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EXHIBIT 2
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 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.
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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
(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,
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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 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
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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
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
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
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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.
(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
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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.
(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
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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 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
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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 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 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.
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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 (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.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Wilson, Sonsini, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
Professional Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. Day
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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and to:
Wilson, Sonsini, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
Professional Corporation
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Company, to:
Netopia, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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:
--------------------------------------
Print Name:
--------------------------------------
Print Title:
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NETOPIA, INC.
Signature:
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Print Name:
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Print Title:
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[SIGNATURE PAGE TO STOCK OPTION AGREEMENT]
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