EXHIBIT 99.4
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT, dated as of June 16, 2002 (this "Agreement"),
among Proxim Corporation, a Delaware corporation (together with its successors,
the "Company"), Ripplewood Partners, L.P., a Delaware limited partnership
(together with its successors, permitted assigns and affiliates, "Partners"),
Ripplewood Co-Investment Fund I, L.L.C., a Delaware limited liability company
(together with its successors, permitted assigns and affiliates,
"Co-Investment") and Ripplewood Investments L.L.C. (formerly known as Ripplewood
Holdings, L.L.C.), a Delaware limited liability company (together with its
successors, permitted assigns and affiliates, "Investments," and together with
Partners and Co-Investment, the "Investors").
W I T N E S S E T H :
WHEREAS, the Company proposes to enter into an Asset Purchase Agreement
(as amended, supplemented otherwise modified from time to time, the "Asset
Purchase Agreement") between the Company and Agere Systems Inc., a Delaware
corporation ("Agere"), pursuant to which, among other things, upon the terms and
subject to the conditions set forth therein, Agere will sell to the Company and
the Company will purchase from Agere all of the right, title and interest in, to
and under certain assets, properties and rights used or held for us by Agere
primarily in the operation or conduct of the ORiNOCO business (the "Asset
Purchase");
WHEREAS, in connection with the Asset Purchase and as a condition to
closing the Asset Purchase Agreement, the Company will execute certain
agreements with one or more financial investors pursuant to which such financial
investors will purchase convertible preferred stock of the Company, warrants to
purchase common stock of the Company and/or subordinate debt convertible into
preferred stock of the Company (the "Financing");
WHEREAS, concurrently with the execution of the Asset Purchase Agreement
and as a condition and inducement to Agere's willingness to enter into the Asset
Purchase Agreement with Agere, each of the Investors has agreed to enter into a
Voting Agreement to approve the Financing (each as amended, supplemented
otherwise modified from time to time, a "Voting Agreement," and collectively,
the "Voting Agreements"); and
WHEREAS, concurrently with the execution of the Voting Agreements and as
a condition and inducement to the Investors' willingness to enter into the
Voting Agreements, the Company has agreed to indemnify each of the Investors and
certain other persons pursuant to the terms set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements and
understandings set forth herein, the parties hereto hereby agree as follows:
Section 1 Indemnification.
(a) The Company shall indemnify and hold harmless (x) each of the
Investors and each of its Affiliates (as defined below) and any controlling
person of any of the foregoing, (y) each of the foregoing's respective
directors, officers, employees and agents and (z) each of the heirs, executors,
successors and assigns of any of the foregoing from and against any and all
damages, claims, losses, expenses, costs, obligations and Liabilities (as
defined below) including, without limiting the generality of the foregoing,
Liabilities for all reasonable attorneys' fees and expenses (including attorney
and expert fees and expenses incurred to enforce the terms of this Agreement)
(collectively, "Losses and Expenses") suffered or incurred by any such
indemnified person or entity to the extent arising from, relating to or
otherwise in respect of, any governmental or other third party claim against
such indemnified person that arises from, relates to or is otherwise in respect
of the execution, delivery or performance of the Asset Purchase Agreement or the
Voting Agreements or the consummation or proposed consummation of the Asset
Purchase and the transactions related thereto or arising therefrom, including,
without limitation, any Losses and Expenses arising from or under any federal,
state or other securities law, but excluding any Losses and Expenses in respect
of any breach by such Investor of the Voting Agreement to which such Investor is
a party. The indemnification provided by the Company pursuant to this Section 1
is separate from and in addition to any other indemnification by the Company to
which the indemnified person may be entitled.
(b) With respect to third-party claims, all claims for indemnification
by an indemnified person (an "Indemnified Party") hereunder shall be asserted
and resolved as set forth in this Section 1. In the event that any written claim
or demand for which the Company would be liable to any Indemnified Party
hereunder is asserted against or sought to be collected from any Indemnified
Party by a third party, such Indemnified Party shall promptly notify the Company
in writing of such claim or demand (the "Claim Notice"), provided that the
failure to promptly provide a Claim Notice will not affect an Indemnified
Party's right to indemnification except to the extent such failure materially
prejudices the Company. The Company shall have twenty (20) days from the date of
receipt of the Claim Notice (the "Notice Period") to notify the Indemnified
Party (i) whether or not the Company disputes the liability of the Company to
the Indemnified Party hereunder with respect to such claim or demand and (ii)
whether or not it desires to defend the Indemnified Party against such claim or
demand. All costs and expenses incurred by the Company in defending such claim
or demand shall be a liability of, and shall be paid by, the Company. Except as
hereinafter provided, in the event that the Company notifies the Indemnified
Party within the Notice Period that it desires to defend the Indemnified Party
against such claim or demand, the Company shall have the right to defend the
Indemnified Party by appropriate proceedings and shall have the sole power to
direct and control such defense; provided, however, that (A) if the Indemnified
Party reasonably determines that there may be a conflict between the positions
of the Company and of the Indemnified Party in conducting the defense of such
claim or that there may be legal defenses available to such Indemnified Party
different from or in addition to those available to the Company, then counsel
for the Indemnified Party shall be entitled to conduct the defense at the
expense of the Company to the extent reasonably determined by such counsel to be
necessary to protect the interests of the Indemnified Party and (B) in any
event, the Indemnified Party shall be entitled at its cost and expense to have
counsel chosen by such Indemnified Party participate in, but not conduct, the
defense. The Indemnified Party shall not settle a claim or demand without the
consent of the Company. The Company shall not, without the prior written consent
of the Indemnified Party, settle, compromise or offer to settle or compromise
any such claim or demand on a basis which would
result in the imposition of a consent order, injunction or decree which would
restrict the future activity or conduct of the Indemnified Party or any
Affiliate thereof or if such settlement or compromise does not include an
unconditional release of the Indemnified Party for any liability arising out of
such claim or demand. If the Company elects not to defend the Indemnified Party
against such claim or demand, whether by not giving the Indemnified Party timely
notice as provided above or otherwise, then the amount of any such claim or
demand or, if the same be contested by the Indemnified Party, that portion
thereof as to which such defense is unsuccessful (and the reasonable costs and
expenses pertaining to such defense) shall be the liability of the Company
hereunder. The Indemnified Party and Company shall each render to each other
such assistance as may reasonably be requested in order to insure the proper and
adequate defense of any such claim or proceeding.
(c) If the indemnification provided for in this Section 1 is unavailable
or insufficient to hold harmless an Indemnified Party under this Section 1, then
the Company, in lieu of indemnifying such Indemnified Party, shall contribute to
the amount paid or payable by such Indemnified Party as a result of the Losses
and Expenses referred to in this Section 1: (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Indemnified Party from the matter giving rise to indemnification hereunder or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company and the Indemnified Party in connection with the matter that
resulted in such Losses and Expenses, as well as any other relevant equitable
considerations. Relative fault shall be determined by reference to, among other
things, the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent the matter giving rise to such Losses and
Expenses.
(d) The parties agree that it would not be just and equitable if
contributions pursuant to Section 1(c) were to be determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to in the first sentence of Section 1(c).
The amount paid by any Indemnified Party as a result of the losses, claims,
damages or liabilities, or actions in respect thereof, referred to in the first
sentence of Section 1(c) shall be deemed to include any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigation,
preparing to defend or defending against any claim which is the subject of this
Section 1.
(e) For purposes of this Agreement, "Affiliate" shall mean, with respect
to any person, any other person that directly or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such person. For purposes of the foregoing sentence, "control" (including, with
correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any person, means the direct or indirect
possession of the power to direct or cause the direction of the management or
policies of such person, whether through the ownership of voting securities, by
contract or otherwise.
(f) For purposes of this Agreement, "Liabilities" means, as to any
person or entity, all debts, liabilities and obligations, direct, indirect,
absolute or contingent of such person or entity, whether accrued, vested or
otherwise, whether known or unknown and whether or not
actually reflected, or required by generally accepted accounting principles to
be reflected, in such person or entity's balance sheets or other books and
records.
Section 2 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given, if delivered
personally, by telecopier or sent by overnight courier as follows:
(a) if to Company, to:
Proxim Corporation
000 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
Fax No.: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
00 Xxxxxxxxx Xxxx Xxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxx
Fax No.: (000) 000-0000
(b) if to any of the Investors, to:
Ripplewood Investments L.L.C.
Xxx Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Fax No.: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
Facsimile No.: (000) 000-0000
and:
Cravath, Swaine & Xxxxx
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxx Xxxx
Facsimile No.: (000) 000-0000
or to such other address or addresses as shall be designated in writing. All
notices shall be effective when received.
Section 3 Entire Agreement; Amendment. This Agreement sets forth the
entire agreement between the parties hereto with respect to the matters subject
to this Agreement. Any provision of this Agreement may be amended or modified in
whole or in part at any time by an agreement in writing between the parties
hereto executed in the same manner as this Agreement. No failure on the part of
any party to exercise, and no delay in exercising, any right shall operate as a
waiver thereof nor shall any single or partial exercise by any party of any
right preclude any other or future exercise thereof or the exercise of any other
right.
Section 4 Severability. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein, shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement or any other such instrument.
Section 5 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original, but all
of which together shall constitute one and the same document.
Section 6 Governing Law; Jurisdiction; Waiver of Jury. This Agreement
shall be governed and construed in accordance with the laws of the State of
Delaware applicable to contracts made and to be performed in the State of
Delaware. Each party hereby submits to the exclusive jurisdiction of the Court
of Chancery or other courts of the State of Delaware in any matter based upon or
arising out of this Agreement or the matters contemplated herein. The parties
hereto waive all right to trial by jury in any action, suit or proceeding
brought to enforce or defend any rights or remedies under this Agreement.
Section 7 Successors and Assigns; Third Party Beneficiaries. The
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors, and administrators of the parties hereto.
Each of the indemnified persons described in Section 1 hereto shall be deemed
third party beneficiaries of this Agreement and shall be entitled to the benefit
of, and to enforce, its terms.
Section 8 Headings and Captions. The section headings and captions
contained in this Agreement are for reference purposes only, are not part of
this Agreement and shall not affect the meaning or interpretation of this
Agreement.
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto, all as of the date first above written.
PROXIM CORPORATION
By: /s/ Xxxxx X. Xxxx
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Name: Xxxxx X. Xxxx
Title: President and COO
RIPPLEWOOD PARTNERS, L.P.
By: Ripplewood Investments L.L.C., its general
partner
By: /s/ Xxx Xxxxxxx
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Name: Xxx Xxxxxxx
Title:
RIPPLEWOOD CO-INVESTMENT FUND I, L.L.C.
By: Ripplewood Investments L.L.C., its general
partner
By: /s/ Xxx Xxxxxxx
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Name: Xxx Xxxxxxx
Title:
RIPPLEWOOD INVESTMENTS L.L.C.
By: /s/ Xxx Xxxxxxx
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Name: Xxx Xxxxxxx
Title:
