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EXHIBIT 99.3
THIS STOCK OPTION AGREEMENT (this "Agreement") is made and entered into
as of January 23, 2001, between Proxim, Inc., a Delaware corporation ("Parent"),
and Netopia, Inc., a Delaware corporation (the "Company"). Capitalized terms
used but not otherwise defined herein will have the meanings ascribed to them in
the Reorganization Agreement (as defined below).
RECITALS
A. The Company, Merger Sub (as defined below) and Parent have entered
into an Agreement and Plan of Reorganization (the "Reorganization Agreement")
which provides for the merger (the "Merger") of a wholly-owned subsidiary of
Parent ("Merger Sub") with and into the Company. Pursuant to the Merger, all
outstanding capital stock of the Company will be converted into the right to
receive Common Stock of Parent.
B. As a condition to Parent's willingness to enter into the
Reorganization Agreement, Parent has requested that Company agree, and Company
has so agreed, to grant to Parent an option to acquire shares of Company's
Common Stock, $0.001 par value (the "Company Shares"), upon the terms and
subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein and in the Reorganization Agreement
and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereto agree as follows:
1. Grant of Option. The Company hereby grants to Parent an irrevocable
option (the "Option") to acquire up to 3,545,398 Company Shares (as adjusted as
set forth herein) (the "Option Shares"), in the manner set forth below by paying
cash at a price of $11.08 per share (the "Exercise Price").
2. Exercise of Option.
(a) The Option may be exercised by Parent, in whole or in part,
at any time or from time to time after (i) the Reorganization Agreement is
terminated pursuant to Section 7.1(g) thereof or (ii) immediately prior to an
event causing the Termination Fee to become payable pursuant to Section
7.3(b)(i)(B) of the Reorganization Agreement (any of the events being referred
to herein as an "Exercise Event"). In the event Parent wishes to exercise the
Option, Parent will deliver to the Company a written notice (each an "Exercise
Notice") specifying the total number of Option Shares it wishes to acquire. Each
closing of a purchase of Option Shares (a "Closing") will occur on a date and at
a time prior to the termination of the Option designated by Parent in an
Exercise Notice delivered at least five business days prior to the date of such
Closing, which Closing will be held at the principal offices of the Company,
provided, however, that any such Closing will not occur until the requirements
of Section 3 are satisfied or waived.
(b) The Option will terminate upon the earliest of (i) the
Effective Time; (ii) twelve (12) months following the date on which the
Reorganization Agreement is terminated pursuant to Section 7.1(b) or 7.1(d)(i),
in either case under circumstances pursuant to which the
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Termination Fee may become payable, if no event causing the Termination Fee to
become payable pursuant to Section 7.3(b)(i) of the Reorganization Agreement has
occurred during such 12-month period; (iii) twelve (12) months following payment
of the Termination Fee in connection with termination of the Reorganization
Agreement pursuant to Section 7.1(g) thereof; (iv) in the event the
Reorganization Agreement has been terminated pursuant to Section 7.1(b) or
7.1(d)(i) thereof and the Termination Fee became payable pursuant to Section
7.3(b)(i) thereof, 12 months after payment of the Termination Fee; and (v) the
date on which the Reorganization Agreement is otherwise terminated; provided,
however, that if the Option cannot be exercised by reason of any applicable
government order or because the waiting period related to the issuance of the
Option Shares under the HSR Act will not have expired or been terminated, then
the Option will not terminate until the tenth business day after such impediment
to exercise will have been removed or will have become final and not subject to
appeal.
3. Conditions to Closing. The obligation of Company to issue Option
Shares to Parent hereunder is subject to the conditions that (A) any waiting
period under the HSR Act applicable to the issuance of the Option Shares
hereunder will have expired or been terminated; (B) all material consents,
approvals, orders or authorizations of, or registrations, declarations or
filings with, any Federal, state or local administrative agency or commission or
other Federal state or local governmental authority or instrumentality, if any,
required in connection with the issuance of the Option Shares hereunder will
have been obtained or made, as the case may be; and (C) no preliminary or
permanent injunction or other order by any court of competent jurisdiction
prohibiting or otherwise restraining such issuance will be in effect. It is
understood and agreed that at any time during which the Option is exercisable,
the parties will use their respective best efforts to satisfy all conditions to
Closing, so that a Closing may take place as promptly as practicable.
4. Closing. At any Closing, (A) the Company will deliver to Parent a
single certificate in definitive form representing the number of Company Shares
designated by Parent in its Exercise Notice, such certificate to be registered
in the name of Parent and to bear the legend set forth in Section 9 hereof,
against delivery of (B) payment by Parent to the Company of the aggregate
purchase price for the Company Shares so designated and purchased by wire
transfer of immediately available funds to a bank account designated by the
Company.
5. Representations and Warranties of the Company. Company represents and
warrants to Parent that (A) Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the corporate power and authority to enter into this Agreement and to carry out
its obligations hereunder; (B) the execution and delivery of this Agreement by
the Company and consummation by the Company of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of the Company and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or any of the transactions contemplated
hereby; (C) this Agreement has been duly executed and delivered by the Company
and constitutes a legal, valid and binding obligation of the Company and,
assuming this Agreement constitutes a legal, valid and binding obligation of
Parent, is enforceable against the Company in accordance with its terms, except
as the enforcement thereof may be limited by bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting enforcement of creditors rights generally
and except as enforcement thereof is subject to general principles of equity
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(regardless of whether enforcement is considered in a proceeding in equity or at
law); (D) except for any filings required under the HSR Act, and subject to
approval of an amendment to the Company's certificate of incorporation by the
stockholders of the Company, the Company has taken all necessary corporate and
other actions to authorize and reserve for issuance and to permit it to issue
upon exercise of the Option, and at all times from the date hereof until the
termination of the Option will have reserved for issuance, a sufficient number
of unissued Company Shares for Parent to exercise the Option in full and will
take all necessary corporate or other action to authorize and reserve for
issuance all additional Company Shares or other securities which may be issuable
pursuant to Section 8(a) upon exercise of the Option, all of which, upon their
issuance and delivery in accordance with the terms of this Agreement, will be
validly issued, fully paid and nonassessable; (E) upon delivery of the Company
Shares and any other securities to Parent upon exercise of the Option, Parent
will acquire such Company Shares or other securities free and clear of all
material claims, liens, charges, encumbrances and security interests of any kind
or nature whatsoever, excluding those imposed by Parent; (F) the execution and
delivery of this Agreement by the Company do not, and the performance of this
Agreement by the Company will not, (i) conflict with or violate the Certificate
of Incorporation or Bylaws or equivalent organizational documents of the Company
or any of its subsidiaries, (ii) assuming compliance with the HSR Act, conflict
with or violate any law, rule, regulation, order, judgment or decree applicable
to the Company or any of its subsidiaries or by which its or any of their
respective properties is bound or affected or (iii) result in any breach of or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or impair the Company's or any of its
subsidiaries' rights or alter the rights or obligations of any third party
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the properties or assets of the Company or any of its subsidiaries pursuant to,
any material note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or its or any of their respective properties are bound or
affected other than, in the case of each of (ii) and (iii), any such items that,
individually or in the aggregate, would not have a material adverse effect on
the Company or materially impair the ability of the Company to consummate the
transactions contemplated by this Agreement; and (G) the execution and delivery
of this Agreement by the Company does not, and the performance of this Agreement
by the Company will not, require any consent, approval, authorization or permit
of, or filing with, or notification to, any governmental body except (i)
pursuant to the HSR Act, (ii) compliance with any applicable requirements of the
Exchange Act, (iii) approvals and authorizations of self-regulatory
organizations in the securities field and (iv) such other consents, approvals
and filings which, if not obtained or made, would not, individually or in the
aggregate, have a material adverse effect on the Company or materially impair
the ability of the Company to consummate the transactions contemplated hereby.
6. Representations and Warranties of Parent. Parent hereby represents
and warrants to Company that (A) Parent is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware,
(B) the execution and delivery by Parent of this Agreement and the consummation
by Parent of the transactions contemplated hereby are within Parent's corporate
powers and have been duly authorized by all necessary corporate action, (C) this
Agreement has been duly and validly executed and delivered by Parent and,
assuming the due authorization, execution and delivery by Company, constitutes a
valid and binding agreement of Parent enforceable against Parent in accordance
with its terms, except as the enforcement thereof
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may be limited by bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization, moratorium or similar
laws affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law), (D) the
execution and delivery by Parent of this Agreement and the consummation by
Parent of the transactions contemplated hereby require no action by or in
respect of, or filing with, any governmental body, agency, official or authority
(insofar as such action or filing relates to Parent) other than (i) compliance
with any applicable requirements of the HSR Act, (ii) compliance with any
applicable requirements of the Exchange Act, (iii) approvals and authorizations
of self-regulatory and governmental organizations in the securities field and
(iv) such other consents, approvals and filings which, if not obtained or made,
would not, individually or in the aggregate, materially impair the ability of
Parent to consummate the transactions contemplated hereby, (E) the execution and
delivery by Parent of this Agreement and the consummation by Parent of the
transactions contemplated hereby do not and will not (i) conflict with or
violate the certificate of incorporation or bylaws (or equivalent organizational
documents) of Parent, Merger Sub or any Parent subsidiary, (ii) assuming
compliance with the HSR Act, conflict with any law, regulation, judgment,
injunction, order or decree applicable to Parent, Merger Sub or any Parent
subsidiary, (iii) result in a breach of or a default under or give rise to a
right of termination, cancellation or acceleration of, or result in the creation
of a lien or encumbrance on any of the properties or assets of Parent, Merger
Sub or any subsidiary of Parent pursuant to, any material agreement, contract or
other instrument binding upon Parent, Merger Sub or any subsidiary of Parent,
other than, in the case of each of (ii) and (iii), any such items that,
individually or in the aggregate, would not materially impair the ability of
Parent to consummate the transactions contemplated by this Agreement.
7. Certain Rights.
(a) Parent Put. At the request of and upon notice by Parent (the
"Put Notice"), at any time during the period during which the Option is
exercisable pursuant to Section 2 (the "Purchase Period"), the Company (or any
successor entity thereof) will purchase from Parent the Option, to the extent
not previously exercised, at the price set forth in subparagraph (i) below (as
limited by subparagraph (iii) below), and the Option Shares, if any, acquired by
Parent pursuant thereto, at the price set forth in subparagraph (ii) below (as
limited by subparagraph (iii) below):
(i) The difference between the "Market/Tender Offer
Price" for the Company Shares as of the date Parent gives notice of its intent
to exercise its rights under this Section 7(a) (defined as the higher of (A) the
highest price per share offered as of such date pursuant to any Acquisition
Proposal which was made prior to such date and (B) the highest closing sale
price of Company Shares then on the NASDAQ National Market during the 20 trading
days ending on the trading day immediately preceding such date) and the Exercise
Price, multiplied by the number of Company Shares purchasable pursuant to the
Option that remain, but only if the Market/Tender Offer Price is greater than
the Exercise Price. For purposes of determining the highest price offered
pursuant to any Acquisition Proposal which involves consideration other than
cash, the value of such consideration will be equal to the higher of (x) if
securities of the same class of the proponent as such consideration are traded
on any national securities exchange or by any registered securities association,
a value based on the closing sale price or asked price for such securities on
their principal trading market on such date and (y) the value ascribed to such
consideration by the
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proponent of such Acquisition Proposal, or if no such value is ascribed, a value
determined in good faith by the Board of Directors of the Company.
(ii) The Exercise Price paid by Parent for Company
Shares acquired pursuant to the Option plus the difference between the
Market/Tender Offer Price and such Exercise Price (but only if the Market/Tender
Offer Price is greater than the Exercise Price) multiplied by the number of
Company Shares so purchased.
(iii) Notwithstanding subparagraphs (i) and (ii) above,
pursuant to this Section 7 Company will not be required to pay Parent in excess
of an aggregate of (x) the product of 1.167 and the Termination Fee plus (y) the
Exercise Price paid by Parent for Company Shares acquired pursuant to the Option
minus (z) any amounts paid to Parent by the Company pursuant to Section 7.3(b)
of the Reorganization Agreement and the net cash amounts or the fair market
value of any property received by Parent pursuant to the sale of Option Shares
(the "Profit Cap"). If the total amount that otherwise would be received by
Parent would exceed the Profit Cap, Parent, at its election, shall either (i)
reduce the number of shares of Company Common Stock subject to the Option, (ii)
deliver to Company for cancellation shares of Company Common Stock previously
purchased by Parent, (iii) pay cash to Company, (iv) reduce the amount paid
pursuant to Section 7(a)(i) or 7(a)(ii) or (v) any combination of the foregoing
so Parent's actually realized total profit, when aggregated with the Termination
Fee actually paid to Parent, shall not exceed the Profit Cap after taking into
account the foregoing actions.
(b) Payment and Redelivery of Option or Shares. In the event
Parent exercises its rights under Section 7(a) , the Company will, within five
business days after Parent delivers notice pursuant to Section 7(a), pay the
required amount to Parent in immediately available funds and Parent will
surrender to the Company the Option and the certificates evidencing the Company
Shares purchased by Parent pursuant thereto.
(c) Limitation on Parent Put. Company shall use its best efforts
to ensure that it can fully perform all of its obligations under this Section 7
under applicable law. If Company is prohibited under applicable law or
regulation from repurchasing the Option Shares contemplated by this Section 7 in
full, Company will promptly so notify Parent, repurchase the maximum possible
number of Option Shares allowed under applicable law and as soon as practicable
thereafter deliver or cause to be delivered, from time to time, to Parent the
portion of the payment owed to Parent that it is no longer prohibited from
delivering.
8. Registration Rights.
(a) Following the termination of the Reorganization Agreement, if
Parent desires to sell any of the Option Shares after the purchase of such
Option Shares pursuant hereto, and any such sale requires, in the good faith
judgment of Parent after consultation with its counsel, registration of such
Option Shares under the Securities Act, Parent (sometimes referred to herein as
the "Holder") may by written notice (a "Registration Notice") to the Company
(the "Registrant") request the Registrant to register under the Securities Act
all or any part of the shares acquired by the Holder pursuant to this Agreement
(such shares requested to be registered, the "Registrable Securities") in order
to permit the sale or other disposition of any or all shares of the Registrable
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Securities that have been acquired by or are issuable to Holder upon exercise of
the Option in accordance with the intended method of sale or other disposition
stated by Holder, including a "shelf" registration statement under Rule 415
under the Securities Act or any successor provision. Holder agrees to cause, and
to cause any underwriters of any sale or other disposition to cause, any sale or
other disposition pursuant to such registration statement to be effected on a
widely distributed basis so that upon consummation thereof no purchaser or
transferee will own beneficially more than 5.0% of the then-outstanding voting
power of Registrant.
(b) The Registrant will use all reasonable efforts to effect, as
promptly as practicable, the registration under the Securities Act of the
unpurchased Registrable Securities requested to be registered in the
Registration Notice and to keep such registration statement effective for such
period not in excess of 120 calendar days from the day such registration
statement first becomes effective as may be reasonably necessary to effect such
sale or other disposition; provided, however, that the Holder will not be
entitled to more than an aggregate of two effective registration statements
hereunder. The obligations of Registrant hereunder to file a registration
statement and to maintain its effectiveness may be suspended for up to 120
calendar days in the aggregate if the Board of Directors of Registrant shall
have determined that the filing of such registration statement or the
maintenance of its effectiveness would require premature disclosure of material
nonpublic information that would materially and adversely affect Registrant or
otherwise interfere with or adversely affect any pending or proposed offering of
securities of Registrant or any other material transaction involving Registrant.
If consummation of the sale of any Registrable Securities pursuant to a
registration hereunder does not occur within 120 days after the filing with the
SEC of the initial registration statement therefor, the provisions of this
Section 8 will again be applicable to any proposed registration. The Registrant
will use all reasonable efforts to cause any Registrable Securities registered
pursuant to this Section 8 to be qualified for sale under the securities or blue
sky laws of such jurisdictions as the Holder may reasonably request and will
continue such registration or qualification in effect in such jurisdictions;
provided, however, that the Registrant will not be required to qualify to do
business in, or consent to general service of process in, any jurisdiction by
reason of this provision. If Registrant effects a registration under the
Securities Act of Company Common Stock for its own account or for any other
stockholders of Registrant (other than on Form S-4 or Form S-8, or any successor
form), it will allow Holder the right to participate in such registration by
selling its Registrable Securities, and such participation will not affect the
obligation of Registrant to effect demand registration statements for Holder
under this Section 8; provided that, if the managing underwriters of such
offering advise Registrant in writing that in their opinion the number of shares
of Company Common Stock requested to be included in such registration exceeds
the number which can be sold in such offering, Registrant will include the
shares requested to be included therein by Holder pro rata with the shares
intended to be included therein by Registrant and such other stockholders.
(c) The registration rights set forth in this Section 8 are
subject to the condition that the Holder will provide the Registrant with such
information with respect to the Holder's Registrable Securities, the plan for
distribution thereof, and such other information with respect to the Holder as,
in the reasonable judgment of counsel for the Registrant, is necessary to enable
the Registrant to include in a registration statement all facts required to be
disclosed with respect to a registration thereunder.
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(d) Notwithstanding anything to the contrary contained herein, in
the event that Parent requests a registration of Registrable Securities pursuant
to Section 8(a) or 8(b) hereof, the Company shall have the right to purchase
all, but not less than all, of the Registrable Securities requested to be
registered, upon the terms and subject to the conditions set forth in this
Section 8(d). If the Company wishes to exercise such purchase right, then within
two (2) business days following receipt of a request for a registration pursuant
to Section 8(a) or 8(b), the Company shall send a written notice (a "Repurchase
Notice") to Parent specifying that the Company wishes to exercise such purchase
right, a date for the closing of such purchase, which shall not be more than
five (5) business days after delivery of such Repurchase notice, and a place for
the closing of such purchase (a "Repurchase Closing"). Upon delivery of a
Repurchase Notice subject to applicable Delaware law, a binding agreement shall
be deemed to exist between Parent and Company providing for the purchase by
Company of the Registrable Securities requested to be registered by Parent, upon
the terms and subject to the conditions set forth in this Section 8(d). The
purchase price per share or other unit of Registrable Securities (the
"Repurchase Price") shall equal the average per share or per unit closing price
as quoted on the Nasdaq (or if not then quoted thereon, on such other exchange
or quotation system on which the Registrable Securities are quoted) for the
period of five (5) trading days ending immediately prior to the day on which
Parent requests registration of the Registrable Securities which Company
subsequently elects to purchase. Parent's obligation to deliver any Registrable
Securities at a Repurchase Closing shall be subject to the condition that, at
such Repurchase Closing, Company shall have delivered to Parent a certificate
signed on behalf of Company by Company's chief executive officer and chief
financial officer, which certificate shall be satisfactory in form and substance
to Parent, to the effect that the purchase by Company of such Registrable
Securities (i) permitted under applicable Delaware corporate law and under the
fraudulent conveyance provisions of the federal bankruptcy code and (ii) does
not violate any material agreement to which Company or any of its subsidiaries
is a party or by which any of their properties or assets is bound. At any
Repurchase Closing, Company shall pay to Parent the aggregate Repurchase Price
for the Registrable Securities being purchased by wire transfer of immediately
available funds in an amount equal to such aggregate Repurchase Price, and
Parent will surrender to Company a certificate evidencing such Registrable
Securities. A purchase of Registrable Securities by Company pursuant to this
Section 8(d) shall be considered a registration for purposes of Section 8(a) and
8(b) hereof.
(e) A registration effected under this Section 8 will be effected
at the Registrant's expense, except for underwriting discounts and commissions
and the fees and expenses of counsel to the Holder, and the Registrant will
provide to the underwriters such documentation (including certificates, opinions
of counsel and "comfort" letters from auditors) as are customary in connection
with underwritten public offerings and as such underwriters may reasonably
require. In connection with any registration, the Holder and the Registrant
agree to enter into an underwriting agreement reasonably acceptable to each such
party, in form and substance customary for transactions of this type with the
underwriters participating in such offering.
(f) The obligations of the Company pursuant to subsections 8(a)
and 8(b) above shall terminate at such time as Parent may sell all shares of
Company Common Stock acquired pursuant to the Option without restriction
pursuant to Rule 144(k) under the Securities Act.
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(g) Indemnification.
(i) The Registrant will indemnify the Holder, each of
its directors and officers and each person who controls the Holder within the
meaning of Section 15 of the Securities Act, and each underwriter of the
Registrant's securities, with respect to any registration, qualification or
compliance which has been effected pursuant to this Agreement, against all
expenses, claims, losses, damages or liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were made,
not misleading, or any violation by the Registrant of any rule or regulation
promulgated under the Securities Act applicable to the Registrant in connection
with any such registration, qualification or compliance, and the Registrant will
reimburse the Holder, each of its directors and officers and each person who
controls the Holder within the meaning of Section 15 of the Securities Act, and
each underwriter for any legal and any other expenses reasonably incurred in
connection with investigating, preparing or defending any such claim, loss,
damage, liability or action; provided, that the Registrant will not be liable in
any such case to the extent that any such claim, loss, damage, liability or
expense arises out of or is based on any untrue statement or omission or alleged
untrue statement or omission, made in reliance upon and in conformity with
written information furnished to the Registrant by such Holder or director or
officer or controlling person or underwriter seeking indemnification.
(ii) The Holder will indemnify the Registrant, each of
its directors and officers and each underwriter of the Registrant's securities
covered by such registration statement and each person who controls the
Registrant within the meaning of Section 15 of the Securities Act, against all
expenses, claims, losses, damages and liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any such
registration statement, prospectus, offering circular or other document, or any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
any violation by the Holder of any rule or regulation promulgated under the
Securities Act applicable to the Holder in connection with any such
registration, qualification or compliance, and will reimburse the Registrant,
such directors, officers or control persons or underwriters for any legal or any
other expenses reasonably incurred in connection with investigating, preparing
or defending any such claim, loss, damage, liability or action, in each case to
the extent, but only to the extent, that such untrue statement (or alleged
untrue statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon and
in conformity with written information furnished to the Registrant by the Holder
for use therein; provided, that in no event will any indemnity under this
Section 8(g) exceed the net proceeds of the offering received by the Holder.
(iii) Each party entitled to indemnification under this
Section 8(g) (the "Indemnified Party") will give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as
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to which indemnity may be sought, and will permit the Indemnifying Party to
assume the defense of any such claim or any litigation resulting therefrom,
provided, that counsel for the Indemnifying Party, who will conduct the defense
of such claim or litigation, will be approved by the Indemnified Party (whose
approval will not unreasonably be withheld), and the Indemnified Party may
participate in such defense at such party's expense; provided, however, that the
Indemnifying Party will pay such expense if representation of the Indemnified
Party by counsel retained by the Indemnifying Party would be inappropriate due
to actual or potential differing interests between the Indemnified Party and any
other party represented by such counsel in such proceeding, and provided
further, however, that the failure of any Indemnified Party to give notice as
provided herein will not relieve the Indemnifying Party of its obligations under
this Section 8(g) unless the failure to give such notice is materially
prejudicial to an Indemnifying Party's ability to defend such action. No
Indemnifying Party, in the defense of any such claim or litigation will, except
with the consent of each Indemnified Party, consent to entry of any judgment or
enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party of a
release from all liability in respect to such claim or litigation. No
Indemnifying Party will be required to indemnify any Indemnified Party with
respect to any settlement entered into without such Indemnifying Party's prior
consent (which will not be unreasonably withheld).
9. Adjustment Upon Changes in Capitalization; Other Agreements.
(a) In the event of any change in the Company Shares by reason of
stock dividends, stock splits, reverse stock splits, mergers (other than the
Merger), recapitalizations, combinations, exchanges of shares and the like, the
type and number of shares or securities subject to the Option, the Exercise
Price will be adjusted appropriately, and proper provision will be made in the
agreements governing such transaction so that Parent will receive, upon exercise
of the Option, the number and class of shares or other securities or property
that Parent would have received in respect of the Company Shares if the Option
had been exercised immediately prior to such event or the record date therefor,
as applicable.
(b) Without limiting the parties' relative rights and obligations
under the Reorganization Agreement, if the number of outstanding Company Shares
increases or decreases after the date of this Agreement (other than pursuant to
an event described in Section 9(a)), the number of Company Shares subject to the
Option (including those Option Shares which may have already been exercised)
will be adjusted so that it equals 19.99% of the number of Company Shares then
issued and outstanding, without giving effect to any Option Shares.
(c) In the event that, at the time of exercise of the Option, the
Company does not have a sufficient number of shares of Common Stock authorized
and available for issuance, the Company shall authorize, and issue to Parent a
number of shares of the Company's Preferred Stock, par value $0.001 per share,
with such rights, preferences and privileges, including economic and voting
rights, equivalent to 19.99% of the number of Company Shares then issued and
outstanding, without giving effect to the issuance of shares of Preferred Stock
upon exercise of the Option. The Company further agrees to file a Certificate of
Designation for such shares of Preferred Stock and to take such actions as are
necessary to authorize and reserve shares of Common Stock for issuance upon
conversion or exchange of the Preferred Stock. In addition, the Company agrees
that it will not
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enter into definitive documentation regarding an Acquisition Transaction, as
defined in the Reorganization Agreement, unless the Preferred Stock issued
hereunder shall be treated in the same manner, including receipt of economic
value, as the number of shares of Common Stock into which such shares of
Preferred Stock would be convertible. For the purposes of this Agreement, shares
of Preferred Stock issued upon exercise of the Option have all rights,
preferences and privileges provided to the Option Shares, including but not
limited to those set forth in Sections 7 and 8 of this Agreement.
10. Restrictive Legends. Each certificate representing Option Shares
issued to Parent hereunder will include a legend in substantially the following
form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR
SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE. SUCH SECURITIES ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS
ON TRANSFER AS SET FORTH IN THE STOCK OPTION AGREEMENT DATED AS OF
JANUARY 23, 2001, A COPY OF WHICH MAY BE OBTAINED FROM THE ISSUER.
It is understood and agreed that (i) the reference to restrictions
arising under the Securities Act in the above legend will be removed by delivery
of substitute certificate(s) without such reference if such Option Shares have
been registered pursuant to the Securities Act, such Option Shares have been
sold in reliance on and in accordance with Rule 144 under the Securities Act or
Holder has delivered to Registrant a copy of a letter from the staff of the SEC,
or an opinion of counsel in form and substance reasonably satisfactory to
Registrant and its counsel, to the effect that such legend is not required for
purposes of the Securities Act and (ii) the reference to restrictions pursuant
to this Agreement in the above legend will be removed by delivery of substitute
certificate(s) without such reference if the Option Shares evidenced by
certificate(s) containing such reference have been sold or transferred in
compliance with the provisions of this Agreement under circumstances that do not
require the retention of such reference.
11. Transfers. The Option Shares may not be sold, assigned, transferred,
or otherwise disposed of except (i) in an underwritten offering as provided in
Section 8, or (ii) to any purchaser or transferee who would not, to the
knowledge of Parent after reasonable inquiry (which shall include obtaining
representation from the purchaser or transferee), immediately following such
sale, assignment, transfer, or disposal, beneficially own more than five percent
(5%) of the then outstanding voting power of the Company; provided, that Parent
shall be able to sell any Option Shares if such sale is made pursuant to a
tender or exchange offer.
12. Investment Intent. Parent shall acquire the Option Shares for
investment purposes only and not with a view to any distribution thereof in
violation of the Securities Act, and shall not sell any Option Shares purchase
pursuant to this Agreement except in compliance with the Securities Act and
applicable state securities and "blue sky" laws.
13. Listing and HSR Filing. The Company, upon the request of Parent,
will promptly file an application to list the Company Shares to be acquired upon
exercise of the Option for quotation
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on the Nasdaq National Market and will use its best efforts to obtain approval
of such listing as soon as practicable. Promptly after the date hereof, each of
the parties hereto will promptly file with the Federal Trade Commission and the
Antitrust Division of the United States Department of Justice all required
premerger notification and report forms and other documents and exhibits
required to be filed under the HSR Act to permit the acquisition of the Company
Shares subject to the Option at the earliest possible date.
14. Binding Effect. This Agreement will be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. Nothing contained in this Agreement, express or implied, is intended to
confer upon any person other than the parties hereto and their respective
successors and permitted assigns any rights or remedies of any nature whatsoever
by reason of this Agreement. Any shares sold by a party in compliance with the
provisions of Section 8 will, upon consummation of such sale, be free of the
restrictions imposed with respect to such shares by this Agreement and any
transferee of such shares will not be entitled to the rights of such party.
Certificates representing shares sold in a registered public offering pursuant
to Section 8 will not be required to bear the legend set forth in Section 10.
15. Specific Performance. The parties hereto recognize and agree that if
for any reason any of the provisions of this Agreement are not performed in
accordance with their specific terms or are otherwise breached, immediate and
irreparable harm or injury would be caused for which money damages would not be
an adequate remedy. Accordingly, each party hereto agrees that in addition to
other remedies the other party hereto will be entitled to an injunction
restraining any violation or threatened violation of the provisions of this
Agreement or the right to enforce any of the covenants or agreements set forth
herein by specific performance. In the event that any action will be brought in
equity to enforce the provisions of the Agreement, neither party hereto will
allege, and each party hereto hereby waives the defense, that there is an
adequate remedy at law.
16. Entire Agreement. This Agreement and the Reorganization Agreement
(including the appendices thereto) constitute the entire agreement between the
parties hereto with respect to the subject matter hereof and supersede all other
prior agreements and understandings, both written and oral, between the parties
hereto with respect to the subject matter hereof.
17. Further Assurances. Each party hereto will execute and deliver all
such further documents and instruments and take all such further action as may
be necessary in order to consummate the transactions contemplated hereby.
18. Validity. The invalidity or unenforceability of any provision of
this Agreement will not affect the validity or enforceability of the other
provisions of this Agreement, which will remain in full force and effect. In the
event any governmental entity of competent jurisdiction holds any provision of
this Agreement to be null, void or unenforceable, the parties hereto will
negotiate in good faith and will execute and deliver an amendment to this
Agreement in order, as nearly as possible, to effectuate, to the extent
permitted by law, the intent of the parties hereto with respect to such
provision.
19. Notices. All notices and other communications hereunder will be in
writing and will be deemed given if delivered personally or by commercial
delivery service, or sent via telecopy
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(receipt confirmed) to the parties at the following addresses or telecopy
numbers (or at such other address or telecopy numbers for a party as will be
specified by like notice):
(a) if to Parent, to:
Proxim, Inc.
000 XxXxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxx
Telecopy No.: (000) 000-0000
with a copy to:
Wilson, Sonsini, Xxxxxxxx & Xxxxxx
Professional Corporation
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Day
Telecopy No.: (000) 000-0000
and to:
Wilson, Sonsini, Xxxxxxxx & Xxxxxx
Professional Corporation
Xxx Xxxxxx
Xxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Telecopy No.: (000) 000-0000
(b) if to the Company, to:
Netopia, Inc.
0000 Xxxxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxx
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxxxxxx Xxxxxxx Xxxxxx Xxxxxxxxxx Xxxxxxxx & Xxxxxxxxx, LLP
000 Xxxxxxxxxxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Telecopy No.: (000) 000-0000
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20. Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of Delaware without giving effect to the
conflicts of law principles thereof.
21. Expenses. Except as otherwise expressly provided herein or in the
Reorganization Agreement, all costs and expenses (including, without limitation,
all fees and disbursements of counsel, accountants, investment bankers, experts
and consultants to a party) incurred in connection with the transactions
contemplated by this Agreement will be paid by the party incurring such
expenses.
22. Amendments; Waiver. This Agreement may be amended by the parties
hereto and the terms and conditions hereof may be waived only by an instrument
in writing signed on behalf of each of the parties hereto, or, in the case of a
waiver, by an instrument signed on behalf of the party waiving compliance.
23. Assignment. Neither of the parties hereto may sell, transfer, assign
or otherwise dispose of any of its rights or obligations under this Agreement or
the Option created hereunder to any other person, without the express written
consent of the other party, except that the rights and obligations hereunder
will inure to the benefit of and be binding upon any successor of a party
hereto.
24. Counterparts. This Agreement may be executed in counterparts, each
of which will be deemed to be an original, but both of which, taken together,
will constitute one and the same instrument.
25. Effect of Headings. The section headings are for convenience only
and shall not affect the construction or interpretation of this Agreement.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers as of the date first above
written.
PROXIM, INC.
Signature:
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Print Name:
------------------------------
Print Title:
-----------------------------
NETOPIA, INC.
Signature:
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Print Name:
------------------------------
Print Title:
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[SIGNATURE PAGE TO STOCK OPTION AGREEMENT]
