1
PROXIM, INC.
INVESTOR RIGHTS AGREEMENT
This Investor Rights Agreement (this "Agreement") is made and entered
into as of June 2, 1999, by and between Proxim, Inc., a Delaware corporation
(the "Company"), and Motorola, Inc., a Delaware corporation (the "Investor").
RECITALS
WHEREAS, the Company desires to sell to the Investor, and the Investor
desires to purchase from the Company, shares (the "Purchased Shares") of Common
Stock, par value $0.001 per share, of the Company (the "Common Stock") and a
Warrant (the "Warrant") to purchase additional shares (the "Warrant Shares") of
the Company's Common Stock on the terms and conditions set forth in that certain
Common Stock and Warrant Purchase Agreement, dated of even date herewith by and
between the Company and the Investor (the "Purchase Agreement") and unless
otherwise provided herein, all capitalized terms shall have the meanings set
forth in the Purchase Agreement.
WHEREAS, the Purchase Agreement provides that the Investor shall be
granted certain information rights, registration rights and other rights, all as
more fully set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual
promises hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. INFORMATION RIGHTS.
(a) Financial Information. The Company covenants and
agrees that, commencing on the date of this Agreement and continuing for so long
as the Investor holds at least 40,000 Purchased Shares or shares of Common Stock
issued or issuable pursuant to exercise of the Warrant, the Company shall:
(i) Annual Reports. Furnish to the Investor
promptly following the filing of such report with the SEC a copy of the
Company's Annual Report on Form 10-K for each fiscal year, which shall
include a consolidated balance sheet as of the end of such fiscal year,
a consolidated statement of income and a consolidated statement of cash
flows of the Company and its subsidiaries for such year, setting forth
in each case in comparative form the figures from the Company's previous
fiscal year, all prepared in accordance with generally accepted
accounting principles and practices and audited by nationally recognized
independent certified public accountants. In the event the Company shall
no longer be required to file Annual Reports on Form 10-K, the Company
shall, within ninety (90) days following the end of each respective
fiscal year, deliver to the Investor a copy of such balance sheets,
statements of income and statements of cash flows.
2
(ii) Quarterly Reports. Furnish to the Investor
promptly following the filing of such report with the SEC, a copy of
each of the Company's Quarterly Reports on Form 10-Q, which shall
include a consolidated balance sheet as of the end of the respective
fiscal quarter, consolidated statements of income and consolidated
statements of cash flows of the Company and its subsidiaries for the
respective fiscal quarter and for the year to-date, setting forth in
each case in comparative form the figures from the comparable periods in
the Company's immediately preceding fiscal year, all prepared in
accordance with generally accepted accounting principles and practices
(except, in the case of any Form 10-Q, as may otherwise be permitted by
Form 10-Q), but all of which may be unaudited. In the event the Company
shall no longer be required to file Quarterly Reports on Form 10-Q, the
Company shall, within forty-five (45) days following the end of each of
the first three (3) fiscal quarters of each fiscal year, deliver to the
Investor a copy of such balance sheets, statements of income and
statements of cash flows.
(b) SEC Filings. The Company shall deliver to the Investor
copies of each other document filed with the SEC on a non-confidential basis
promptly following the filing of such document with the SEC.
2. REGISTRATION RIGHTS.
(a) Definitions. For purposes of this Section 2:
(i) Registration. The terms "register,"
"registered," and "registration" refer to a registration effected by
preparing and filing a registration statement in compliance with the
Securities Act of 1933, as amended, (the "Securities Act"), and the
declaration or ordering of effectiveness of such registration statement
(ii) Registrable Securities. The term "Registrable
Securities" means: (x) the Purchased Shares, and any shares of Common
Stock of the Company issued or issuable upon exercise of the Warrant;
(y) any other shares of Common Stock of the Company acquired by the
Investor from the Company or from another Investor having similar
registration rights after the date hereof; and (z) any shares of Common
Stock of the Company or other securities of the Company issued as (or
issuable upon the conversion or exercise of any warrant, right or other
security that is issued as) a dividend or other distribution with
respect to, or in exchange for or in replacement of, any of the
securities described in the immediately preceding Clauses (x) or (y).
Notwithstanding the foregoing, "Registrable Securities" shall exclude
any Registrable Securities sold by a person in a transaction in which
rights under this Section 2 are not assigned in accordance with this
Agreement or any Registrable Securities sold in a public offering,
whether sold pursuant to Rule 144 promulgated under the Securities Act,
or in a registered offering, or otherwise.
(iii) Registrable Securities Then Outstanding. The
number of shares of "Registrable Securities then outstanding" shall mean
the number of shares of
2
3
Purchased Shares, shares of Common Stock and other securities that are
Registrable Securities and are then issued and outstanding.
(iv) Holder. For purposes of this Section 2, the
term "Holder" means Investor or any subsidiary or affiliate of Investor
owning of record Registrable Securities that have not been sold to the
public or pursuant to Rule 144 promulgated under the Securities Act or
any permitted assignee of record of such Registrable Securities to whom
rights under this Section 2 have been duly assigned in accordance with
Section 4 of this Agreement.
(v) Form S-3. The term "Form S-3" means such form
under the Securities Act as is in effect on the date hereof or any
successor registration form under the Securities Act subsequently
adopted by the SEC that permits inclusion or incorporation of
substantial information by reference to other documents filed by the
Company with the SEC.
(b) Demand Registration.
(i) Request by Holders. If, at any time following
the first anniversary of the Closing, as defined in the Purchase
Agreement, during which the Company is not eligible to file a
registration statement on Form S-3, the Company receives a written
request from the Holders of twenty-five percent (25%) of the Purchased
Shares issued as of the Closing that the Company file a registration
statement under the Securities Act on Form S-1 or such other form as
such Holders may request covering the registration of Registrable
Securities, then the Company shall, within ten (10) business days of the
receipt of such written request, give written notice of such request
("Request Notice") to all Holders, and use commercially reasonable
efforts to effect, as soon as practicable, the registration under the
Securities Act of all Registrable Securities that Holders request to be
registered and included in such registration by written notice given by
such Holders to the Company within twenty (20) days after receipt of the
Request Notice; provided that the Company shall not be obligated to
effect any such registration if the Company has, within the six (6)
month period preceding the date of such request, already effected a
registration under the Securities Act pursuant to this Section 2(b) or
Section 2(c) or (d), other than a registration from which the
Registrable Securities of Holders have been excluded with respect to all
or any portion of the Registrable Securities the Holders requested be
included in such registration; provided, further, that the Company shall
have no obligation to file any registration statement contemplated by
this Section 2(b) if the expected gross proceeds of the sale of
Registrable Securities under such registration statement, based on the
market price of the Common Stock as of the date of the initial request
for such registration delivered by the Holders, does not exceed Three
Million Dollars ($3,000,000). If requested by such Holders, the Company
shall register such Registrable Securities on Form S-1 or any successor
registration form.
(ii) Underwriting. If the Holders initiating the
registration request under this Section 2(b) ("Initiating Holders")
intend to distribute the Registrable
3
4
Securities covered by their request by means of an underwriting, then
they shall so advise the Company as a part of their request, and the
Company shall include such information in the written notice referred to
in Section 2(b)(i). In such event, the right of any Holder to include
its Registrable Securities in such registration shall be conditioned
upon such Holder's participation in such underwriting and the inclusion
of such Holder's Registrable Securities in the underwriting (unless
otherwise mutually agreed by a majority in interest of the initiating
Holders and such Holder determined based on the number of Registrable
Securities held by such Holders being registered). All Holders proposing
to distribute their securities through such underwriting shall enter
into an underwriting agreement in customary form with the managing
underwriter or underwriters selected for such underwriting by the
Holders of a majority of the Registrable Securities being registered and
reasonably acceptable to the Company (including a market stand-off
agreement of up to 180 days if required by such underwriters).
Notwithstanding any other provision of this Section 2(b), if the
underwriter(s) advise(s) the Company in writing that marketing factors
require a limitation of the number of securities to be underwritten then
the Company shall so advise all Holders of Registrable Securities that
would otherwise be registered and underwritten pursuant hereto, and the
number of Registrable Securities that may be included in the
underwriting shall be reduced as required by the underwriter(s) and
allocated among the Holders of Registrable Securities on a pro rata
basis according to the number of Registrable Securities then outstanding
held by each Holder requesting registration (including the initiating
Holders); provided, however, that the number of shares of Registrable
Securities to be included in such underwriting and registration shall
not be reduced unless all other securities of the Company and any
selling securityholder other than the Holders are first entirely
excluded from the underwriting and registration. Any Registrable
Securities excluded and withdrawn from such underwriting shall be
withdrawn from the registration.
(iii) Maximum Number of Demand Registrations. The
Company shall be obligated to effect only three (3) such registrations
pursuant to this Section 2(b).
(iv) Deferral. Notwithstanding the foregoing, if
the Company shall furnish to Holders requesting the filing of a
registration statement pursuant to this Section 2(b), a certificate
signed by the Chief Executive Officer of the Company stating that in the
good faith judgment of the Board, it would be materially detrimental to
the Company and its stockholders for such registration statement to be
filed, then the Company shall have the right to defer such filing for a
period of not more than ninety (90) days after receipt of the request of
the initiating Holders; provided, however, that the Company may not
utilize this right more than once in any twelve (12) month period.
(v) Expenses. All expenses incurred in connection
with any registration pursuant to this Section 2(b), including all
federal and "blue sky" registration, filing and qualification fees,
printer's and accounting fees, and fees and disbursements of counsel for
the Company (but excluding underwriters' discounts and commissions
relating to shares sold by the Holders and any fees and disbursements of
counsel to the
4
5
Holders), shall be borne by the Company. Each Holder participating in a
registration pursuant to this Section 2(b) shall bear such Holder's
proportionate share (based on the total number of shares sold in such
registration other than for the account of the Company) of all
discounts, commissions or other amounts payable to underwriters or
brokers in connection with such offering by the Holders. Notwithstanding
the foregoing, the Company shall not be required to pay for any expenses
of any registration proceeding begun pursuant to this Section 2(b) if
the registration request is subsequently withdrawn at the request of the
Holders of a majority of the Registrable Securities to be registered,
unless the Holders of such majority agree that such registration
constitutes the use by the Holders of one (1) demand registration
pursuant to this Section 2(b) (in which case such registration shall
also constitute the use by all Holders of Registrable Securities of one
(l) such demand registration); provided further, however, that if at the
time of such withdrawal, the Holders have learned of a material adverse
change relating to the business or operations of the Company not known
to the Holders at the time of their request for such registration and
have withdrawn their request for registration after learning of such
material adverse change, then the Holders shall not be required to pay
any of such expenses and such registration shall not constitute the use
of a demand registration pursuant to this Section 2(b).
(c) Piggyback Registrations. The Company shall notify all
Holders of Registrable Securities in writing at least twenty (20) days prior to
filing any registration statement under the Securities Act for purposes of
effecting a public offering of securities of the Company (including registration
statements relating to secondary offerings of securities of the Company, but
excluding registration statements relating to any employee benefit plan or any
merger or other corporate reorganization) and will afford each such Holder an
opportunity to include in such registration statement all or any part of the
Registrable Securities then held by such Holder. Each Holder desiring to include
in any such registration statement all or any part of the Registrable Securities
held by such Holder shall within twenty (20) days after receipt of the
above-described notice from the Company, so notify the Company in writing, and
in such notice shall inform the Company of the number of Registrable Securities
such Holder wishes to include in such registration statement. If a Holder
decides not to include all of its Registrable Securities in any registration
statement thereafter filed by the Company, such Holder shall nevertheless
continue to have the right to include any Registrable Securities in any
subsequent registration statement or registration statements as may be filed by
the Company with respect to offerings of its securities, all upon the terms and
conditions set forth herein.
(i) Underwriting. If a registration statement under
which the Company gives notice under this Section 2(c) is for an
underwritten offering, then the Company shall so advise the Holders of
Registrable Securities. In such event, the right of any such Holder's
Registrable Securities to be included in such a registration pursuant
shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities
in the underwriting to the extent provided herein. All Holders proposing
to distribute their Registrable Securities through such underwriting
shall enter into an underwriting agreement in customary form with the
managing underwriter or underwriters selected for such underwriting
(including a market
5
6
stand-off agreement of up to 180 days if required by such underwriters);
provided, however, that it shall not be considered customary to require
any of the Holders to provide representations and warranties regarding
the Company or indemnification of the underwriters for material
misstatements or omissions in the registration statement or prospectus
for such offering. Notwithstanding any other provision of this
Agreement, if the managing underwriter determine(s) in good faith that
marketing factors require a limitation of the number of shares to be
underwritten, then the managing underwriter(s) may exclude shares from
the registration and the underwriting; provided; however, that the
securities to be included in the registration and the underwriting shall
be allocated, (A) first to the Company (provided, however, that a
minimum of fifteen percent (15%) of the number of Registrable Securities
that each Holder (where any Registrable Securities that are not shares
of Common Stock but are exercisable or exchangeable for, or convertible
into, shares of Common Stock, shall be deemed to have been so exercised,
exchanged or converted for such purpose) must also in any event be
included), (B) second, to the extent the managing underwriter determines
additional securities can be included after compliance with Clause (A),
to each of the Holders (to the extent not included pursuant to Clause
(A)) requesting inclusion of their Registrable Securities in such
registration statement on a pro rata basis based on the total number of
Registrable Securities and other securities entitled to registration
then held by each such Holder, and (C) third, to the extent the managing
underwriter determines additional securities can be included after
compliance with Clauses (A) and (B), any other shares of Common Stock or
other securities of the Company. Any Registrable Securities excluded or
withdrawn from such underwriting shall be excluded and withdrawn from
the registration. For any Holder that is a partnership, the Holder and
the partners and retired partners of such Holder, or the estates and
family members of any such partners and retired partners and any trusts
for the benefit of any of the foregoing persons, and for any Holder that
is a corporation, the Holder and all corporations that are affiliates of
such Holder, shall be deemed to be a single "Holder," and any pro rata
reduction with respect to such "Holder" shall be based upon the
aggregate amount of shares carrying registration rights owned by all
entities and individuals included in such "Holder," as defined in this
sentence.
(ii) Expenses. All expenses incurred in connection
with a registration pursuant to this Section 2(c) (excluding
underwriters' and brokers' discounts and commissions relating to shares
sold by the Holders and any fees and disbursements of counsel to the
Holders), including all federal and "blue sky" registration, filing and
qualification fees, printers' and accounting fees, and fees and
disbursements of counsel for the Company, shall be borne by the Company.
(iii) Not Demand Registration. Registration
pursuant to this Section 2(c) shall not be deemed to be a demand
registration as described in Section 2(b) above. Except as otherwise
provided herein, there shall be no limit on the number of times the
Holders may request registration of Registrable Securities under this
Section 2(c).
6
7
(d) Form S-3 Registration. If, at any time after the first
anniversary of the Closing, as defined in the Purchase Agreement, the Company is
so requested by any Holder, the Company shall use all reasonable commercial
efforts to cause to be filed and become effective with the SEC a registration
statement on Form S-3, if available, relating to all of the Registrable
Securities; provided, however, that the Company shall have no obligation to file
any registration statement contemplated by this Section 2(d) if the expected
gross proceeds of the sale of Registrable Securities under such registration
statement, based on the market price of the Common Stock as of the date of such
request, does not exceed Three Million Dollars ($3,000,000). The Company shall
use commercially reasonable efforts to cause any such registration statement to
become effective as promptly as practicable after such filing and shall also use
commercially reasonable efforts to obtain any related qualifications,
registrations or other compliances that may be necessary under any applicable
"blue sky" laws. In connection with such registration, the Company will:
(i) Notice. Promptly give written notice to the
Holders of the proposed registration and any related qualification or
compliance; and
(ii) Registration. Effect such registration and all
such qualifications and compliances and as would permit or facilitate
the sale and distribution of all or such portion of such Holders or
Holders' Registrable Securities; provided, however, that the Company
shall not be obligated to effect any such registration, qualification or
compliance pursuant to this Section 2(d) in any particular jurisdiction
in which the Company would be required to qualify to do business or to
execute a general consent to service of process in effecting such
registration, qualification or compliance.
(iii) Number of Form S-3 Registrations. The Company
shall be obligated to effect only three (3) registrations upon the
request of the Holders under this Section 2(d).
(iv) Expenses. The Company shall pay all expenses
incurred in connection with each registration requested pursuant to this
Section 2(d), excluding underwriters' or brokers' discounts and
commissions relating to shares sold by the Holders and any fees and
disbursements of counsel to the Holders, but including federal and "blue
sky" registration, filing and qualification fees, printers' and
accounting fees, and fees and disbursements of counsel.
(v) Deferral. Notwithstanding the foregoing, if the
Company shall furnish to Holders requesting the filing of a registration
statement pursuant to this Section 2(d), a certificate signed by the
Chief Executive Officer of the Company stating that in the good faith
judgment of the Board, it would be materially detrimental to the Company
and its stockholders for such registration statement to be filed, then
the Company shall have the right to defer such filing for a period of
not more than ninety (90) days after receipt of the request of the
initiating Holders; provided, however, that the Company may not utilize
this right more than once in any twelve (12) month period, and the
period of time that the Company is obligated to maintain the
effectiveness of any
7
8
registration statement under Clause (vii) below shall be extended for
the length of any such period of deferral.
(vi) Not Demand Registration. Form S-3
registrations shall not be deemed to be demand registrations as
described in Section 2(b) above.
(vii) Maintenance. The Company shall use all
reasonable commercial efforts to maintain the effectiveness of any Form
S-3 registration statement filed under this Section 2(d) until the
earlier of: (a) the date on which all of the Registrable Securities have
been sold; and (b) sixty (60) days after the effective date of such
registration statement; provided, however, that unless all of the
Registrable Securities held by the Investor as of such anniversary date
could then be sold in a single transaction in accordance with Rule 144
under the Securities Act without exceeding the volume limitations
thereof, if the Company receives written notice from the Investor that
the Investor may be deemed to be an "affiliate" of the Company for
purposes of the Securities Act, the date in this Clause (b) shall be
extended until the Investor advises the Company that it no longer
believes it may be deemed such an "affiliate."
(e) Obligations of the Company. Whenever required to
effect the registration of any Registrable Securities under this Agreement the
Company shall, as expeditiously as reasonably possible:
(i) Registration Statement. Prepare and file with
the SEC a registration statement with respect to such Registrable
Securities and use commercially reasonable efforts to cause such
registration statement to become effective; provided, however, that,
except as otherwise required in this Section 2, the Company shall not be
required to keep any such registration statement effective for more than
sixty (60) days.
(ii) Amendments and Supplements. Prepare and file
with the SEC such amendments and supplements to such registration
statement and the prospectus used in connection with such registration
statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered
by such registration statement.
(iii) Prospectuses. Furnish to the Holders such
number of copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other
documents as they may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by them that are
included in such registration.
(iv) Blue Sky. Use commercially reasonable efforts
to register and qualify the securities covered by such registration
statement under such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably requested by the Holders, provided
that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.
8
9
(v) Underwriting. In the event of any underwritten
public offering, enter into and perform its obligations under an
underwriting agreement in usual and customary form (including customary
indemnification of the underwriters by the Company), with the managing
underwriter(s) of such offering. Each Holder participating in such
underwriting shall also enter into and perform its obligations under
such an agreement; provided, however, that it shall not be considered
customary to require any of the Holders to provide representations and
warranties regarding the Company or indemnification of the underwriters
for material misstatements or omissions in the registration statement or
prospectus for such offering.
(vi) Notification. Notify each Holder of
Registrable Securities covered by such registration statement at any
time when a prospectus relating thereto is required to be delivered
under the Securities Act of the happening of any event as a result of
which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances
then existing.
(f) Furnish Information. It shall be a condition
precedent to the obligations of the Company to take any action pursuant to
Sections 2(b), (c) or (d) that the selling Holders shall furnish to the Company
such information regarding themselves, the Registrable Securities held by them,
and the intended method of disposition of such securities as shall be required
to timely effect the registration of their Registrable Securities.
(g) Indemnification. In the event any Registrable
Securities are included in a registration statement under Sections 2(b), (c) or
(d):
(i) By the Company. To the extent permitted by law,
the Company will indemnify and hold harmless each Holder, the partners,
officers, shareholders, employees, representatives and directors of each
Holder, any underwriter (as determined in the Securities Act) for such
Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Securities Act or the Securities Exchange Act
of 1934, as amended, against any losses, claims, damages, or Liabilities
(joint or several) to which they may become subject under the Securities
Act, the Exchange Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof)
arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"):
(A) any untrue statement or alleged
untrue statement of a material fact contained in such registration
statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto;
(B) the 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
9
10
(C) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any
federal or state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any federal or state
securities law in connection with the offering covered by such
registration statement;
and the Company will reimburse each such Holder, partner, officer, shareholder,
employee, representative, director, underwriter or controlling person for any
legal or other expenses reasonably incurred by them, as incurred, in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the indemnity agreement contained in this
subsection shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
consent of the Company (which consent shall not be unreasonably withheld), nor
shall the Company be liable in any such case for any such loss, claim, damage,
liability or action to the extent that it arises out of or is based upon a
Violation that occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
such Holder, partner, officer, shareholder, employee, representative, director,
underwriter or controlling person of such Holder.
(ii) By Selling Holders. To the extent permitted by
law, each selling Holder will indemnify and hold harmless the Company,
each of its directors, each of its officers who have signed the
registration statement, each person, if any, who controls the Company
within the meaning of the Securities Act, any underwriter and any other
Holder selling securities under such registration statement or any of
such other Holder's partners, officers, shareholders, employees,
representatives and directors and any person who controls such Holder
within the meaning of the Securities Act or the Exchange Act, against
any losses, claims, damages or liabilities (joint or several) to which
the Company or any such officer or director, controlling person,
underwriter or other such Holder, partner, officer, shareholder,
employee, representative, director or controlling person of such other
Holder may become subject under the Securities Act, the Exchange Act or
other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based
upon any Violation, in each case to the extent (and only to the extent)
that such Violation occurs in reliance upon and in conformity with
written information furnished by such Holder expressly for use in
connection with such registration; and each such Holder will reimburse
any legal or other expenses reasonably incurred by the Company or any
such officer or director, controlling person, underwriter or other
Holder, partner, officer, shareholder, employee, representative,
director or controlling person of such other Holder in connection with
investigating or defending any such loss, claim, damage, liability or
action: provided, however, that the indemnity agreement contained in
this subsection shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is
effected without the consent of the Holder, which consent shall not be
unreasonably withheld; and provided, further, that the total amounts
payable in indemnity by a Holder under this subsection or otherwise in
respect of any and all Violations shall not exceed in the aggregate the
net proceeds received by such Holder in the registered offering out of
which such Violations arise.
10
11
(iii) Notice. Promptly after receipt by an
indemnified party under of notice of the commencement of any action
(including any governmental action), such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party
under this section, deliver to the indemnifying party a written notice
of the commencement thereof and the indemnifying party shall have the
right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to
assume the defense thereof with counsel mutually satisfactory to the
parties; provided, however, that an indemnified party shall have the
right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, to the extent that representation of such
indemnified party by the counsel retained by the indemnifying party
would be inappropriate due to actual or potential conflict of interests
between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any
such action shall not relieve such indemnifying party of liability under
this Section 2(g) except to the extent the indemnifying party is
prejudiced as a result thereof.
(iv) Defect Eliminated in Final Prospectus. The
foregoing indemnity agreements of the Company and Holders are subject to
the condition that, insofar as they relate to any Violation made in a
preliminary prospectus but eliminated or remedied in the amended
prospectus on file with the SEC at the time the registration statement
in question becomes effective or the amended prospectus filed with the
SEC pursuant to SEC Rule 424(b) (the "Final Prospectus"), such indemnity
agreement shall not inure to the benefit of any person if a copy of the
Final Prospectus was timely furnished to the indemnified party and was
not furnished to the person asserting the loss, liability, claim or
damage at or prior to the time such action is required by the Securities
Act.
(v) Contribution. In order to provide for just and
equitable contribution to joint liability under the Securities Act in
any case in which either (A) any Holder exercising rights under this
Agreement, or any controlling person of any such Holder, makes a claim
for indemnification pursuant to this section, but it is judicially
determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this section
provides for indemnification in such case, or (B) contribution under the
Securities Act may be required on the part of any such selling Holder or
any such controlling person in circumstances for which indemnification
is provided under this section; then, and in each such case, the Company
and such Holder will contribute to the aggregate losses, claims, damages
or liabilities to which they may be subject (after contribution from
others) in such proportion so that such Holder is responsible for the
portion represented by the percentage that the public offering price of
its Registrable Securities offered by and sold under the registration
statement bears to the public offering price of all securities offered
by and sold under such registration statement, and the Company and other
selling Holders are responsible for the remaining portion; provided,
11
12
however, that, in any such case: (X) no such Holder will be required to
contribute any amount in excess of the public offering price of all such
Registrable Securities offered and sold by such Holder pursuant to such
registration statement; and (Y) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) will be entitled to contribution from any person or entity who was
not guilty of such fraudulent misrepresentation.
(vi) Survival. The obligations of the Company and
Holders under this Section 2(g) shall survive until the third
anniversary of the completion of any offering of Registrable Securities
in a registration statement, regardless of the expiration of any
statutes of limitation or extensions of such statutes.
(h) Termination of the Company's Obligations. The Company
shall have no obligations pursuant to this Section 2 with respect to any
Registrable Securities proposed to be sold by a Holder in a registration
pursuant to Section 2(b), (c) or (d) more than five (5) years after the date of
this Agreement or if, in the opinion of counsel to the Company, all such
Registrable Securities to be sold by any Holder may then be sold under Rule 144
in a single transaction without exceeding the volume limits thereunder.
(i) No Superior Registration Rights to Third Parties.
Without the prior written consent of Investor, the Company covenants and agrees
that it shall not grant, or cause or permit to be created, for the benefit of
any person or entity any registration rights of any kind (whether similar to the
demand, "piggyback" or Form S-3 registration rights described in this Section 2,
or otherwise) relating to shares of the Company's Common Stock or any other
securities of the Company that are superior to the rights granted under this
Section 2. The Company reserves the right to grant registration rights relating
to the Company's Common Stock or any other securities of the Company that are
pari passu with the rights granted to Investor under this Section 2.
(j) Suspension Provisions. Notwithstanding the foregoing
subsections of this Section 2, the Company shall not be required to take any
action with respect to the registration or the declaration of effectiveness of
the registration statement following written notice to the Holders from the
Company (a "Suspension Notice") of the existence of any state of facts or the
happening of any event (including pending negotiations relating to, or the
consummation of, a transaction, or the occurrence of any event that the Company
believes, in good faith, requires additional disclosure of material, non-public
information by the Company in the registration statement that the Company
believes it has a bona fide business purpose for preserving confidentiality or
that renders the Company unable to comply with the published rules and
regulations of the SEC promulgated under the Securities Act or the Securities
Exchange Act, as in effect at any relevant time (the "Rules and Regulations"))
that would result in (i) the registration statement, any amendment or
post-effective amendment thereto, or any document incorporated therein by
reference containing an untrue statement of a material fact or omitting to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading, or (ii) the prospectus issued under the
registration statement, any prospectus supplement, or any document incorporated
therein by reference including an untrue statement of
12
13
material fact or omitting to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, provided that the Company (X) shall not issue a Suspension
Notice more than once in any 12 month period, (Y) shall use its best efforts to
remedy, as promptly as practicable, but in any event within 90 days of the date
on which the Suspension Notice was delivered, the circumstances that gave rise
to the Suspension Notice and deliver to the Holders notification that the
Suspension Notice is no longer in effect and (Z) shall not issue a Suspension
Notice for any period during which the Company's executive officers are not
similarly restrained from disposing of shares of the Company's Common Stock.
Upon receipt of a Suspension Notice from the Company, all time limits applicable
to the Holders under this Section 2 shall automatically be extended by an amount
of time equal to the amount of time the Suspension Notice is in effect, the
Holders will forthwith discontinue disposition of all such shares pursuant to
the registration statement until receipt from the Company of copies of
prospectus supplements or amendments prepared by or on behalf of the Company
(which the Company shall prepare promptly), together with a notification that
the Suspension Notice is no longer in effect, and if so directed by the Company,
the Holders will deliver to the Company all copies in their possession of the
prospectus covering such shares current at the time of receipt of any Suspension
Notice.
3. ASSIGNMENT. The rights of the Investor under Sections 1 and 2
are transferable to any purchaser or transferee of the Purchased Shares, the
Warrant or the Warrant Shares; provided, however, that Investor shall only be
permitted to assign its rights under Section 1 and 2 appurtenant to the Warrant
and/or the Warrant Shares to any person or entity that is a permitted transferee
of the Warrant under Section 8 of the Warrant; and provided, further, that any
such assignee shall receive such assigned rights subject to all the terms and
conditions of this Agreement.
4. EXCHANGE ACT REPORTS. The Company agrees to:
(a) Use commercially reasonable efforts to file with the
SEC in a timely manner all reports and other documents required of the Company
under the Securities Act and the Securities Exchange Act of 0000 (xxx "Xxxxxxxx
Xxx").
(b) Furnish to each Holder forthwith upon request a
written statement by the Company that it has complied with the reporting
requirements of the Securities Act and the Exchange Act, or that it qualifies as
a registrant whose securities may be resold pursuant to Form S-3.
(c) Make and keep public information available as those
terms are understood and defined in Rule 144 under the Securities Act.
(d) So long as Investor owns the Purchased Shares or the
Warrant Shares, furnish to the Investor upon request a written statement by the
Company as to its compliance with the reporting requirements of Rule 144, and of
the Securities Act and the Exchange Act and such other reports and documents so
filed with the SEC as an Investor may reasonably request in availing itself of
any rule or regulation of the SEC allowing an Investor to sell any such
securities without registration.
13
14
5. MISCELLANEOUS.
(a) Successors and Assigns. The terms and conditions of
this Agreement will inure to the benefit of and be binding upon the respective
successors and permitted assigns of the parties.
(b) Governing Law. This Agreement will be governed by and
construed under the internal laws of the State of Delaware, without reference to
principles of conflict of laws or choice of laws.
(c) Counterparts. This Agreement may be executed in two or
more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
(d) Headings. The headings and captions used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement. All references in this Agreement to
sections, paragraphs, exhibits and schedules will, unless otherwise provided,
refer to sections and paragraphs hereof and exhibits and schedules attached
hereto, all of which exhibits and schedules are incorporated herein by this
reference.
(e) Notices. Any notice required or permitted under this
Agreement shall be given in writing, shall be effective when received, and shall
in any event be deemed received and effectively given upon personal delivery to
the party to be notified or three (3) business days after deposit with the
United States Post Office, by registered or certified mail, postage prepaid, or
one (1) business day after deposit with a nationally recognized courier service
such as Federal Express for next business day delivery under circumstances in
which such service guarantees next business day delivery, or one (1) business
day after facsimile with copy delivered by registered or certified mail, in any
case, postage prepaid and addressed to the party to be notified at the address
indicated for such party on the signature page hereof or at such other address
as the Investor or the Company may designate by giving at least ten (10) days
advance written notice pursuant to this Section 5(e).
(f) Amendments and Waivers. This Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the Company and the holders of Purchased Shares and
Warrant Shares representing at least a majority of the total aggregate number of
Purchased Shares and Warrant Shares then outstanding (excluding any of such
shares that have been sold in a transaction in which rights under Section 2 are
not assigned in accordance with this Agreement or sold to the public pursuant to
SEC Rule 144 or otherwise). Any amendment or waiver effected in accordance with
this Section 5(f) will be binding upon the Investor, the Company and their
respective successors and assigns. Notwithstanding the foregoing, the provisions
of Sections 2 and 3 may not be amended without the written consent of the
Company and the Investor, which may be withheld in either of their sole and
absolute discretions.
14
15
(g) Severability. If any provision of this Agreement is
held to be unenforceable under applicable law, such provision will be excluded
from this Agreement and the balance of the Agreement will be interpreted as if
such provision were so excluded and will be enforceable in accordance with its
terms.
(h) Entire Agreement. This Agreement, together with the
Purchase Agreement and all exhibits and schedules hereto and thereto constitutes
the entire agreement and understanding of the parties with respect to the
subject matter hereof and supersedes any and all prior negotiations,
correspondence, agreements, understandings, duties or obligations between the
parties with respect to the subject matter hereof.
(i) Further Assurances. From and after the date of this
Agreement upon the request of the Company or the Investor, the Company and the
Investor will execute and deliver such instruments, documents or other writings,
and take such other actions, as may be reasonably necessary or desirable to
confirm and carry out and to effectuate fully the intent and purposes of this
Agreement.
(j) Meaning of Include and Including. Whenever in this
Agreement the word "include" or "including" is used, it shall be deemed to mean
"include, without limitation" or "including, without limitation," as the case
may be, and the language following "include" or "including" shall not be deemed
to set forth an exhaustive list.
(k) Fees, Costs and Expenses. All fees, costs and expenses
(including attorneys' fees and expenses) incurred by either party hereto in
connection with the preparation, negotiation and execution of this Agreement and
the Purchase Agreement and the consummation of the transactions contemplated
hereby and thereby (including the costs associated with any filings with, or
compliance with any of the requirements of, any governmental authorities), shall
be the sole and exclusive responsibility of such party.
(l) Competition. Nothing set forth herein shall be deemed
to preclude, limit or restrict the Company's or the Investor's ability to
compete with the other.
(m) Stock Splits, Dividends and other Similar Events. The
provisions of this Agreement (including the number of shares of Common Stock and
other securities described herein) shall be appropriately adjusted to reflect
any stock split, stock dividend, reorganization or other similar event that may
occur with respect to the Company after the date hereof.
[THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
15
16
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
PROXIM, INC. MOTOROLA, INC.
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxx
------------------------------- --------------------------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxx X. Xxxxx
---------------------------- ------------------------------------
Title: Chief Financial Officer Title: S.V.P. & GM Motorola
-------------------------- ----------------------------------
Date Signed: June 2, 1999 Date Signed: June 2, 1999
--------------------- ----------------------------
Address: 000 Xxxxx Xxxxxxxx Xxxxxx Address: Multimedia Group
Xxxxxxxx Xxxx, XX 00000 Xxxxxxxx X0-00
00 Xxxxx Xxxxxxxxx
Telephone No: (000) 000-0000 Xxxxxxxxx, XX 00000
Facsimile No: (000) 000-0000 Attention: Senior VP
and General Manager
with copies to:
Proxim, Inc.
Attention: Xxxxx X. Xxxxxx Facsimile No.: (000) 000-0000
Chief Financial Officer
000 Xxxxx Xxxxxxxx Xxxxxx with copies to:
Xxxxxxxx Xxxx, XX 00000
Motorola, Inc.
and Law Department
Attention: General Counsel
Wilson, Sonsini, Xxxxxxxx & Xxxxxx 0000 Xxxx Xxxxxxxxx Xxxx
Attention: Xxxxxxx X. Xxxxx Xxxxxxxxxx, XX 00000
000 Xxxx Xxxx Xxxx Xxxxxxxxx No.: (000)000-0000
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Telephone No.: (000) 000-0000 and
Facsimile No.: (000) 000-0000
Motorola, Inc.
Corporate Business
Development
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Facsimile No.: (000)000-0000
{Signature page to Investor Rights Agreement between
Motorola, Inc. and Proxim, Inc.}
