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EXHIBIT 10.16
REIMBURSEMENT AND SECURITY AGREEMENT
This REIMBURSEMENT AND SECURITY AGREEMENT, dated as of March 15, 2001
(this "Agreement") , is entered into by and between XXXXX X. XXXX ("Obligor")
and PROXIM, INC., a Delaware corporation ("Proxim").
RECITALS
A. The Bear Xxxxxxx Companies, Inc., Bear Xxxxxxx Securities Corp. or
Bear Xxxxxxx & Co. Inc. (including any of their respective affiliate
organizations, the "Bear Xxxxxxx Entities") has entered into a Customer
Agreement with Obligor dated as of ____________, ___ (the "Customer Agreement")
which provides for, among other things, the ability of Obligor to obtain margin
loans, which obligations are secured by, among other things, shares of Proxim
common stock owned by Obligor.
B. The Board of Directors of Proxim has determined that it is the best
interests of Proxim and its stockholders that Proxim execute a Guaranty in favor
of the Bear Xxxxxxx Entities dated as of March 15, 2001, to guaranty the
obligations of Xx. Xxxx under the Customer Agreement up to a maximum of
$5,000,000 (the "Guaranty").
C. In order to induce Proxim to guaranty the obligations of Obligor
under the Customer Agreement, Obligor has agreed to enter into this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Obligor hereby agrees with Proxim as follows:
1. REIMBURSEMENT. If Proxim shall at any time or from time to time make
any payment to the Bear Xxxxxxx Entities after demand by the Bear Xxxxxxx
Entities under the Guaranty, Obligor shall immediately reimburse Proxim (a) for
all amounts paid to the Bear Xxxxxxx Entities under the Guaranty, and (b) any
costs or expenses, including without limitation reasonable attorneys fees and
costs (including the fees of attorneys employed by Proxim), incurred by Proxim
in connection with any demand made by the Bear Xxxxxxx Entities under the
Guaranty or the enforcement of or attempt to enforce any of the obligations of
Obligor which are not performed as and when required by this Agreement. The
Obligations under this Agreement shall be absolute, unconditional and
irrevocable and shall not be reduced by any set-off or any event or occurrence
including any action or inaction by the Bear Xxxxxxx Entities or the
unenforceability of the agreements under which the Loan was made. "Obligations"
shall mean and include all amounts due Proxim under this Agreement or applicable
law in connection with the Guaranty and the obligations thereunder, now existing
or hereafter arising, whether direct or indirect, absolute or contingent, due or
to become due. Any Obligations not paid when due shall bear interest a rate per
annum equal to the "prime rate" as set forth in the "Money Rates" column of The
Wall Street Journal from time to time, plus 4%, and such interest shall become
part of the Obligations.
2. GUARANTY FEE. In consideration of Proxim's delivery of the Guarantee
to the Bear Xxxxxxx Entities, Obligor agrees that for so long as the Guaranty
has not been terminated he shall pay on the last day of
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each calendar month a guarantee fee for each month equal to 0.25% of the maximum
amount of the Guarantee. The fee shall be pro-rated for any portion of a month
in which it is outstanding.
3. SATISFACTION OF LOAN OR RELEASE OF GUARANTY. Obligor agrees that if
Obligor's continued employment by Proxim shall terminate for any reason
(including without limitation by reason of resignation, death or disability),
Obligor shall within [10] days of such termination, at Obligor's expense, either
(i) satisfy in full his obligations under the Customer Agreement or (ii) cause
the Bear Xxxxxxx Entities to release Proxim from the Guaranty. Obligor agrees to
take any such action as is necessary to obtain a release of Proxim's Guaranty
notwithstanding any additional expense associated with such release.
4. COVENANTS OF OBLIGOR. Obligor agrees:
(a) To timely perform all of his obligations to the Bear
Xxxxxxx Entities entered into in connection with the
Customer Agreement.
(b) To give Proxim prompt notice of any default in the
observance of Obligor's obligations to the Bear
Xxxxxxx Entities under the Customer Agreement and to
immediately cure any such default.
(c) To transfer all of Obligor's other investment
property consisting of liquid securities, money
market funds and similar assets, as soon as
reasonably practicable, into the account with the
Bear Xxxxxxx Entities to secure the obligations under
the Customer Agreement and to take all other
reasonably practicable steps prevent the Guaranty
from being called by the Bear Xxxxxxx Entities.
(d) To sell any and all securities and other assets
necessary, including without limitation the orderly
sale of shares of Proxim common stock in compliance
with Proxim's xxxxxxx xxxxxxx policy and take all
actions reasonably necessary to terminate and cause
the Bear Xxxxxxx Entities to release Proxim from the
Guaranty;
(e) Within 10 business days or as soon as practicable, to
obtain a home equity loan on his principal residence
at 345 Hermosa, Menlo Park, California, and apply the
proceeds thereof to the obligations under the
Customer Agreement, or in the alternative, to deliver
a second deed of trust to Proxim securing the
obligations under this Agreement.
(f) While the Guaranty is outstanding, not to deliver any
orders with respect to the Customer Agreement to the
Bear Xxxxxxx Entities other than liquidation orders.
(f) To give Proxim prompt notice of any change of address
by Obligor.
5. SECURITY. As security for the Obligations, Obligor hereby pledges
and grants to Proxim a security interest in all right, title and interest of
Obligor in and to the property described in Attachment 1 hereto (collectively
and severally, the "Collateral"), which Attachment 1 is incorporated herein by
this reference.
6. AUTHORIZED ACTION BY PROXIM.
(a) Obligor hereby authorizes Proxim to request and the Bear Xxxxxxx
Entities to provide periodic
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reports on the status of the obligations under the Customer Agreement, Obligor's
payment record and any other credit information with respect to Obligor or the
obligations under the Customer Agreement. Obligor hereby irrevocably appoints
Proxim as its attorney-in-fact and agrees that Proxim may perform (but Proxim
shall not be obligated to and shall incur no liability to Obligor or any third
party for failure so to do) any act which Obligor is obligated by this Agreement
to perform, and to exercise such rights and powers as Obligor might exercise
with respect to the Collateral, including the right to (a) collect by legal
proceedings or otherwise and endorse, receive and receipt for all distributions,
dividends, interest, payments, proceeds and other sums and property now or
hereafter payable on or on account of the Collateral; (b) enter into any
extension, reorganization, deposit, merger, consolidation or other agreement
pertaining to, or deposit, surrender, accept, hold or apply other property in
exchange for the Collateral; (c) insure, process and preserve the Collateral;
(d) make any compromise or settlement, and take any action it deems advisable,
with respect to the Collateral; and (e) execute UCC financing statements and
other documents, instruments and agreements required hereunder; provided,
however, that Proxim shall not exercise any such powers prior to the occurrence
of an Event of Default and shall only exercise such powers during the
continuance of an Event of Default. Obligor agrees to reimburse Proxim upon
demand for any reasonable costs and expenses, including attorneys' fees, which
Proxim may incur while acting as Obligor's attorney-in-fact hereunder, all of
which costs and expenses are included in the Obligations. It is further agreed
and understood between the parties hereto that such care as Proxim gives to the
safekeeping of its own property of like kind shall constitute reasonable care of
the Collateral when in Proxim's possession; provided, however, that Proxim shall
not be required to make any presentment, demand or protest, or give any notice
and need not take any action to preserve any rights against any prior party or
any other person in connection with the Obligations or with respect to the
Collateral. So long as no Event of Default shall have occurred and be
continuing, Obligor shall be entitled to receive and retain free and clear of
the security interest of Proxim hereunder any and all distributions, dividends
and interest paid in respect of the Collateral.
(b) During any period after termination of Obligor's employment in
Proxim and prior to termination and release of the Guaranty, Proxim shall have
the right to have all distributions, dividends and interest paid in respect of
the Collateral delivered to it and held as Collateral until such time as the the
Guaranty is released or until Proxim otherwise exercises its rights as a secured
party with respect thereto. Proxim shall have no responsibility for any
diminution in value of any Collateral held during such period, it being
understood that Obligor may obtain the release of any such Collateral at any
time by satisfying the Obligations under this Agreement.
7. DEFAULT AND REMEDIES. Obligor shall be deemed in default under this
Agreement upon the occurrence and during the continuance of any of the following
events (each, an "Event of Default"):
(a) Obligor shall default with respect to any obligation
to the Bear Xxxxxxx Entities in connection with the
Customer Agreement and such default shall continue
uncured for [30] days.
(b) Obligor shall default on its obligations under
Section 2 of this Agreement or Obligor shall default
with respect to any other obligation to Proxim under
this Agreement and such default shall continue
uncured for 30 days.
(c) The Bear Xxxxxxx Entities shall make any demand for
payment under the Guaranty.
(d) Obligor shall become the subject of any bankruptcy or
insolvency proceeding.
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(e) Obligor shall resign or otherwise terminate his
employment as Proxim's Chief Executive Officer.
Upon the occurrence and during the continuance of any such Event of Default,
Proxim shall have all of the rights set forth under this Agreement and all of
the rights of a secured creditor under the California Uniform Commercial Code
and other applicable law. Obligor acknowledges and recognizes that Proxim may be
unable to effect a public sale of all or a part of the Collateral and may be
compelled to resort to one or more private sales to a restricted group of
purchasers who will be obligated to agree, among other things, to acquire the
Collateral for their own account, for investment and not with a view to the
distribution or resale thereof. Obligor acknowledges that any such private sales
may be at prices and on terms less favorable than those of public sales, and
agrees that so long as such sales are made in good faith such private sales
shall be deemed to have been made in a commercially reasonable manner and that
Proxim has no obligation to delay sale of any Collateral to permit the issuer
thereof to register it for public sale under the Securities Act of 1933, as
amended or under any state securities law.
8. MISCELLANEOUS.
(a) Notices. Except as otherwise provided herein, all notices,
requests, demands, consents, instructions or other communications to or upon
Obligor or Proxim under this Agreement shall be in writing and delivered to each
party at the address most recently provided by such party to the other party.
(b) Nonwaiver. No failure or delay on Proxim's part in
exercising any right hereunder shall operate as a waiver thereof or of any other
right nor shall any single or partial exercise of any such right preclude any
other further exercise thereof or of any other right.
(c) Amendments and Waivers. This Agreement may not be amended
or modified, nor may any of its terms be waived, except by written instruments
signed by Obligor and Proxim. Each waiver or consent under any provision hereof
shall be effective only in the specific instances for the purpose for which
given.
(d) Assignments. This Agreement shall be binding upon and
inure to the benefit of Proxim and Obligor and their respective successors and
assigns; provided, however, that Obligor may not assign or delegate rights and
obligations hereunder without the prior written consent of Proxim.
(e) Cumulative Rights, etc. The rights, powers and remedies of
Proxim under this Agreement shall be in addition to all rights, powers and
remedies given to Proxim by virtue of any applicable law, rule or regulation of
any governmental authority or any other agreement, all of which rights, powers,
and remedies shall be cumulative and may be exercised successively or
concurrently without impairing Proxim's rights hereunder.
(f) Partial Invalidity. If at any time any provision of this
Agreement is or becomes illegal, invalid or unenforceable in any respect under
the law or any jurisdiction, neither the legality, validity or enforceability of
the remaining provisions of this Agreement nor the legality, validity or
enforceability of such provision under the law of any other jurisdiction shall
in any way be affected or impaired thereby.
(g) Expenses. Obligor shall pay on demand all reasonable fees
and expenses, including reasonable attorneys' fees and expenses, incurred by
Proxim in connection with any demand by the Bear Xxxxxxx Entities under the
Guaranty related to the Loan, or the enforcement or attempt to enforce any of
the obligations of Obligor which are not performed as and when required by this
Agreement.
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(h) Entire Agreement. This Agreement constitutes and contains
the entire agreement of Obligor and Proxim with respect to the subject matter
hereof and supersedes any and all prior agreements, negotiations,
correspondence, understandings and communications among the parties, whether
written or oral, respecting the subject matter hereof.
(i) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California without
reference to conflicts of law rules.
(j) Jury Trial. EACH OF OBLIGOR AND PROXIM, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL
BY JURY AS TO ANY ISSUE RELATING HERETO IN ANY ACTION, PROCEEDING, OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(k) Arbitration.
(i) Obligor and Proxim agree that any dispute or
controversy arising out of, relating to, or in connection with this
Agreement and the transaction contemplated hereby shall be subject to
binding arbitration to be held in Santa Xxxxx County, California, in
accordance with the National Rules for the Resolution of Employment
Disputes then in effect of the American Arbitration Association (the
"Rules"), unless otherwise required by law. The arbitrator may grant
injunctions or other relief in such dispute or controversy. The
decision of the arbitrator shall be final, conclusive and binding on
the parties to the arbitration. Judgment may be entered on the
arbitrator's decision in any court having jurisdiction.
(ii) The arbitrator(s) shall apply California law to
the merits of any dispute or claim, without reference to rules of
conflict of law. Obligor hereby expressly consents to the personal
jurisdiction of the state and federal courts located in California for
any action or proceeding arising from or relating to this Agreement
and/or relating to any arbitration in which the parties are
participants.
(iii) The parties may apply to any court of competent
jurisdiction for a temporary restraining order, preliminary injunction,
or other interim or conservatory relief, as necessary, without breach
of this arbitration agreement and without abridgment of the powers of
the arbitrator.
(iv) OBLIGOR HAS CAREFULLY READ AND UNDERSTANDS THE
ARBITRATION PROVISIONS OF THIS AGREEMENT. OBLIGOR IS EXECUTING THIS
AGREEMENT VOLUNTARILY AND WITHOUT DURESS OR UNDUE INFLUENCE. OBLIGOR
UNDERSTANDS THAT BY SIGNING THIS AGREEMENT, OBLIGOR AGREES TO SUBMIT
ANY FUTURE CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH
THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY TO BINDING
ARBITRATION TO THE EXTENT PERMITTED BY LAW, AND THAT THIS ARBITRATION
CLAUSE CONSTITUTES A WAIVER OF OBLIGOR'S RIGHT TO A JURY TRIAL AND
RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF
THIS AGREEMENT.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first written above.
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PROXIM, INC.
A DELAWARE CORPORATION
By: /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
Title: Vice President of Finance and Administration
and Chief Financial Officer
By: /s/ Xxxxx X. Xxxx
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Name: Xxxxx X. Xxxx
Title: Chairman of the Board of Directors,
President and Chief Executive Officer
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ATTACHMENT 1 TO SECURITY AGREEMENT
All right, title and interest of Obligor, now owned or hereafter
acquired, in and to, the following:
(a) All goods and equipment now owned or hereafter acquired, including,
without limitation, all laboratory equipment, computer equipment, office
equipment, 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;
(b) 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 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, and books relating to any of the foregoing;
(c) All contract rights, general intangibles, health care insurance
receivables, payment intangibles and commercial tort claims, now owned or
hereafter acquired, including, without limitation, goodwill, license agreements,
franchise agreements, blueprints, drawings, purchase orders, customer lists,
route lists, infringements, claims, computer programs, computer disks, computer
tapes, literature, reports, catalogs, design rights, income tax refunds,
payments of insurance and rights to payment of any kind;
(d) All now existing and hereafter arising accounts, contract rights,
royalties, license rights and all other forms of obligations owing to Obligor
arising out of the sale or lease of goods, the licensing of technology or the
rendering of services by Obligor (subject, in each case, to the contractual
rights of third parties to require funds received by Obligor to be expended in a
particular manner), whether or not earned by performance, and any and all credit
insurance, guaranties, and other security therefor, as well as all merchandise
returned to or reclaimed by Obligor and Obligor's books relating to any of the
foregoing;
(e) All documents, cash, deposit accounts, letters of credit, letter of
credit rights, supporting obligations, certificates of deposit, instruments,
chattel paper, electronic chattel paper, tangible chattel paper and investment
property, including, without limitation, all securities, whether certificated or
uncertificated, security entitlements, securities accounts, commodity contracts
and commodity accounts, and all financial assets held in any securities account
or otherwise, wherever located, now owned or hereafter acquired and Obligor's
books relating to the foregoing; and
(f) Any and all claims, rights and interests in any of the above and
all substitutions for, additions and accessions to and proceeds thereof,
including, without limitation, insurance, condemnation, requisition or similar
payments and the proceeds thereof.
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