purchaser shall
file with the proper authorities all forms and other documents necessary to be
filed pursuant to the HSR Act, and the regulations promulgated thereunder, as
promptly as possible and shall cooperate with the each other in promptly
producing such additional information as those authorities may reasonably
require to allow early termination of the notice period provided by the HSR Act
or as otherwise necessary to comply with statutory requirements of the Federal
Trade Commission or the Department of Justice. The Company and each Purchaser
shall pay the filing fee associated with its respective filing of the HSR Act
notification.
5.2. Other Governmental Approvals. As soon as practicable
after the execution of this Agreement, the Company and each Purchaser shall file
all applications and reports and take such other action (in addition to any
filings required under the HSR Act) which is reasonably required to be taken or
filed with any governmental authority in connection with the transactions
contemplated by this Agreement. The Company and each Purchaser shall give all
additional notices to third parties and take other action reasonably required to
be or taken by it under any authorization, lease, note, mortgage, indenture,
agreement or other instrument or any law, rule, regulation, demand or court or
administrative order in connection with the transactions contemplated by this
Agreement.
5.3. Further Assurances. Each party agrees to cooperate with
each other and their respective officers, employees, attorneys, accountants and
other agents, and, generally, do such other acts and things in good faith as may
be reasonable or appropriate to timely effectuate the intents and purposes of
this Agreement and the consummation of the transactions contemplated hereby,
including, but not limited to, taking any action to facilitate the filing any
document or the taking of any action to assist the other parties hereto in
complying with the terms of Sections 5.1 and 5.2 herein.
5.4. Board Designees and Observers. Upon the consummation of
the Exchange, the following rights shall be granted to Warburg and BCP and shall
supersede all similar rights granted to Warburg and BCP pursuant to the terms of
the 2002 Purchase Agreement, the 2003 Purchase Agreement, Section 9(e) of the
Series A Preferred Certificate of Designations or Section 9(e) of the Series B
Preferred Certificate of Designations, which similar rights shall then be null
and void and of no further force or effect.
(a) Warburg shall have the exclusive right to appoint one (1)
director and BCP shall have the exclusive right to appoint one (1) director
(each, a "Board Designee") to the Board of Directors for so long as Warburg or
BCP, as the case may be, Beneficially Owns shares of Common Stock equal to at
least twenty-five percent (25%) of the number of shares of Common Stock issued
to Warburg or BCP, as the case may be, pursuant to the Exchange. In addition,
Warburg shall have the exclusive right to appoint one (1) additional Board
Designee for
22
so long as Warburg Beneficially Owns shares of Common Stock equal to at least
fifty percent (50%) of the number of shares of Common Stock issued to Warburg
pursuant to the Exchange. The Board Designees shall be duly appointed in
accordance with the Company's By-laws, Certificate of Incorporation and the
General Corporation Law of Delaware. For so long as Warburg retains the right to
appoint two Board Designees, the Warburg Board Designees so elected shall serve
as a Class III Director and a Class II Director, respectively, and BCP's Board
Designee so elected shall serve as a Class II Director (as designated in the
Company's Certificate of Incorporation), each serving until his or her successor
is elected and qualified. If, pursuant to this Section 5.4(a), Warburg should
retain the right to appoint only one Board Designee, Warburg shall elect to
retain either its Class III Board Designee or its Class II Board Designee, in
its sole discretion. For so long as such membership does not conflict with any
applicable law or regulation or listing requirement of Nasdaq (as determined in
good faith by the Board of Directors of the Company), the Board Designees shall
serve as members of the Audit Committee, Compensation Committee and each other
principal committee of the Board of Directors. Any vacancy in the position of
the Board Designees appointed by Warburg or the Board Designee appointed by BCP
may be filled only by Warburg and BCP, respectively. Each of the Board Designees
appointed by Warburg and the Board Designee appointed by BCP may, during his or
her term of office, be removed at any time, with or without cause, by and only
by Warburg and BCP, respectively, at a special meeting called for such purpose
or by written consent of Warburg and BCP, respectively. Any vacancy created by
such removal may also be filled at such meeting or by such consent.
(b) In addition to the Board Designees, Warburg shall have the
right to have one observer (the "Board Observer") attend the meetings of the
Board of Directors. For so long as Warburg and/or BCP have the right to
designate Board Designees or a Board Observer pursuant to Section 5.4(a) herein
and this Section 5.4(b), respectively, each Board Designee and the Board
Observer shall receive a copy of all materials distributed to the Board of
Directors, whether provided to the Board of Directors in advance of, during or
after any meeting of the Board of Directors, regardless of whether such Board
Designee or the Board Observer shall be in attendance at any such meeting;
provided, however, that the Company shall have the right to withhold any
information from the Board Observer and to exclude the Board Observer from any
meeting or portion thereof if access to such information or attendance at such
meeting could:
(i) in the reasonable judgment of the Company's outside
counsel, adversely affect the attorney client privilege between the company and
its counsel;
(ii) cause the Board of Directors to breach its fiduciary
duties; or
(iii) result in a conflict between the interests of the
Company, on the one hand, and those of the Board Observer or any of its
Affiliates, on the other hand.
The Company shall use its reasonable best efforts to ensure that any withholding
of information or any restriction on attendance is strictly limited only to the
extent necessary as set forth in the preceding paragraph.
(c) Each Board Designee and the Board Observer shall be
reimbursed for out-of-pocket expenses incurred in connection with participation
as a member or observer, as the
23
case may be, of the Board of Directors in a manner consistent with the Company's
policies for reimbursing other outside members of the Board of Directors. In
addition, each Board Designee shall be entitled to the same compensation paid to
other outside members of the Board of Directors in his or her capacity as a
director, which compensation shall be assignable to Warburg and BCP, as the case
may be.
(d) For so long as Warburg and/or BCP have the rights to
appoint the Board Designees pursuant to Section 5.4(a) herein, there shall be no
greater than nine (9) members on the Board of Directors at all times. The size
of the Board of Directors shall not be increased by any election by Warburg or
BCP to appoint one or more of their respective Board Designees pursuant to
Section 5.4(a) herein.
5.5. Series C Preferred Certificate of Designations. The
Company shall file the Series C Preferred Certificate of Designations with the
Secretary of State of the State of Delaware, and satisfactory evidence of such
filing shall be delivered to the Purchasers within one Business Day following
receipt of Stockholder Approval.
5.6. Covenant Pending the Closing. Between the date of this
Agreement and the Closing Date, the Company will promptly advise each Purchaser
of any action or event of which it becomes aware which has the effect of making
incorrect, in any material respect, any of the Company's representations or
warranties or which has the effect of rendering any of the Company's covenants
incapable of performance.
5.7. Proxy Statement.
(a) The Company shall use its reasonable best efforts to
prepare and file with the SEC, as promptly as practicable after the date hereof
but in no event later than twenty (20) Business Days after the Closing Date,
preliminary proxy materials with respect to the meeting of the stockholders for
the purpose of approving the Special Meeting Proposal. Thereafter, the Company
shall as promptly as possible file with the SEC the definitive proxy statement
and (i) call a Special Meeting to be held at the earliest practicable date but
in no event later than forty (40) days after the earlier of (x) receiving
notification that the SEC is not reviewing the preliminary proxy materials and
(y) the conclusion of any SEC review of the preliminary proxy materials, for the
sole purpose of voting upon the Special Meeting Proposal and (ii) include in the
proxy statement the recommendation of its Board of Directors that holders of the
Common Stock approve the Special Meeting Proposal; provided, however, that the
Board of Directors may withdraw or adversely modify their recommendation of the
Special Meeting Proposal if the Board of Directors determines in good faith
(after consultation with its financial advisors and legal counsel) that from a
financial point of view to the stockholders of the Company the Special Meeting
Proposal is not in the best interests of the Company's stockholders. Neither
prior to nor at the Special Meeting shall the Company put forth any matter,
other than the Special Meeting Proposal, to the holders of Common Stock for
their approval without the prior written consent of the Purchasers.
(b) The Company shall use its reasonable best efforts to
prepare and file with the SEC, as promptly as reasonably practicable taking into
account any pending material issues or transactions affecting the Company after
the Exchange Closing, preliminary proxy materials
24
with respect to the meeting of the stockholders for the purpose of approving (i)
an increase in the authorized capital of the Company and (ii) a reverse stock
split of the Common Stock (collectively, the "Charter Amendment Proposals"), in
each case on terms to be determined after consultation with (x) its legal
counsel and financial advisors and (y) the Purchasers. Thereafter, the Company
shall as promptly as possible file with the SEC the definitive proxy statement
and acting through its Board of Directors, (i) call a special meeting of the
stockholders of the Company to be held at the earliest practicable date after
the earlier of (x) receiving notification that the SEC is not reviewing the
preliminary proxy materials and (y) the conclusion of any SEC review of the
preliminary proxy materials, for the purpose of voting upon the Charter
Amendment Proposals and (ii) include in the proxy statement the recommendation
of its Board of Directors that holders of the Common Stock approve the Charter
Amendment Proposals; provided, however, that the Board of Directors may withdraw
or adversely modify their recommendation of the Charter Amendment Proposals if
the Board of Directors determines in good faith (after consultation with its
financial advisors and legal counsel) that the Charter Amendment Proposals are
not in the best interests of the Company.
5.8. Subscription Right. Prior to the date of the Exchange
Closing, all subscription rights granted to Warburg and BCP pursuant to the
terms of the 2002 Purchase Agreement and the 2003 Purchase Agreement shall be in
full force and effect, and shall remain valid and binding obligations of the
Company. From and after the date of the Exchange Closing, all such subscription
rights shall terminate and the corresponding provisions in the 2002 Purchase
Agreement and the 2003 Purchase Agreement shall be deemed null and void and of
no further force and effect.
5.9. Standstill.
(a) Each of the Company and Warburg hereby agree that
effective upon the Exchange Closing, Section 5.9 of the 2003 Purchase Agreement
shall automatically, and without any further action of any party, be null and
void and of no further force and effect and that the rights of the parties
thereunder shall be governed by the provisions set forth in this Section 5.9.
(b) In the event that at any time following the date of the
Exchange Closing until July 27, 0000, Xxxxxxx and any of its Affiliates own more
than forty-nine percent (49%) of the issued and outstanding voting securities of
the Company (the "Voting Stock"), Warburg agrees that (i) it shall be entitled
to vote (or take action by written consent in respect of) not more than
forty-nine percent (49%) of the issued and outstanding shares of Voting Stock
and (ii) it will abstain from voting any shares in excess of forty-nine percent
(49%) of the Voting Stock; provided, however, that Warburg and its Affiliates
shall be entitled to vote (or take action by written consent in respect of) all
shares of Voting Stock owned by it or its Affiliates in connection with any vote
to approve the Charter Amendment Proposals.
(c) Warburg further agrees that until July 27, 2008, except
among Warburg and any of its Affiliates, it shall not form, join or in any way
participate in a "group" (within the meaning of Section 13(d)(3) of the Exchange
Act) with respect to the Voting Stock.
5.10. Nominating Committee; Agreement to Vote.
25
(a) For so long as a Purchaser is subject to Section 5.8
herein, such Purchaser and such Purchaser's designees on the Board of Directors
shall vote (i) in favor of the establishment of a nominating committee of the
Board of Directors consisting entirely of Independent Directors and (ii) if
necessary to comply with applicable requirements of federal law, state law, or
Nasdaq relating to the Board of Directors, in favor of an increase in the number
of authorized members of the Board of Directors such that a majority of the
members of the Board of Directors are Independent Directors. At or with respect
to any election of one or more directors (including to fill any vacancy on the
Board of Directors), for so long as a Purchaser is subject to Section 5.8
herein, such Purchaser shall vote all of its shares of Voting Stock in favor of
the election of any nominee to the Board of Directors whose nomination was
approved by the unanimous consent of the Board of Directors.
(b) Each Purchaser severally agrees to vote all shares of
Voting Stock held by such Purchaser in favor of the Exchange, the Charter
Amendment Proposals and, if required, the exchange of Notes upon a Qualified
Transaction at any meeting(s) of the Company's stockholders called for the
purpose of approving such proposals unless at or prior to such meeting(s) the
Board of Directors shall have withdrawn or adversely modified its recommendation
of the Exchange, the Charter Amendment Proposals or the exchange of Notes upon a
Qualified Transaction in accordance with Section 5.7(b).
5.11. Affirmative Covenants in Connection with the Sale of the
Notes. The Company agrees that, until the earlier of (i) such date that all
Notes are exchanged by the holders thereof in accordance with Section 5.13 or
(ii) the date upon which all Obligations are satisfied in full, the Company will
perform and observe all of the provisions contained in this Section 5.11.
(a) Notice. The Company shall notify the Purchasers promptly,
but in any event within two (2) Business Days of its discovery thereof, (i)
whenever any Event of Default occurs, (ii) whenever any action, suit or
proceeding is commenced by or against the Company which, if adversely
determined, would, or would be reasonably likely to, result in a Material
Adverse Effect and (iii) whenever any Material Adverse Effect occurs.
(b) Continued Existence; Compliance with Law. The Company
shall comply in all respects with its Certificate of Incorporation. The Company
shall preserve, renew and keep in full force and effect its existence as a
corporation and its material rights, licenses, certificates, and permits and
shall comply in all material respects with all laws, rules, regulations,
ordinances, orders and judgments applicable to it. The Company will obtain,
renew and extend all of the foregoing rights, certificates, permits, licenses,
certificates of compliance and the like which may be necessary for the
continuation of the operation of its business as currently conducted and will
give prompt written notice to the Purchasers of (i) any citation or order
relating thereto, (ii) any lapse, suspension, revocation, rescission or other
termination thereof, (iii) any alleged breach or violation thereof by the
Company or any other Person, (iv) any proceeding relating thereto or (v) any
refusal of any Person to grant or extend the same.
(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
26
repairs to or maintenance of the same unless such cost of repairs is contested
in good faith by appropriate proceedings or other appropriate actions promptly
initiated and diligently conducted and if the Company shall have set aside on
its books such reserves, if any, with respect thereto as are required by GAAP
and deemed appropriate by the Company and its independent accountants.
(d) Title to Property. All property, whether real or personal,
owned by the Company shall be held in the name of the Company unless otherwise
approved by the Board of Directors and the Purchasers holding at least a
majority of the outstanding aggregate principal amount of the Notes issued
pursuant to this Agreement.
(e) Information and Inspection. The Company shall furnish to
the Purchasers from time to time, upon request, financial statements of the
Company and information pertaining to any covenant, provision or condition
hereof. At all reasonable times and as often as the Purchasers may reasonably
request, upon reasonable notice, the Company shall permit any authorized
representative designated by the Purchasers to visit and inspect any of the
properties of the Company and to take extracts therefrom and to discuss the
Company's affairs, finances and accounts with the management of the Company and
the Company's independent auditors.
(f) Insurance. The Company will maintain or cause to be
maintained on all insurable properties now or hereafter owned by the Company
insurance against loss or damage by fire or other casualty to the extent
customary with respect to like properties of companies conducting similar
businesses, and will maintain or cause to be maintained public liability and
workers' compensation insurance insuring the Company to the extent customary
with respect to companies conducting similar businesses and, upon request, will
furnish to the Purchasers satisfactory evidence of the same. The Company shall
also maintain such other insurance as may be reasonably requested by the
Purchasers.
(g) Payment of Taxes. The Company will pay and discharge
promptly as they become due and payable all Taxes, assessments and other
governmental charges or levies imposed upon it or its income or any of its
property or assets, or any part thereof, as well as all lawful claims of any
kind (including claims for labor, materials and supplies) which, if unpaid,
might by law become a Lien upon its property; provided that the Company shall
not be required to pay any Taxes, assessments, charges, levies or claims if the
amount, applicability or validity thereof shall currently be contested in good
faith by appropriate proceedings or other appropriate actions promptly initiated
and diligently conducted and if the Company shall have set aside on its books
such reserves, if any, with respect thereto as are required by GAAP and deemed
appropriate by the Company and its independent accountants.
(h) Payment of Other Indebtedness, Etc. Except as to (i)
matters being contested in good faith and by appropriate proceedings or other
appropriate action or (ii) trade payables, the Company will pay promptly when
due, or in conformance with the Company's customary practices, all other
material indebtedness, liabilities and obligations incident to the conduct of
its business.
5.12. Negative Covenants in Connection with the Sale of the
Notes. The Company agrees that, until the earlier of (i) such date that all
Notes are exchanged by the holders thereof in accordance with Section 5.13 or
(ii) the date upon which all Obligations are satisfied
27
in full, the Company shall not, directly or indirectly, take any of the actions
set out in this Section 5.12; provided, however, that nothing contained in this
Section 5.12 shall prohibit the Company's Board of Directors from engaging in
any action in connection with or directed toward a merger, acquisition or
strategic financing transaction, subject to the Company's obligations under
Section 6(b) of the Notes.
(a) Liabilities. The Company shall not incur, create, assume
or permit to exist any Liabilities, except: (i) Liabilities existing on the date
hereof; (ii) Liabilities arising hereunder or any other Liabilities owed to the
Purchasers under the Loan Documents; (iii) trade accounts payable and other
unsecured Liabilities incurred and payable in the ordinary course of business;
(iv) Liabilities for Taxes, assessments, franchise fees, governmental charges,
Liens or similar claims to the extent that payment thereof shall not be required
to be made by the provisions hereof; (v) purchase money Liabilities relating to
the purchase price of equipment to be used in the business of the Company in an
aggregate outstanding amount not to exceed at any one time $1,000,000; (vi) any
renewals, extensions, substitutions, refinancings or replacements of any
Liability otherwise permitted hereunder so long as (1) the aggregate amount of
Liabilities represented thereby is not increased by such renewal, extension,
substitution, refinancing or replacement, (2) the average life and the date such
Liability is scheduled to mature are not shortened, (3) the new Liability shall
not be senior in right of payment to the Liability that is being extended,
renewed, substituted, refinanced or replaced and (4) the terms and conditions of
such Liability are not more onerous to the Company in any material respect than
the terms and conditions of the Liability renewed, extended, substituted,
refinanced or replaced; (vii) any Liabilities the net proceeds of which are used
to repay the Notes in their entirety; or (viii) any Liabilities arising under
the SVB Agreements; (ix) Liabilities owed by the Company to any of its
subsidiaries or owed by any of its subsidiaries to any other of its subsidiaries
or to the Company; (x) Liabilities incurred in connection with the Symbol patent
infringement litigation that do not constitute a Material Adverse Change; or
(xi) Liabilities incurred in connection with any settlement of litigation that
is approved by the Board of Directors and the Purchasers holding at least a
majority of the outstanding aggregate principal amount of the Notes issued
pursuant to this Agreement, which approval by the Purchasers shall not be
unreasonably withheld.
(b) Guaranties. The Company shall not pledge its credit or
property in any manner, or otherwise become responsible, for the payment or
other performance of the Liabilities or other obligations of another Person and
shall not act as a guarantor (whether of payment or of collection), surety,
co-maker or endorser for, or agree conditionally or otherwise to make any
purchase, loan or investment in order thereby to enable, another Person to
prevent or correct a default of any kind, except endorsements of negotiable
instruments for collection in the ordinary course of business.
(c) Notes, Accounts Receivable and Claims. The Company shall
not sell, discount or otherwise dispose of any material note or material account
receivable, with or without recourse, except for collection in the ordinary
course of business or in connection with the SVB Agreements or the Xxxxx Xxxx
indebtedness more fully described in Section 5.12 of the Disclosure Schedule;
fail to assert timely any material claim, cause of action or contract right that
it possesses against any third party; nor agree to settle or compromise any such
claim, cause of action or contract right except for (i) settlements or
compromises made in the reasonable exercise of business judgment in the ordinary
course of business or (ii) in connection with any
28
settlement of litigation that is approved by Board of Directors and the
Purchasers holding at least a majority of the outstanding aggregate principal
amount of the Notes issued pursuant to this Agreement, which approval by the
Purchasers shall not be unreasonably withheld.
(d) Disposal of Assets. The Company shall not sell, lease,
transfer, assign or otherwise dispose of any material part of its assets to any
Person, except for sales, leases, transfers, assignments or other dispositions
made: (i) in the ordinary course of business; (ii) in connection with the
restructuring plans publicly disclosed by the Company, (iii) in connection with
the SVB Agreements; or (iv) in connection with the Xxxxx Xxxx indebtedness more
fully described in Section 5.12 of the Disclosure Schedule.
(e) Amendment of Governing Documents. The Company shall not
amend or modify its Certificate of Incorporation or By-laws in any respect which
would have a material adverse effect upon the Purchasers' rights and remedies
under the Loan Documents.
(f) Reorganizations; Acquisitions. The Company shall not be a
party to any recapitalization or purchase all or a substantial part of the
capital stock, partnership interests or assets of any Person or any division or
business unit of any Person unless such transaction is unanimously approved by
the Board of Directors.
(g) Liens. The Company shall not suffer or permit any property
or asset now owned or hereafter acquired by it to be or become encumbered by any
Lien other than Permitted Liens.
(h) Capital Distributions. The Company shall not make any
capital distributions, or pay or declare any dividend or distribution, except
(i) in connection with a stock split or combination, (ii) in accordance with
this Agreement, the 2003 Purchase Agreement and/or the 2002 Purchase Agreement
or (iii) for dividends or distributions by the subsidiaries of the Company to
the Company.
(i) Transactions with Affiliates. Except in connection with
the Loan Documents, the Company shall not pay any management or other fee to,
or, except in the ordinary course of business with its subsidiaries, enter into
any transaction with, any Affiliate.
(j) Amendments or Waivers. Except with respect to the SVB
Agreements, the Company shall not amend or cancel or consent to the amendment or
cancellation of any contract (or waive a right thereunder) in any manner that
might have the effect of materially and adversely (a) affecting its financial
condition, (b) affecting the rights of the Purchasers under the Loan Documents
or (c) decreasing or adversely affecting the value of the collateral securing
the Obligations.
(k) Accounting Matters. Except upon thirty (30) days' written
notice, the Company shall not change its fiscal year or accounting practices.
(l) Subsidiaries. The Company shall not form or acquire or
cause to be formed or acquired any Subsidiary, except in the ordinary course
consistent with past practice.
29
(m) Investments. The Company shall not make any investments
other than investments in cash equivalents, except in the ordinary course
consistent with past practice or as otherwise approved by the Board of Directors
and the Purchasers holding at least a majority of the outstanding aggregate
principal amount of the Notes issued pursuant to this Agreement.
(n) Issuance of Preferred Stock. Except in connection with the
transactions contemplated by this Agreement, the Company shall not create,
authorize or issue any shares of preferred stock, or any security convertible
into, or exchangeable or exercisable for, shares of preferred stock.
(o) Indirect Actions. The Company shall not permit any of its
subsidiaries to take any of the actions set forth in this Section 5.12 nor
permit any of the conditions set forth in this Section 5.12 to occur with
respect to its subsidiaries; provided, however, that with respect to Section
5.12(b), Purchasers acknowledge and consent to the secured guaranties issued by
certain of the Company's subsidiaries for the benefit of SVB, and consent to any
related arrangements for the benefit of SVB approved by the Board of Directors.
5.13. Exchange of Notes Upon a Qualified Transaction.
(a) Simultaneously with the closing of a Qualified
Transaction, the outstanding principal and accrued but unpaid interest on the
Notes shall immediately and automatically be exchanged for the class of common
stock of the Company as is issued in the Qualified Transaction. The number of
shares of Common Stock to be issued to each Purchaser upon such exchange shall
be equal to the quotient obtained by dividing (a) the outstanding principal and
unpaid accrued interest due on each Note on the date of exchange, by (b) the
price per share of the Common Stock sold to the investors in the Qualified
Transaction, and the issuance of such shares upon exchange of the Notes shall be
upon and subject to substantially the same terms and conditions applicable to
the Qualified Transaction. In addition, in the event that warrants to purchase
shares of Common Stock are issued to the investors in the Qualified Transaction,
each Purchaser shall be entitle to receive from the Company, upon exchange of
the Notes, a number of warrants to purchase Common Stock on a proportionate
basis with the investors in the Qualified Transaction based on the outstanding
principal and unpaid accrued interest on each such Note exchanged. Each
Purchaser hereby agrees to execute all necessary documents in connection with
the exchange of the Notes, including, but not limited to, a definitive stock or
securities purchase agreement.
(b) No fractional shares of Common Stock will be issued upon
exchange of the Notes. In lieu of any fractional share to which the Purchaser
would otherwise be entitled, the Company will pay to the Purchasers in cash the
amount of the unexchanged principal balance plus accrued but unpaid interest
then outstanding on the Notes that would otherwise be exchanged for such
fractional share. Upon exchange of the Notes, the Purchasers shall surrender the
Notes, duly endorsed, at the principal offices of the Company or any transfer
agent of the Company. At its expense, the Company will, as soon as practicable
thereafter, issue and deliver to such Purchasers, at such principal office, a
certificate or certificates for the number of shares to which each such
Purchaser is entitled upon such exchange, together with other securities and
property to which such Purchaser is entitled upon such exchange under the terms
of its Note, including a check payable to such Purchaser for any cash amounts
payable as described herein.
30
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.
5.14. Stock Options. From and after the Closing Date, the
Company agrees that in the event the Company grants any stock options, stock
grants or similar rights under the terms of (i) the Company's 1995 Long-Term
Incentive Plan (the "1995 Plan"), (ii) Proxim, Inc.'s 1999 Nonstatutory Stock
Option Plan (the "1999 NSO Plan"), (iii) the 1999 Proxim Corporation Stock
Incentive Plan (the "1999 Plan") or (iv) the Company's 2001 Stock Bonus Plan for
Non-Officer Employees (the "2001 Plan" and collectively with the 1995 Plan, the
1999 NSO Plan and the 1999 Plan, the "Plans"), the Company shall, and shall
cause the applicable plan administrator to, ensure that the transactions
contemplated by the terms of this Agreement and the other Transaction Documents
shall not at any time constitute a Change of Control (as defined in the 1995
Plan, 1999 NSO Plan, 1999 Plan or 2001 Plan, as the case may be) under the
relevant plan or any of the relevant agreements governing any such stock option,
stock grant or similar right. The Company acknowledges and agrees that the
consummation of the transactions contemplated by this Agreement and the other
Transaction Documents do not, and will not at any time, constitute a Change of
Control (as defined in the 1999 Plan or 2001 Plan, as the case may be) under the
terms of the 1999 Plan or 2001 Plan.
5.15. Qualified Transaction. The Company hereby agrees to use
its reasonable best efforts to market and consummate a Qualified Transaction on
commercially reasonable terms as promptly as reasonably practicable following
the date of the Exchange Closing.
6. Conditions Precedent.
6.1. Conditions to the Obligation of the Purchasers to
Consummate the Closing. The several obligations of each Purchaser to consummate
the transactions to be consummated at the Closing are subject to the
satisfaction of the conditions precedent set forth in this Section 6.1.
(a) The representations and warranties contained herein of the
Company shall be true and correct on and as of the Closing Date with the same
force and effect as though made on and as of the Closing Date (it being
understood and agreed by each Purchaser that for purposes of this Section
6.1(a), in the case of any representation and warranty of the Company contained
herein (i) which is qualified by application thereto by a Material Adverse
Effect standard, such representation and warranty need be true and correct by
application thereto only of a Material Adverse Change standard, (ii) which is
not hereinabove qualified by application thereto of a materiality standard, such
representation and warranty need be true and correct only in all material
respects or (iii) which is made as of a specific date, such representation and
warranty need be true and correct only as of such specific date).
(b) The Company shall have performed in all material respects
all obligations and conditions herein required to be performed or observed by
the Company on or prior to the Closing Date.
31
(c) Each Purchaser shall have received a certificate, dated the Closing
Date, signed by each of the President and the Chief Financial Officer of the
Company, certifying on behalf of the Company that the conditions specified in
the foregoing Sections 6.1(a) and (b) have been fulfilled.
(d) Each Purchaser shall have received from the Company's counsel,
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, an opinion in form and substance reasonably
satisfactory to the Purchasers.
(e) There shall not have been any Material Adverse Change since the
Announcement Date.
(f) All corporate and other proceedings to be taken by the Company in
connection with the transactions contemplated hereby and all documents incident
thereto shall be reasonably satisfactory in form and substance to the Purchasers
and the Purchasers shall have received all such counterpart originals or
certified or other copies of such documents as it may reasonably request.
(g) The Company and the Collateral Agent, on behalf of the Purchasers,
and the Purchasers with respect to Articles X and XI thereof, shall have entered
into the Pledge and Security Agreement.
(h) The Collateral Agent, on behalf of the Purchasers, SVB, the Company
and the Guaranteeing Subsidiaries shall have entered into the Intercreditor
Agreement and all consents identified in Section 6.1(h) of the Disclosure
Schedule shall have been obtained, including all consents and waivers required
from SVB in connection with the transactions contemplated in the Loan Documents.
(i) All UCC filings and filings shall have been made in the United
States Patent and Trademark Office in connection with the creation and
perfection of the security interests in and Liens on the Collateral granted
pursuant to the Loan Documents.
(j) To the extent the Company and the Purchasers agree is reasonably
required, the waiting period under the HSR Act shall have expired or notice of
early termination of the waiting period shall have been received by the Company
and the Purchasers.
(k) Neither the purchase of and payment for the Notes nor any of the
transactions contemplated by the Exchange shall be prohibited or enjoined by any
law, court order or government regulation.
6.2. Conditions to the Obligation of the Company to Consummate the
Closing. The obligation of the Company to consummate the transactions to be
consummated at the Closing, and to issue and sell to each Purchaser the Notes to
be purchased by it at the Closing pursuant to this Agreement, is subject to the
satisfaction of the conditions precedent set forth in this Section 6.2.
(a) The representations and warranties contained herein of such
Purchaser shall be true and correct on and as of the Closing Date, with the same
force and effect as though
32
made on and as of Closing Date (it being understood and agreed by the Company
that, in the case of any representation and warranty of such Purchaser contained
herein which is not hereinabove qualified by application thereto of a
materiality standard, such representation and warranty need be true and correct
only in all material respects).
(b) Such Purchaser shall have performed in all material respects all
obligations and conditions herein required to be performed or observed by such
Purchaser on or prior to the Closing Date.
(c) To the extent the Company and the Purchasers agree is reasonably
required, the waiting period under the HSR Act shall have expired or notice of
early termination of the waiting period shall have been received by the Company
and the Purchasers.
Each Purchaser's obligations under this Section 6.2 shall be several
and independent from the obligations of each other Purchaser; and the failure by
any Purchaser to fulfill or comply with any of the conditions set forth in this
Section 6.2 shall not affect the obligations of the Company to any other
Purchaser to consummate the transactions contemplated by this Agreement.
6.3. Conditions Precedent to the Exchange Closing. The obligation of
the Company and the several obligations of each Purchaser to consummate the
transactions to be consummated at the Exchange Closing shall be subject to the
condition precedent that (i) the Stockholder Approval has been received and (ii)
the Series C Preferred Certificate of Designations has been filed with, and
accepted by, the Secretary of State of the State of Delaware.
7. Registration of the Securities; Compliance with the Securities Act.
7.1. Securities Law Transfer Restrictions. No Purchaser shall sell,
assign, pledge, transfer or otherwise dispose of or encumber any of the
Securities being purchased by it hereunder unless the transferee agrees in
writing to be bound by the terms of this Agreement and except (i) pursuant to an
effective registration statement under the Securities Act or (ii) pursuant to an
available exemption from registration under the Securities Act and applicable
state securities laws and, if requested by the Company, upon delivery by such
Purchaser of an opinion of counsel reasonably satisfactory to the Company to the
effect that the proposed transfer is exempt from registration under the
Securities Act and applicable state securities laws. The Company shall not
register any transfer of the Securities in violation of this Section 7.1. The
Company may, and may instruct any transfer agent for the Company to, place such
stop transfer orders as may be required on the transfer books of the Company in
order to ensure compliance with the provisions of this Section 7.1.
Notwithstanding the foregoing, the Notes shall not be transferable without the
prior written consent of the Company, except for transfers to Affiliates of the
Purchasers that agree not to further transfer the Notes.
7.2. Legends. Each certificate representing any of the Securities shall
be endorsed with the legend set forth below, and each Purchaser covenants that,
except to the extent such restrictions are waived by the Company, it shall not
transfer the shares represented by any
33
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] [AND THE SECURITIES
ISSUABLE UPON ITS EXCHANGE] HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR SECURITIES LAWS OF ANY STATE AND MAY NOT BE
OFFERED, SOLD, ASSIGNED, PLEDGED TRANSFERRED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE
STATE SECURITIES LAWS OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION
UNDER THE ACT OR SUCH LAWS AND, IF REQUESTED BY THE COMPANY, UPON DELIVERY OF AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT THE PROPOSED
TRANSFER IS EXEMPT FROM THE ACT OR SUCH LAWS."
7.3. Registration Procedures and Other Matters. The Company shall:
(a) upon the request of a majority-in-interest of the Purchasers, use
its reasonable best efforts, subject to receipt of necessary information from
each Purchaser for inclusion in such filing, to prepare and file with the SEC
within 180 days after the closing of a Qualified Transaction or such other time
as shall be mutually agreed to, a registration statement on Form S-3 (the
"Registration Statement") covering the Securities held by each Purchaser, or the
Holders (defined in Section 7.4 below), from time to time, in compliance with
the Securities Act;
(b) use its reasonable best efforts to cause the Registration Statement
to become effective as promptly as practicable after filing, such efforts to
include, without limiting the generality of the foregoing, preparing and filing
with the SEC any financial statements that are required to be filed prior to the
effectiveness of such Registration Statement;
(c) use its reasonable best efforts to prepare and file with the SEC
such amendments and supplements to the Registration Statement and the prospectus
used in connection therewith (the "Prospectus") as may be necessary to keep the
Registration Statement continuously effective and free from any material
misstatement or omission to state a material fact for a period not exceeding,
with respect to each Holder's Securities, the earlier of (i) the date on which
each Holder may sell all Securities then held by such Holder without restriction
by the volume limitations of Rule 144(e) of the Securities Act or (ii) such time
as all Securities purchased by such Holder have been sold pursuant to a
registration statement or are otherwise freely tradeable;
(d) furnish to each Holder with respect to the Securities registered
under the Registration Statement such number of copies of the Registration
Statement, Prospectuses and preliminary prospectuses in conformity with the
requirements of the Securities Act and such other documents as such Holder may
reasonably request, in order to facilitate the public sale or other disposition
of all or any of the Securities by such Holder; provided, however, that the
obligation of the Company to deliver copies of Prospectuses or preliminary
Prospectuses to such Holder shall be subject to the receipt by the Company of
reasonable assurances from such Holder
34
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 to be
issued in connection with the Exchange to be listed on Nasdaq in connection with
the filing of the Registration Statement.
Notwithstanding anything to the contrary herein, the Registration
Statement shall cover only the Securities.
7.4. Transfer of Securities; Suspension.
(a) Each Purchaser agrees that in case of any disposition of its
Securities not made pursuant to the Registration Statement to (i) a third party
who agrees to be bound by the provisions of this Section 7 and makes the
representations to the Company contained in Section 4 herein or (ii) its
partners as part of a distribution of all or part of the Securities (in each
case the "Transferee", and together with the Purchasers, the "Holders"), such
Purchaser will promptly notify the Company of any changes in the information set
forth in the Registration Statement regarding the Holders or their plans of
distribution. The Company agrees, in case of such sale, transfer or distribution
(to the extent made in accordance with Section 7.1), to promptly file one or
more post-effective amendments to the Registration Statement or a supplement to
the related Prospectus, naming each Transferee as a Selling Shareholder in
accordance with the provisions of the Securities Act.
(b) Except in the event that paragraph (c) below applies, the Company
shall (i) prepare and file from time to time with the SEC a post-effective
amendment to the Registration Statement or a supplement to the related
Prospectus or a supplement or amendment to any document incorporated therein by
reference or file any other required document so that
35
such Registration Statement will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, and so that, as thereafter
delivered to the purchasers of Securities being sold thereunder, such Prospectus
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; (ii) provide each Holder copies of any documents filed pursuant to
Section 7.4(b)(i); and (iii) inform each Holder that the Company has complied
with its obligations in Section 7.4(b)(i) (or that, if the Company has filed a
post-effective amendment to the Registration Statement which has not yet been
declared effective, the Company will notify each Holder to that effect, will use
its reasonable best efforts to secure the effectiveness of such post-effective
amendment as promptly as possible and will promptly notify each Holder pursuant
to Section 7.4(b)(i) herein when the amendment has become effective).
(c) Subject to paragraph (d) below, in the event (i) of any request by
the SEC or any other federal or state governmental authority during the period
of effectiveness of the Registration Statement for amendments or supplements to
a Registration Statement or related Prospectus or for additional information;
(ii) of the issuance by the SEC or any other federal or state governmental
authority of any stop order suspending the effectiveness of a Registration
Statement or the initiation of any proceedings for that purpose; (iii) of the
receipt by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Securities for sale
in any jurisdiction or the initiation or threatening of any proceeding for such
purpose; (iv) of any event or circumstance which, upon the advice of its
counsel, necessitates the making of any changes in the Registration Statement or
Prospectus, or any document incorporated or deemed to be incorporated therein by
reference, so that, in the case of the Registration Statement, it will not
contain any untrue statement of a material fact or any omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and that in the case of the Prospectus, it will not
contain any untrue statement of a material fact or any omission to state a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; or (v) the Company determines in good faith that offers and sales
pursuant to the Registration Statement should not be made by reason of the
presence of material undisclosed circumstances or developments with respect to
which the disclosure that would be required in such a Registration Statement or
related Prospectus is premature, would have an adverse effect on the Company or
is otherwise inadvisable, then the Company shall deliver a certificate in
writing to each Holder (the "Suspension Notice") to the effect of the foregoing
and, upon receipt of such Suspension Notice, such Holder will refrain from
selling any Securities pursuant to the Registration Statement (a "Suspension")
until such Holder's receipt of copies of a supplemented or amended Prospectus
prepared and filed by the Company, or until it is advised in writing by the
Company that the current Prospectus may be used, and has received copies of any
additional or supplemental filings that are incorporated or deemed incorporated
by reference in any such Prospectus. In the event of any Suspension, the Company
will use its reasonable best efforts to cause the use of the Prospectus so
suspended to be resumed as soon as reasonably practicable after the delivery of
a Suspension Notice to each Holder. In addition to and without limiting any
other remedies (including, without limitation, at law or at equity) available to
such Holder, such Holder shall be entitled to specific performance in the event
that the Company fails to comply with the provisions of this Section 7.4(c).
36
(d) Notwithstanding the foregoing paragraphs of this Section 7.4, no
Holder shall be prohibited from selling Securities under the Registration
Statement as a result of Suspensions on more than three occasions of not more
than 30 days each in any twelve month period unless, in the good faith judgment
of the Board of Directors, upon the written opinion of counsel, the sale of
Securities under the Registration Statement in reliance on this paragraph 7.4(d)
would be reasonably likely to cause a violation of the Securities Act or the
Exchange Act and result in liability to the Company.
(e) Provided that a Suspension is not then in effect, each Holder may
sell Securities under the Registration Statement, provided that it arranges for
delivery of a current Prospectus to the transferee of such Securities. Upon
receipt of a request therefor, the Company will provide an adequate number of
current Prospectuses to such Holder and to supply copies to any other parties
requiring such Prospectuses.
(f) Each Holder acknowledges and agrees that the Securities sold
pursuant to the Registration Statement are not transferable on the books of the
Company unless the stock certificate submitted to the transfer agent evidencing
such Securities is accompanied by a certificate reasonably satisfactory to the
Company to the effect that (i) the Securities have been sold in accordance with
such Registration Statement and (ii) the requirement of delivering a current
Prospectus has been satisfied.
(g) In the event of a sale of Securities by any Holder pursuant to the
Registration Statement, such Holder shall deliver to the Company's transfer
agent an appropriate notification of the sale, so that the Securities may be
properly transferred.
7.5. Company Registration.
(a) If the Company shall determine to register any of its equity
securities either for its own account or for the account of other stockholders
at any time prior to the effectiveness of the Registration Statement, other than
(i) a registration relating solely to employee benefit plans, (ii) a
registration relating solely to a SEC Rule 145 transaction (iii) a registration
relating solely to securities issued in connection with settlement of litigation
otherwise approved in the manner specified in Section 5.12(a)(xii), or (iv) a
registration on any registration form which does not permit secondary sales or
does not include substantially the same information as would be required to be
included in a registration statement covering the sale of Securities, the
Company will:
(i) promptly give to each of the Holders a written notice thereof
(which shall include a list of the jurisdictions in which the Company intends to
attempt to qualify such securities under the applicable blue sky or other state
securities laws); and
(ii) if so requested by the Holders of at least fifty-one percent (51%)
or more of the Securities (on an as-converted, as exercised basis), include in
such registration (and any related qualification under blue sky laws or other
compliance), and in any underwriting involved therein, all the Securities
specified in a written request or requests made by the Holders within fifteen
(15) days after receipt of the written notice from the Company described in
clause (i) above, except as set forth in Section 7.5(b) below. Such written
request may specify all or a part
37
of the Holders' Securities. In the event any Holder requests inclusion in a
registration pursuant to this Section 7.5 in connection with a distribution of
Securities to its partners, the registration shall provide for the resale by
such partners, if requested by such Holder.
(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
38
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
39
indemnify the Company (or such officer, director, employee, agent or controlling
Person) shall be limited to the net amount received by such Selling Stockholder
from the sale of its Securities pursuant to such Registration Statement.
(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
40
Shareholder on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement. The
Company and each Purchaser agree that it would not be just and equitable if
contribution pursuant to this subsection (e) were determined by pro rata
allocation (even if the Purchasers and other Selling Shareholders were treated
as one entity for such purpose) or by any other method of allocation which does
not take into account the equitable considerations referred to above in this
subsection (e). The amount paid or payable by an indemnified Person as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (e) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified Person in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (e), no Selling Stockholder shall be required to
contribute any amount in excess of the amount by which the net amount received
by such Selling Stockholder from the sale of the Securities to which such loss
relates exceeds the amount of any damages which such Selling Stockholder has
otherwise been required to pay by reason of such untrue statement (except in the
event of fraud by such Selling Stockholder). No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. The Selling Stockholder's obligations in this
subsection to contribute shall be in proportion to the respective sale of
Securities of such Selling Stockholder and shall not be joint with any other
Selling Shareholders.
(f) The parties to this Agreement hereby acknowledge that they are
sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions hereof including, without limitation, the
provisions of this Section 7.6, and are fully informed regarding said
provisions. They further acknowledge that the provisions of this Section 7.6
fairly allocate the risks in light of the ability of the parties to investigate
the Company and its business in order to assure that adequate disclosure is made
in the Registration Statement as required by the Securities Act and the Exchange
Act. The parties are advised that federal or state public policy as interpreted
by the courts in certain jurisdictions may be contrary to certain of the
provisions of this Section 7.6, and the parties hereto hereby expressly waive
and relinquish any right or ability to assert such public policy as a defense to
a claim under this Section 7.6 and further agree not to attempt to assert any
such defense.
7.7. Termination of Conditions and Obligations. The conditions
precedent imposed by this Section 7 upon the transferability of the Securities
shall cease and terminate as to any particular number of the Securities when
such Securities shall have been effectively registered under the Securities Act
and sold or otherwise disposed of in accordance with the intended method of
disposition set forth in the Registration Statement covering such Securities or
at such time as an opinion of counsel reasonably satisfactory to the Company
shall have been rendered to the effect that such conditions are not necessary in
order to comply with the Securities Act.
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
41
Company's headquarters to discuss all information relevant for disclosure in the
Registration Statement covering the Securities and will otherwise cooperate with
any Holder's conducting an investigation for the purpose of reducing or
eliminating such Holder exposure to liability under the Securities Act,
including the reasonable production of information at the Company's
headquarters; provided, that the Company shall not be required to disclose any
confidential information to any holder or meet at its headquarters with any
Purchaser until and unless such Holder or Purchaser shall have entered into a
confidentiality agreement in form and substance reasonably satisfactory to the
Company with the Company with respect thereto.
7.9. Delay of Registration. The Holders shall have no right to take any
action to restrain, enjoin or otherwise delay any registration pursuant to this
Section 7 as a result of any controversy that may arise with respect to the
interpretation or implementation of this Agreement.
8. Termination.
8.1. Termination. Unless the Closing has occurred prior thereto, this
Agreement and, except as herein provided, all the rights of the parties hereto,
shall terminate on August 10, 2004 (unless such date is extended by mutual
written consent of the Purchasers and the Company).
8.2. Effect of Termination. In the event of termination pursuant to
Section 8.1 hereof, this Agreement shall become null and void and have no
effect. Notwithstanding anything to the contrary contained herein, in the event
this Agreement is terminated in accordance with Section 8.1 hereof, all of the
terms and provisions of the 2002 Purchase Agreement and the 2003 Purchase
Agreement shall remain in full force and effect.
9. Miscellaneous Provisions.
9.1. Public Statements or Releases. Neither the Company nor any
Purchaser shall make any public announcement with respect to the existence or
terms of this Agreement or the transactions provided for herein without the
prior approval of the other parties, which shall not be unreasonably withheld or
delayed. Notwithstanding the foregoing, nothing in this Section 9.1 shall
prevent any party from making any public announcement it considers necessary in
order to satisfy its obligations under the law or the rules of any national
securities exchange, provided such party, to the extent practicable, provides
the other parties with an opportunity to review and comment on any proposed
public announcement before it is made.
9.2. Rights Cumulative. Each and all of the various rights, powers and
remedies of the parties shall be considered to be cumulative with and in
addition to any other rights, powers and remedies which such parties may have at
law or in equity in the event of the breach of any of the terms of this
Agreement. The exercise or partial exercise of any right, power or remedy shall
neither constitute the exclusive election thereof nor the waiver of any other
right, power or remedy available to such party.
9.3. Pronouns. All pronouns or any variation thereof shall be deemed to
refer to the masculine, feminine or neuter, singular or plural, as the identity
of the person, persons, entity or entities may require.
42
9.4. Notices.
(a) Any notices, reports or other correspondence (hereinafter
collectively referred to as "correspondence") required or permitted to be given
hereunder shall be sent by postage prepaid first class mail, courier or
facsimile or delivered by hand to the party to whom such correspondence is
required or permitted to be given hereunder. The date of giving any notice shall
be the date of its actual receipt.
(b) All correspondence to the Company shall be addressed as follows:
Proxim Corporation
000 Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Chief Financial Officer
Facsimile: (000) 000-0000
(c) All correspondence to any Purchaser shall be sent to such Purchaser
at the address set forth in Exhibit A.
(d) Any Person may change the address to which correspondence to it is
to be addressed by notification as provided for herein.
9.5. Captions. The captions and paragraph headings of this Agreement
are solely for the convenience of reference and shall not affect its
interpretation.
9.6. Severability. Should any part or provision of this Agreement be
held unenforceable or in conflict with the applicable laws or regulations of any
jurisdiction, the invalid or unenforceable part or provisions shall be replaced
with a provision which accomplishes, to the extent possible, the original
business purpose of such part or provision in a valid and enforceable manner,
and the remainder of this Agreement shall remain binding upon the parties
hereto.
9.7. Confidentiality. Except as and to the extent required by law, each
party (the "Recipient") shall not disclose or use, and shall direct its
representatives not to disclose or use to the detriment of the other parties
hereto (the "Disclosing Party"), any Confidential Information furnished, or to
be furnished, by the Disclosing Party or its representatives to the Recipient or
its representatives at any time or in any manner other than in connection with
the Proposed Transaction. For purposes of this paragraph, "Confidential
Information" means any non-public, proprietary or confidential information with
respect to a Disclosing Party, unless (a) such information is already known to
the Recipient or its representatives or to others not bound by a duty of
confidentiality or such other information becomes publicly available through no
fault of the Recipient or its representatives, (b) the use of such information
is necessary or appropriate in making any filing or obtaining any consent or
approval required for the consummation of the Proposed Transaction and the other
parties hereto have consented to such disclosure, (c) the information is
disclosed to an affiliate of the Recipient in connection with the consummation
of the Proposed Transaction or (d) the furnishing of the information is legally
required in connection with legal proceedings or by any governmental agency;
provided,
43
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.
9.8. Governing Law; Injunctive Relief.
(a) This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York.
(b) Each of the parties hereto acknowledges and agrees that damages
will not be an adequate remedy for any material breach or violation of this
Agreement if such material breach or violation would cause immediate and
irreparable harm (an "Irreparable Breach"). Accordingly, in the event of a
threatened or ongoing Irreparable Breach, each party hereto shall be entitled to
seek, in any state or federal court in the State of New York, equitable relief
of a kind appropriate in light of the nature of the ongoing or threatened
Irreparable Breach, which relief may include, without limitation, specific
performance or injunctive relief; provided, however, that if the party bringing
such action is unsuccessful in obtaining the relief sought, the moving party
shall pay the non-moving party's reasonable costs, including attorney's fees,
incurred in connection with defending such action. Such remedies shall not be
the parties' exclusive remedies, but shall be in addition to all other remedies
provided in this Agreement.
9.9. Waiver. No waiver of any term, provision or condition of this
Agreement, whether by conduct or otherwise, in any one or more instances, shall
be deemed to be, or be construed as, a further or continuing waiver of any such
term, provision or condition or as a waiver of any other term, provision or
condition of this Agreement.
9.10. Expenses. The Company shall pay all documented fees and expenses
incurred by the Purchasers in connection with the transactions contemplated
hereby including, without limitation, all legal, consulting and accounting fees
incurred under and in connection with the execution and delivery of this
Agreement and the other Transaction Documents ("Transaction Fees"). Payments due
pursuant to this Section 9.10 will be made at the Closing and the Exchange
Closing for all documented fees and expenses incurred but unpaid as of such
date; provided, that in the event each of the Closing and the Exchange Closing
occurs, or if one does not occur then upon termination of this Agreement, and in
any event, any remaining payments will be made not later than 30 days after a
xxxx for such fees and expenses has been sent by the Purchasers to the Company.
The Purchasers will be entitled, at their option, to receive payment of the
Transaction Fees through a reduction in the aggregate purchase price to be paid
by the Purchasers at each Closing.
9.11. Assignment. The rights and obligations of the parties hereto
shall inure to the benefit of and shall be binding upon the authorized
successors and permitted assigns of each party. None of the parties may assign
its rights or obligations under this Agreement or designate another Person (i)
to perform all or part of its obligations under this Agreement or (ii) to have
all or part of its rights and benefits under this Agreement, in each case
without the prior written consent of the other parties, provided, however, that
the Purchasers shall have the right to assign
44
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.
9.12. Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument
9.13. 2002 Purchase Agreement and 2003 Purchase Agreement. Except as
expressly set forth herein, each party acknowledges and agrees that the 2002
Purchase Agreement and the 2003 Purchase Agreement shall remain in full force
and effect.
9.14. Entire Agreement. This Agreement, the Notes and the other Loan
Documents constitute the entire agreement between the parties hereto respecting
the subject matter hereof and supersede all prior agreements, negotiations,
understandings, representations and statements respecting the subject matter
hereof, whether written or oral. No modification, alteration, waiver or change
in any of the terms of this Agreement shall be valid or binding upon the parties
hereto unless made in writing and duly executed by the Company and Purchasers
holding in the aggregate at least a majority of the aggregate principal amount
of the Notes or least a majority of the Securities other than the Notes.
[Signature Page Follows]
45
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal as of the day and year first above written.
PROXIM Corporation
By: /s/ Xxxxxx Xxxxxxxx
---------------------------------------
Name: Xxxxxx Xxxxxxxx
Title: President and Chief Executive
Officer
PURCHASERS:
WARBURG PINCUS PRIVATE EQUITY VIII, L.P.
By: WARBURG, XXXXXX & CO.,
its General Partner
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Partner
BCP CAPITAL, L.P.
By: BCP General LLC
its General Partner
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
BCP CAPITAL QPF, L.P.
By: BCP General LLC
its General Partner
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
[Signature page to Securities Purchase Agreement]
BCP CAPITAL AFFILIATES FUND LLC
By: BCP Capital Management LLC
its Manager
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
[Signature page to Securities Purchase Agreement]
EXHIBIT A
Schedule of Purchasers
Shares of Series B Preferred Common Stock Issuable upon Series C Preferred Stock
Purchaser Principal Amount of Stock Issuable Upon Exchange of Stockholder Approval of the Issuable Upon Stockholder
Name and Address Notes to be Purchased the Outstanding Notes(1) Exchange Approval of the Exchange
---------------- --------------------- ------------------------------- --------------------------- -------------------------
WARBURG PINCUS 8,666,667 425,186 142,133,339 346,680
PRIVATE EQUITY
VIII, L.P.
000 Xxxxxxxxx
Xxxxxx
Xxx Xxxx, XX 00000
Attention:
Xxxxx Xxxxxxx
Fax No. 000-000-0000
with a copy to:
Xxxxxxx Xxxx &
Xxxxxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X.
Xxxxxxx
Xxxxxxx
X. Xxxx
Facsimile:(212)
728-8111
BCP CAPITAL, L.P. 161,996 7,915 2,645,861 6,440
Xxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxxxx,
XX 00000
BCP CAPITAL QPF, L.P. 1,171,337 57,282 19,148,640 46,680
Xxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxxxx,
XX 00000
BCP CAPITAL AFFILIATES
FUND LLC -- 216 72,160 200
----------------
(1) Assumes a Closing Date of July 30, 2004. In the event the Closing occurs
prior to or after July 30, 2004, the number of shares of Series B to be
issued to each Purchaser will be appropriately adjusted.
Xxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
TOTAL $10,000,000 490,599 164,000,000 400,000
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 __, 2004, BY AND AMONG SILICON VALLEY BANK, WARBURG PINCUS
PRIVATE EQUITY VIII, L.P., IN ITS CAPACITY AS COLLATERAL AGENT, PROXIM
CORPORATION, PROXIM WIRELESS NETWORKS, INC., WIRELESSHOME CORPORATION AND PROXIM
INTERNATIONAL HOLDINGS, INC. (FORMERLY WESTERN MULTIPLEX INTERNATIONAL HOLDINGS,
INC.).
FORM OF
SECURED PROMISSORY NOTE
$______________ July __, 2004
FOR VALUE RECEIVED, Proxim Corporation, a Delaware corporation (the
"Maker" or the "Company"), hereby unconditionally promises to pay to the order
of ________________________ (the "Holder"), having an address at
_____________________, at such address or at such other place as may be
designated in writing by the Holder, or its permitted assigns, the original
aggregate principal sum of ________________ dollars ($__________.00), together
with interest from the date hereof on the unpaid principal balance of this Note
(as defined herein) outstanding at a rate equal to fifteen percent (15%)
(computed on the basis of the actual number of days elapsed in a 365-day year)
per annum, subject to adjustment as provided below, and continuing on the
outstanding principal until this Note is exchanged pursuant to the terms set
forth in the Purchase Agreement (as defined herein) or, indefeasibly and
irrevocably, paid in full by the Maker. All payments of principal and interest
by the Maker under this Note, including without limitation amounts payable
pursuant to Section 6(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 automatically, and without action by any party hereto, bear interest
at an annual rate of
twenty percent (20%) (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.
"Change of Control" shall have the meaning ascribed to such term in the
Form of Certificate of Designations, Preferences and Rights of the Series C
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.
"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 Closing" shall have the meaning ascribed to such term in the
Purchase Agreement.
"Guaranteeing Subsidiaries" shall have the meaning ascribed to such
term in the Purchase Agreement.
"Holder" 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.
-2-
"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, (ii) any date on which the Holder shall
have demanded payment of this Note pursuant to Section 6(b) herein; and (iii)
June 30, 2005.
"Note" shall have the meaning ascribed to such term in Section 2
herein.
"Note Exchange Date" shall mean the date on which the Notes are
exchanged upon the closing of a Qualified Transaction in accordance with the
terms of the Purchase Agreement.
"Note Obligations" shall have the meaning ascribed to such term in the
Pledge and Security Agreement.
"Pledge and Security Agreement" shall mean the Pledge and Security
Agreement, dated as of July __, 2004, by and among the Maker, the Collateral
Agent and the Purchasers (for the purposes of agreeing to and accepting the
provisions set forth in Article X and Article XI therein).
"Prepayment Notice" shall have the meaning ascribed to such term in
Section 4 herein.
"Purchase Agreement" shall mean the Securities Purchase Agreement,
dated as of July __, 2004, and as that agreement may be amended from time to
time, by and among the Maker and the Purchasers.
"Purchasers" shall have the meaning ascribed to such term in the
Purchase Agreement.
"Qualified Transaction" shall have the meaning ascribed to such term in
the Purchase Agreement.
"Required Holders" shall mean the holders of at least a majority of the
outstanding aggregate principal amount of the Notes.
"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.
"Stockholder Approval" shall have the meaning ascribed to such term in
the Purchase Agreement.
"Warburg" shall mean Warburg Pincus Private Equity VIII, L.P.
-3-
2. Securities Purchase Agreement. This Senior Secured Promissory Note
(this "Note") is one of the several Notes of the Maker issued pursuant to the
Purchase Agreement and is subject to the terms and conditions of, and entitled
to the benefit of, the provisions thereof. This 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 a replacement Note 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 this Note is lost, stolen, mutilated or
destroyed.
3. Security. As collateral for the satisfaction of and payment in full of
the Maker's Note Obligations, including the repayment in full of the principal
of premium, if any, and interest 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 and irrevocable payment in full of the
Note Obligations and (ii) the Note Exchange Date.
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 date
that Stockholder Approval is denied at the Special Meeting; provided, however,
that any partial prepayments pursuant to this Section 4 shall be made in an
aggregate amount of not less than twenty-five percent (25%) of the original
aggregate principal amount of the Notes (or such lesser aggregate principal
amount as remains outstanding at the time of prepayment) and any such prepayment
must be made on a pro rata basis to all holders of Notes then outstanding;
provided, further, that an Event of Default shall not have occurred prior to the
date of prepayment by the Company; provided, further, that the Company shall
provide written notice to the Holder setting forth the date of such prepayment
(the "Prepayment Notice"), which date shall be at least 10 Business Days from
the date of receipt by the Holder of the Prepayment Notice, with the presumption
that the Prepayment Notice is received by the Holder within three Business Days
of the date of delivery. Any such 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 under this Note shall be
(i) if the Maturity Date occurs prior to the Note Exchange Date, paid in full on
the Maturity Date, or (ii) if the Note Exchange Date occurs prior to the
Maturity Date, exchanged on the Note Exchange Date in accordance with the terms
of the Purchase Agreement.
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
-4-
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 (10) 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 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 the 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 or any Guaranteeing Subsidiary (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 or
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 agent to take charge of or
liquidate any of its property or assets or upon the commencement against the
Maker or any Guaranteeing Subsidiary 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 against the Maker
or any of its subsidiaries involving an amount in excess of $4,000,000 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 Sections 6(b)(i) and 6(b)(ii), upon a Change of
Control;
-5-
(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 and during the continuance of a Material
Adverse Change; provided, however, that following the occurrence of (i) the
Exchange Closing and (ii) the initial closing of a Qualified Transaction, any
ruling or judgment made or entered against the Company and/or any of its
subsidiaries in the pending Symbol patent infringement litigation shall not
constitute a Material Adverse Change for purposes of this paragraph 6(a)(x);
(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"), then upon the occurrence of
any such Event of Default all unpaid principal and accrued interest under this
Note shall become immediately due and payable (A) upon election of the Required
Holders, with respect to (i) through (iv) and (vi) through (xii), and (B)
automatically, with respect to (v), in each case 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)
upon the occurrence of a Change of Control on or after the date of the Exchange
Closing but prior to the closing of a Qualified Transaction, at the option of
the Holder, an amount equal to 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 this Note to the Maker; and (ii) (x) upon the occurrence of a Change
of Control prior to the date of the Exchange Closing, or (y) at any time
following the thirtieth (30th) day after Stockholder Approval is denied at the
Special Meeting, in each case at the option of the Holder, 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 this Note to
the Maker.
(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 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.
7. Additional Remedies Upon Default. In addition to the remedies set forth
in Section 6(a) hereof, 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.
-6-
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 attorneys' 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:
EXHIBIT C
FORM OF
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF SERIES C
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 C Preferred Stock of Proxim Corporation" (the
"CERTIFICATE"). All capitalized terms not defined above or in Sections 1 through
10 below are defined in Section 11 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. 400,000 shares of Preferred Stock
of the Corporation shall constitute a series of Preferred Stock designated as
Series C Preferred Stock (the "SERIES C PREFERRED STOCK"). The number of shares
of Series C 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 C 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 C Preferred Stock shall, with respect to 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, the
Series A Preferred Stock, the Series B 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 C Preferred
Stock (whether with respect to 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, Series B
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 C Preferred Stock (whether with respect to payment of
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 C Preferred Stock (whether with
respect 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 C Preferred Stock shall not be
entitled to receive dividends on the Series C Preferred Stock.
(b) From and after the time, if any, that the Corporation fails to pay
to the holder of any shares of Series C Preferred Stock, on the date specified
for redemption in accordance with Section 5, Section 6 or Section 7 hereof or on
the date specified for repurchase in accordance with Section 10, the redemption
price calculated pursuant to Section 5, the Change of Control Price (as defined
below) or the Material Asset Sale Price (as defined below) after such holder has
delivered notice to the Corporation pursuant Section 10 of its intention to
exercise its repurchase rights under Section 10, if applicable, 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 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(b) shall
not be applicable at any time that (A) the Corporation has irrevocably paid, in
accordance with Section 5 or Section 7, the entire redemption price payable to
each holder of Series C Preferred Stock, (B) the Corporation has irrevocably
paid, in accordance with Section 6, the Change of Control Price payable to each
holder or (C) the Corporation has irrevocably paid, in accordance with Section
10, the Material Asset Sale Price payable to each holder that has exercised its
repurchase right pursuant to Section 10.
4. LIQUIDATION PREFERENCE.
(a) The initial liquidation preference for the shares of Series C
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 8.75%, compounded quarterly,
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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) or a Material Asset Sale (as
defined below), the Liquidation Value upon such Change of Control or Material
Asset Sale, as the case may be, 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) or Material Asset Sale Date (as
defined below), as the case may be, through the eighth anniversary of the
Original Issue Date exceeds (ii) the Liquidation Value in effect immediately
prior to the adjustment pursuant to this Section 4(a). The Stated Value shall be
subject to appropriate adjustment in the event of any stock dividend, stock
split, stock distribution or combination, subdivision, reclassification or other
corporate actions having a similar effect with respect to the Series C Preferred
Stock (each, a "Capital Stock Adjustment").
(b) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of shares of Series C
Preferred Stock shall be entitled to receive 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.
(c) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of shares of Series C
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 C 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 of shares of Series C Preferred Stock and
any such other Parity Securities ratably in accordance with the Liquidation
Value for the Series C 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. MANDATORY REDEMPTION; PROCEDURES FOR REDEMPTION.
(a) On ______ ___, 20__ [EIGHTH ANNIVERSARY OF ORIGINAL ISSUE DATE],
the Corporation shall redeem all outstanding shares of Series C Preferred Stock,
if any, at a cash redemption price equal to the Liquidation Value as if the
Series C Preferred Stock had fully accreted through such date, after taking into
account any Capital Stock Adjustments (such
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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 C 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 C
Preferred Stock, the Corporation shall effect such redemption pro rata among the
holders thereof (based on the number of shares of Series C Preferred Stock held
on the date of notice of redemption).
(b) In the event of a redemption of shares of Series C Preferred Stock
pursuant to Section 5(a), Section 6 or Section 7, 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 C 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 C
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 C 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 C Preferred Stock
(except the right to receive the Redemption Price without interest upon
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 this Section 5, Section 6 and Section 7, the
Corporation shall have no right to redeem the shares of Series C Preferred
Stock. Any shares of Series C 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
C Preferred Stock accordingly.
6. CHANGE OF CONTROL; PROCEDURES UPON CHANGE OF CONTROL. In the event
that the Corporation undergoes a Change of Control (the date of such occurrence
being the "Change of Control Date"), the Corporation shall be required to redeem
in cash or readily marketable securities all outstanding shares of Series C
Preferred Stock, if any, at a redemption price (the "Change of Control Price")
equal to the Liquidation Value as if the Series C Preferred Stock had fully
accreted through the eighth
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anniversary of the Original Issuance Date (after taking into account any Capital
Stock Adjustments, plus following the eighth anniversary of the Original Issue
Date, an amount equal to the unrecognized accretion, if any, from the end of the
immediately preceding quarter ending ______, ______, ______ or _______ to but
not including the Redemption Date. In the event of a redemption pursuant to this
Section 6, the Corporation shall follow the redemption procedures set forth in
Section 5.
7. OPTIONAL REDEMPTION. At any time prior to _______, 20__ [eighth
anniversary of the Original Issuance Date], the Corporation shall have the right
at its option to redeem all outstanding shares of Series C Preferred Stock at a
price per share in cash equal to the Liquidation Value as if it had fully
accreted through the eighth anniversary of the Original Issuance Date. The
Corporation shall also have the right at its option to redeem all outstanding
shares of Series C Preferred Stock (i) at any time prior to, and including, the
third anniversary of the Original Issuance Date at a price per share in cash
equal to its then accreted Liquidation Value (after taking into account any
Capital Stock Adjustments), if the Market Price of the Common Stock has been
higher than TWO DOLLARS AND TWENTY-FIVE CENTS ($2.25) for a period of forty-five
(45) consecutive trading days prior to the date of the applicable Redemption
Notice or (ii) at any time following the third anniversary of the Original
Issuance Date at a price per share equal to its then accreted Liquidation Value
(after taking into account any Capital Stock Adjustments), if the Market Price
of the Common Stock has been higher than TWO DOLLARS ($2.00) for a period of
forty-five (45) consecutive trading days prior to the date of issuance of the
applicable Redemption Notice. In the event of a redemption pursuant to this
Section 7, the Corporation shall follow the redemption procedures set forth in
Section 5.
8. STATUS OF SHARES. All shares of Series C Preferred Stock that are at
any time redeemed pursuant to Section 5, Section 6 or Section 7 or repurchased
pursuant to Section 10 and all shares of Series C 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.
9. VOTING RIGHTS.
(a) The holders of record of shares of Series C 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 C Preferred Stock shall not be
entitled to vote with the holders of the Common Stock on matters submitted for a
vote of holders of Common Stock.
(c) Notwithstanding anything to the contrary set forth in Section 9(b),
for so long as any shares of Series C 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 C Preferred Stock, voting as a single class:
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(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 C
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); or
(iv) declare or pay any dividend on the Common Stock;
provided that no such consent or vote of the holders of Series C 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 C Preferred Stock at the time
outstanding shall have been called for redemption or repurchase by the
Corporation in accordance with Section 5, Section 6, Section 7 or Section 10, 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 set forth in the Corporation's certificate of
incorporation.
10. MATERIAL ASSET SALE; PROCEDURES UPON A MATERIAL ASSET SALE.
(a) If the Corporation undergoes a Material Asset Sale (the date of
such occurrence being the "MATERIAL ASSET SALE DATE"), each holder of shares of
Series C Preferred Stock shall have the right to require the Corporation to
repurchase such holder's shares of Series C Preferred Stock, in whole or in
part, at such holder's option, at a cash repurchase price (the "MATERIAL ASSET
SALE PRICE") equal to the Liquidation Value as if the Series C Preferred Stock
had fully accreted through the eighth anniversary of the Original Issuance Date
(after taking into account any Capital Stock Adjustments), plus following the
eighth anniversary of the Original Issue Date, an amount equal to the
unrecognized accretion, if any, from the end of the immediately preceding
quarter ending ______, ______, ______ or _______ to but not including the
Material Asset Sale Repurchase Date.
(b) The Corporation shall send notice to each holder of Series C
Preferred Stock of a Material Asset Sale within 30 days of the Material Asset
Sale Date. To exercise its right to require the Corporation to repurchase its
shares, the holder of shares of Series C Preferred Stock shall submit its
certificates representing any shares of Series C Preferred Stock
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to be repurchased by the Corporation to the Corporation with a written notice of
its election to exercise it rights pursuant to Section 10(a) and specifying the
date upon which the Corporation shall repurchase the shares, which date shall be
no later than the 60th day following the date such holder received the
Corporation's notice specified in the previous sentence (the "MATERIAL ASSET
SALE REPURCHASE DATE").
(c) Upon surrender in accordance with the notice of a Material Asset
Sale of the certificates for any shares to be repurchased, such shares shall be
repurchased by the Corporation on the Material Asset Sale Repurchase Date at the
Material Asset Sale Price. In case 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.
11. 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 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.
"BCP" means BCP Capital, L.P. (formerly Broadview Capital Partners,
L.P.), BCP Capital QPF, L.P. (formerly Broadview Capital Partners Qualified
Purchaser Fund, L.P.) and BCP Affiliates Fund LLC (formerly Broadview Capital
Partners Affiliates Fund L.L.C.)
"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.
"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.
"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:
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(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 BCP, 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 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;
provided, however, that in event shall the consummation of the
transactions contemplated by the Purchase Agreement result in a Change of
Control.
"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.
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"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
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.
"Material Asset Sale" shall mean any sale of the Corporation's assets
(i) that does not constitute a Business Combination and (ii) as a result of
which sale the Corporation's revenues for the prior twelve-month period would
have declined by forty percent (40%) or more on a pro forma basis giving effect
to such asset sale.
"Original Issue Date" means the date upon which the initial shares of
Series C 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 that certain Securities Purchase Agreement,
dated as of July 27, 2004, among the Corporation and the purchasers named
therein.
"Series A Preferred Stock" means the Series A Convertible Preferred
Stock of the Corporation, par value $.01 per share.
"Series B Preferred Stock" means the Series B 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.
- 9 -
12. NO OTHER RIGHTS. The shares of Series C 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 _________ ___, 200_.
[Signature Page Follows]
- 10 -
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
duly executed and acknowledged by its undersigned duly authorized officer this
__ day of _________, 200_.
PROXIM CORPORATION
By: ___________________________________
Name:
Title:
- 11 -
EXHIBIT D
FORM OF
PLEDGE AND SECURITY AGREEMENT
PLEDGE AND SECURITY AGREEMENT, dated as of July __, 2004 (as
amended, restated, modified or supplemented from time to time, this "Agreement")
by and among PROXIM CORPORATION, a Delaware corporation (the "Grantor"), WARBURG
PINCUS PRIVATE EQUITY VIII, L.P., as collateral agent for the Noteholders (as
herein defined) (in such capacity, the "Collateral Agent"), and the Noteholders
(for the purposes of agreeing to and accepting the provisions set forth in
Article X and Article XI herein).
WITNESSETH:
WHEREAS, reference is made to that certain Securities Purchase
Agreement, dated as of July 27, 2004 (the "Purchase Agreement"), by and among
the Grantor and the purchasers named therein (the "Purchasers"), pursuant to
which, subject to the conditions set forth therein, the parties thereto have
agreed to the issuance by the Grantor of $10 million in aggregate principal
amount of secured promissory notes (the "Notes") to the Purchasers (the
Purchasers and the other holders from time to time of the Notes being referred
to herein collectively as the "Noteholders");
WHEREAS, in conjunction with the Purchase Agreement, the
Grantor is entering into this Agreement for the purpose of, among other things,
granting liens on and security interests in the Collateral provided for herein
as security for the full, prompt and complete payment and performance when due
of the Note Obligations;
WHEREAS, reference is made to those certain Subsidiary
Guaranties, dated as of even date herewith, by each of the Guaranteeing
Subsidiaries (as defined herein) in favor of the Noteholders and (ii) those
certain Subsidiary Pledge and Security Agreements, dated as of even date
herewith (collectively the "Subsidiary Pledge and Security Agreements"), by and
among each of the Guaranteeing Subsidiaries and the Collateral Agent; and
WHEREAS, reference is made to that certain Intercreditor
Agreement (as defined herein), which governs the ranking and priority of the
security interests and liens granted hereunder and under the Subsidiary Pledge
and Security Agreements.
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, and of the issuance and
acceptance of the Notes, the Grantor and the Collateral Agent hereby set forth
and 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 (except for United
States "intent-to-use" applications for trademark or service xxxx registrations
filed pursuant to Section 1(b) of the Xxxxxx Act, unless and until an Amendment
to Allege Use or a Statement of Use under Sections 1(c) and 1(d) of said Act has
been filed), 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.
"Guaranteeing Subsidiaries" means Proxim Wireless Networks,
Inc., WirelessHome Corporation and Proxim International Holdings, Inc. (formerly
Western Multiplex International Holdings, Inc.).
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"Intercreditor Agreement" means the Intercreditor Agreement,
dated as of even date herewith, by and among the Collateral Agent, SVB, the
Company and the Guaranteeing Subsidiaries and all schedules, exhibits and
annexes attached thereto.
"Note Obligations" means all obligations of the Grantor under
or in respect of the Notes, including obligations set forth in the Notes, the
Purchase Agreement, this Agreement or any of the other Collateral Documents,
including without limitation obligations for principal, premium, interest,
purchase price, payments upon demand of a Noteholder, 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).
"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 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; (e) the Temporary Overadvance Agreement, dated as of June 23,
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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.
"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 Note 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.
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.;
4
(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
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.
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(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
(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 Note Obligations remain 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
6
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.
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 Note 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
7
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 Note Obligations for the
ratable benefit of the Noteholders in the priorities set forth in the
Intercreditor Agreement and in the Notes; 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
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.
8
(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
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
9
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 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. Each
Noteholder irrevocably authorizes the Collateral Agent to act upon the
instructions and directions of the Requisite Holders to consent to amendments to
or waivers of this Agreement, the Intercreditor Agreement and any other
Collateral Document so long as such instruction, direction, amendment or waiver
is made with or approved by the consent of the Requisite Holders.
SECTION 10.3 GENERAL IMMUNITY.
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(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 Note 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 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.
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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 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
12
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 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 Note 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 (or confirms its
authorization to) to enter into and act pursuant to 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
13
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, which may act on behalf of the Noteholders with the consent of the
Requisite Holders as set forth in Section 10.2 herein.
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 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 issuance and
delivery of any 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.
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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 Note Obligations shall
have been paid in cash and otherwise performed in full and (ii) the date all of
the Notes are exchanged upon the closing of a Qualified Transaction in
accordance with the terms of 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 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 Note
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 Note Obligations and the
security interests granted herein shall be reinstated and the Note 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.]
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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 Manager
By: ____________________________________
Name:
Title:
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 E
FORM OF
INTERCREDITOR AGREEMENT
THIS INTERCREDITOR AGREEMENT, dated as of July __, 2004 (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"), PROXIM CORPORATION (the
"Company") and PROXIM WIRELESS NETWORKS, INC., WIRELESSHOME CORPORATION and
PROXIM INTERNATIONAL HOLDINGS, INC. (formerly Western Multiplex International
Holdings, Inc.), each of which is a wholly-owned subsidiary of the Company
(collectively the "Guaranteeing Subsidiaries").
WITNESSETH:
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 Parent Collateral (as herein defined) to SVB and to those
certain SVB Subsidiary Agreements (as herein defined), pursuant to which the
Guaranteeing Subsidiaries have guaranteed the obligations of the Company under
the SVB Agreements and have granted security interests in and liens on the SVB
Subsidiary Collateral (as herein defined);
WHEREAS, reference is made to that certain Securities Purchase
Agreement, dated as of July 27, 2004 (the "Purchase Agreement"), by and among
the Company and the purchasers named therein (the "Purchasers"), pursuant to
which, subject to the conditions set forth therein, the parties thereto have
agreed to the issuance by the Company of $10 million in aggregate principal
amount of secured promissory notes (the "Notes") to the Purchasers (the
Purchasers and the other holders from time to time of the Notes being referred
to herein collectively as the "Noteholders");
WHEREAS, reference is made to that certain Pledge and Security
Agreement, dated as of even date herewith (the "Pledge and Security Agreement"),
by and among the Company, the Collateral Agent and the Purchasers (for the
purposes of agreeing to and accepting the provisions set forth in Article X and
Article XI therein), pursuant to which the Company is granting liens on and
security interests in the Collateral (as defined in the Pledge and Security
Agreement) as security for the full, prompt and complete payment and performance
when due of the Note Obligations (as defined herein);
WHEREAS, reference is made to those certain Subsidiary Guaranties,
dated as of even date herewith (collectively the "Subsidiary Guaranties"), by
each of the Guaranteeing Subsidiaries in favor of the Noteholders, and (ii)
those certain Subsidiary Pledge and Security Agreements, dated as of even date
herewith (collectively the "Subsidiary Pledge and Security Agreements"), by and
among each of the Guaranteeing Subsidiaries and the Collateral Agent;
WHEREAS, the Pledge and Security Agreement and the Subsidiary Pledge
and Security Agreements provide that the ranking and priority of the security
interests and liens granted thereunder shall be governed in accordance with the
provisions set forth herein; and
WHEREAS, in connection with the Pledge and Security Agreement and the
Subsidiary Pledge and Security Agreements, the parties wish to enter into this
Agreement.
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby set forth and 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 any Guaranteeing Subsidiary 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.
"Note Guaranty Obligations" means the obligations of the Guaranteeing
Subsidiaries under the Subsidiary Guaranties in favor of the Noteholders.
"Note Obligations" has the meaning given to it in the Pledge and
Security Agreement.
"Noteholder Collateral" means "Collateral," as defined in the
Noteholder Collateral Documents.
"Noteholder Collateral Documents" means the Pledge and Security
Agreement, the Subsidiary Pledge and Security Agreements, 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.
"Requisite Holders" has the meaning given to it in the Pledge and
Security Agreement.
"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
2
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 the SVB Parent Collateral and the SVB Subsidiary
Collateral.
"SVB Obligations" means all present and future indebtedness,
liabilities, guarantees and other obligations of the Company or any Guaranteeing
Subsidiary 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 or any Guaranteeing Subsidiary, as the case
may be, provided, that the aggregate principal amount thereof does not exceed
$20,000,000.
"SVB Parent Collateral" means "Collateral," as defined in the SVB
Agreements, including without limitation the assets described on Exhibit A
hereto.
"SVB Subsidiary Agreements" means collectively the following (as the
same may have been previously modified or amended and as the same may hereafter
be modified or amended from time to time): (a) the Continuing Guaranty, dated
December 27, 2002, by the Guaranteeing Subsidiaries in favor of SVB; (b) the
Security Agreement, dated December 27, 2002, between the Guaranteeing
Subsidiaries and SVB; and (c) the Intellectual Property Security Agreement,
dated as of December 27, 2002, between the Guaranteeing Subsidiaries and SVB.
"SVB Subsidiary Collateral" means the collateral described in the SVB
Subsidiary Security Agreement, including without limitation, the assets set
forth in Exhibit B attached hereto.
"SVB Subsidiary Security Agreement" means the Security Agreement, dated
December 27, 2002, between each of the Guaranteeing Subsidiaries and SVB and all
future amendments and supplements thereto.
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,
on behalf of the Noteholders, in the SVB Collateral to secure the Note
Obligations 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 or order of issuance or incurrence of
any of the obligations referred to in this Section 2.1 (a) , or 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
3
thereto or of the order of filing or recording of any financing
statement, notice of lien or other document with respect thereto.
(b) 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
Subsidiary Collateral shall be first priority security interests and
liens;
(ii) the security interests and liens of the Collateral Agent,
on behalf of the Noteholders, in the SVB Subsidiary Collateral to
secure the Note Guaranty Obligations 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 or order of issuance or incurrence of
any of the obligations referred to in this Section 2.1(b), or 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.
(c) SVB hereby consents to: (i) the issuance of the Notes by the
Company to the Noteholders; (ii) the execution and delivery of the Subsidiary
Guaranties; and (iii) 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.(1)
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 with
respect to the Collateral, shall be paid over to SVB for application to the SVB
Obligations in the manner provided in the SVB Agreements or the SVB Subsidiary
Agreements, as the case may be.
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 as to SVB pursuant to Section 4.4 hereof).
----------------------
(1) Company to confirm whether any other transactions under the Purchase
Agreement require SVB consent.
4
2.4 No Other Beneficiaries of Lien Subordination. This Agreement and
the provisions contained herein are intended only for the benefit of SVB and, to
the extent provided in Section 2.1 or Section 4.4 hereof, the Noteholders, and
not for the benefit of the Company or the Guaranteeing Subsidiaries or any other
creditor of the Company. Neither the Company nor any Guaranteeing Subsidiary
will 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, relative to the
lien rights of SVB, 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 SVB 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 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
and the SVB Subsidiary 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
5
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 (other than to transfer any
Note to the Company for cancellation or to exchange any Note upon the closing of
a Qualified Transaction in accordance with the terms of the Purchase Agreement)
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; provided, further that as to any payments to which SVB is
not entitled, such payments shall be received and held in trust for the
Noteholders for application to the Note Obligations in the manner provided in
the Loan Documents.
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.
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 or any Guaranteeing
Subsidiary 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 or such Guaranteeing Subsidiary, as the case may be,
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.
6
(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 or any
Guaranteeing Subsidiary 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 or the SVB Subsidiary 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 or any Guaranteeing Subsidiary
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 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
Collateral 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.
7
4.2 Further Assurances. The Company, each Guaranteeing Subsidiary 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, each Guaranteeing Subsidiary 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 the liens
granted under the SVB Agreements or the SVB Subsidiary 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:
SVB: SILICON VALLEY BANK
0000 Xxxx Xxxx
Xxxxx 000, Xxxx Xxxx XX 00000
Attention: Xxxxx Xxxxxxx Leaf
Facsimile: (000) 000-0000
COLLATERAL AGENT AND C/O WARBURG PINCUS PRIVATE EQUITY VIII, L.P.
NOTEHOLDERS: 000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxx
Facsimile: (000) 000-0000
COMPANY AND GUARANTEEING PROXIM CORPORATION
SUBSIDIARIES: 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, which may
act on behalf of the Noteholders with the consent of the Requisite Holders
pursuant to Section 10.2 of the Pledge and Security Agreement, and, in the case
of any such amendment or waiver that would adversely affect the Company or any
Guaranteeing Subsidiary, the Company.
8
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.
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.]
9
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:
PROXIM WIRELESS NETWORKS, INC.
By: ____________________________________
Name:
Title:
WIRELESSHOME CORPORATION
By: ____________________________________
Name:
Title:
PROXIM INTERNATIONAL HOLDINGS, INC.
By: ____________________________________
Name:
Title:
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.
EXHIBIT "B"
All right, title and interest of the Guaranteeing Subsidiaries 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 of the Guaranteeing
Subsidiaries' books relating to any of the above.
As used above in this Exhibit B, 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 the Guaranteeing Subsidiaries.
"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 Guaranteeing Subsidiaries 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 Guaranteeing Subsidiaries' 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.
