Exhibit 10.2


 


SUBSCRIPTION AGREEMENT


 


Proxim
Corporation


935
Stewart Drive


Sunnyvale,
CA 94085


 


The undersigned (the “Investor”)
hereby confirms its agreement with you as follows:


 


1.                                      This
Subscription Agreement (this “Subscription Agreement”) is made as of the
date set forth below between Proxim Corporation, a Delaware corporation (the “Company”),
and the Investor.


 


2.                                      The
Company has authorized the sale and issuance to certain investors of up to 9,000,000
shares (the “Shares”) of its Class A Common Stock, par value $.01 per
share (the “Common Stock”).


 


3.                                      The
Company will also issue to the Investor a Warrant to Purchase Common Stock in
the form attached hereto as Exhibit A (a “Warrant” and,
collectively with the warrants issued to the Other Investors, as such term is
defined in Annex I hereto, the “Warrants”).  The Warrants will be exercisable into shares
of Common Stock (the “Warrant Shares”) commencing on the date that is
six (6) months following the Closing Date (as defined in the Terms and
Conditions for Purchase of Shares) and will expire on the date that is the
fifth (5th) anniversary of the Closing Date. 
The Warrant will entitle the Investor to purchase a number of shares of
Common Stock equal to the product of (x) the number of Shares purchased by the
Investor hereunder times (y) 0.50 and have an exercise price equal to
$2.35 (subject to adjustment as provided therein).


 


4.                                      The
Purchase price for the Shares and Warrant being purchased by the Investor
hereunder shall be $1.80 per Share (the “Purchase Price”).


 


5.                                      The
offering and sale of the Shares and Warrants (the “Offering”) are being
made pursuant to an effective “shelf” Registration Statement on Form S-3, File
No. 333-119975 (including the Prospectus contained therein (the “Base Prospectus”),
the “Registration Statement”) filed by the Company with the Securities
and Exchange Commission (the “Commission”).  Prior to the consummation of the sale of the
Shares and Warrants pursuant to the Offering, the Company will file a
Prospectus Supplement (the “Prospectus Supplement”) with the Commission
containing certain supplemental information regarding the Shares, the Warrants
and the terms of the Offering and will provide a copy of such filing to the
Investor promptly following such filing. 
The Base Prospectus, as amended and supplemented by the Prospectus
Supplement, is referred to herein as the “Prospectus”.


 


6.                                      The
Company and the Investor agree that the Investor will purchase from the
Company, and the Company will issue and sell to the Investor, the number of Shares
set forth below and a Warrant for the aggregate purchase price set forth
below.  The Shares and the Warrants shall
be purchased pursuant to the Terms and Conditions for Purchase of Shares and
Warrants attached hereto as Annex I and incorporated herein by reference
as though fully set forth herein (the “Terms and Conditions”).  Unless otherwise requested by the Investor
and agreed to by the


 





















 


Company, the Shares
purchased by the Investor will be delivered by electronic book-entry,
registered in the Investor’s name as set forth below, and will be released by Equiserve,
Inc., the Company’s transfer agent (the “Transfer Agent”), to the
Investor at the Closing in accordance with the Terms and Conditions.


 


7.                                      The
Investor represents that, except as set forth below, (a) it has had no
position, office or other material relationship within the past three years
with the Company or its affiliates and (b) it has no direct or indirect
affiliation or association with any NASD member.  Exceptions:


 


 


(If no exceptions, write “none.” If left blank, response will be deemed
to be “none.”)


 


[SIGNATURE PAGE FOLLOWS]


 


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Number of Shares:                               


 


Aggregate Purchase Price:
$       


 


Please confirm that the foregoing correctly sets forth
the agreement between us by signing in the space provided below for that
purpose.


 


 


	
   

  	
  Dated as of: February 7,
  2005

  
	
   

  	
   

  
	
   

  	
  [INVESTOR]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ADDRESS:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  With a copy to:

  
	
   

  	
   

  
	
   

  	
   

  
	
  Agreed and
  Accepted

  	
   

  
	
  this 7th day of
  February, 2005:

  	
   

  
	
   

  	
   

  
	
  PROXIM
  CORPORATION

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Michael Angel

  	
   

  	
   

  
	
  Title:

  	
  Chief Financial
  Officer

  	
   

  	
   

  
												



 


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ANNEX I


 


TERMS AND CONDITIONS FOR PURCHASE OF SHARES AND
WARRANTS


 


1.                                      Authorization
and Sale of the Securities.  On the
terms and subject to the conditions contained in these Terms and Conditions and
in the Subscription Agreement to which these Terms and Conditions are attached
(the “Subscription Agreement” and, together with these Terms and
Conditions, this “Agreement”), the Company has authorized the sale of
the Shares and the Warrants and the issuance of the Warrant Shares.  The Shares, the Warrants and the Warrant
Shares are collectively referred to herein as the “Securities”.


 


2.                                      Agreement
to Sell and Purchase the Shares and Warrants; Placement Agent.


 


2.1.                            Purchase and Sale.  At
the Closing (as defined in Section 3.1), the Company will sell to
the Investor, and the Investor will purchase from the Company, upon the terms
and conditions contained in this Agreement, the number of Shares set forth on
the signature page to the Subscription Agreement (the “Signature Page”)
for the aggregate purchase price therefor set forth on the Signature Page, and
the Company will issue the Shares and a Warrant to the Investor.


 


2.2.                            Other Investors.  The
Company proposes to enter into this same form of Subscription Agreement with
certain other investors (the “Other Investors”) and expects to complete sales
of Shares and Warrants to them.  The
Investor and the Other Investors are hereinafter sometimes collectively
referred to as the “Investors”.


 


2.3.                            Placement Agent.  The Investor
acknowledges that the Company intends to pay East Peak Advisors L.L.C. (the “Placement
Agent”) fees in respect of the sale of Shares and Warrants to the
Investors.


 


2.4.                            Placement
Agent Agreement.  The Company has
entered into a Financial Advisor Agreement (the “Placement Agent Agreement”)
with the Placement Agent. The Company hereby agrees that the Investor may rely
on the representations, warranties, covenants and agreements of the Company as
if the same were set forth in full herein. A copy of the Placement Agent Agreement
as executed by the Company and the Placement Agent has heretofore been
delivered to the Investor.


 


3.                                      Closing
and Delivery of the Shares and Warrants and Funds.


 


3.1.                            Closing.  The completion of the purchase and sale
of the Shares and Warrants (the “Closing”) will occur at a place and
time (the “Closing Date”) to be specified by the Company and the
Placement Agent, and of which the Investors will be notified in advance by the
Placement Agent.  The Closing Date shall
occur on February 7, 2005, and not later than February 8, 2005.  At the Closing, (a) the Company will cause
the Transfer Agent to deliver to the Investor the number of Shares set forth on
the Signature Page registered in the name of the Investor or, if so indicated
on the Investor Questionnaire attached hereto as Exhibit B, in the name
of a nominee designated by the Investor, (b) the Company will issue and deliver
to the Investor a Warrant, registered in the name of the Investor or, if so
indicated on Investor Questionnaire attached hereto as Exhibit B,  in the name of a nominee designated by the Investor,
(c) the


 


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Company will deliver to
the Investor an opinion, dated the Closing Date, of outside counsel
representing the Company addressed to the Investor and in form and substance
reasonably acceptable to the Investor, and (d) the aggregate Purchase Price for
the Shares and Warrant being purchased by the Investor will be delivered by or
on behalf of the Investor to the Company by wire transfer of immediately
available funds.


 


3.2.                            Closing
Conditions.


 


(a)                                  Conditions to the Company’s Obligations.  The Company’s obligation to issue
the Shares and Warrant to the Investor will be subject to the accuracy as of
the Closing Date of the representations and warranties made by the Investor and
the fulfillment of those undertakings of the Investor to be fulfilled at or
prior to the Closing Date.


 


(b)                                 Conditions to the Investor’s Obligations.  The Investor’s obligation to
purchase the Shares and Warrant will be subject to (i) the accuracy in all
material respects on the Closing Date of the representations and warranties
made by the Company, (ii) the fulfillment of those undertakings of the Company
to be fulfilled prior to the Closing Date, including, without limitation, those
representations, warranties and covenants contained in the Placement Agreement,
and (iii) the filing of the Prospectus Supplement with the Commission and the
delivery to the Investor of reasonable evidence of such filing (collectively,
the “Company Closing Conditions”). 
The Investor’s obligations are expressly not conditioned on the purchase
by any or all of the Other Investors of the Shares and Warrants that they have
agreed to purchase from the Company, and the Investor acknowledges that the
Company may sell less than all of the Shares in the Offering.


 


3.3.                            Deposit/Withdrawal
at Custodian. At the time of Closing, and
upon receipt of a federal wire number from the Investor, the Company shall
instruct the Transfer Agent to effect transfer of the Shares directly to the
account(s) identified by the Investor through the facilities of the Depository
Trust Company (“DTC”) by means of the Deposit/Withdrawal at
Custodian or “DWAC” process.


 


4.                                      Representations,
Warranties and Covenants of the Investor.


 


4.1.                            The
Investor represents and warrants to the Company that (a) the Investor is
knowledgeable, sophisticated and experienced in making, and is qualified to
make decisions with respect to, investments in shares presenting an investment
decision like that involved in the purchase of the Shares and Warrant,
including investments in securities issued by the Company and investments in
comparable companies, and has requested, received, reviewed and considered all
information it deemed relevant in making an informed decision to purchase the
Shares and Warrant, and (b) the Investor, in connection with its decision to
purchase the Shares and Warrant, relied only upon the Registration Statement, the
Prospectus, the Company’s reports on Forms 10-K, 10-Q, and 8-K as filed by the
Company with the Commission, and the Company’s representations and warranties
set forth herein and in the Placement Agreement.


 


4.2.                            The
Investor acknowledges that the Placement Agent is not authorized to make any
representation or use any information in connection with the issue, placement,
purchase and


 


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sale of the Shares and
the Warrants, except as set forth or incorporated by reference in the
Prospectus.


 


4.3.                            The
Investor represents and warrants to the Company that (a) the Investor has full
right, power, authority and capacity to enter into this Agreement and to
consummate the transactions contemplated hereby and has taken all necessary
action to authorize the execution, delivery and performance of this Agreement,
and (b) this Agreement constitutes a valid and binding obligation of the
Investor enforceable against the Investor in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ and contracting
parties’ rights generally and except as enforceability may be subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).


 


4.4.                            The
Investor understands that nothing in this Agreement or any other materials
presented to the Investor in connection with the purchase and sale of the
Shares and the Warrants constitutes legal, tax or investment advice.  The Investor has consulted such legal, tax
and investment advisors as it, in its sole discretion, has deemed necessary or
appropriate in connection with its purchase of the Shares and Warrant.


 


4.5.                            The
Investor represents and warrants that it has not purchased any shares of Common
Stock, engaged in any short selling of the Company’s securities, or established
or increased any “put equivalent position” as defined in Rule 16(a)-1(h) under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
with respect to the Common Stock (collectively, a “Short Sale”), within
the three (3) month period ending on the date of this Agreement. The Investor
agrees that it will not effect any Short Sales until the public announcement of
the terms of this Agreement; provided, however,
that the Company agrees that it will publicly announce such terms on or before
9:00 am (eastern time) on the Business Day immediately following the date of
this Agreement.


 


5.                                      Representations,
Warranties and Covenants of the Company.  The Company represents and warrants to,
and covenants with, the Investor as follows:


 


5.1.                            The
Company has been duly organized and is validly existing as a corporation in
good standing under the laws of the State of Delaware, with corporate power and
authority to own or lease its properties and conduct its business as described
in the Prospectus.  The Company is duly
qualified to transact business in all jurisdictions in which the failure to be
so qualified would have a material adverse effect on the earnings, business,
management, properties, assets, rights, operations or financial condition of
the Company (a “Material Adverse Effect”).   Each subsidiary of the Company has been duly
organized and is validly existing in good standing under the laws of its
jurisdiction of organization, except where the failure to be so qualified would
not have a Material Adverse Effect.


 


5.2.                            The
Company has full legal power and authority to enter into this Agreement and the
Warrant (together, the “Transaction Documents”) and to consummate the
transactions contemplated hereby and thereby.  The Transaction Documents have been duly
authorized, executed and delivered by the Company and constitute legal, valid
and binding obligations of the Company enforceable against the Company in
accordance with their respective terms, except as


 


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enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors’ and contracting parties’ rights generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).


 


5.3.                            The
Company has an authorized capitalization as set forth in the Prospectus, and
all of the issued shares of Common Stock of the Company have been duly and
validly authorized and issued, are fully paid and non-assessable and conform to
the description of the Common Stock contained in the Prospectus; and all of the
issued shares of capital stock of each subsidiary of the Company have been duly
and validly authorized and issued, are fully paid and non-assessable and are
owned directly or indirectly by the Company, free and clear of all liens,
encumbrances, equitable interests or claims.


 


5.4.                            The
Shares have been duly authorized and, when issued and delivered against payment
therefor as provided herein, will be validly issued and fully paid and
non-assessable and will conform to the description of the Common Stock
contained in the Prospectus. The Warrants have been duly authorized and when
issued and paid for as contemplated herein will be validly issued.  The Warrant Shares have been duly authorized
and when issued and paid for as contemplated in the Warrants will be validly
issued, fully paid and non-assessable.  No
preemptive rights of shareholders exist with respect to any security of the
Company or the issue and sale thereof.  The form of certificates for the
Common Stock and Warrants conform to the corporate law of the State of
Delaware.  The Company has reserved from
its duly authorized capital stock 9,000,000 shares of Common Stock issuable
pursuant to this Agreement and the Warrants.


 


5.5.                            Except
as disclosed in the Prospectus, and except for employee stock options and
restricted stock units issued pursuant to stock option or stock purchase plans
approved by the Company’s Board of Directors, and if required by applicable law
or regulation, the Company’s stockholders, there are no outstanding rights,
options or warrants for the purchase of any securities of the Company, and the
Company is not a party to any agreement pursuant to which any person has the
right to purchase any securities of the Company.


 


5.6.                            The
Company filed the Registration Statement with the Commission on October 26,
2004 under the Securities Act, and the rules and regulations (collectively, the
“Rules and Regulations”) of the Commission promulgated thereunder. The
Registration Statement was declared effective by the Commission on November 8,
2004, and no stop order suspending the effectiveness of the Registration
Statement has been issued and, to the Company’s knowledge, no proceeding for
that purpose has been initiated or threatened by the Commission. Any reference
herein to the Registration Statement or the Prospectus shall be deemed to refer
to and include the documents incorporated by reference therein pursuant to Item
12 of Form S-3 which were filed under the Exchange Act on or before the last to
occur of the effective date of the Registration Statement, the date of the
Based Prospectus or the date of the Prospectus Supplement, and any reference
herein to the terms “amend”, “amendment” or “supplement” with respect to the
Registration Statement or the Prospectus shall be deemed to refer to and
include (i) the filing of any document under the Exchange Act after the
effective date of the Registration Statement, the date of such Base Prospectus
or the date of the Prospectus Supplement, as the case may be, which is
incorporated therein by reference and (ii) any such document so filed.


 


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5.7.                            The
Registration Statement conforms, and the Prospectus and any further amendments
or supplements to the Registration Statement or the Prospectus will conform, in
all material respects to the requirements of the Act and the rules and
regulations of the Commission thereunder.


 


5.8.                            The
Registration Statement, the Prospectus and any amendments or supplements
thereto contain all statements which are required to be made therein by, and
will conform to, the requirements of the Securities Act of 1933, as amended
(the “Securities Act”), and the rules and regulations promulgated by the
Commission thereunder (the “Rules and Regulations”).  The Registration Statement, the Prospectus and
any amendments or supplements thereto do not contain, and will not contain, any
untrue statement of a material fact and do not omit, and will not omit, to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however,
that the Company makes no representations or warranties as to information
contained in or omitted from the Registration Statement, the Prospectus or any
such amendment or supplement, in reliance upon, and in conformity with, written
information furnished to the Company by or on behalf of the Investor specifically
for use in the preparation thereof.  The
Company has not distributed any offering material in connection with the
offering and sale of the Securities, other than the Registration Statement and
the Prospectus.


 


5.9.                            The
offer and sale of the Shares and the Warrants by the Company to the Investor at
the Closing, and the Warrant Shares upon exercise of the Warrants will be made
pursuant to the Registration Statement and the Prospectus, and will comply in
all material respects with the requirements of the Securities Act, the Exchange
Act and the Rules and Regulations.


 


5.10.                     At the
Closing, the Shares and the Warrants, and upon exercise of the Warrants (and
assuming the Registration Statement is effective and available at the time of
such exercise), the Warrant Shares, shall be issued to the Investor without any
restrictive or other legend and, at all times following the Closing, there
shall exist no restriction on, or any requirement imposed by the Company or its
transfer agent with respect to, the offer or sale of Shares, the Warrants or
the Warrant Shares by any Investor, regardless of whether such offer or sale is
made to the public, on an exchange (in which the case the rules of such
exchange shall apply), in a private transaction, or otherwise.


 


5.11.                     The Company’s
Common Stock is registered pursuant to Section 12(g) of the Exchange Act
and is listed on the Nasdaq National Market. 
The Company currently meets the continuing eligibility requirements for
listing on the Nasdaq National Market and has not received any notice from
Nasdaq that it does not currently satisfy such requirements or that such
continued listing is in any way threatened. 
The Company has taken no action designed to, or which, to the knowledge
of the Company, would reasonably be expected to have the effect of, terminating
the registration of the Common Stock under the Exchange Act or delisting the
Common Stock from the Nasdaq National Market. 
The issuance and sale of the Shares hereunder does not and will not
contravene the rules and regulations, or any listing criteria, of the Nasdaq
National Market. Based on informal advice of the staff of the NASD and to the
Company’s knowledge, the issuance and sale of the Warrants and the Warrant
Shares hereunder does not and will not contravene the rules and regulations, or
any listing criteria, of the Nasdaq National Market


 


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5.12.                     The financial
statements of the Company, together with related notes and schedules as set
forth or incorporated by reference in the Registration Statement, present
fairly the financial position and the results of operations and cash flows of
the Company as of the indicated dates and for the indicated periods.  Such financial statements and related
schedules have been prepared in accordance with generally accepted accounting
principles, consistently applied through the periods involved, except as
disclosed therein, and all adjustments necessary for a fair presentation of
results for such periods have been made. The summary financial and statistical
data of the Company included in the Registration Statement present fairly the
information shown therein and such data have been compiled on a basis
consistent with the financial statements presented therein.


 


5.13.                     PricewaterhouseCoopers
LLP, who has certified certain of the financial statements filed with the
Commission as part of the Registration Statement, are independent public
accountants as required by the Securities Act and the Rules and Regulations.


 


5.14.                     All material
contracts filed with the Commission and to which the Company or a subsidiary of
the Company is a party have been duly authorized, executed and delivered by the
Company or such subsidiary, constitute valid and binding agreements of the
Company or such subsidiary, and are enforceable against the Company or such
subsidiary in accordance with the terms thereof, subject to the effect of
applicable bankruptcy, insolvency or similar laws affecting creditors’ rights
generally and equitable principles of general applicability.


 


5.15.                     There is no
action, suit, claim or proceeding pending or, to the knowledge of the Company,
threatened against the Company or any of its subsidiaries before any court or
administrative agency or otherwise which if determined adversely to the Company
or its subsidiaries might result in any Material Adverse Effect or adversely
affect the consummation of the transactions contemplated hereby; and, to the
best of the Company’s knowledge, no such proceedings are threatened.


 


5.16.                     Any leases of
real property and buildings that are material to the business of the Company
and its subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere with the
use made and proposed to be made of such property and buildings by the Company
and its subsidiaries.


 


5.17.                     Neither the
Company nor any of its subsidiaries has sustained since the date of the latest
unaudited financial statements included in the Prospectus any loss or
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus that would individually or in the aggregate
result in a Material Adverse Effect; and, since the date of the latest
unaudited financial statements included in the Prospectus, or as otherwise
disclosed in the Prospectus, there has not been any change in the capital stock
or long-term debt of the Company or any of its subsidiaries, there have been no
transactions entered into by the Company or any of its subsidiaries, other than
those in the ordinary course of business, that would individually or in the
aggregate result in a Material Adverse Effect the Company and its subsidiaries
considered as one enterprise and which are required to be disclosed in the
Prospectus, there has been no dividend or distribution of any kind declared,
paid or made by the Company on any class of its capital stock or any change in
the


 


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general affairs,
management, financial position, stockholders’ equity or results of operations
of the Company and its subsidiaries taken as a whole, that would constitute a
Material Adverse Effect otherwise than as set forth or described in the
Prospectus.


 


5.18.                     Neither the
Company nor any of its subsidiaries is in violation of its charter documents or
bylaws.  Neither the Company nor any of
its subsidiaries is, nor, with the giving of notice or lapse of time or both,
will it be, in violation of or in default under any agreement, lease, contract,
indenture or other instrument or obligation to which it is a party or by which
it, or any of its properties, is bound and which violation or default has
resulted in, or could reasonably be expected to result in, a Material Adverse
Effect.


 


5.19.                     Each
approval, consent, order, authorization, designation, declaration or filing by
or with any regulatory, administrative or other governmental body necessary in
connection with the execution and delivery by the Company of this Agreement and
the consummation of the transactions herein contemplated has been obtained or
made and is in full force and effect.


 


5.20.                     The issue and
sale of the Shares and the Warrants by the Company and the compliance by the
Company with all of the provisions of this Agreement and the consummation of
the transactions herein contemplated (including without limitation the issuance
of the Warrant Shares upon exercise of the Warrants) will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries is
bound or to which any of the property or assets of the Company or any of its
subsidiaries is subject, nor will such action result in any violation of the
provisions of the Certificate of Incorporation or By-laws of the Company or any
statute or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company or any of its subsidiaries or any of
their properties; and no filing, consent, approval, authorization, order,
registration or qualification of or with any such court or governmental agency
or body is required for the issue and sale of the Shares, the Warrants or the
Warrant Shares or the consummation by the Company of the transactions
contemplated by this Agreement, except for any filings which may be required
for the issuance of the Warrant Shares in the event the Registration Statement
is no longer available for the purpose of issuing such Warrant Shares.


 


5.21.                     The Company
and its subsidiaries own or possess or otherwise have the right to use adequate
patents, patent rights, licenses, inventions, copyrights, know-how (including
trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks,
trade names or other intellectual property (collectively, “Intellectual
Property”) necessary to carry on the business now operated by them, and neither the Company nor any of its
subsidiaries has received written notice or otherwise has actual knowledge of
any asserted right with respect to infringement  of Intellectual Property
that the Company reasonably believes as of the date of this Agreement will have
a Material Adverse Effect.


 


5.22.                     Each material
employee benefit plan, within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”), that is
maintained,


 


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administered or
contributed to by the Company or any of its affiliates for employees or former
employees of the Company and its subsidiaries has been maintained in material
compliance with its terms and the requirements of any applicable statutes,
orders, rules and regulations, including but not limited to ERISA and the
Internal Revenue Code of 1986, as amended (the “Code”); no prohibited
transaction, within the meaning of Section 406 of ERISA or Section 4975
of the Code, has occurred which would result in a material liability to the
Company with respect to any such plan excluding transactions effected pursuant
to a statutory or administrative exemption; and for each such plan that is
subject to the funding rules of Section 412 of the Code or Section 302
of ERISA, no “accumulated funding deficiency” as defined in Section 412 of
the Code has been incurred, whether or not waived, and the present value of all
benefits accrued under such plan determined using reasonable actuarial
assumptions does not exceed the fair market value of the assets of each such
plan (excluding for these purposes accrued but unpaid contributions by an
amount that represents a material liability to the Company).


 


5.23.                     Neither the
Company nor, to the Company’s best knowledge, any of its affiliates has taken
or intends to take, directly or indirectly, any action designed to cause or
result in, or which has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of the shares of
Common Stock to facilitate the sale or resale of the Shares.


 


5.24.                     The Company
is not and, after giving effect to the offering and sale of the Shares and the
Warrants will not be, an “investment company”, as such term is defined in the
Investment Company Act of 1940, as amended.


 


5.25.                     The Company
maintains a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management’s general or specific authorization; (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with management’s
general or specific authorization; and (iv) the recorded accountability for
assets is compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.


 


5.26.                     The Company and
its subsidiaries carry, or are covered by, insurance in such amounts and
covering such risks as the Company believes is reasonable for the conduct of their
businesses and the value of its properties.


 


5.27.                     The Company
has not at any time during the last five years (i) made any unlawful
contribution to any candidate for foreign office, or failed to disclose fully
any contribution in violation of law, or (ii) made any payment to any federal
or state governmental officer or official, or other person charged with similar
public or quasi-public duties, other than payments required or permitted by the
laws of the United States or any jurisdiction thereof.


 


5.28.                     Except as
disclosed in the Prospectus, no person has the right to require the Company or
any of its subsidiaries to register any securities for sale under the
Securities Act by reason of the filing of the Registration Statement with the
Commission or by reason of the issuance and sale of the Shares, except for
rights which have been waived.


 


11





















 


5.29.                     The Shares
and the Warrant Shares have been approved for inclusion, subject to official
notice of issuance, in the Nasdaq National Market.


 


5.30.                     Other than
the Placement Agent Agreement and this Agreement, neither the Company nor any
of its subsidiaries is a party to any contract, agreement or understanding with
any person that would give rise to a valid claim against the Company or any of
its subsidiaries for a brokerage commission, finder’s fee or like payment in
connection with the offering and sale of the Shares, except for rights that
have been waived.


 


6.                                      Right
of Participation.


 


6.1.                            Defined
Terms.  When used herein, the
following terms shall have the respective meanings indicated:


 


(a)                                  “Excluded
Security” means (i) securities purchased under this Agreement; (ii)
securities issued upon exercise of the Warrants; (iii) shares of Common Stock
issuable or issued to (x) employees, consultants or directors from time to time
either directly or upon the exercise of options, in such case granted or to be
granted by the Company’s Board of Directors (the “Board of Directors”),
pursuant to one or more stock option plans or restricted stock plans or stock
purchase plans in effect as of the Closing Date or subsequently approved by the
Board of Directors including a majority of the Company’s independent directors
(as such term is defined under Rule 4200(a)(15) of the Nasdaq Market Rules) of
the Board of Directors, or (y) vendors pursuant to warrants to purchase Common
Stock that are outstanding on the date hereof or issued hereafter, provided
such issuances are approved by the Board of Directors; (iv) shares of Common
Stock issued in connection with any stock split, stock dividend or
recapitalization of the Company; (v) shares of Common Stock issued in
connection with the acquisition by the Company of any corporation or other
entity or substantially all of the assets of any corporation or other entity or
division thereof occurring after the Closing Date; (vi) shares of Common Stock
issued upon the exercise or conversion of any securities of the Company
outstanding on the Closing Date; (vii) shares of Common Stock issued in
connection with a joint venture, strategic alliance or other commercial
relationship relating to the operation of the Company’s business the primary
purpose of which is not to raise equity capital; (viii) securities issued
pursuant to a bona fide firm commitment underwritten public offering; and (ix)
securities issued in a registered direct offering sold pursuant to a
registration statement other than the Registration Statement.


 


(b)                                 “Pro
Rata Share” means, with respect to an Investor at any time, the percentage
determined by dividing the aggregate number of such Investor’s Shares and
Warrant Shares issuable under the Warrants at such time, determined on a fully
diluted basis after giving effect to the exercise in full of such Warrants
(without regard to any restrictions on such exercise that may be set forth in
the Warrants), by the number of the shares of the Common Stock outstanding plus
the number of Warrant Shares issuable under the Warrants at such time.


 


(c)                                  “Subsequent
Placement” means the issuance, sale, exchange, or agreement or obligation
to issue, sell or exchange or reserve, or agreement to or set aside for
issuance, sale or exchange any shares of Common Stock (or securities or rights
convertible, exercisable or exchangeable, directly or indirectly, for Common
Stock) that are offered or sold


 


12





















 


by the Company for a per
share price that is less than the Purchase Price per Share (proportionately
adjusted for stock splits, stock dividends and similar event); provided, however, that the issuance or sale, or agreement
to issue or sell, an Excluded Security shall not constitute a Subsequent
Placement.


 


6.2.                            Offered
Securities. From the Closing Date through the first date on which none of
the Warrants remain outstanding (as a result of their exercise and/or
expiration), the Company will not, directly or indirectly, effect a Subsequent
Placement, unless in each such case the Company shall have first offered to
sell to each Investor its Pro Rata Share of the securities being offered in
such Subsequent Placement (the securities being offered to the Investors being
referred to herein as the “Offered Securities”).  Notwithstanding the foregoing, each Investor’s
rights to participate in Subsequent Placements pursuant to this Section 6
shall expire when such Investor’s Warrants are no longer outstanding and have
either been exercised or have expired. 
The Company shall offer to sell to each Investor (A) such Investor’s Pro
Rata Share of the Offered Securities (the “Basic Amount”), and (B) such
additional portion of the Offered Securities as such Investor shall indicate it
will purchase should the other Investors subscribe for less than their Basic
Amounts (the “Undersubscription Amount”), at a price and on such other
terms as shall have been specified by the Company in writing delivered to such
Investor (the “Offer”), which Offer by its terms shall remain open and
irrevocable for a period of not less than three (3) Business Days from such
Investor’s receipt of the terms of the Offer in writing (the “Offer Period”).  Each Investor agrees that it will keep the
terms of any such Subsequent Placement confidential until such information is
publicly available.  Additionally, each
Investor agrees that it will not purchase or sell any of the Company’s
securities while in possession of information regarding any Subsequent
Placement until such information is publicly available.


 


6.3.                            Notice
of Acceptance.  If the Investor
wishes to accept the Offer, the Investor shall deliver written notice thereof
(a “Notice of Acceptance”) to the Company prior to the expiration of the
Offer Period, specifying the amount of the Investor’s Basic Amount that the
Investor elects to purchase and, if the Investor elects to purchase all of its
Basic Amount, the Undersubscription Amount that the Investor elects to
purchase.  If the aggregate of the Basic
Amounts subscribed for by all Investors is less than the total Offered
Securities, each Investor who has indicated in its Notice of Acceptance that it
wishes to purchase Undersubscription Amounts shall be entitled to purchase all
Undersubscription Amounts it has subscribed for; provided,
however, that if  the
aggregate of the Undersubscription Amounts subscribed for exceed the difference
between the Offered Securities and the Basic Amounts subscribed for (the “Available
Undersubscription Amount”), each Investor who has subscribed for any
Undersubscription Amount shall be entitled to purchase only that portion of the
Available Undersubscription Amount as the Undersubscription Amount subscribed
for by such Investor bears to the total Undersubscription Amounts subscribed
for by all Investors, subject to rounding by the Board of Directors to the
extent it deems reasonably necessary.


 


6.4.                            Permitted
Sales of Refused Securities.  In the
event that Notices of Acceptance are not timely delivered by the Investors in
respect of all the Offered Securities, the Company shall have forty-five (45)
days from the expiration of the Offer Period to close the sale of all or any
part of such Offered Securities as to which a Notice of Acceptance has not been
given by an Investor (the “Refused Securities”) to the person or persons
specified in the Offer, but only upon terms and conditions, including, without
limitation, unit price and interest rates (if applicable),


 


13





















 


which are, in the
aggregate, no more favorable to such other person or persons or less favorable
to the Company than those set forth in the Offer.


 


6.5.                            Reduction
in Amount of Offered Securities.  In
the event that the Company proposes to sell less than all the Refused
Securities (any such sale to be in the manner and on the terms specified in Section 6.4
above), then the Investor may, at its option and in its sole and absolute
discretion, reduce the number or other units of the Offered Securities
specified in its Notice of Acceptance to an amount which shall be not less than
the amount of the Offered Securities which the Investor elected to purchase
pursuant to Section 6.3 above multiplied by a fraction, (A) the
numerator of which shall be the amount of Offered Securities which the Company
actually proposes to sell, and (B) the denominator of which shall be the amount
of all Offered Securities. In the event that any Investor so elects to reduce
the number or amount of Offered Securities specified in its Notice of
Acceptance, the Company may not sell or otherwise dispose of more than the
reduced amount of the Offered Securities until such securities have been
offered to the Investors in accordance herewith.


 


6.6.                            Closing.
Upon each closing of the purchase and sale of Offered Securities, the Investor
shall purchase from the Company, and the Company shall sell to the Investor the
number of Offered Securities specified in its Notice of Acceptance, as reduced
pursuant to Section 6.5 above if the Investors have so elected,
upon the terms and conditions specified in the Offer.  The purchase by the Investors of any Offered
Securities is subject in all cases to the preparation, execution and delivery
by the Company and the Investors of a purchase agreement relating to such
Offered Securities on the same terms and conditions applicable to other persons
purchasing the Offered Securities.


 


6.7.                            Further
Sale. In each case, any Offered Securities not purchased by the Investors
or other person or persons in accordance herewith may not be sold or otherwise
disposed of by the Company until they are again offered to the Investors under
the procedures specified herein.


 


7.                                      Further
Agreements.


 


7.1.                            The
Company shall notify the Investor promptly, and will, if requested, confirm
such notification in writing, of the receipt by the Company of any notification
with respect to any suspension of the qualification of the Shares or Warrant
Shares for offer and sale in any jurisdiction. 
If at any time the Commission shall issue any order suspending the
effectiveness of the Registration Statement in connection with the offering
contemplated hereby, the Company will make every reasonable effort to obtain
the withdrawal of any such order as soon as practicable.


 


7.2.                            The
Company shall comply with all the undertakings contained in the Registration
Statement.


 


7.3.


 


(a)                                  In
the event that, on any date, the Registration Statement is unavailable to the
Company for the purpose of issuing the Warrant Shares to the Investor upon
exercise of the Investor’s Warrant (such date, a “Registration Trigger Date”),
the Company will prepare and file with the Commission, as soon as practicable
following the Registration Trigger Date, but in no


 


14





















 


event later than the
thirtieth (30th) day following the Registration Trigger Date (the “Filing
Deadline”), a registration statement on Form S-3 (or, if the Company is not
then eligible to use Form S-3, on such other form as the Company is then eligible
to use) covering the resale of the Warrant Shares by the Investor (the “Second
Registration Statement”). In the event that the Company files the Second
Registration Statement on a form other than Form S-3, it shall convert the
Second Registration Statement to a Form S-3, or file a new registration
statement on Form S-3 covering the number of Warrant Shares covered by the
Second Registration Statement, as soon as practicable (but in no event more
than thirty (30) days) following the date on which it becomes eligible to use
Form S-3 for the resale of the Warrant Shares by the Investor.


 


(b)           The Company shall use its reasonable
best efforts to cause the Second Registration Statement to become effective as
promptly as practicable after filing, such efforts to include, without limiting
the generality of the foregoing, responding promptly to any and all comments
made by the staff of the Commission with respect to the Registration Statement,
and submitting to the Commission, within two (2) Business Days after the
Company learns that no review of the Registration Statement will be made by the
staff of the Commission or that the staff of the Commission has no further
comments on the Registration Statement, as the case may be, a request for
acceleration of the effectiveness of such Registration Statement to a time and
date not later than two (2) Business Days after the submission of such
request.  Notwithstanding the foregoing,
in the event the Second Registration Statement is not effective within ninety
(90) days of the Registration Trigger Date (if there is no review of the Second
Registration Statement by the Commission) or one hundred and twenty (120) days
(if there is a review of the Second Registration Statement by the Commission),
the Company shall pay a penalty to the Holders equal to 1.5%  of the value of the Warrant Shares (the “Penalty”)
at the time of such failure of the Second Registration Statement to be
effective (the “Effectiveness Failure”). 
The Penalty shall be payable to the Holders at the time of the
Effectiveness Failure and every 30 days following such Effectiveness Failure
until the Second Registration Statement is declared effective by the
Commission.  The value of the Warrant
Shares shall be determined by taking the volume weighted average price per
share for the five days prior to and including the date of the Effectiveness
Failure. The Company will maintain the effectiveness of the Second Registration
Statement filed pursuant to this Agreement until the earliest to occur of (i)
the date on which all of the Registrable Securities eligible for resale
thereunder have been publicly sold pursuant to either the Second Registration
Statement or Rule 144 under the Securities Act (“Rule 144”), (ii) the
date on which all of the Warrant Shares remaining to be sold under the Second
Registration Statement (in the reasonable opinion of counsel to the Company)
may be immediately sold to the public under paragraph (k) of Rule 144 under the
Securities Act or any successor provision and (iii) the date that is the second
(2nd) anniversary of the Closing Date (the period beginning on the
Closing Date and ending on the earliest to occur of (i), (ii) or (iii) above
being referred to herein as the “Registration Period”).


 


(c)     The Company shall use its commercially
reasonable efforts to prepare and file with the Commission such amendments and
supplements to the Second Registration Statement and the prospectus used in
connection therewith (the “Second Prospectus”) as may be necessary to
keep the Second Registration Statement continuously effective and free from any
material misstatement or omission to state a material fact for a period not
exceeding one year.


 


15





















 


(d)                                 The
Company shall furnish to each Holder with respect to the Warrant Shares
registered under the Second Registration Statement such number of copies of the
Second Registration Statement, Second Prospectuses and preliminary prospectuses
in conformity with the requirements of the Securities Act and such other
documents as such Holder may reasonably request, in order to facilitate the
public sale or other disposition of all or any of the Warrant Shares by such
Holder.


 


(e)                                  The
Company shall file documents required of the Company for blue sky clearance in
states specified in writing by each Investor and use its commercially
reasonable efforts to maintain such blue sky qualifications during the Registration
Period; provided, however, that the Company shall not be required
to qualify to do business or consent to service of process in any jurisdiction
in which it is not now so qualified or has not so consented.


 


(f)                                    The
Company shall bear all expenses in connection with the procedures described in
this Section 7.3 and the registration of the Securities pursuant to the
Registration Statement (provided, that, if the Warrant Shares are
offered pursuant to an underwritten offering, the Investor shall bear the cost
of all underwriting discounts and selling commissions applicable to the sale of
Warrant Shares).


 


(g)                                 The
Company shall notify the Investor immediately after becoming aware of the
issuance of any stop order by the Commission delaying or suspending the
effectiveness of the Second Registration Statement or of the initiation or
threat of any proceeding for that purpose; and promptly use its commercially
reasonable efforts to prevent the issuance of any stop order and to obtain its
withdrawal at the earliest possible moment if such stop order should be issued.


 


(h)                                 The
Company shall notify the Investor immediately after becoming aware of the
occurrence of any event (but shall not, without the prior written consent of
such Investor, disclose to such Investor any facts or circumstances
constituting material non-public information) as a result of which the Second Prospectus,
as then in effect, contains an untrue statement of material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing,
and as promptly as practicable prepare and file with the Commission and furnish
to the Investor a reasonable number of copies of a supplement or an amendment
to such Second Prospectus as may be necessary so that such Second Prospectus does
not contain an untrue statement of material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing.


 


(i)                                     In
the event that, at any time, the number of shares available under the Second Registration
Statement is insufficient to cover all of the Warrant Shares issuable under the
Warrants (without regard to any restriction on the exercise thereof), the
Company shall promptly amend the Second Registration Statement or file a new
registration statement, in any event as soon as practicable, but not later than
the tenth (10th) day following notice from the Investor of the occurrence of
such event, so that the Registration Statement or such new registration
statement, or both, covers no less than one hundred percent (100%) of the
Warrant Shares issuable under the Warrants (without regard to any restriction
on the exercise of such


 


16





















 


Warrants).  The Company shall use its best efforts to
cause such amendment and/or new Registration Statement to become effective as
soon as practicable following the filing thereof.


 


7.4.                            Suspension.


 


(a)                                  Subject
to paragraph (b) below, in the event (i) of any request by the Commission
or any other federal or state governmental authority during the period of
effectiveness of the Second Registration Statement for amendments or
supplements to the Second Registration Statement or related Second Prospectus
or for additional information; (ii) of the issuance by the Commission or
any other federal or state governmental authority of any stop order suspending
the effectiveness of the Second Registration Statement or the initiation of any
proceedings for that purpose; (iii) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of the Warrant Shares for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose; (iv) of any event
or circumstance which, upon the advice of its counsel, necessitates the making
of any changes in the Second Registration Statement or Second Prospectus, or
any document incorporated or deemed to be incorporated therein by reference, so
that, in the case of the Second Registration Statement, it will not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and that in the case of the Second Prospectus, it will not contain
any untrue statement of a material fact or any omission to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
or (v) the Company determines in good faith that offers and sales pursuant to
the Second Registration Statement should not be made by reason of the presence
of material undisclosed circumstances or developments with respect to which the
disclosure that would be required in such a Registration Statement or related
Prospectus is premature, would have an adverse effect on the Company or is
otherwise inadvisable, then the Company shall immediately notify the Investor in
writing (the “Suspension Notice”) to the effect of the foregoing and,
upon receipt of such Suspension Notice, the Investor will refrain from selling
any Warrant Shares pursuant to the Second Registration Statement (a “Suspension”)
until the Investor’s receipt of copies of a supplemented or amended Second
Prospectus prepared and filed by the Company, or until it is advised in writing
by the Company that the current Second Prospectus may be used, and has received
copies of any additional or supplemental filings that are incorporated or
deemed incorporated by reference in any such Second Prospectus.  In the event of any Suspension, the Company
will use its commercially reasonable efforts to cause the use of the Second
Prospectus so suspended to be resumed as soon as reasonably practicable after
the delivery of a Suspension Notice to each Holder, and in no event shall the
Company be permitted to suspend the use of the Second Registration Statement or
the Second Prospectus pursuant to (v) above for a period exceeding ninety (90)
days in any 365-day period.  In addition
to and without limiting any other remedies (including, without limitation, at
law or at equity) available to the Investor, such Holder shall be entitled to
specific performance in the event that the Company fails to comply with the
provisions of this Section 7.4(a).


 


(b)                                 As
long as a Suspension is not then in effect, each Holder may sell Warrant Shares
under the Second Registration Statement. 
Upon receipt of a request therefor, the Company will provide an adequate
number of current Second Prospectuses to such Holder and to supply copies to
any other parties requiring such Second Prospectuses.


 


17





















 


(c)                                  The
Investor agrees that it will notify the Company in the event that it has sold Warrant
Shares pursuant to the Second Registration Statement, in which case the Company
will provide instructions to the Company’s transfer agent so that the Warrant
Shares may be properly transferred.


 


7.5.                            Transfer
Restrictions.  From and after a
Registration Trigger Date, the Investor shall not sell, assign, pledge,
transfer or otherwise dispose of or encumber any Warrant Shares that, at the
time of such sale, constitute “restricted securities” (as such term is used in
Rule 144), unless the transferee (the “Transferee”) agrees in writing to
be bound by the terms of this Agreement, in which case such Transferee will be
deemed to be an “Investor” for purposes hereof, and except (i) pursuant to an
effective registration statement under the Securities Act, in which case the
Investor shall notify the Company that it has sold Warrant Shares pursuant to
such registration statement (a “Notice of Subsequent Sale”), or (ii)
pursuant to an available exemption from registration under the Securities Act
and applicable state securities laws and, if requested by the Company, upon
delivery by such Investor of an opinion of counsel reasonably satisfactory to
the Company to the effect that the proposed transfer is exempt from
registration under the Securities Act and applicable state securities laws. The
Company may, and may instruct any transfer agent for the Company to, place such
stop transfer orders as may be required on the transfer books of the Company in
order to ensure compliance with the provisions of this Section 7.5. The transferee
will promptly notify the Company of any changes to be made in the information
set forth in the Registration Statement regarding the Transferee or its plans
of distribution, and the Company agrees, in such event, to file promptly (but
in no event more than five (5) Business Day following such notification) one or
more post-effective amendments to the Second Registration Statement or a
supplement to the related Second Prospectus, naming such Transferee as a
selling shareholder in accordance with the provisions of the Securities Act.


 


7.6.                            Legends.  From and after a Registration Trigger Date, each
certificate representing Warrant Shares shall be endorsed with a legend in the
following form:


 


“THE SECURITIES REPRESENTED
BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “ACT”), OR SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED,
SOLD, ASSIGNED, PLEDGED TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER
THE ACT OR SUCH LAWS AND, IF REQUESTED BY THE COMPANY, UPON DELIVERY OF AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT THE PROPOSED
TRANSFER IS EXEMPT FROM THE ACT OR SUCH LAWS.”


 


Notwithstanding the
foregoing, as long as (A) the resale or transfer (including without limitation
a pledge) of any of the Warrant Shares are registered
pursuant to the Second Registration Statement and the Investor delivers a
Notice of Subsequent Sale to the Company with respect to such Warrant Shares,
(B) such Warrant Shares have been sold pursuant to Rule 144, subject to receipt
by the Company of customary documentation reasonably acceptable to the Company
in connection therewith, or (C) such Securities are eligible for resale under
paragraph (k) of Rule 144 or any successor provision, such Warrant Shares shall
be issued without any legend or other


 


18





















 


restrictive
language and, with respect to Warrant Shares upon which such legend is stamped,
the Company shall issue new certificates without such legend to the holder upon
request.


 


7.7.                            The
Company will apply the net proceeds from the offering and sale of the Shares
and the Warrants in the manner set forth in the Prospectus under the caption “Use
of Proceeds.”


 


7.8.                            For so
long as the Warrants are outstanding, the Company will furnish to the Investor,
as soon as they are available, copies of all reports or other communications
(financial or other) furnished to all holders of the Common Stock.


 


7.9.                            Certificates
evidencing the Shares and the Warrants shall not contain any legend restricting
their transferability by the Investor. 
The Company shall cause its counsel to issue a legal opinion to the
Company’s transfer agent if required by the Company’s transfer agent to effect
a transfer of any of the Securities.


 


8.                                      Indemnification.


 


8.1.                            The
Company shall indemnify and hold harmless the Investor, each officer, director,
employee, agent and representative of the Investor, and each person, if any,
who controls the Investor within the meaning of the Securities Act or the
Exchange Act against any losses, claims, damages, liabilities or reasonable
out-of-pocket expenses (whether joint or several) (collectively, including
legal or other expenses reasonably incurred in connection with investigating or
defending same, “Losses”), insofar as any such Losses arise out of or
are based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in the Second Registration Statement, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto, or (ii) the omission or alleged omission to state
therein a material fact required to be stated in the Second Registration
Statement, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.  Subject to the
provisions of Section 8.2 below, the Company will reimburse the Investor,
and each such officer, director, employee, agent, representative or controlling
person, for any legal or other out-of-pocket expenses reasonably incurred by
any such entity or person in connection with investigating or defending any
Loss as such expenses are incurred.  The
foregoing indemnity shall not apply to amounts paid in settlement of any Loss
if such settlement is effected without the consent of the Company (which
consent shall not be unreasonably withheld), nor shall the Company be obligated
to indemnify any person for any Loss to the extent that such Loss is (x) based
upon and is in conformity with written information furnished by such person
expressly for use in the Second Registration Statement or (y) based on a
failure of such person to deliver or cause to be delivered the final prospectus
contained in the Second Registration Statement and made available by the
Company, if such delivery is required by applicable law.  The Company shall not enter into any
settlement of a Loss that does not provide for the unconditional release of
such Investor from all liabilities and obligations relating to such Loss.


 


8.2.                            Promptly
after receipt by an indemnified party under this Section 8 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  8,


 


19





















 


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 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 reasonably incurred fees and expenses
of one such counsel for all indemnified parties to be paid by the indemnifying
party, if representation of such indemnified party by the counsel retained by
the indemnifying party would be inappropriate under applicable standards of
professional conduct due to actual or potential conflicting 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, to the extent prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 8 with respect to such
action, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 8 or with respect to any other
action unless the indemnifying party is materially prejudiced as a result of
not receiving such notice.


 


8.3.                            In the
event that the indemnity provided in this Section 8 is unavailable
or insufficient to hold harmless an indemnified party for any reason, the
Company and the Investor agree, severally and not jointly, to contribute to the
aggregate Losses to which the Company or the Investor may be subject in such
proportion as is appropriate to reflect the relative fault of the Company and the
Investor in connection with the statements or omissions which resulted in such
Losses; provided, however, that in no case shall
such Investor be responsible for any amount in excess of the net proceeds
resulting from the sale of the Warrant Shares sold by it under the Second Registration
Statement.  Relative fault shall be
determined by reference to whether any alleged untrue statement or omission
relates to information provided by the Company or by the Investor.  The Company and the Investor agree that it
would not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation which does not take account of the
equitable considerations referred to above. 
Notwithstanding the provisions of this Section 8.3, no
person guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any person who is
not guilty of such fraudulent misrepresentation.  For purposes of this Section 8,
each person who controls the Investor within the meaning of either the
Securities Act or the Exchange Act and each officer, director, employee, agent
or representative of the Investor shall have the same rights to contribution as
such Investor, and each person who controls the Company within the meaning of
either the Securities Act or the Exchange Act and each officer, director,
employee, agent or representative of the Company shall have the same rights to
contribution as the Company, subject in each case to the applicable terms and
conditions of this Section 8.3.


 


9.                                      Survival
of Representations, Warranties and Agreements. 
Notwithstanding any investigation made by any party to this
Agreement or by the Placement Agent, all covenants, agreements, representations
and warranties made by the Company and the Investor herein will survive the
execution of this Agreement, the delivery to the Investor of the Shares and
Warrants being purchased and the payment therefor.


 


10.                               Expenses.  The Company and the Investor shall pay all
costs and expenses that it incurs in connection with the negotiation,
execution, delivery and performance of this Agreement; provided,
however, that that the Company shall, at the Closing, pay up to
$35,000 in immediately


 


20





















 


available funds for all
reasonable out-of-pocket expenses (including without limitation reasonable
legal fees and expenses) incurred or to be incurred by Satellite Asset
Management, L.P. (“Satellite”) in connection its due diligence
investigation of the Company and the negotiation, preparation, execution,
delivery and performance of this Agreement and the other documents executed and
delivered at the Closing.  At the
Closing, the amount due for such fees and expenses (which may include fees and
expenses estimated to be incurred for completion of the transaction and
post-closing matters) may be netted out of the Purchase Price payable by
Satellite.  In the event the amount paid
by the Company for such fees and expenses is less than the amount of fees and
expenses actually incurred by Satellite, the Company shall promptly pay such
deficiency (up to $35,000 in the aggregate, including any amounts paid at
Closing) within thirty (30) days following receipt of an invoice therefor.


 


11.                               Notices.  Any notice, demand or request required or
permitted to be given by the Company or the Investor pursuant to the terms of
this Agreement shall be in writing and shall be deemed delivered (i) when
delivered personally or by verifiable facsimile transmission, unless such
delivery is made on a day that is not a Business Day, in which case such
delivery will be deemed to be made on the next succeeding Business Day, (ii) on
the next Business Day after timely delivery to an overnight courier and (iii)
on the Business Day actually received if deposited in the U.S. mail (certified
or registered mail, return receipt requested, postage prepaid), addressed as
follows:


 


(a)                                  If to the Company:


 


Proxim
Corporation


935
Stewart Drive


Sunnyvale,
CA 94085


Fax
No.:  (408) 731-3680


Attention:
 Michael Angel


 


(b)                                 with a  copy (which shall not
constitute notice) to:


 


Wilson
Sonsini Goodrich & Rosati P.C.


650
Page Mill Road


Palo Alto, California 94304


Fax No.:  (650)
493-6811


Attention:  Robert Day


 


(c)                                  if
to the Investor, at its address on the Signature Page hereto, or at such other
address or addresses as may have been furnished to the Company in writing. For
purposes of this Agreement, “Business Day” means any day other than a
Saturday, a Sunday or a day on which the New York Stock Exchange is closed or
on which banks in the City of New York are required or authorized by law to be
closed.


 


12.                               Entire
Agreement; Amendments; Waiver.  This
Agreement, the Warrant and the other documents and agreements executed and
delivered by the Company and the Investor in


 


21





















 


connection therewith constitute
the entire agreement between the parties with regard to the subject matter
hereof and thereof, superseding all prior agreements or understandings, whether
written or oral, between or among the parties. 
Except as expressly provided herein, neither this Agreement nor any term
hereof may be amended except pursuant to a written instrument executed by the
Company and the Investor, and no provision hereof may be waived other than by a
written instrument signed by the party against whom enforcement of any such
waiver is sought.  Any waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.


 


13.                               Headings.  The headings of the various sections of
this Agreement have been inserted for convenience of reference only and will
not be deemed to be part of this Agreement.


 


14.                               Severability.  In case any provision contained in this
Agreement should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein will
not in any way be affected or impaired thereby.


 


15.                               Governing
Law.  This Agreement shall be
governed by and construed under the laws of the State of New York applicable to
contracts made and to be performed entirely within the State of New York.  Each party hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in the City and
County of New York for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such
court, that such suit, action or proceeding is brought in an inconvenient forum
or that the venue of such suit, action or proceeding is improper.  Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit,
action or proceeding by mailing a copy thereof to such party at the address in
effect for notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to
limit in any way any right to serve process in any manner permitted by law.


 


16.                               Counterparts.  This Agreement may be executed in two or
more counterparts, each of which will constitute an original, but all of which,
when taken together, will constitute but one instrument, and will become
effective when one or more counterparts have been signed by each party hereto
and delivered to the other parties.


 


22





















 


EXHIBIT B


 


PROXIM CORPORATION


 


INVESTOR QUESTIONNAIRE


 


Pursuant to Section 3
of the Agreement, please provide the following information:


 


	
  1.

  	
   

  	
  The exact name
  that your Shares and Warrants are to be registered in. You may use a nominee
  name if appropriate:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  The relationship
  between the Investor and the registered holder listed in response to item 1
  above:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  The mailing
  address of the registered holder listed in response to item 1 above:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  The Social
  Security Number or Tax Identification Number of the registered holder listed
  in the response to item 1 above:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Name of DTC
  Participant (broker-dealer at which the account or accounts to be credited
  with the Shares are maintained):

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  DTC Participant
  Number:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Name of Account
  at DTC Participant being credited with the Shares:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  Account Number
  at DTC Participant being credited with the Shares