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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) MARCH 7, 1997
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P-COM, INC.
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(Exact name of registrant as specified in charter)
DELAWARE 0-25356 77-02893711
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
3175 S. WINCHESTER BOULEVARD, CAMPBELL, CALIFORNIA 95008
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (408) 866-3666
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NOT APPLICABLE
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(Former name or former address, if changed since last report.)
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Item 2 ACQUISITION OR DISPOSITION OF ASSETS
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(a) On March 7, 1997, P-COM, Inc., a Delaware corporation ("P-COM"),
purchased substantially all of the assets of Columbia Spectrum Management, LP, a
Delaware limited partnership ("CSM") (the "Asset Purchase"), pursuant to an
Asset Purchase Agreement, filed as Exhibit 7(c)(2) to this report, by and among
P-COM, CSM and all partners of CSM (the "Purchase Agreement").
The assets acquired in the Asset Purchase include service contracts,
intellectual property, goodwill and related property. CSM's primary facilities
are located in Vienna, Virginia. The consideration for the Asset Purchase
equalled Twenty Two Million Five Hundred Thousand Dollars ($22,500,000)
consisting of Eight Million Dollars ($8,000,000) in cash and Three Hundred
Ninety Eight Thousand Three Hundred Six (398,306) shares of P-COM Common Stock.
The acquisition will be accounted for using the purchase method of accounting
with goodwill amortization. It is not currently anticipated that this
accounting treatment will have a material adverse effect on the consolidated
financial results of P-COM for the year ended December 31, 1997. The cash
consideration used for the acquisition consisted of cash generated by operations
and from the net proceeds received by P-COM from the public offering of shares
of P-COM Common Stock consummated in May 1996. The basis for determining the
amount of consideration paid by P-COM in the Asset Purchase was negotiated
between unrelated parties. In connection with the Asset Purchase, P-COM, CSM,
and all the partners of CSM also entered into a Registration Rights Agreement,
filed as Exhibit 7(c)(4) hereto, whereby P-COM has agreed to file a registration
statement covering the Common Stock issued in the Asset Purchase, such
registration statement to be effective on or before July 31, 1997. The
description of the agreements set forth herein does not purport to be complete
and is qualified in its entirety by reference to the provisions of the
definitive agreements, filed as a exhibits hereto.
(b) Prior to the Asset Purchase, CSM was in the business of providing
market and systems analysis, frequency planning, negotiation services, program
management, and turnkey relocation encompassing all of the above for the
cellular, business by-pass, and Personal Communications Systems ("PCS")
industry. P-COM intends to continue these operations at CSM's headquarters in
Vienna, Virginia for at least the next two years.
Item 7 FINANCIAL STATEMENTS AND EXHIBITS
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(a) Financial Statements of Business Acquired. As of the date of filing of
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this initial report, there are no audited financial statements available
relating to CSM that would meet the rules required by this form. Price
Waterhouse LLP, certified public accountants of P-COM, is currently preparing
audited financial statements of CSM for P-COM. These audited financial
statements will be filed as an amendment on Form 8 to this initial report as
soon as practicable.
(b) Pro Forma Financial Information. Pro forma financial information is
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currently being prepared and will be filed as an amendment to this initial
report as soon as practicable.
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(c) Exhibit. The following documents are filed as exhibits to this report:
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1. Exhibit 7(c)(2) - Asset Purchase Agreement, dated February
12, 1997, by and among P-COM, CSM and the partners of CSM
(Exhibit 5.8, the Registration Rights Agreement, is filed as
Exhibit 7(c)(4) hereto, all other exhibits are immaterial
and have been excluded, as well as all schedules; such
exhibits and schedules will be furnished supplementally upon
request by the Securities and Exchange Commission).
2. Exhibit 7(c)(4) - Registration Rights Agreement, dated March
7, 1997, by and among P-COM, CSM and the partners of CSM.
3. Exhibit 7(c)(99) - Press Release, dated February 12, 1997,
issued by P-COM announcing the signing of the Asset Purchase
Agreement.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
P-COM, INC.
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(Registrant)
Date: March 21, 1997 By: /s/ Michael J. Sophie
________________________________
Name: Michael J. Sophie
Title: Vice President, Finance and
Administration and Chief Financial
Officer
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EXHIBIT INDEX
Exhibit
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7(c)(2) Asset Purchase Agreement, dated February 12, 1997, by and
among P-COM, Inc., Columbia Spectrum Management LP, and
all partners of Columbia Spectrum Management LP.
7(c)(4) Exhibit 7(c)(4) - Registration Rights Agreement, dated
March 7, 1997, by and among P-COM, Inc., Columbia Spectrum
Management LP, and all partners of Columbia Spectrum
Management LP.
7(c)(99) Press Release, dated February 12, 1997, issued by P-COM
announcing the signing of the Asset Purchase Agreement.
<PAGE>
EXHIBIT 7(C)(2)
ASSET PURCHASE AGREEMENT
by and among
P-COM, Inc., a Delaware corporation,
P-COM Field Services, Inc. a Delaware corporation,
Columbia Spectrum Management, L.P., a Delaware limited partnership,
and
The Partners of Columbia Spectrum Management, L.P.
Dated as of February 12, 1997
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TABLE OF CONTENTS
Page
ARTICLE I PURCHASE AND SALE OF ASSETS ................................... 1
Section 1.1 Description of Assets to be Acquired .................... 1
Section 1.2 Excluded Assets ......................................... 2
ARTICLE II LIABILITIES ................................................... 2
Section 2.1 Liabilities ............................................. 2
ARTICLE III PURCHASE PRICE ................................................ 3
Section 3.1 ......................................................... 3
Section 3.2 Amount ................................................... 3
Section 3.3 Net Asset Determination .................................. 4
ARTICLE IV REPRESENTATIONS AND WARRANTIES................................. 5
Section 4.1 Representations and Warranties of Seller and each Partner. 5
(a) Organization of Seller ................................... 5
(b) Equity Structure ......................................... 6
(c) Authorization of Seller .................................. 6
(d) Financial Information .................................... 6
(e) Absence of Certain Changes and Events .................... 6
(f) Conduct of Business ...................................... 8
(g) Undisclosed Liabilities .................................. 8
(h) Inventory ................................................ 8
(i) Taxes .................................................... 8
(j) Compliance With Law ...................................... 9
(k) Governmental and Third Party Consents .................... 9
(l) Intellectual Property Rights ............................. 10
(m) Restrictive Documents or Orders .......................... 11
(n) Contracts and Commitments ................................ 11
(o) Assets ................................................... 12
(p) Title to the Property .................................... 12
(q) Litigation ............................................... 12
(r) No Conflict or Default ................................... 12
(s) Labor Relations .......................................... 13
(t) Pension, Profit Sharing, etc ............................. 13
(u) Brokers' and Finders' Fees/Contractual Limitations ....... 13
(v) Interested Party Relationships ........................... 14
(w) Certain Payments ......................................... 14
(x) Customers ................................................ 14
(y) Books and Records ........................................ 14
(z) Complete Disclosure ...................................... 14
i.
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(aa) Insurance ................................................ 15
(ab) Environmental Matters .................................... 15
(ac) Backlog .................................................. 15
(ad) Purchase Entirely for Own Account ........................ 15
(ae) Disclosure of Information ................................ 15
(af) Investment Experience .................................... 15
(ag) Accredited Investor ...................................... 16
(ah) Restricted Securities .................................... 16
(ai) Legends .................................................. 16
(aj) Service Provider Agreements .............................. 16
(ak) Subsidiaries ............................................. 16
(al) Exports to Certain Countries ............................. 17
(am) Foreign Corrupt Practices Act ............................ 17
Section 4.2 Representations and Warranties of P-COM and Purchaser..... 17
(a) Organization ............................................. 17
(b) Brokers' and Finders' Fees/Contractual Limitations........ 18
(c) Valid Issuance of Purchase Shares ........................ 18
(d) SEC Filings .............................................. 18
(e) Authorization of Seller .................................. 19
(f) Absence of Certain Changes and Events .................... 19
(g) Government Consents ...................................... 19
(h) Litigation ............................................... 19
(i) No Conflict or Default ................................... 19
ARTICLE V COVENANTS...................................................... 20
Section 5.1 Covenants Against Disclosure.............................. 20
Section 5.2 Non-Competition........................................... 20
Section 5.3 Maintenance of Business................................... 22
Section 5.4 Access to Information..................................... 24
Section 5.5 Other Discussions......................................... 24
Section 5.6 Assignment of Contracts................................... 25
Section 5.7 Relocation of Seller's Facilities......................... 25
Section 5.8 Registration Rights....................................... 25
Section 5.9 Termination of Employment Agreements...................... 25
Section 5.10 Collection of Pre-Closing Receivables..................... 25
ARTICLE VI CLOSING........................................................ 26
Section 6.1 Time of Closing........................................... 26
Section 6.2 Deliveries by Seller...................................... 26
Section 6.3 Deliveries by Purchaser................................... 27
Section 6.4 Further Assurances........................................ 27
ii.
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ARTICLE VII CONDITIONS PRECEDENT TO OBLIGATIONS............................ 28
Section 7.1 Conditions to Obligations of P-COM and Purchaser.......... 28
(a) Representations and Warranties............................ 28
(b) Performance of Agreement.................................. 28
(c) No Material Adverse Change................................ 28
(d) Absence of Governmental or Other Objection................ 28
(e) Approval of Documentation................................. 28
(f) Third Party Consents...................................... 28
(g) Comsearch Agreement....................................... 28
Section 7.2 Conditions to Obligations of Seller....................... 29
(a) Performance of Agreement.................................. 29
(b) Representations and Warranties............................ 29
(c) Approval of Documentation................................. 29
(d) Absence of Governmental or Other Objection................ 29
(e) Third Party Consents...................................... 29
ARTICLE VIII INDEMNIFICATION................................................ 29
Section 8.1 Survival of Representations, Warranties, Covenants and
Agreements................................................ 29
Section 8.2 Seller and Partner Indemnification........................ 30
Section 8.3 Procedure for Indemnification with Respect to
Third-Party Claims........................................ 31
Section 8.4 Procedure For Indemnification with Respect to
Non-Third Party Claims.................................... 32
Section 8.5 Limitation on Indemnification............................. 33
ARTICLE IX TERMINATION.................................................... 33
Section 9.1 Termination............................................... 33
ARTICLE X MISCELLANEOUS PROVISIONS....................................... 34
Section 10.1 Notice................................................... 34
Section 10.2 Entire Agreement......................................... 35
Section 10.3 Binding Effect; Assignment............................... 35
Section 10.4 Expenses of Transaction; Taxes........................... 35
Section 10.5 Waiver; Consent.......................................... 36
Section 10.6 Third-Party Beneficiaries................................ 36
Section 10.7 Counterparts............................................. 36
Section 10.8 Severability............................................. 36
Section 10.9 Remedies of Purchaser.................................... 36
Section 10.10 Governing Law............................................ 36
Section 10.11 Arbitration; Attorneys' Fees............................. 37
Section 10.12 Cooperation and Records Retention........................ 37
Section 10.13 Bulk Sales Law........................................... 38
iii.
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Exhibits
3.2 Escrow Agreement
5.8 Registration Rights Agreement
Schedules
1.1(a) List of Related Property
1.1(b) List of Contracts
1.1(c) List of Intellectual Property Rights
1.1(g) List of Leasehold Interests
1.2 List of Excluded Assets
2.1 List of Assumed Liabilities
4.1(b) List of Holders of Outstanding Seller Equity Interests
4.1(j) List of Governmental Permits
4.1(s) List of Employees
4.1(x) List of Material Customers
4.1(aa) List of Insurance Policies
4.1(ab) List of Environmental Matters
4.1(ac) Backlog of Orders
4.1(ag) List of Non-Accredited Investors
4.2 P-COM/Purchaser Disclosure Letter
iv.
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ASSET PURCHASE AGREEMENT
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THIS AGREEMENT is dated as of February 12, 1997 by and among P-COM,
Inc., a Delaware corporation ("P-COM"), P-COM Field Services, Inc. a Delaware
corporation and a wholly-owned subsidiary of P-COM ("Purchaser"), Columbia
Spectrum Management, L.P., a Delaware limited partnership ("Seller"), and the
individuals and other entities listed on the signature pages hereto
(collectively, all of the "Partners").
WHEREAS, Seller is engaged in the business of providing consulting,
negotiation and related services to facilitate the relocation of operators of
microwave facilities on certain radio frequency bands to other frequencies or to
a substitute system, and proposes to engage in the provision of warehousing
services for the build out of wireless systems and the ownership and leasing of
towers to wireless communications companies (collectively, the "Business") which
Business is located primarily at 8300 Boone Boulevard, Suite 800, Vienna,
Virginia (the "Business Premises");
WHEREAS, Purchaser desires to acquire from Seller and Seller desires
to transfer to Purchaser, the assets, properties, and rights of Seller, upon the
terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the parties hereby agree as follows:
ARTICLE I
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PURCHASE AND SALE OF ASSETS
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Section 1.1 Description of Assets to be Acquired. Upon the terms and
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subject to the conditions set forth in this Agreement, at the Time of Closing
(as defined in Section 5.1), Seller agrees to convey, sell, transfer, assign,
and deliver to Purchaser, and Purchaser shall purchase from Seller, all right,
title, and interest of Seller at the Time of Closing in and to all of the
assets, personal properties, and rights of the Business of every kind, nature,
and description, personal, tangible, and intangible, known or unknown, wherever
located, including, without limitation, the following:
(a) The machinery, equipment, computer hardware, peripherals,
software, quality assurance equipment and furniture and fixtures (the "Related
Property"), including those listed on Schedule 1.1(a) hereto;
(b) All rights and claims, exclusive of Pre-Closing Receivables (as
hereinafter defined) under all agreements, contracts, contract rights, licenses,
purchase and sale orders, quotations, and other executory commitments relating
to the Business
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(collectively, the "Contracts"), including, without limitation, those listed on
Schedule 1.1(b) hereto;
(c) All rights of Seller to all patents, trademarks, trade names,
service marks, copyrights, trade secret rights and other intellectual property
rights, and any applications or registrations therefor, and all net lists,
schematics, technology, source code, know-how, computer software programs and
all other tangible and intangible information or material used, usable or
proposed to be used in the Business, including, without limitation, those listed
on Schedule 1.1(c) hereto (collectively, the "Intellectual Property Rights");
(d) All rights under express or implied warranties from suppliers and
vendors to Seller relating to the Business, except as they relate to Retained
Liabilities (as hereinafter defined);
(e) All of Seller's causes of action, judgments, and claims or
demands of whatever kind or description arising out of or relating to the
Business;
(f) All goodwill of the Business (the "Goodwill");
(g) All leasehold interests of Seller relating to the Business,
including, without limitation, those listed on Schedule 1.1(g) (the "Leasehold
Interests"); and
(h) Any additional assets identified on the Closing Date Balance
Sheet.
The assets, properties, and rights to be conveyed, sold, transferred,
assigned, and delivered to Purchaser pursuant to this Section 1.1 are sometimes
hereinafter collectively referred to as the "Assets."
Section 1.2 Excluded Assets. Notwithstanding the provisions of
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Section 1.1 hereof, the Assets to be transferred to Purchaser pursuant to this
Agreement shall not include (i) all accounts receivable of Seller (including,
without limitation, amounts due or to become due to Seller for work that has
been performed, whether or not billed) as of the Time of Closing (the "Pre-
Closing Receivables") or (ii) those assets specifically listed on Schedule 1.2
(collectively, the "Excluded Assets").
ARTICLE II
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LIABILITIES
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Section 2.1 Liabilities. Purchaser hereby agrees to assume at the
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Time of Closing the obligations of Seller under those Contracts as specifically
set forth on Schedule 2.1 attached hereto (the "Assumed Liabilities"). Except
as specifically set forth on Schedule 2.1, Purchaser shall not assume, nor shall
Purchaser nor any affiliate of
2.
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Purchaser be deemed to have assumed or guaranteed, and Seller agrees and shall
continue to be solely responsible for, any and all liabilities, litigation,
disputes, debts, payables (including, without limitation, payables as of the
Time of Closing to suppliers of goods that have been sold by Seller or services
provided by Seller prior to or at the Time of Closing), obligations,
counterclaims, rights of set-off or commitments, whether such liabilities are
contingent or otherwise or direct or indirect, of Seller in existence on or
prior to the Time of Closing, or otherwise, or based on any events, facts or
circumstances in existence prior to or in connection with the sale of the Assets
or the Business or in connection with or arising from any activities or
inactivities of Seller, including without limitation any severance obligations
of Seller to its employees, or any services provided by or goods or assets sold
by or products delivered by Seller, or based on any obligations under the
Contracts that arise on or after the Time of Closing to the extent that the
obligation is imposed, asserted or incurred as a result of acts or omissions of
Seller, or third parties acting on behalf of, or performing any function at the
request of Seller, prior to or on the Closing (collectively, the "Liabilities").
ARTICLE III
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PURCHASE PRICE
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Section 3.1 Consideration . Upon the terms and subject to the
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conditions contained in this Agreement, in consideration for the Assets and in
full payment therefore, Purchaser will pay, or cause to be paid, the purchase
price set forth in Section 3.2.
Section 3.2 Amount. The purchase price ("Purchase Price") for the
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Assets shall consist of:
(a) Cash. Six Million Five Hundred Dollars ($6,500,000) which shall
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be payable by wire transfer at the Time of Closing and One Million Five Hundred
Thousand Dollars ($1,500,000) held in an escrow account for a period of two (2)
years, with Five Hundred Thousand Dollars ($500,000) of such cash consideration
placed in escrow to be released after one (1) year, assuming that there are no
pending claims at such time for Damages and the other One Million Dollars
($1,000,000) to be released on the second anniversary of the Closing, except for
the amount of any pending claims for Damages at such time in accordance with
Article VIII, pursuant to the terms of an escrow agreement, the form of which is
attached hereto as Exhibit 3.2 (the "Escrow Agreement"); and
(b) Purchase Shares. Shares of Common Stock of P-COM to be issued
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directly from P-COM to each of the Partners or, in the case of and to the extent
directed in writing by Columbia Spectrum Management Investors, L.P. ("CSMI"), to
the
3.
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partners thereof, as assignees of Seller and in furtherance of its complete
liquidation, in accordance with Schedule 3.2(b) (the "Purchase Shares").
The aggregate number of Purchase Shares to be issued to the Partners
shall be determined by dividing the amount of Fourteen Million Five Hundred
Thousand Dollars ($14,500,000) by the average closing sales price of the P-COM
Common Stock as quoted on the National Association of Securities Dealers
Automated Quotation System National Market ("Nasdaq National Market") for the
thirty (30) consecutive trading days ending two (2) trading days prior to the
Time of Closing (the "Closing Date Average Price"); provided, however, that in
the event that the closing sales price of the P-COM Common Stock as quoted on
the Nasdaq National Market on the earlier of (i) July 31, 1997, and (ii) the
date upon which a registration statement covering all of the Purchase Shares
requesting registration pursuant to that certain Registration Rights Agreement
in the form attached hereto as Exhibit 5.8, is declared effective by the
Securities and Exchange Commission (the "Effective Price") either exceeds or is
less than the Closing Date Average Price, the number of Purchase Shares issuable
to the Partners pursuant to this Agreement shall be correspondingly adjusted
(the "Purchase Share Adjustment") such that the aggregate number of Purchase
Shares issuable to the Partners shall equal the number achieved by dividing
$14,500,000 by the Effective Price. Notwithstanding the foregoing, (a) if the
Effective Price exceeds the Closing Date Average Price by fifteen percent (15%)
or more, then the Purchase Share Adjustment shall be based on a price equal to
the Closing Date Average Price multiplied by 1.15 and (b) if the Effective Price
is more than fifteen percent (15%) less than the Closing Date Average Price,
then the Purchase Share Adjustment shall be based on a price equal to the
Closing Date Average Price multiplied by .85. In the event of a Purchase Price
Adjustment pursuant to this Section 3.2(b), the escrow agent appointed under the
Escrow Agreement shall be entitled to deduct the appropriate number of either
Partner Escrow Shares (as defined below) or P-COM Escrow Shares (as defined
below), as applicable, from the escrow account and deliver such shares instead
to the appropriate party.
The Purchase Shares shall be paid as follows:
(i) Eighty-five Percent (85%) of the total number of Purchase Shares
calculated in accordance with this Section 3.2(b) based on the Closing Date
Average Price shall be issued at the Time of Closing and delivered to the
Partners; and
(ii) Fifteen Percent (15%) of the total number of Purchase Shares
calculated in accordance with this Section 3.2(b) based on the Closing Date
Average Price shall be issued at the Time of Closing and held (until an
Effective Price is determined pursuant to Section 3.2(b)) in an escrow account
pursuant to the Escrow Agreement as collateral for a potential Purchase Price
Adjustment, as defined in Section 3.2(b) (the "Partner Escrow Shares"). In
addition, P-COM shall place an equivalent number of shares of its Common Stock
into such an escrow account to serve as collateral for a potential Purchase
Price Adjustment (the "P-COM Escrow Shares").
4.
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Section 3.3 Net Asset Determination.
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(a) Adjustment Amount. To the extent that as of the Time of Closing,
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the value of the Assets does not equal or exceed $400,000, an adjustment shall
be made to the purchase price as follows: if the Assets as of the Time of
Closing are less than $400,000, a credit shall be allowed by Seller to Purchaser
in the amount by which the Assets fall short of $400,000, and such credit shall
be considered a reduction of the purchase price and shall be paid as hereinafter
set forth.
(b) Procedures. As soon as reasonably practicable after the Time of
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Closing, but in no event later than five (5) business days thereafter, Seller
shall deliver to Purchaser an unaudited balance sheet of Seller dated as of the
Time of Closing, which shall fairly present the Assets of Seller as of the Time
of Closing in accordance with GAAP applied on a basis consistent with previous
periods (the "Closing Date Balance Sheet"). As soon as possible after the
Closing Date, and in any event, within fifteen (15) days of the Closing Date,
representatives of Purchaser and Seller shall jointly determine the Assets as of
the Closing Date. Upon certification of such amounts jointly by such
representatives, the parties shall within five (5) business days make such
further payments between themselves as set forth in Section 3.3(a).
Notwithstanding the foregoing, in the event that Seller and the Partners do not
make such payment in cash or stock within five (5) days, Purchaser shall be
entitled to deduct on a pro rata basis from the cash consideration held pursuant
to the Escrow Agreement that amount due and owing pursuant to this Section 3.3.
(c) Disputes. In the event that the representatives of Purchaser and
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Seller are unable to agree with respect to any determination of Assets within
fifteen (15) days of the Time of Closing, Purchaser and Seller hereby agree that
such determination shall be referred to Price Waterhouse, or another nationally
recognized accounting firm agreed upon by the parties (the "Auditor"), which
shall promptly make a determination. If necessary, the decision of the Auditor
shall be binding on the parties. In the event that the Auditor is required to
make any such determination, Seller and Purchaser shall each pay fifty percent
(50%) of the fees of the Auditor.
ARTICLE IV
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REPRESENTATIONS AND WARRANTIES
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Section 4.1 Representations and Warranties of Seller and each
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Partner. Except as specifically set forth in the schedules hereto delivered by
- - -------
Seller and the Partners to P-COM and Purchaser, each of Seller and the Partners
hereby, jointly and severally, represents and warrants to P-COM and Purchaser as
of the date hereof and again at and as of the Closing Date that:
5.
<PAGE>
(a) Organization of Seller. Seller is a limited partnership duly
----------------------
organized and validly existing under the laws of the State of Delaware and has
all requisite partnership power and authority to own and operate the Business in
the places where the Business is now conducted and to directly own, lease, and
operate the Assets. Seller is duly qualified or licensed to do business as a
limited partnership and is in good standing in the Commonwealth of Virginia, and
is not required to be qualified in any other jurisdiction in which the nature of
its business or location of its properties requires such qualification or
licensing and where the failure to be so qualified would adversely affect the
Business.
(b) Equity Structure. Schedule 4.1(b) contains a complete and
----------------
accurate list of the equity interests owned of record by the holders of
outstanding Seller Equity Interests and their state or country of residence or,
in the case of entities other than individuals, their principal place of
business. As of the date of this Agreement, there are no equity interests
reserved for issuance upon the exercise of options or rights to purchase equity
interests of Seller.
(c) Authorization of Seller. Seller and each Partner that is not a
-----------------------
natural person has full organizational power and authority to enter into this
Agreement and the Escrow Agreement, to perform its obligations hereunder and
thereunder, and to consummate the transactions contemplated hereby and thereby,
including, without limitation, the execution and delivery of this Agreement and
the Escrow Agreement, general conveyances, bills of sale, assignments, and other
documents and instruments evidencing the conveyance of the Assets or delivered
in accordance with Section 6.2 hereunder (the "Seller Closing Documents"). Each
of the Seller and the Partners has taken all necessary and appropriate action
with respect to the execution and delivery of this Agreement, the Escrow
Agreement and the other Closing Documents. This Agreement, the Escrow Agreement
and the other Closing Documents constitute valid and binding obligations of
Seller and, to the extent that they are parties thereto, the Partners,
enforceable against them in accordance with their respective terms except as
limited by applicable bankruptcy, insolvency, moratorium, reorganization, or
other laws affecting creditors' rights and remedies generally or by general
principles of equity.
(d) Financial Information. Seller has furnished to Purchaser a
---------------------
complete and accurate copy of its audited balance sheet as of December 31, 1995
and 1994, and its audited statements of operations, cash flow and equity for its
fiscal years ended December 31, 1995, 1994 and 1993 and its unaudited balance
sheet as of December 31, 1996, and its unaudited statement of operations, cash
flow and equity for its fiscal year ended December 31, 1996 which has been
diligently prepared by management and reviewed by Seller's accountants (which,
collectively with the Closing Date Balance Sheet referred to in Section 3.3
hereof, shall be referred to herein for all purposes as, the "Financial
Statements"). The Financial Statements have been prepared in accordance with
generally accepted accounting principles ("GAAP") consistently applied and
fairly present the consolidated financial position of Seller as and at the dates
thereof and
6.
<PAGE>
Seller's consolidated results of operations and cash flows for the periods then
ended. The notes to the audited Financial Statements, if applicable, as at and
for each such period set forth in reasonable detail Seller's accounting
policies, principles and methods with respect to the calculation of its accounts
receivable (including policies for its warranty and bad debt reserves, revenue
recognition and capitalized software development costs). The projections of
Seller were prepared in good faith and are based on assumptions Seller believes
to be reasonable.
(e) Absence of Certain Changes and Events. Except as contemplated
-------------------------------------
herein, since December 31, 1996, there has not been:
(i) Any adverse change in the financial condition, results of
operation, assets, liabilities, business, or to the knowledge of Seller and the
Partners, any adverse change in the prospects of Seller, or any occurrence,
circumstance, or combination thereof which reasonably could be expected to
result in any such adverse change;
(ii) Any shortage of materials or supplies, fire, explosion,
accident, requisition or taking of property by any governmental agency, flood,
drought, earthquake, or other natural event, riot, act of God or a public enemy,
or damage, destruction, or other casualty, whether covered by insurance or not,
which has had an adverse effect on the Business or the Assets or any such event
which reasonably could be expected to have such an effect on the Business or the
Assets;
(iii) Any material transaction relating to the Business (other
than the transactions contemplated herein) which was entered into or carried out
by Seller other than in the ordinary and usual course of business;
(iv) Any material change made by Seller in its method of
operating the Business or its accounting practices relating thereto;
(v) Any mortgage, pledge, lien, security interest,
hypothecation, charge or other encumbrance imposed or agreed to be imposed on or
with respect to the Assets other than liens arising with respect to taxes not
yet due and payable, and such minor liens and encumbrances, if any, which arise
in the ordinary course of business and are not material in nature or amount
either individually or in the aggregate, and which do not detract from the value
of the Assets or impair the operations conducted thereon or any discharge or
satisfaction thereof;
(vi) Any sale, lease, or disposition of, or any agreement to
sell, lease, or dispose of any of the Assets, other than sales, leases, or
dispositions in the usual and ordinary course of business and consistent with
prior practice;
7.
<PAGE>
(vii) Any modification, waiver, change, amendment, release,
rescission, accord and satisfaction, or termination of, or with respect to, any
material term, condition, or provision of any contract, agreement, license, or
other instrument to which Seller is a party and relating to or affecting the
Business or the Assets, other than any satisfaction by performance in accordance
with the terms thereof in the usual and ordinary course of business and
consistent with prior practice;
(viii) Any labor disputes or disturbances materially affecting
in an adverse fashion the Business or the financial condition of Seller,
including, without limitation, the filing of any petition or charge of unfair
labor practices with the National Labor Relations Board;
(ix) Any written notice from any executive officer of Seller
or any employee of Seller who provides any services to the Business that such
employee has terminated, or intends to terminate, such employee's employment
with Seller;
(x) Any written notice from any supplier of goods to Seller
(a "Supplier") that any such Supplier will not continue to supply the current
level and type of goods currently being provided by such Supplier to Seller on
similar terms and conditions;
(xi) To the actual knowledge of Seller and the Partners, any
materially adverse facts relating to, or written indications from, vendors or
customers that may reasonably have a material adverse effect on the Business or
the Assets;
(xii) Any waivers by Seller of any rights of substantial value
relating to the Business; or
(xiii) Any purchase or lease of, or any agreements to purchase
or lease, capital assets relating to the Business by Seller in excess of $10,000
individually or in excess of $25,000 in the aggregate.
(f) Conduct of Business. At all times since December 31, 1996, Seller
-------------------
has conducted the Business diligently in the ordinary course thereof and used
reasonable commercial efforts to preserve intact the organization of the
Business and the good will of its customers, suppliers, and others having
business relations with Seller.
(g) Undisclosed Liabilities. There are no material debts,
-----------------------
liabilities, or obligations with respect to Seller or to which the Assets or
Business are subject, whether liquidated, unliquidated, accrued, absolute,
contingent, or otherwise, that are not specifically identified in the schedules
hereto or reflected in the Financial Statements, other than these incurred in
the ordinary course of business after the date hereof.
(h) Inventory. The Seller does not own or possess any inventory.
---------
8.
<PAGE>
(i) Taxes.
-----
(i) Definitions. For purposes of this Agreement:
-----------
a. the term "Taxes" means (A) all federal, state, local,
foreign and other net income, gross income, gross receipts, sales, use, ad
valorem, transfer, franchise, profits, license, lease, service, service use,
withholding, payroll, employment, excise, severance, stamp, occupation, premium,
property, windfall profits, customs, duties or other taxes, fees, assessments or
charges of any kind whatever, together with any interest and any penalties,
additions to tax or additional amounts with respect thereto, (B) any liability
for payment of amounts described in clause (A) whether as a result of transferee
liability, of being a member of an affiliated, consolidated, combined or unitary
group for any period, or otherwise through operation of law, and (C) any
liability for the payment of amounts described in clauses (A) or (B) as a result
of any tax sharing, tax indemnity or tax allocation agreement or any other
express or implied agreement to indemnify any other person; and the term "Tax"
means any one of the foregoing Taxes; and
b. the term "Returns" means all returns, declarations,
reports, statements and other documents required to be filed in respect of
Taxes, and the term "Return" means any one of the foregoing Returns.
(ii) At the Time of Closing, Seller will have properly
completed and filed on a timely basis and in correct form all Returns required
to be filed on or prior to the Time of Closing. There are no liens for Taxes on
the Assets, and all Taxes due or payable, and all interest and penalties
thereon, whether disputed or not, which could result in the imposition of any
lien on the Assets or against Purchaser, have been paid in full.
(iii) With respect to all amounts in respect of Taxes imposed
upon Seller, or for which Seller is liable, whether to taxing authorities (as,
for example, under law) or to other persons or entities (as, for example, under
tax allocation agreements), with respect to all taxable periods ending on or
before the Time of Closing and portions, through the Time of Closing, of periods
commencing before the Time of Closing and ending after the Time of Closing, all
applicable tax laws and agreements have been fully complied with, and all such
amounts due and payable by Seller to taxing authorities or others have been
paid.
(j) Compliance With Law. Schedule 4.1(j) sets forth all of Seller's
-------------------
franchises, licenses, permits, use permits, consents, authorizations, and
approvals of any federal, state, or local regulatory, administrative, or other
governmental or zoning agency or body relating to the Business (collectively
referred to herein as "Governmental Permits"). Seller has complied and is in
compliance with all applicable federal, state, and, to the best of Seller's and
each Partner's knowledge, foreign and local laws, statutes,
9.
<PAGE>
licensing requirements, rules, and regulations, and judicial or administrative
or zoning decisions. Seller has been granted all licenses, permits (temporary
and otherwise), authorizations, and approvals from federal, state, and local
government regulatory or zoning bodies necessary to carry on the Business and
maintain the Assets, all of which are currently valid and in full force and
effect. There is no order issued, investigation, or proceeding pending or to
Seller's and each Partner's knowledge, threatened against and no notice served
on Seller with respect to any violation of any law, ordinance, order, writ,
decree, rule, or regulation issued by any federal, state, local, or foreign
court or governmental agency or instrumentality.
(k) Governmental and Third Party Consents. Except as required by the
-------------------------------------
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and all rules
and regulations promulgated thereunder, no consent, approval, order, or
authorization of, or registration, qualification, designation, declaration, or
filing with any federal, state, local, or provincial governmental authority on
the part of Seller or any Partner is required in connection with the
consummation of the transactions contemplated hereunder. Except as indicated on
Schedule 1.1(b), no consent, approval or authorization of any third party (other
than Purchaser and parties related to Purchaser, such as lenders, stockholders
and similar persons) is required in connection with Seller's consummation of the
transactions contemplated hereunder.
(l) Intellectual Property Rights.
----------------------------
(i) Seller owns, or is licensed or otherwise entitled to
exercise, all Intellectual Property Rights without any conflict or infringement
of the rights of others of which Seller or any Partner has knowledge. All of
such Intellectual Property Rights are set forth in Schedule 1.1(d).
(ii) Schedule 1.1(c) also lists (i) all patents and all
registered copyrights, trade dress, trade names, trademarks, service marks and
other company, product or service identifiers and mask work rights included in
the Intellectual Property Rights, and specifies the jurisdictions in which each
such Intellectual Property Right has been registered, including the respective
registration numbers; (ii) all licenses, sublicenses and other agreements as to
which Seller is a party and pursuant to which Seller or any other person is
authorized to use any Intellectual Property Right; and (iii) all parties to whom
Seller has delivered copies of Seller source code, whether pursuant to an escrow
arrangement or otherwise, or parties who have the right to receive such source
code. Copies of all licenses, sublicenses, and other agreements identified
pursuant to clause (ii) above have been delivered by Seller to Purchaser.
(iii) Seller is not, or as a result of the execution and
delivery of this Agreement or the performance of Seller's obligations hereunder
will not be, in violation of, or lose or in any way impair any material rights
pursuant to any license, sublicense or agreement described in Schedule 1.1(c).
10.
<PAGE>
(iv) Seller is the absolute owner or licensee of, with all
necessary right, title and interest in and to (free and clear of any liens,
encumbrances or security interests), the Intellectual Property Rights and has
rights to the use, sale, license or disposal thereof or the material covered
thereby in connection with the services or products in respect of which the
Intellectual Property Rights are being used.
(v) No claims with respect to the Intellectual Property
Rights have been asserted or, to the best knowledge of Seller and each Partner,
are threatened by any person, and Seller knows of no claims (i) contesting the
right of Seller to use, sell, license or dispose of any Intellectual Property
Rights, or (ii) challenging the ownership, validity or effectiveness of any of
the Intellectual Property Rights.
(vi) Any and all patents and registered trademarks, service
marks, and other company, product or service identifiers and registered
copyrights held by Seller are valid and subsisting.
(vii) To Seller's and each Partner's knowledge, there has not
been and there is not now any unauthorized use, infringement or misappropriation
of any of the Intellectual Property Rights by any third party, including,
without limitation, any service provider of Seller; Seller has not been sued or
charged as a defendant in any claim, suit, action or proceeding which involves a
claim of infringement of any patents, trademarks, service marks, copyrights or
other intellectual property rights and which has not been finally terminated
prior to the date hereof; there are no such charges or claims outstanding; and
Seller does not have any infringement liability with respect to any patent,
trademark, service mark, copyright or other intellectual property right of
another.
(viii) No Intellectual Property Right is subject to any
outstanding order, judgment, decree, stipulation or agreement restricting in any
manner the licensing thereof by Seller. Seller has not entered into any
agreement to indemnify any other person against any charge of infringement of
any Intellectual Property Right. Seller has not entered into any agreement
granting any third party the right to bring infringement actions with respect
to, or otherwise to enforce rights with respect to, any Intellectual Property
Right. To the knowledge of Seller and the Partners, Seller has the exclusive
right to file, prosecute and maintain all applications and registrations with
respect to the Intellectual Property Rights.
(m) Restrictive Documents or Orders. Neither Seller nor any Partner
-------------------------------
is a party to or bound under any order, judgment, or decree, or any similar
restriction not of general application which adversely affects, or reasonably
could be expected to adversely affect the continued operation by Purchaser of
the Business after the Time of Closing on substantially the same basis as said
Business was theretofore operated.
(n) Contracts and Commitments.
-------------------------
11.
<PAGE>
(i) There is set forth on Schedule 1.1(b) a list of all
outstanding Contracts, whether or not in writing, to which Seller is a party, or
to which any of the Assets are subject except for any contracts where the dollar
amount involved is less than $10,000 and which are not, individually or in the
aggregate, material to the business, results of operations, financial condition
or prospects of Seller.
(ii) Seller has performed all of its obligations under the
terms of each Contract, and is not in default thereunder. To the best of
Seller's and each Partner's knowledge, no event or omission has occurred which
but for the giving of notice or lapse of time or both would constitute a default
by any party thereto under any such Contract. Each such Contract is valid and
binding on all parties thereto and in full force and effect except as limited by
applicable bankruptcy, insolvency, moratorium, reorganization, or other laws
affecting creditors' rights and remedies generally or by general principles of
equity. Seller has received no written or unwritten notice of default,
cancellation, or termination in connection with any such Contract.
(iii) Schedule 1.1(b) identifies all sole or limited source
supply agreements.
(o) Assets. The Assets consist of all the assets (other than the
------
Excluded Assets) necessary to operate the Business in the same manner as the
Business was operated by Seller immediately prior to the Time of Closing, and
none of the Partners, nor any family member or entity affiliated with any of the
Partners or any such family member owns, or has any interest in, any asset used
in the operation of the Business, except as set forth on the Disclosure
Schedule.
(p) Title to the Property.
---------------------
(i) Seller has good and marketable title to the Assets,
including all property listed on Schedule 1.1(a), free and clear of all liens.
Seller has a valid leasehold interests in all leased properties, free and clear
of all liens, listed on Schedule 1.1(i) as leased by Seller.
(ii) By virtue of the deliveries made at the Closing,
Purchaser will obtain good and marketable title to all of the Assets, free and
clear of all liens, and a valid leasehold interest in the real property
described in its lease agreement, free and clear of all liens, in each case
exclusive of any liens incurred by Purchaser.
(q) Litigation. Seller is not engaged in, and has not received any
----------
threat of, any litigation, arbitration, investigation, claim or other proceeding
relating to Seller or any employees, benefit plans, properties, Intellectual
Property Rights, the Business, the Assets, licenses, permits, or goodwill, or
against or affecting the actions taken or contemplated in connection therewith,
nor, to the best of the Seller's and each Partner's knowledge, is there any
reasonable basis therefor. There is no action, suit, proceeding,
12.
<PAGE>
or investigation pending or threatened against Seller or any Partner that
questions the validity of this Agreement, the Escrow Agreement, the other
Closing Documents or the right of Seller or the Partners to enter into this
Agreement, the Escrow Agreement, the other Closing Documents, or to consummate
the transactions contemplated hereby or thereby, or which might result in any
material adverse change in the Assets, the Business, condition, prospects or
properties of Seller. There is no action, suit, proceeding, or investigation by
Seller currently pending or which Seller currently intends to initiate. Seller
is not bound by any judgment, decree, injunction, ruling or order of any court,
governmental, regulatory or administrative department, commission, agency or
instrumentality, arbitrator or any other person which would or could have a
material adverse effect on the Business or the Assets.
(r) No Conflict or Default. Neither the execution and delivery of
----------------------
this Agreement or the Escrow Agreement, nor compliance with the terms and
provisions hereof and thereof, including, without limitation, the consummation
of the transactions contemplated hereby and thereby, will violate any statute,
regulation, or ordinance of any governmental or administrative authority, or
conflict with or result in the breach of any term, condition, or provision of
Seller's partnership agreement, as presently in effect, certificate of limited
partnership, or, except with respect to the required consents indicated on
Schedule 1.1(b), of any agreement, deed, contract, mortgage, indenture, writ,
order, decree, legal obligation or instrument to which Seller or any of the
Partners are a party or by which it or they or any of the Assets are or may be
bound, or constitute a default (or an event which, with the lapse of time or the
giving of notice, or both, would constitute a default) thereunder.
(s) Labor Relations.
---------------
(i) To the best of Seller's and each Partner's knowledge,
with respect to the Business, Seller has not failed to comply in any respect
with Title VII of the Civil Rights Act of 1964, as amended, the Fair Labor
Standards Act, as amended, the Occupational Safety and Health Act of 1970, as
amended, all applicable federal, state, and local laws, rules, and regulations
relating to employment, and all applicable laws, rules and regulations governing
payment of minimum wages and overtime rates, and the withholding and payment of
taxes from compensation of employees.
(ii) There are no labor controversies pending or threatened
between Seller and any of its employees (the "Employees") or any labor union or
other collective bargaining unit representing any of the Employees.
(iii) Seller has never entered into a collective bargaining
agree ment or other labor union contract relating to the Business and applicable
to the Employees.
13.
<PAGE>
(iv) Except as set forth on Schedule 4.1(s), there are no
written employment or separation agreements, or oral employment or separation
agreements other than those establishing an "at-will" employment relationship
between Seller and any of the Employees.
(v) Attached hereto as Schedule 4.1(s) is a list of all
employees of the Business.
(vi) All payments due from the Seller on account of employee
health and welfare insurance have been paid.
(vii) All severance and vacation and similar payments by the
Seller which are or were due under the terms of any agreement or otherwise have
been paid in full.
(t) Pension, Profit Sharing, etc. Seller has no "Employer Pension
-----------------------------
Benefit Plan" in effect, as such term is defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended.
(u) Brokers' and Finders' Fees/Contractual Limitations. Neither the
--------------------------------------------------
Partners nor Seller is obligated to pay any fees or expenses of any broker or
finder in connection with the origin, negotiation, or execution of this
Agreement or in connection with any transactions contemplated hereby, except for
the fees of Montgomery Securities, which fees are the obligation of the Partners
on behalf of Seller. Neither Seller nor any officer, director, employee,
partner, agent, or representative of Seller (collectively
"Agent/Representatives") are or have been subject to any agreement, letter of
intent, or understanding of any kind which prohibits, limits, or restricts
Seller or Agent/Representatives from negotiating, entering into and consummating
this Agreement and the transactions contemplated hereby.
(v) Interested Party Relationships. Neither the Partners nor Seller
------------------------------
(nor any family member of the Partners or any corporation, partnership, or other
entity which, directly or indirectly, alone or together with others, controls,
is controlled by, or is in common control with the Partners, Seller or any such
family member) have any material financial interest, direct or indirect, in any
material Supplier or customer, any party to any contract which is material to
the Business, or any competitor with the Business, except as provided in
Schedule 4.1(v).
(w) Certain Payments. In connection with the Business, Seller has not
----------------
and no person directly or indirectly on behalf of Seller has made or received
any payment that was not legal to make or receive.
(x) Customers. Except as indicated on Schedule 4.1(x) attached
---------
hereto, no single customer of Seller accounted for more than 5% of the net sales
of Seller
14.
<PAGE>
during the twelve-month period ended December 31, 1996. Seller has furnished
Purchaser with complete and accurate copies or descriptions of all current
agreements (written or unwritten) with such customers. Neither Seller nor the
Partners is actually aware of any event, happening, or fact which has led it or
him to believe that any of such customers will not continue their current level
of purchases after the Time of Closing.
(y) Books and Records. The books and records of Seller to which
-----------------
Purchaser and its accountants and attorneys have been given access are the true
books and records of Seller and truly and fairly reflect the underlying facts
and transactions in all material respects.
(z) Complete Disclosure. No representation or warranty made by Seller
-------------------
or any Partner in this Agreement, nor any document, written information,
statement, financial statement, certificate, schedule or exhibit prepared and
furnished by Seller or any Partner or its respective representatives pursuant
hereto or in connection with the transactions contemplated hereby, contains any
untrue statement of a material fact, or omits to state a material fact necessary
to make the statements or facts contained herein or therein not misleading in
light of the circumstances under which they were furnished. To the best
knowledge of Seller and any Partner, there is no event, fact or condition that
has resulted in any event, change or effect that is materially adverse to the
condition (financial or otherwise), properties, assets, liabilities, businesses,
operations, results of operations or prospects of Seller taken as a whole that
has not been set forth in this Agreement or in the Schedules hereto.
(aa) Insurance. Schedule 4.1(aa) lists all insurance policies and
---------
fidelity bonds covering the assets, business, equipment, properties, operations,
employees, officers and directors of Seller, the amounts of coverage under each
such policy and bond of Seller. Seller has not been refused any requested
coverage and no material claim made by Seller has been denied by the
underwriters of such policies or bonds. All premiums payable under all such
policies and bonds have been paid, and Seller is otherwise in full compliance
with the terms of such policies and bonds (or other policies and bonds providing
substantially similar insurance coverage). Seller is in compliance with each of
such policies. Seller does not know of any threatened termination of, the
invalidation of any coverage of or material premium increase with respect to,
any of such policies.
(ab) Environmental Matters. Except as set forth in Schedule 4.1(ab),
---------------------
Seller is not aware of any fact or circumstance which is reasonably expected to
involve Seller in any environmental litigation or impose upon Seller any
environmental liability which would have a material and adverse effect on the
business condition of Seller.
(ac) Backlog. Schedule 4.1(ac) hereto sets forth the backlog of
-------
orders relating to the Business that Seller is to ship and contract work to be
performed as of the date set forth on such schedule. Seller either possesses
sufficient inventory of parts,
15.
<PAGE>
materials and personnel to produce the same within their scheduled delivery
dates or such parts or materials have lead times such that Seller can acquire
such parts and materials in time to produce and ship such backlog in accordance
with its scheduled shipping date.
(ad) Purchase Entirely for Own Account. This Agreement is made with
---------------------------------
the Seller and the Partners in reliance upon Seller's and each Partner's
representation that the Purchase Shares to be received by Seller and each
Partner will be acquired for investment for Seller's or Partner's own account,
not as a nominee or agent, and not with a view to the resale or distribution of
any part thereof, and that Seller or Partner has no present intention of
selling, granting any participation in, or otherwise distributing the same,
except in each case for any subsequent resale or distribution effected pursuant
to an effective registration statement under the Securities Act of 1933, as
amended, or an available exemption from the registration requirements thereof.
(ae) Disclosure of Information. Seller and each Partner believes it
-------------------------
has received all the information it considers necessary or appropriate for
deciding whether to purchase the Purchase Shares.
(af) Investment Experience. Seller and each Partner can bear the
---------------------
economic risk of its investment, and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the investment in the Purchase Shares. Seller and each Partner also
represents it has not been organized for the purpose of acquiring the Purchase
Shares.
(ag) Accredited Investor. Except as set forth in Schedule 4.1(ag),
-------------------
Seller and each Partner is an "accredited investor" within the meaning of
Securities and Exchange Commission ("SEC") Rule 501 of Regulation D, as
presently in effect.
(ah) Restricted Securities. Seller and each Partner understands that
---------------------
the Purchase Shares it is receiving are characterized as "restricted securities"
under the federal securities laws inasmuch as they are being acquired in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Act only in certain limited circumstances. In this connection, Seller and
each Partner is familiar with SEC Rule 144, as presently in effect, and
understands the resale limitations imposed thereby and by the Act.
(ai) Legends. It is understood that the certificates evidencing the
-------
Purchase Shares may bear one or all of the following legends:
(i) "These securities have not been registered under the
Securities Act of 1933, as amended. They may not be sold, offered for sale,
pledged or hypothecated in the absence of a registration statement in effect
with respect to the
16.
<PAGE>
securities under such Act or an opinion of counsel satisfactory to the Company
that such registration is not required or unless sold pursuant to Rule 144 of
such Act."
(ii) Any legend required by the laws of any applicable
jurisdiction or any other state.
(aj) Service Provider Agreements. To the knowledge of Seller and the
---------------------------
Partners, no current or former employee of Seller is in violation of any term of
any employment agreement (whether written or verbal), patent or trademark
disclosure agreement, or any other contract or agreement relating to the
relationship of any such service provider with Seller or any other party
(including prior employers), or any term of any judgment, decree or order,
because of the nature of the business now conducted or now proposed to be
conducted by Seller. Each current and former service provider of Seller has
executed a proprietary information and inventions agreement (or similar
agreement) with Seller in the form then being used by Seller, which forms have
been previously delivered to Purchaser by Seller. Neither Seller nor any Partner
is aware that any of Seller's service providers is in violation thereof and each
will use all efforts to prevent any such violation. Neither Seller nor any
Partner is aware that any of Seller's service providers is obligated under any
contract (including licenses, covenants or commitments of any nature) or other
agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with the use of his or her best
efforts to promote the interests of Seller or that would conflict with Seller's
business as conducted or as proposed to be conducted.
(ak) Subsidiaries. Seller does not own or control, directly or
------------
indirectly, any corporation, partnership, business, trust or other entity.
(al) Exports to Certain Countries. For the five years preceding the
----------------------------
date hereof, Seller has made no sales to entities located or residing or
domiciled in, directly or indirectly, Cuba, North Korea, Libya, Iraq, Iran or
any other countries prohibited by U.S. export control laws.
(am) Foreign Corrupt Practices Act. Seller and each Partner has no
-----------------------------
knowledge or reason to believe that any of the activities or types of conduct
below have been or may have been engaged in by Seller, either directly or
indirectly:
(i) Any bribes or kickbacks to government officials or their
relatives, or any other payments to such persons, whether or not legal, to
obtain or retain business or to receive favorable treatment with regard to
business; or
(ii) Any bribes or kickbacks to persons other than government
officials, or to relatives of such persons, or any other payments to such
persons or their relatives, whether or not legal, to obtain or retain business
or to receive favorable treatment with regard to business; or
17.
<PAGE>
(iii) Any illegal contributions made to any political party,
political candidate or holder of governmental office; or
(iv) Any bank accounts, funds or pools of funds created or
maintained without being reflected on the corporate books of account, or as to
which the receipts and disbursements therefrom have not been reflected on such
books; or
(v) Any receipts or disbursements, the actual nature of which
has been "disguised" or intentionally misrecorded on the corporate books of
account; or
(vi) Any payments or reimbursements made to personnel of the
Company for the purposes of enabling them to expend time or to make
contributions or payments of the kind or for the purpose referred to in
subparagraphs (i)-(vi) above. In addition, Seller and the Partners have no
reason to believe that Seller has violated the United States Corrupt Foreign
Practices Act or any other similar laws, statute, rule or regulation of any
country.
Section 4.2 Representations and Warranties of P-COM and Purchaser.
----------- -----------------------------------------------------
Except as set forth in a letter (Schedule 4.2) specifically referring to this
Section 4.2 of this Agreement (the "P-COM/Purchaser Disclosure Letter")
delivered by P-COM and Purchaser to Seller and the Partners, each of P-COM and
Purchaser hereby represent and warrant to Seller and the Partners that as of the
date hereof and at and as of the Closing Date:
(a) Organization. Each of P-COM and Purchaser is a corporation duly
------------
organized and validly existing under the laws of the State of Delaware, and has
all corporate power and authority to lease, own, and operate its properties and
carry on its business and operations and to directly own, lease, and operate its
assets. Each of P-COM and Purchaser is duly qualified or licensed to do
business as a corporation, and is in good standing in each jurisdiction where
the failure to qualify would have a material adverse effect on its business and
operations. Each of P-COM and Purchaser has made available to Seller complete
and accurate copies of its Certificates of Incorporation and Bylaws and all
amendments thereto, and minutes and actions of all meetings of its Board of
Directors and its stockholders. No corporate actions have been approved or
taken by P-COM's or Purchaser's Board of Directors or stockholders that are not
reflected in such minutes and actions.
(b) Brokers' and Finders' Fees/Contractual Limitations. Neither P-COM
--------------------------------------------------
nor Purchaser is obligated to pay any fees or expenses of any broker or finder
in connection with the origin, negotiation, or execution of this Agreement, the
Escrow Agreement, or in connection with any transactions contemplated hereby
that Seller or the Partners would be required or obligated to make or pay.
Neither P-COM nor Purchaser nor any officer, director, employee, agent, or
representative of either P-COM
18.
<PAGE>
or Purchaser (collectively, the "Purchaser's Representatives") is or has been
subject to any agreement, letter of intent, or understanding of any kind which
prohibits, limits, or restricts P-COM, Purchaser or Purchaser's Representatives
from negotiating, entering into, and consummating this Agreement, the Escrow
Agreement, and the transactions contemplated hereby and thereby.
(c) Valid Issuance of Purchase Shares. The Purchase Shares, when
---------------------------------
issued and delivered in accordance with the terms hereof and for the
consideration expressed herein, will be duly and validly issued, fully paid and
nonassessable and will be issued in compliance with all applicable federal and
state securities laws.
(d) SEC Filings. P-COM has filed all forms, reports and documents
-----------
required to be filed with the Securities and Exchange Commission ("SEC") since
March 2, 1995, and has provided or made available to Seller and the Partners:
(i) its Annual Report on Form 10-K for the fiscal year ended December 31, 1995,
(ii) its Quarterly Reports on Form 10-Q for the periods ended March 31, 1996,
June 30, 1996 and September 30, 1996 (iii) the proxy statement relating to
Purchaser's 1996 annual meeting of shareholders, (iv) the two prospectuses which
form part of the two registration statements on Form S-1 declared effective by
the SEC on March 2, 1995 and August 17, 1995, respectively, and (v) the
prospectus which forms part of the registration statement on Form S-3 declared
effective by the SEC on May 16, 1996 (collectively, the "P-COM SEC Reports").
The P-COM SEC reports were prepared in accordance with the requirements of the
Securities Act or the Securities Exchange Act of 1934, as amended, as the case
may be, and did not at the time they were filed or declared effective, as the
case may be, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except to the extent corrected by a document subsequently
filed with the SEC or publicly disseminated.
(e) Authorization of Seller. P-COM and Purchaser have full power and
-----------------------
authority to enter into this Agreement, the Escrow Agreement, and the
Registration Rights Agreement, to perform their obligations hereunder and
thereunder, and to consummate the transactions contemplated hereby and thereby,
including, without limitation, the execution and delivery of this Agreement, the
Escrow Agreement, the Registration Rights Agreement, and those other documents
and instruments evidencing the purchase of the Assets or the assumption of the
Assumed Liabilities by Purchaser or delivered in accordance with Section 6.3
hereunder (the "Purchaser Closing Documents"). P-COM and Purchaser have taken
all necessary and appropriate action with respect to the execution and delivery
of this Agreement, the Escrow Agreement, the Registration Rights Agreement and
the other Purchaser Closing Documents, as applicable. This Agreement, the
Escrow Agreement, the Registration Rights Agreement and the other Purchaser
Closing Documents constitute valid and binding obligations of P-COM and
Purchaser, as applicable, enforceable in accordance with their respective terms
except as
19.
<PAGE>
limited by applicable bankruptcy, insolvency, moratorium, reorganization, or
other laws affecting creditors' rights and remedies generally or by general
principles of equity.
(f) Absence of Certain Changes and Events. Except as contemplated
-------------------------------------
herein, since December 31, 1996, there has not been any material adverse change
in the financial condition or results of operation of P-COM; provided, however,
that for purposes of this Section 4.2(f), a change in the price of P-COM's
Common Stock as quoted on the Nasdaq NMS shall not be deemed a material adverse
change.
(g) Government Consents. Except as required by the Hart-Scott-Rodino
-------------------
Antitrust Improvements Act of 1976, as amended, and all rules and regulations
promulgated thereunder, and except as required under any state securities laws,
if applicable, no consent, approval, order, or authorization of, or
registration, qualification, designation, declaration, or filing with any
federal, state, local, or provincial governmental authority on the part of P-COM
or Purchaser is required in connection with the consummation of the transactions
contemplated hereunder.
(h) Litigation. There is no action, suit, proceeding, or
----------
investigation pending or, to the best knowledge of P-COM and Purchaser,
threatened against P-COM or Purchaser that questions the validity of this
Agreement, the Escrow Agreement, the Registration Rights Agreement, the other
Purchaser Closing Documents or the right of P-COM and Purchaser to enter into
this Agreement, the Escrow Agreement, the Registration Rights Agreement and the
other Purchaser Closing Documents or to consummate the transactions contemplated
hereby or thereby.
(i) No Conflict or Default. Neither the execution and delivery of
----------------------
this Agreement nor the agreements contemplated hereby, nor compliance with the
terms and provisions hereof and thereof, including, without limitation, the
consummation of the transactions contemplated hereby and thereby, will conflict
with or result in the breach of any term, condition, or provision of P-COM's or
Purchaser's certificate of incorporation or bylaws, or of any material
agreement, deed, contract, mortgage, indenture, writ, order, decree, legal
obligation or instrument to which Purchaser is a party or by which it is or may
be bound, except as set forth in the P-COM/Purchaser Disclosure Letter, or
constitute a default (or an event which, with the lapse of time or the giving of
notice, or both, would constitute a default) thereunder.
ARTICLE V
---------
COVENANTS
---------
Section 5.1 Covenants Against Disclosure. The parties agree to
----------- ----------------------------
maintain the confidentiality of the terms and conditions of this Agreement,
except to the extent required by law and pursuant to the public reporting
obligations of Purchaser. No party shall disseminate (except to the parties to
this Agreement) any press release or
20.
<PAGE>
announcement concerning the transactions contemplated by this Agreement or the
Escrow Agreement or the parties hereto or thereto without the prior written
consent of Seller and Purchaser, except as required under the public reporting
obligations of Purchaser or as may be required to obtain consents necessary
pursuant to Sections 7.1(f) and 7.2(e) hereof to consummate the transactions
contemplated herein; provided that Purchaser shall issue a press release in form
and substance reasonably acceptable to Seller describing the transaction
contemplated herein at any time within ten (10) days after the date hereof and
within ten (10) days after the Time of Closing.
Section 5.2 Non-Competition.
----------- ---------------
5.2.1 Commencing on the Time of Closing and continuing for the
-----
later of three (3) years thereafter or, in the case of Partners who are
employees of Seller, one year after such Partner ceases employment with the
Purchaser, Seller and each of the Partners (provided, however, that the
obligations of Katie Grammes hereunder shall only arise in the event that she
enters into an employment agreement with Purchaser pursuant to Section 6.3(e)
hereof) other than (i) Columbia Spectrum Management Investors L.P. ("CSM
Investors L.P.") which shall be subject instead to Section 4.2.2 hereof, and
(ii) Comsearch and Thomas Lusk, who shall not be subject to this covenant, agree
individually, that it, he, or she shall not engage (except in his or her
capacity as an officer, director, and/or employee of Purchaser), directly or
indirectly, whether on its, his, or her own account or as a shareholder (other
than as a less than 1% shareholder of a publicly-held company (other than P-
COM)), partner, joint venturer, employee, consultant, advisor, and/or agent, of
any person, firm, corporation, or other entity, in any or all of the following
activities in any geographic area or territory in which Purchaser, any of its
affiliates (which for purposes of this Section 5.2 shall include any company or
business which Purchaser or its affiliates has or will acquire) or Seller does
business, has ever done business or sought to do business:
(a) Enter into or engage in the Business, including, but not limited
to, the business of providing hardware or services related to microwave path
relocation for Personal Communications Systems ("PCS") or Mobile Satellite
Systems ("MSS");
(b) Solicit customers, suppliers, or business patronage which results
in competition with Purchaser or any of its affiliates, in the Business,
including, but not limited to, the business of providing hardware or services
related to microwave path relocation for PCS or MSS; or
(c) Encourage or solicit any employees of Purchaser or any of its
affiliates to leave the employment of Purchaser or any of its affiliates for any
reason; or
(d) Promote or assist, financially or otherwise, any person, firm,
association, corporation, or other entity engaged in the Business, including,
but not
21.
<PAGE>
limited to, the business of providing hardware or services related to microwave
path relocation for PCS or MSS.
5.2.2 Commencing on the Time of Closing and continuing for three
-----
(3) years thereafter, CSM Investors L.P. agrees it shall not engage, directly or
indirectly, whether on its own account or as a shareholder (other than as a less
than 1% shareholder of a publicly-held company (other than P-COM)), partner,
joint venturer, employee, consultant, advisor, and/or agent, of any person,
firm, corporation, or other entity, in any or all of the following activities in
any geographic area or territory in which Purchaser, any of its affiliates
(which for purposes of this Section 5.2 shall include any company or business
which Purchaser or its affiliates has or will acquire) or Seller does business,
has ever done business or sought to do business:
(a) Enter into or engage in the business of providing hardware or
services related to microwave path relocation for PCS or MSS; or
(b) Solicit customers, suppliers, or business patronage which results
in competition with Purchaser or any of its affiliates, in the business of
providing hardware or services related to microwave path relocation for PCS or
MSS; or
(c) Encourage or solicit any employees of Seller hired by Purchaser or
any of its affiliates to leave the employment of Purchaser or any of its
affiliates for any reason; or
(d) Promote or assist, financially or otherwise, any person, firm,
association, corporation, or other entity engaged in the business of providing
hardware or services related to microwave path relocation for PCS or MSS.
5.2.3 CSM Investors L.P. further covenants and agrees that each of
-----
its partners shall agree in writing to be individually bound by the terms of
this Section 5.2.3 as if a signatory hereto; provided, however, that the
obligations of each such partner shall not apply to the holding of minority
equity investments in other entities without direct participation in the
management or operation of such entity's business.
5.2.4 Without limitation, the parties agree and intend that the
-----
covenants contained in this Section 5.2 shall be deemed to be a series of
separate covenants and agreements, one for each and every county of each state
and political sub division in any geographic area or territory in which
Purchaser, any of its affiliates (which for purposes of this Section 5.2 shall
include any company or business which Purchaser or its affiliates has or will
acquire) or Seller does business, has ever done business or sought to do
business. If, in any judicial proceeding, a court shall refuse to enforce in
such action any of the separate covenants deemed included herein, then at the
option of Purchaser, wholly-unenforceable covenants shall be deemed eliminated
from the
22.
<PAGE>
provisions hereof for the purpose of such proceeding to the extent necessary to
permit the remaining separate covenants to be enforced in such a proceeding.
5.2.5 The parties agree that due to the unique nature of the
-----
services and capabilities of Seller and the Partners, there can be no adequate
remedy at law for any breach of their obligations hereunder, that any such
breach may allow Seller or any of the Partners and/or third parties to unfairly
compete with Purchaser resulting in irreparable harm to Purchaser, and
therefore, that upon any such breach or any threat thereof, Purchaser shall be
entitled to appropriate equitable relief in addition to whatever remedies it
might have at law. Further, Purchaser shall be entitled to indemnification by
Seller and the Partners, individually and not jointly, from any loss or harm,
including, without limitation, attorney's fees, in connection with any breach,
or any enforcement, of each of their obligations hereunder.
5.2.6 Seller and the Partners represent and warrant to Purchaser
-----
that the covenants of Seller and each of the Partners in this Section 5.2 are
reasonably necessary for the protection of Purchaser's interests under this
Agreement and are not unduly restrictive upon Seller or any of the Partners.
Section 5.3 Maintenance of Business. During the period from the date
----------- -----------------------
of this Agreement and continuing until the earlier of the termination of this
Agreement or the Time of Closing, Seller shall carry on its business in the
usual, regular and ordinary course in substantially the same manner as conducted
prior to the date of this Agreement and, to the extent consistent with such
business, use commercially reasonable efforts to preserve intact its present
business organizations, keep available the services of its present service
providers and preserve its relationships with customers, suppliers,
distributors, licensors, licensees, and others having business dealings with it,
so as to maintain its goodwill and ongoing businesses. Seller shall promptly
notify Purchaser of any event or occurrence not in the ordinary course of
business of Seller, and any event which could have a material and adverse effect
on the business condition of Seller. Except as expressly contemplated by this
Agreement, Seller, without the prior written consent of Purchaser shall not:
(a) Enter into any commitment or transaction not in the ordinary
course of business to be performed over a period longer than six (6) months in
duration, or, except as in accordance with its existing capital budget
previously disclosed to Purchaser, to purchase fixed assets with an aggregate
purchase price exceeding $5,000;
(b) Transfer to any person or entity any rights to the Seller's
Intellectual Property Rights, except licenses of Intellectual Property Rights in
connection with the sale of Seller's products in the ordinary course of business
consistent with past practice;
23.
<PAGE>
(c) Breach, amend or otherwise materially modify the terms of any
Contract;
(d) Except with prior consultation with Purchaser, commence a
lawsuit other than for the routine collection of bills;
(e) Issue, deliver or sell or authorize or propose the issuance,
delivery or sale of or authorization of, the purchase of any Seller Equity
Interests or subscriptions, rights, warrants or options to acquire, or other
agreements or commitments of any character obligating it to issue any such
equity interests or other convertible securities, other than the issuance of
Seller Equity Interests upon the exercise of previously outstanding options and
warrants to purchase Seller Equity Interests;
(f) Cause or permit any amendments to Seller's partnership agreement;
(g) Acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, association or other business
organization or division thereof, or otherwise acquire or agree to acquire any
assets which are material, individually or in the aggregate, to the business
condition of Seller;
(h) Sell, lease, license or otherwise dispose of any of its properties
or assets except in the ordinary course of business;
(i) Incur any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities or guarantee any debt
securities of others;
(j) Adopt or amend any employee benefit plans, or enter into any
employment contract, except in compliance with the terms of preexisting service
agreements, or increase the salaries or wage rates of its employees other than
pursuant to scheduled employee reviews under Seller's normal employee review
cycle or in connection with the hiring of employees other than officers in the
ordinary course of business, in all cases consistent with past practice, or
otherwise increase or modify the compensation or benefits payable or to become
payable by Seller to any of its service providers;
(k) Engage in any activities or transactions that are outside the
ordinary course of its business consistent with past practice;
(l) Fail to pay or otherwise satisfy its material monetary obligations
as they become due or consistent with past practice, except such as are being
contested in good faith;
24.
<PAGE>
(m) Waive or commit to waive any rights of substantial value;
(n) Cancel, amend or, other than in the ordinary course upon
expiration of a policy term, renew any material insurance policy;
(o) Alter, or enter into any commitment to materially alter, its
interest in any corporation, association, joint venture, partnership or business
entity in which Seller directly or indirectly holds any interest on the date
hereof;
(p) Agree (in writing or otherwise) to take, any of the actions
described in this Section 4.3 or any action which would make any of the
representations or warranties or covenants of Seller and the Partners contained
in this Agreement materially untrue or incorrect as of the Closing Date; or
(q) Hire, or enter into any commitment to hire, any additional
employees or service providers of Seller.
Section 5.4 Access to Information. Each of Seller, P-COM and
----------- ---------------------
Purchaser will give the other and their respective accountants, legal counsel
and other representatives full access, during normal business hours, to all of
the properties, books, contracts, commitments, and records relating to the
Business, the Assets and the business of P-COM and Purchaser, and Seller will
furnish to P-COM and Purchaser, their respective accountants, legal counsel, and
other representatives during such period all such information concerning the
Business or the Assets as P-COM and Purchaser may reasonably request; provided,
that any furnishing of such information pursuant hereto or any investigation by
P-COM, Purchaser or Seller shall not affect such party's right to rely on the
representations, warranties, agreements and covenants made by the parties in
this Agreement. Seller and the Partners shall cooperate with P-COM and the
Purchaser in auditing the financial statements of Seller, including, but not
limited to, executing any and all written representations reasonably required by
Purchaser's accountants.
Section 5.5 Other Discussions. From the date hereof until the
----------- -----------------
earlier of the Time of Closing or the termination of this Agreement, neither
Seller, nor any officer, director, employee, shareholder, agent, or
representative of Seller (collectively, "Agent/Representatives") shall discuss
or negotiate on its or their behalf, with any other party, concerning the
possible disposition of the Business or the Assets. If Seller or any of the
Agent/Representatives receives any inquiries from another party relating to any
proposed disposition of the Business or the Assets following the date hereof,
Seller shall promptly (a) advise such party that Seller is not entitled to enter
into any such discussions or negotiations and (b) notify P-COM and Purchaser of
such inquiry.
Section 5.6 Assignment of Contracts. Seller and the Partners shall
----------- -----------------------
use their best efforts to assist P-COM and Purchaser in obtaining good and
sufficient assignments to Purchaser of the Contracts and Seller's rights
thereunder.
25.
<PAGE>
Section 5.7 Relocation of Seller's Facilities. From the Time of
----------- ---------------------------------
Closing until two (2) years after the Time of Closing, P-COM and Purchaser will
not relocate the Business Premises outside of the Northern Virginia area without
the prior written consent of a majority in interest of the Partners then
providing services to P-COM or Purchaser.
Section 5.8 Registration Rights. P-COM hereby agrees to grant
----------- -------------------
registration rights to the Partners as set forth in the Registration Rights
Agreement attached hereto as Exhibit 5.8 (the "Registration Rights Agreement").
Section 5.9 Termination of Employment Agreements. Seller agrees to
----------- ------------------------------------
terminate all employment agreements between Seller and its officers and
employees prior to the Time of Closing.
Section 5.10 Collection of Pre-Closing Receivables.
------------ -------------------------------------
(a) Purchaser shall, from and after the Closing Date until 180 days
after the Closing Date (the "Collection Period), use its reasonable efforts to
collect for Seller's account the Pre-Closing Receivables.
(b) All amounts relating to the Business received by Purchaser from
obligors under the Pre-Closing Receivables (including any such obligors that are
also indebted to Purchaser) shall be applied by Purchaser in accordance with the
obligors' instructions; provided, however, that if such instructions are not
-----------------
obtained, such amounts shall be applied first to the oldest outstanding invoice
in respect of which such obligor is indebted to either of Seller or Purchaser.
(c) During the Collection Period, as often as is practicable upon the
reasonable request of the Partners, Purchaser shall deliver to Seller a
statement setting forth in reasonable detail the amount of proceeds collected by
Purchaser up to such date and shall concurrently remit to Seller an amount equal
to the amount, if any, by which such collections exceeded such payments.
(d) Seller and Purchaser shall cooperate in all matters necessary or
appropriate to carry out fully the purposes and intent of this Section 5.10.
ARTICLE VI
----------
CLOSING
-------
Section 6.1 Time of Closing. The transactions contemplated by this
----------- ---------------
Agreement shall be completed (the "Closing") on the first business day on which
the last of the conditions contained in Article VII hereof is fulfilled or
waived (the "Time of
26.
<PAGE>
Closing"), with the expectation that the Closing shall occur on or about
February 24, 1997 unless otherwise agreed to in writing by Seller. The Closing
shall take place at the offices of Brobeck, Phleger & Harrison LLP, Two
Embarcadero Place, 2200 Geng Road, Palo Alto, California, 94303 or at such other
place or date as may be agreed to in writing by P-COM, Purchaser and Seller.
The "Closing" shall mean the deliveries to be made by the parties hereto at the
Time of Closing in accordance with this Agreement.
Section 6.2 Deliveries by Seller. At the Closing, the Partners and
----------- --------------------
Seller, as applicable, shall deliver to Purchaser, all duly and properly
executed, the following:
(a) A good and sufficient Bill of Sale for the Assets, in a form
mutually agreed to by Seller and the Purchaser, selling, delivering,
transferring, and assigning to Purchaser title to all of Seller's right, title,
and interest to the Assets, free and clear of all mortgages, pledges, liens,
encumbrances, security interests, equities, charges, and restrictions of any
nature whatsoever.
(b) An opinion of Covington & Burling, counsel to Seller and the
Partners, dated the date of the Closing, in a form mutually agreed to by Seller
and the Purchaser, customary for counsel to Seller.
(c) The Escrow Agreement.
(d) Offer letters and employment agreements offering employment to
those individuals listed on Schedule 6.2(d) in a form mutually agreed to by
Seller and the Purchaser, executed by such employees.
(e) Executed Proprietary Information and Inventions Agreement from
each employee and/or consultant listed on Schedule 6.2(e) in a form mutually
agreed to by Seller and the Purchaser.
(f) An affidavit of Seller, stating, under penalty of perjury,
Seller's United States taxpayer identification number and that Seller is not a
foreign person, pursuant to Section 1445(b)(2) of the Code.
(g) A good and sufficient Assignment and Assumption of the Contracts
that are Assumed Liabilities, in a form mutually agreed to by Seller and the
Purchaser (the "Assignment").
(h) A good and sufficient Assignment of the trade names and other
intellectual property rights, selling, delivering, transferring, and assigning
to Purchaser title to all of Seller's right, title, and interest to such trade
names and other intellectual property rights.
(i) The Registration Rights Agreement.
27.
<PAGE>
(j) A certificate executed by its President, dated the date of the
Closing, to the effect that the conditions set forth in subsections (a), (b),
(c) and (d) of Section 7.1, have been satisfied.
Section 6.3 Deliveries by Purchaser. At the Closing, P-COM and
----------- -----------------------
Purchaser, as applicable, shall deliver, or cause to be delivered, to Seller
and/or the Partners, as applicable, all duly and properly executed, the
following:
(a) The payments set forth in Section 3.2.
(b) The Assignment.
(c) The Escrow Agreement.
(d) The Registration Rights Agreement.
(e) Executed offer letters and employment agreements offering
employment to those individuals listed to Schedule 4.1(s) in a form mutually
agreed to by Seller and the Purchaser.
(f) Stock certificates or other evidence satisfactory to Seller and
the Partners of the Purchase Shares, issued in accordance with Section 3.2(b).
(g) An opinion of Brobeck, Phleger & Harrison LLP, counsel to P-COM
and the Purchaser, dated as of the date of the Closing, in a form mutually
agreed to by Seller and the Purchaser, customary for counsel to Purchaser.
(h) A certificate executed by its President, dated the date of the
Closing, to the effect that the conditions set forth in subsections (a) and (b)
of Section 7.2 have been satisfied.
Section 6.4 Further Assurances. At or after the Time of Closing,
----------- ------------------
each party shall prepare, execute, and deliver, at the preparer's expense, such
further instruments of conveyance, sale, assignment, or transfer, and shall take
or cause to be taken such other or further action, as any party shall reasonably
request of any other party at any time or from time to time in order to perfect,
confirm, or evidence in Purchaser title to all or any part of the Assets or to
consummate, in any other manner, the terms and provisions of this Agreement.
ARTICLE VII
-----------
CONDITIONS PRECEDENT TO OBLIGATIONS
-----------------------------------
28.
<PAGE>
Section 7.1 Conditions to Obligations of P-COM and Purchaser. Each
----------- ------------------------------------------------
and every obligation of P-COM and Purchaser to be performed at the Closing shall
be subject to the satisfaction as of or before the Time of Closing of the
following conditions (unless waived in writing by P-COM or Purchaser, as
applicable):
(a) Representations and Warranties. The representations and
------------------------------
warranties of Seller and the Partners set forth in Section 4.1 of this Agreement
shall have been true and correct in all material respects when made and shall be
true and correct in all material respects at and as of the Time of Closing as if
such representations and warranties were made as of such date and time.
(b) Performance of Agreement. All covenants, conditions, and other
------------------------
obligations under this Agreement which are to be performed or complied with by
the Partners and Seller, as the case may be, including Executive Committee and
partner approval, shall have been fully performed and complied with in all
material respects at or prior to the Time of Closing, including, without
limitation, the delivery of the instruments and documents in accordance with
Section 6.2 hereof.
(c) No Material Adverse Change. There shall have been no material
--------------------------
adverse change in the financial condition, prospects, business or properties of
Seller which materially adversely affects the conduct of the Business as
presently being conducted or the financial condition, business, or properties of
Seller since December 31, 1996.
(d) Absence of Governmental or Other Objection. There shall be no
------------------------------------------
pending or threatened lawsuit challenging the transaction by any body or agency
of the federal, state, or local government or by any third party, and the
consummation of the transaction shall not have been enjoined by a court of
competent jurisdiction as of the Time of Closing and any applicable waiting
period under any applicable federal law shall have expired.
(e) Approval of Documentation. The form and substance of all
-------------------------
certificates, instruments, opinions, and other documents delivered or to be
delivered to Purchaser and P-COM under this Agreement shall be satisfactory to
Purchaser and P-COM and their counsel in all reasonable respects.
(f) Third Party Consents. Seller and each Partner shall have obtained
--------------------
all third party consents and approvals and assignments to the Contracts with
BellSouth Personal Communications, Inc. and Sprint Spectrum, L.P.
(g) Comsearch Agreement. Seller shall have entered into an agreement
-------------------
with Comsearch in a form satisfactory to Purchaser.
29.
<PAGE>
Section 7.2 Conditions to Obligations of Seller. Each and every
----------- -----------------------------------
obligation of Seller to be performed at the Time of Closing shall be subject to
the satisfaction as of or before such time of the following conditions (unless
waived in writing by Seller):
(a) Performance of Agreement. All covenants, conditions, and other
------------------------
obligations under this Agreement which are to be performed or complied with by
Purchaser and P-COM shall have been fully performed and complied with in all
material respects at or prior to the Time of Closing, including, without
limitation, the delivery of the instruments and documents in accordance with
Section 6.3 hereof.
(b) Representations and Warranties. The representations and
------------------------------
warranties of Purchaser and P-COM set forth in Section 4.2 of this Agreement
shall have been true and correct in all material respects when made and shall be
true and correct in all material respects at and as of the Time of Closing as if
such representations and warranties were made as of such date and time.
(c) Approval of Documentation. The form and substance of all
-------------------------
certificates, instruments, opinions, and other documents delivered or to be
delivered to Seller and the Partners under this Agreement shall be satisfactory
to Seller and the Partners and their respective counsel in all reasonable
respects.
(d) Absence of Governmental or Other Objection. There shall be no
------------------------------------------
pending or threatened lawsuit challenging the transaction by any body or agency
of the federal, state, or local government or by any third party, and the
consummation of the transaction shall not have been enjoined by a court of
competent jurisdiction as of the Time of Closing and any applicable waiting
period under any applicable federal law shall have expired.
(e) Third Party Consents. Seller and each Partner shall have obtained
--------------------
all third party consents and approvals and assignments to the Contracts with
BellSouth Personal Communications, Inc. and Sprint Spectrum, L.P.
ARTICLE VIII
------------
INDEMNIFICATION
---------------
Section 8.1 Survival of Representations, Warranties, Covenants and
----------- ------------------------------------------------------
Agreements.
- - ----------
(a) Notwithstanding any investigation conducted at any time with
regard thereto by or on behalf of any party, all representations, warranties,
covenants and agreements of the parties shall survive the execution, delivery
and performance of
30.
<PAGE>
this Agreement for a period of two (2) years, except as otherwise specified in
Section 8.1(e). All representations and warranties of the parties set forth in
this Agreement shall be deemed to have been made again by each party at and as
of the Closing.
(b) As used in this Article VIII, any reference to a representation,
warranty, agreement or covenant contained in any section of this Agreement shall
include the schedule (which, if in a form different at the Time of Closing from
the date hereof, shall be in a form reasonably acceptable to Purchaser and P-COM
as of the date hereof and as of the Closing) relating to such section.
(c) Except as otherwise specified in Section 8.1(e), Purchaser and its
affiliates shall, absent fraud, have recourse only to the assets in the escrow
for the obligations of Seller and the Partners under this Agreement.
(d) The indemnity obligations of the parties shall terminate two (2)
years after the Closing. Notwithstanding the expiration date of the
representations, warranties, covenants and agreements set forth herein, if
Purchaser or its affiliates shall notify Seller and the Partners with respect to
the submission of a claim during the time period of survivability of such
representation, warranty, covenant or agreement, Seller's and each Partner's
liability or obligation for Damages with respect to such claim shall continue in
full force and effect until settled by mutual agreement or arbitration pursuant
to Section 10.11 with respect to those claims timely made. Such notice shall
specify in reasonable detail the basis of such claim.
(e) Notwithstanding anything in this Agreement to the contrary, the
covenants contained in Article X and Sections 5.2 and 5.7 (which shall survive
in accordance with their terms) and the related indemnification rights thereto
shall be deemed to be separate and apart from any of the limitations set forth
in Article VIII of this Agreement and the terms of the Escrow Agreement. In
addition, the responsibilities of each of the Seller (but not the Partners) and
the Purchaser (but not P-COM) with respect to the liabilities that each party
shall either assume or retain, as applicable, pursuant to Article II hereof
shall survive indefinitely and shall not be affected by any limitations on
indemnification provided herein.
Section 8.2 Seller and Partner Indemnification.
----------- ----------------------------------
(a) Seller and each of the Partners hereby agree, jointly and
severally, to indemnify and hold harmless Purchaser and its officers, directors
and other affiliates against any and all losses, liabilities, damages, demands,
claims, suits, actions, judgments, and causes of action, assessments, costs, and
expenses, including, without limitation, interest, penalties, attorneys' fees,
any and all expenses incurred in investigating, preparing, and defending against
any litigation, commenced or threatened, and any claim whatsoever, and any and
all amounts paid in settlement of any claim or litigation (collectively,
"Damages"), asserted against, resulting from, imposed upon, or
31.
<PAGE>
incurred or suffered by Purchaser or its officers, directors and other
affiliates, directly or indirectly, as a result of or arising from (1) any
inaccuracy in or breach or nonfulfillment of any of the representations,
warranties, covenants, or agreements made by any of the Partners or Seller in
this Agreement or any facts or circumstances constituting such an inaccuracy,
breach, or nonfulfillment, (2) any failure of Seller or any Partner to pay,
perform or discharge any of the Liabilities (other than Assumed Liabilities),
(3) the conduct of the Business or the ownership or use of the Assets at any
time prior to or as of the Time of Closing, or (4) regardless of any
disclosures, any liabilities of the Partners or Seller, other than Assumed
Liabilities, imposed upon Purchaser or any Affiliate as transferee of the Assets
or otherwise, including, without limitation, any liability arising out of any
lien or any obligation or claim brought by creditors of Seller or claims based
on the premise that the sale of the Assets did not comply with any bulk sales
provisions and any liability, arising out of Seller's obligations to Seller's
employees (including, without limitation, any obligations under any employee
benefit, profit sharing, or pension or welfare plan) or out of Seller's status
as employer of its employees (all of which shall be referred to as "Seller and
Partner Indemnifiable Claims").
(b) P-COM and Purchaser hereby agree to indemnify and hold harmless
the Seller and its officers, directors and other affiliates against any and all
Damages asserted against, resulting from, imposed upon, or incurred or suffered
by Seller and its officers, directors and other affiliates, directly or
indirectly, as a result of or arising from (1) any inaccuracy in or breach or
nonfulfillment of any of the representations, warranties, covenants, or
agreements made by P-COM or Purchaser in this Agreement or any facts or
circumstances constituting such an inaccuracy, breach, or nonfulfillment, or (2)
any failure of P-COM or Purchaser to pay, perform or discharge any of the
Assumed Liabilities (all of which shall be referred to as the "Purchaser
Indemnifiable Claims" and together with Seller and Partner Indemnifiable Claims,
the "Indemnifiable Claims"). The indemnification obligations of, and Seller's
and each of the Partner's recourse against, P-COM or Purchaser or any of their
affiliates shall terminate two (2) years after the Closing. In addition, the
indemnification obligations of P-COM and Purchaser hereunder shall in no event
exceed the indemnification obligations of Seller and the Partners arising from
the cash consideration deposited in escrow pursuant to Section 3.2(a) hereof and
shall be reduced pursuant to the formula provided to the Seller and the Partners
with respect thereto.
Section 8.3 Procedure for Indemnification with Respect to Third-Party
----------- ---------------------------------------------------------
Claims.
- - ------
(a) If a party determines to seek indemnification (such party shall be
referred to herein as an "Indemnified Party") under this Article VIII with
respect to any Indemnifiable Claims resulting from the assertion of liability by
third parties, such Indemnified Party shall give notice to the parties from
which indemnification is sought (such parties shall be referred to herein as
"Indemnifying Parties") within 60 days of such Indemnified Party becoming aware
of any such Indemnifiable Claim or of facts upon
32.
<PAGE>
which any such Indemnifiable Claim will be based; the notice shall set forth
such material information with respect thereto as is then reasonably available
to such Indemnified Party. In case any such liability is asserted against any
Indemnified Party, and such Indemnified Party notifies the Indemnifying Parties
thereof, the Indemnifying Parties will be entitled, if such Indemnifying Parties
so elect by written notice delivered to such Indemnified Party within 20 days
after receiving such Indemnified Party's notice, to assume the defense thereof
with counsel selected by the Indemnifying Party, which counsel shall be
reasonably satisfactory to such Indemnified Party. Notwithstanding the
foregoing, (i) such Indemnified Party shall also have the right to employ its
own counsel in any such case, but the fees and expenses of such counsel shall be
at the expense of such Indemnified Party unless such party shall reasonably
determine that there is a conflict of interest between or among such Indemnified
Party and any Indemnifying Party with respect to such Indemnifiable Claim, in
which case the fees and expenses of such counsel will be borne by such
Indemnifying Parties, and (ii) none of the Indemnified Parties shall have any
obligation to give any notice of any assertion of liability by a third party
unless such assertion is in writing, and (iii) the rights of the Indemnified
Parties to be indemnified hereunder in respect of Indemnifiable Claims resulting
from the assertion of liability by third parties shall not be adversely affected
by their failure to give notice pursuant to the foregoing unless, and, if so,
only to the extent that, such Indemnifying Parties are materially prejudiced
thereby. With respect to any assertion of liability by a third party that
results in an Indemnifiable Claim, the parties hereto shall make available to
each other all relevant information in their possession material to any such
assertion.
(b) In the event that such Indemnifying Parties, within 20 days after
receipt of the aforesaid notice of an Indemnifiable Claim, fail to assume the
defense of such Indemnified Party against such Indemnifiable Claim, such
Indemnified Party shall have the right to undertake the defense, compromise, or
settlement of such action on behalf of and for the account, expense, and risk of
such Indemnifying Parties.
(c) Notwithstanding anything in this Article VIII to the contrary, if
there is a reasonable probability that an Indemnifiable Claim may materially
adversely affect such Indemnified Party, such Indemnified Party shall have the
right to participate in such defense, compromise, or settlement and such
Indemnifying Parties shall not, without such Indemnified Party's written consent
(which consent shall not be unreasonably withheld), settle or compromise any
Indemnifiable Claim or consent to entry of any judgment in respect thereof
unless such settlement, compromise, or consent includes as an unconditional term
thereof the giving by the claimant or the plaintiff to such Indemnified Party a
release from all liability in respect of such Indemnifiable Claim.
Section 8.4 Procedure For Indemnification with Respect to Non-Third
----------- -------------------------------------------------------
Party Claims. In the event that any Indemnified Party asserts the existence of
- - ------------
an Indemnifiable Claim (but excluding claims resulting from the assertion of
liability by third parties), it shall give written notice to the Indemnifying
Parties. Such written notice
33.
<PAGE>
shall state that it is being given pursuant to this Section 8.4, specify the
nature and amount of the claim asserted and indicate the date on which such
assertion shall be deemed accepted and the amount of the claim deemed a valid
claim (such date to be established in accordance with the next sentence). If
such Indemnifying Parties, within 60 days after the mailing of notice by such
Indemnified Party, shall not give written notice to such Indemnified Party
announcing its intent to contest such assertion of such Indemnified Party, such
assertion shall be deemed accepted and the amount of claim shall be deemed a
valid claim. In the event, however, that such Indemnifying Parties contest the
assertion of a claim by giving such written notice to such Indemnified Party
within said period, then the parties shall act in good faith to reach agreement
regarding such claim. If the parties hereto, acting in good faith, cannot reach
agreement with respect to such claim within ten (10) days after notice thereof,
such claim will be submitted to and settled by arbitration pursuant to Section
10.11 hereof.
Section 8.5 Limitation on Indemnification. Notwithstanding any
----------- -----------------------------
provision of this Article VIII, the parties shall each be entitled to
indemnification under this Article VIII only when the aggregate amount of all
entitlements to indemnification hereunder exceeds $50,000, at which point such
indemnified parties shall be entitled to the full amount pursuant to this
Article VIII in excess of such liability cushion.
ARTICLE IX
----------
TERMINATION
-----------
Section 9.1 Termination.
----------- -----------
9.1.1 This Agreement may be terminated at any time prior to the
-----
Time of Closing:
(a) if the Closing is not consummated within three (3) months of
the date hereof;
(b) by mutual agreement of the Board of Directors of Purchaser
and the Executive Committee of Seller;
(c) by P-COM or Purchaser, if there has been a breach by Seller
or any of the Partners of any material representation, warranty, covenant or
agreement set forth in this Agreement which Seller or such Partner fails to cure
within fifteen (15) business days after notice thereof is given by P-COM or
Purchaser (except that no cure period shall be provided for a breach by Seller
or the Partners which by its nature cannot be cured);
34.
<PAGE>
(d) by Seller, if there has been a breach by P-COM or Purchaser
of any material representation, warranty, covenant or agreement set forth in
this Agreement, which P-COM or Purchaser fails to cure within fifteen (15)
business days after notice thereof is given by Seller (except that no cure
period shall be provided for a breach by P-COM or Purchaser which by its nature
cannot be cured);
(e) by P-COM, Purchaser or Seller, if any permanent injunction or
other order of a court preventing the Closing shall have become final and
nonappealable or shall render unlikely within a reasonable period of time the
consummation of the Closing on the terms contemplated hereby; or
(f) by P-COM, Purchaser or Seller, if any Governmental Entity
shall have issued a temporary restraining order, preliminary injunction or
permanent injunction or other order preventing the consummation of the Closing
or any litigation shall be pending, the ultimate resolution of which is likely
(i) in P-COM or Purchaser's opinion to result in the issuance of such an order
or injunction, or the imposition against P-COM or Purchaser of substantial
damages if the Closing is consummated, or (ii) in P-COM's, Purchaser's or
Seller's opinion to render P-COM, Purchaser or Seller unable to consummate the
Closing.
9.1.2 Where action is taken to terminate this Agreement pursuant
-----
to this Section 9.1, it shall be sufficient authorization for such action to be
authorized by the Board of Directors or Executive Committee, as applicable, of
the party taking such action.
9.1.3 In the event of termination of this Agreement as provided in
-----
this Section 9.1 or a failure to meet all of the closing conditions, this
Agreement shall forthwith terminate without liability of any party to any other
party; provided, however, that the agreements contained or referred to in
Sections 5.1 and 10.4 shall survive and be legally enforceable.
ARTICLE X
---------
MISCELLANEOUS PROVISIONS
------------------------
Section 10.1 Notice. All notices and other communications required
------------ ------
or permitted under this Agreement shall be delivered to the parties at the
address set forth below or at such other address that they designate by notice
to all other parties in accordance with this Section 10.1:
If to Seller or
Partners: Columbia Spectrum Management, L.P.
8300 Boone Boulevard
35.
<PAGE>
Suite 800
Vienna, Virginia 22182
Attention: William L. Welch, Jr.
Telecopy No.: (703) 917-9325
with a copy to: Columbia Capital Corporation
201 N. Union Street, Suite 300
Alexandria, VA 22314
Attn: Neil P. Byrne
Telecopy No. : (703) 519-3904
and to: Covington & Burling
1201 Pennsylvania Avenue
Washington, D.C. 20044-7566
Attn.: Michael E. Cutler, Esq.
Telecopy No.: (202) 778-5258
If to P-COM or P-COM, Inc.
Purchaser: 3175 S. Winchester Boulevard
Campbell, California 95008
Attn: Michael Sophie
Telecopy No.: (408) 866-3678
with a copy to: Brobeck, Phleger & Harrison LLP
Two Embarcadero Place
2200 Geng Road
Palo Alto, CA 94303
Attn: Warren T. Lazarow, Esq.
and H. Richard Hukari, Esq.
Telecopy No.: (415) 496-2733
All notices and communications shall be deemed to have been received: (i) in
the case of personal delivery, on the date of such delivery; (ii) in the case of
telex or facsimile transmission, on the date on which the sender receives
confirmation by telex or facsimile transmission that such notice was received by
the addressee, provided that a copy of such transmission is additionally sent by
mail as set forth in (iv) below; (iii) in the case of overnight air courier, on
the second business day following the day sent, with receipt confirmed by the
courier; and (iv) in the case of mailing by first class certified or registered
mail, postage prepaid, return receipt requested, on the fifth business day
following such mailing.
Section 10.2 Entire Agreement. This Agreement, the exhibits and
------------ ----------------
schedules hereto, and the documents referred to herein embody the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof, and
36.
<PAGE>
supersede all prior and contemporaneous agreements and understandings, oral or
written, relative to said subject matter.
Section 10.3 Binding Effect; Assignment. This Agreement and the
------------ --------------------------
various rights and obligations arising hereunder shall inure to the benefit of
and be binding upon Seller, its successors and permitted assigns, and P-COM and
Purchaser and their successors and permitted assigns. Neither this Agreement
nor any of the rights, interests, or obligations hereunder shall be transferred
or assigned (by operation of law or otherwise) by any of the parties hereto
without the prior written consent of the other party.
Section 10.4 Expenses of Transaction; Taxes. Each of P-Com and
------------ ------------------------------
Purchaser shall bear its own costs and expenses in connection with this
Agreement and the transactions contemplated hereby for its own account and the
Partners shall bear their and the Seller's own costs and expenses in connection
with this Agreement and the transactions contemplated hereby. Seller shall pay
all applicable sales, use, transfer, documentary and other taxes arising out of
the purchase and sale of the Assets.
Section 10.5 Waiver; Consent. This Agreement may not be changed,
------------ ---------------
amended, terminated, augmented, rescinded, or discharged (other than by
performance), in whole or in part, except by a writing executed by the parties
hereto, and no waiver of any of the provisions or conditions of this Agreement
or any of the rights of a party hereto shall be effective or binding unless such
waiver shall be in writing and signed by the party claimed to have given or
consented thereto. Except to the extent that a party hereto may have otherwise
agreed in writing, no waiver by that party of any condition of this Agreement or
breach by the other party of any of its obligations or representations hereunder
or thereunder shall be deemed to be a waiver of any other condition or
subsequent or prior breach of the same or any other obligation or representation
by the other party, nor shall any forbearance by the first party to seek a
remedy for any noncompliance or breach by the other party be deemed to be a
waiver by the first party of its rights and remedies with respect to such
noncompliance or breach.
Section 10.6 Third-Party Beneficiaries. Except as otherwise
------------ -------------------------
expressly pro vided for in this Agreement, nothing herein, expressed or implied,
is intended or shall be construed to confer upon or give to any person, firm,
corporation, or legal entity, other than the parties hereto, any rights,
remedies, or other benefits under or by reason of this Agreement.
Section 10.7 Counterparts. This Agreement may be executed
------------ ------------
simultaneously in multiple counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument.
Section 10.8 Severability. If one or more provisions of this
------------ ------------
Agreement are held to be unenforceable under applicable law, such provision
shall be excluded from
37.
<PAGE>
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
Section 10.9 Remedies of Purchaser. Each of the Seller and the
------------ ---------------------
Partners agree that the Assets are unique and not otherwise readily available to
Purchaser. Accordingly, Seller acknowledges that, in addition to all other
remedies to which Purchaser is entitled, Purchaser shall have the right to
enforce the terms of this Agreement by a decree of specific performance,
provided Purchaser is not in material default hereunder.
Section 10.10 Governing Law. This Agreement shall in all respects be
------------- -------------
construed in accordance with and governed by the laws of the State of Delaware
without regard to the conflicts or choice of law provisions thereof.
Section 10.11 Arbitration; Attorneys' Fees.
------------- ----------------------------
(a) Any controversy between the parties hereto involving the
construction or application of any terms, covenants or conditions of this
Agreement or the Escrow Agreement, or any claims arising out of or relating to
this Agreement or the Escrow Agreement or the breach thereof will be settled by
arbitration in Santa Clara County, California, in accordance with the then
current Commercial Arbitration Rules of the American Arbitration Association
(the "AAA"), and judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof. Such arbitration shall be
conducted by three (3) arbitrators chosen by mutual agreement of the parties
hereto, or failing such agreement, an arbitrator appointed by the AAA. There
shall be limited discovery prior to the arbitration hearing as follows: (a)
exchange of witness lists and copies of documentary evidence and documents
related to or arising out of the issues to be arbitrated, (b) depositions of all
party witnesses, and (c) such other depositions as may be allowed by the
arbitrators upon a showing of good cause. Depositions shall be conducted in
accordance with the California Code of Civil Procedure, the arbitrator(s) shall
be required to provide in writing to the parties the basis for the award or
order of such arbitrator(s), and a court reporter shall record all hearings,
with such record constituting the official transcript of such proceedings.
(b) In the event of arbitration filed or instituted between the
parties with respect to this Agreement or the Escrow Agreement, the prevailing
party will be entitled to receive from the other party all costs, damages and
expenses, including reasonable attorney's fees, incurred by the prevailing party
in connection with that action or proceeding whether or not the controversy is
reduced to judgment or award. The prevailing party will be that party who may
be fairly said by the arbitrator(s) to have prevailed on the major disputed
issues.
Section 10.12 Cooperation and Records Retention. Seller, the Partners
------------- ---------------------------------
and Purchaser shall (i) each provide the others with such assistance as may
reasonably
38.
<PAGE>
be requested by them in connection with the preparation of any Tax return,
statement, report, form or other document (hereinafter collectively a "Tax
Return"), or in connection with any audit or other examination by any taxing
authority or any judicial or administrative proceedings relating to liability
for Taxes, (ii) each retain and provide the other, with any records or other
information which may be relevant to any such Tax Return, audit or examination,
proceeding or determination, and (iii) each provide the other with any final
determination of any such audit or examination, proceeding or determination that
affects any amount required to be shown on any Tax Return of the other for any
period. Without limiting the generality of the foregoing, Seller (and, after
Seller's dissolution, Partners) and Purchaser shall retain, until the applicable
statute of limitations (including any extensions) have expired, copies of all
Tax Returns, supporting work schedules and other records or information which
may be relevant to such Tax Returns for all tax periods or portions thereof
ending before or including the Time of Closing and shall not destroy or
otherwise dispose of any such records without first providing the other party
with a reasonable opportunity to review and copy the same. Seller (and, after
Seller's dissolution, Partners) shall keep the original copies of such records,
as well as all books of accounts, general ledgers, sales invoices, accounts
payable and payroll records, drawings, files, papers, and all other records (the
"Records") at its facility in Virginia and, at Seller's (and, after Seller's
dissolution, Partners) expense, shall promptly provide complete copies of the
Records to Purchaser upon Purchaser's request and shall make all Records
available for inspection at any time upon Purchaser's request.
Section 10.13 Bulk Sales Law. Purchaser waives compliance by Seller
------------- --------------
with any provisions of bulk sales laws applicable to this transaction, if any.
39.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
P-COM, INC.,
a Delaware corporation
By:
--------------------------------------------
Michael Sophie
Vice President, Finance and Administration
and Chief Financial Officer
P-COM FIELD SERVICES, INC.
a Delaware corporation
By:
--------------------------------------------
COLUMBIA SPECTRUM MANAGEMENT, L.P.
a limited partnership
By:
--------------------------------------------
William L. Welch, Jr.
Executive Vice President
and Chief Financial Officer
<PAGE>
PARTNERS
COLUMBIA SPECTRUM MANAGEMENT, INC.
By:
--------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
COLUMBIA SPECTRUM MANAGEMENT INVESTORS L.P.
By:
--------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
THOMAS STROUP
COMSEARCH, INC.
By:
--------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
--------------------------------------------
WILLIAM WELCH
--------------------------------------------
KATIE GRAMMES
--------------------------------------------
THOMAS LUSK
41.
<PAGE>
EXHIBIT 3.2
ESCROW AGREEMENT
(will be furnished upon request)
<PAGE>
SCHEDULE 1.1(a)
LIST OF RELATED PROPERTY
(will be furnished upon request)
<PAGE>
SCHEDULE 1.1(b)
(will be furnished upon request)
LIST OF CONTRACTS
<PAGE>
SCHEDULE 1.1(c)
LIST OF GOVERNMENTAL PERMITS
(will be furnished upon request)
<PAGE>
SCHEDULE 1.1(d)
LIST OF INTELLECTUAL PROPERTY RIGHTS
(will be furnished upon request)
<PAGE>
SCHEDULE 1.1(e)
LIST OF ACCOUNTS RECEIVABLE
(will be furnished upon request)
<PAGE>
SCHEDULE 1.1(i)
LIST OF LEASEHOLD INTERESTS
(will be furnished upon request)
<PAGE>
SCHEDULE 1.2
LIST OF EXCLUDED ASSETS
(will be furnished upon request)
<PAGE>
SCHEDULE 2.1
LIST OF ASSUMED LIABILITIES
(will be furnished upon request)
<PAGE>
SCHEDULE 4.1
DISCLOSURE LETTER
(will be furnished upon request)
<PAGE>
SCHEDULE 4.1(b)
LIST OF HOLDERS OF SELLER EQUITY INTERESTS
(will be furnished upon request)
<PAGE>
SCHEDULE 4.1(s)
LIST OF EMPLOYEES
(will be furnished upon request)
<PAGE>
SCHEDULE 4.1(aa)
LIST OF INSURANCE POLICIES
(will be furnished upon request)
<PAGE>
SCHEDULE 4.1(ab)
LIST OF ENVIRONMENTAL MATTERS
(will be furnished upon request)
<PAGE>
SCHEDULE 4.1(ac)
BACKLOG OF ORDERS
(will be furnished upon request)
<PAGE>
SCHEDULE 4.2
P-COM/PURCHASER DISCLOSURE LETTER
(will be furnished upon request)
<PAGE>
SCHEDULE 6.2(d)
LIST OF EMPLOYMENT AGREEMENTS
(will be furnished upon request)
<PAGE>
SCHEDULE 6.2(e)
LIST OF PROPRIETARY INFORMATION AND INVENTIONS AGREEMENTS
(will be furnished upon request)
<PAGE>
EXHIBIT 7(C)(4)
REGISTRATION RIGHTS AGREEMENT
-----------------------------
THIS REGISTRATION RIGHTS AGREEMENT is made as of the ____ day of
March, 1997, by and among P-COM, Inc., a Delaware corporation (the "Company"),
and the securityholders listed on Schedule A hereto, each of which is
individually herein referred to as a "Securityholder".
RECITALS
--------
WHEREAS, the Company and the Securityholders are several parties to
the Asset Purchase Agreement dated February 12, 1997 (the "Acquisition
Agreement") which provides for the acquisition (the "Acquisition") of all or
substantially all of the assets of Columbia Spectrum Management, L.P. ("CSM") by
the Company;
WHEREAS, in order to induce CSM and the Securityholders to enter into
the Acquisition Agreement, the Securityholders and the Company hereby agree that
this Agreement shall govern the rights of the Securityholders to cause the
Company to register shares of Common Stock issued to the Securityholders as set
forth herein;
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Registration Rights. The Company covenants and agrees as follows:
-------------------
1.1 Definitions. For purposes of this Section 1:
-----------
(a) The term "Act" means the Securities Act of 1933, as amended.
(b) The term "Holder" means any person owning or having the right to
acquire Registrable Securities or any assignee thereof in accordance with this
Agreement.
(c) The term "1934 Act" shall mean the Securities Exchange Act of 1934,
as amended.
(d) The term "register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Act, and the declaration or ordering of
effectiveness of such registration statement or document.
(e) The term "Registrable Securities" means (i) the Common Stock of
the Company issued in the Acquisition to the Securityholders and (ii) any Common
<PAGE>
Stock of the Company issued as (or issuable upon the conversion or exercise of
any warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of the shares
referenced in (i) above, excluding in all cases, however, any Registrable
Securities sold by a person in a transaction in which his rights under this
Section 1 are not properly assigned.
(f) The number of shares of "Registrable Securities then outstanding"
shall be determined by the number of shares of Common Stock outstanding which
are, and the number of shares of Common Stock issuable pursuant to then
exercisable securities which are, Registrable Securities.
(g) The term "SEC" shall mean the Securities and Exchange Commission.
1.2 Registration.
------------
(a) Subject to the terms of this Agreement, the Company shall effect
as soon as practicable, and in any event by July 31, 1997, the registration
under the Act of all Registrable Securities, subject to the limitations of
subsection 1.2(b).
(b) If the Holders intend to distribute the Registrable Securities
covered by their request by means of an underwriting, they shall so advise the
Company as a part of their request made pursuant to subsection 1.2(a) and the
Company shall include such information in the written notice referred to in
subsection 1.2(a). The underwriter will be selected by the Company and shall be
reasonably acceptable to the Holders. All Holders proposing to distribute their
securities through such underwriting shall (together with the Company as
provided in subsection 1.3(e)) enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for such underwriting.
(c) The Company shall not be obligated to effect, or to take any
action to effect, any registration pursuant to this Section 1.2:
(i) after the Company has effected one registration pursuant to
this Section 1.2 and such registration has been declared or ordered effective;
or
(ii) if the Company can otherwise include all Registrable
Securities on a registration statement effected on behalf of the Company or
other stockholders of the Company.
1.3 Obligations of the Company. Whenever required under this Section
--------------------------
1 to effect the registration of any Registrable Securities, the Company shall,
as soon as reasonably possible:
2.
<PAGE>
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and cause such registration statement to
become effective by July 31, 1997, and, upon the request of the Holders of a
majority of the Registrable Securities registered thereunder, keep such
registration statement effective for a period not to exceed the lesser of one
year from the effective date or until the distribution contemplated in the
registration statement has been completed; provided, however, that (i) such one-
year period shall be extended for a period of time equal to the period the
Holder refrains from selling any securities included in such registration at the
request of an underwriter of Common Stock (or other securities) of the Company;
and (ii) in the case of any registration of Registrable Securities on Form S-3
which are intended to be offered on a continuous or delayed basis, such one-year
period shall be extended, until all such Registrable Securities are sold,
provided that Rule 415 or any successor rule under the Act, permits an offering
on a continuous or delayed basis, and provided further that applicable rules
under the Act governing the obligation to file a post-effective amendment
permit, in lieu of filing a post-effective amendment which (I) includes any
prospectus required by Section 10(a)(3) of the Act or (II) reflects facts or
events representing a material or fundamental change in the information set
forth in the registration statement, the incorporation by reference of
information required to be included in (I) and (II) above to be contained in
periodic reports filed pursuant to Section 13 or 15(d) of the 1934 Act in the
registration statement.
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to the Holders such reasonable numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned by them.
(d) Register and qualify the securities covered by such registration
statement under such other securities or Blue Sky laws of such jurisdictions as
shall be reasonably requested by the Holders in writing; provided that the
Company shall not be required in connection therewith or as a condition thereto
to qualify to do business or to file a general consent to service of process in
any such states or jurisdictions, unless the Company is already subject to
service in such jurisdiction and except as may be required by the Act.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each Holder participating
in such underwriting shall also enter into and perform its obligations under
such an agreement.
3.
<PAGE>
(f) Cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange on which similar securities
issued by the Company are then listed.
1.4 Furnish Information. It shall be a condition precedent to the
-------------------
obligations of the Company to take any action pursuant to this Section 1 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of such Holder's Registrable
Securities.
1.5 Expenses of Demand Registration. All expenses, other than
-------------------------------
underwriting discounts, commissions and fees and disbursements of counsel for
the selling Holders, incurred in connection with a registration, filing or
qualification pursuant to Section 1.2, including (without limitation) all
registration, filing and qualification fees, printers' and accounting fees, and
fees and disbursements of counsel for the Company, shall be borne by the
Company.
1.6 Reports Under Securities Exchange Act of 1934. With a view to
---------------------------------------------
making available to the Holders the benefits of Rule 144 promulgated under the
Act and any other rule or regulation of the SEC that may at any time permit a
Holder to sell securities of the Company to the public without registration or
pursuant to a registration statement on Form S-3, the Company agrees to use its
reasonable efforts to file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act.
1.7 Assignment of Registration Rights. The rights to cause the
---------------------------------
Company to register Registrable Securities pursuant to this Section 1 may be
assigned (but only with all related obligations) by a Holder to any transferee
or assignee of such securities provided: (a) the Company is, within a
reasonable time after such transfer, furnished with written notice of the name
and address of such transferee or assignee and the securities with respect to
which such registration rights are being assigned; (b) such transferee or
assignee agrees in writing to be bound by and subject to the terms and
conditions of this Agreement; and (c) such assignment shall be effective only if
immediately following such transfer the further disposition of such securities
by the transferee or assignee is restricted under the Act.
1.8 Termination of Registration Rights. No Holder shall be entitled
----------------------------------
to exercise or utilize any right provided for in this Section 1 and the Company
shall be entitled to terminate the effectiveness of any registration statement
upon the earliest to occur of (i) two years following the consummation of the
Acquisition, (ii) one year after the consummation of the Acquisition if the SEC
changes the Rule 144 holding period to one year after the acquisition of
securities, (iii) the date upon which all of the Registrable Securities have
been sold pursuant to an effective registration statement or
4.
<PAGE>
(iv) the date when any Holder may be able to sell all of his unsold Registrable
Securities within any three-month period pursuant to Rule 144 under the Act.
2. Miscellaneous.
-------------
2.1 Successors and Assigns. Except as otherwise provided herein, the
----------------------
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any shares of Registrable Securities). Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
2.2 Governing Law. This Agreement shall be governed by and construed
-------------
under the laws of the State of Delaware as applied to agreements among Delaware
residents entered into and to be performed entirely within Delaware.
2.3 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
2.4 Notices. Unless otherwise provided, any notice required or
-------
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified at the address
indicated for such party on the signature page hereof, or at such other address
as such party may designate by ten (10) days' advance written notice to the
other parties.
2.5 Amendments and Waivers. Any term of this Agreement may be
----------------------
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
a majority of the Registrable Securities then outstanding. Any amendment or
waiver effected in accordance with this paragraph shall be binding upon each
holder of any Registrable Securities then outstanding, each future holder of all
such Registrable Securities, regardless of whether such Holder has actually
executed the amendment or waiver.
2.6 Remedies. In the event that the Company fails to have the
--------
registration statement for the Registrable Securities declared effective by the
SEC on or before July 31, 1997, then the Holders shall have, in addition to a
right against the Company for specific performance of the obligations of the
Company under this Agreement, the right to receive, as liquidated damages (and
as the only form of monetary damages payable by the Company hereunder) for such
failure by the Company,
5.
<PAGE>
only an amount equal to the product of (i) the amount, if any, by which the
closing sales price of the P-COM Common Stock on the Nasdaq NMS or such other
securities exchange or over-the-counter market on which such Common Stock is
then traded (the "NMS") on July 31, 1997, exceeds, if at all, the closing sales
price of such Common Stock on the date that such registration statement becomes
effective or such Common Stock otherwise becomes freely tradeable, whichever
first occurs (the "Registration Date"), multiplied by (ii) the number of
Registrable Securities held by the Securityholders. The Company shall be
entitled, in its sole discretion, to pay such damages in cash or in shares of
its Common Stock, provided such Common Stock is registered under the Act with
the SEC for immediate sale.
2.7 Severability. If one or more provisions of this Agreement are
------------
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
2.8 Entire Agreement; Amendment; Waiver. This Agreement constitutes
-----------------------------------
the full and entire understanding and agreement between the parties with regard
to the subject matter hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
P-COM, INC., a Delaware corporation
By: ______________________________________
Address: ___________________________________________
___________________________________________
6.
<PAGE>
REGISTRATION RIGHTS AGREEMENT
SIGNATURE PAGE
SECURITYHOLDER:
___________________________________________
Address: ___________________________________________
___________________________________________
7.
<PAGE>
SCHEDULE A
----------
LIST OF SECURITYHOLDERS
(will be furnished upon request)
<PAGE>
EXHIBIT A
TABLE OF CONTENTS
-----------------
Page
----
1. Registration Rights ................................................... 1
1.1 Definitions ..................................................... 1
1.2 Registration .................................................... 2
1.3 Obligations of the Company ...................................... 2
1.4 Furnish Information ............................................. 3
1.5 Expenses of Demand Registration ................................. 4
1.6 Reports Under Securities Exchange Act of 1934 ................... 4
1.7 Assignment of Registration Rights ............................... 4
1.8 Termination of Registration Rights .............................. 4
2. Miscellaneous ......................................................... 4
2.1 Successors and Assigns .......................................... 4
2.2 Governing Law ................................................... 5
2.3 Counterparts .................................................... 5
2.4 Notices ......................................................... 5
2.5 Amendments and Waivers .......................................... 5
2.6 Remedies ........................................................ 5
2.7 Severability .................................................... 6
2.8 Entire Agreement; Amendment; Waiver ............................. 6
i.
<PAGE>
EXHIBIT 7(C)(99)
( BW)(P-COM)(PCMS) P-Com Inc. Announces Execution of Definitive Agreement to
Purchase Columbia Spectrum Management
Business Editors/Computer Writers
CAMPBELL, Calif.--(BUSINESS WIRE)--Feb. 12, 1997--P-Com Inc.
(NASDAQ/NMS:PCMS) announced that it has signed a definitive agreement to
purchase the assets of Columbia Spectrum Management, LP, a provider of turnkey
relocation services for microwave paths over spectrum allocated by the Federal
Communications Commission for Personal Communications Services ("PCS") and other
emerging technologies.
Columbia Spectrum Management provides market and system analysis,
frequency planning, negotiation services, program management, and turnkey
relocation encompassing all the above for the cellular, business by-pass, and
PCS industry.
"This acquisition is designed to broaden our worldwide product offering
to include services which our customers, both domestic and international, have
been requesting. In addition, this will allow P-Com to become more involved with
our customers in the actual design and rollout of their networks," stated George
Roberts, chairman and CEO of P-Com Inc.
The purchase price will be $22.5 million of which $8.0 million will be
paid in cash and $14.5 million will be paid in shares of P-Com's common stock.
The acquisition will not be accounted for under the purchase method of
accounting and it is not currently anticipated that this accounting treatment
will have a material adverse effect on the financial results of the company for
the year ended Dec. 31, 1997. It is anticipated that the acquisition will be
completed in February 1997.
P-Com Inc. develops, manufactures and markets millimeter wave radio
systems for the worldwide wireless telecommunications market. The point-to-point
radio links provided by P-Com are designed to satisfy the network requirements
of cellular and personal communications services, corporate communications,
public utilities and local governments.
Statements in this release that are forward looking involve known and
unknown risks and uncertainties, which may cause the Company's actual results in
future periods to be materially different from any future performance that may
be suggested in this release. The Company operates in an industry sector where
securities and values are highly volatile and may be influenced by economic and
other factors beyond the Company's control. Reference is made to the discussion
of risk factors detailed in the Company's filings with the Securities and
Exchange Commission, including its reports on Form 10-K and 10-Q.
<PAGE>
P-Com Inc., with world headquarters in Campbell, and offices in Florida,
the United Kingdom, Italy, France, Germany, Mexico and Singapore, is committed
to designing, manufacturing and marketing highly reliable and cost-effective
radio transmission systems for the worldwide telecommunications industry. P-Com
Inc. is an ISO 9001 certified company. For additional information, contact P-Com
at: P-Com Inc., 3175 S. Winchester Boulevard, Campbell, CA 95008 USA
TELEPHONE: 408/866-3666 FAX: 866-3655
--30--
CONTACT: P-Com Inc., Campbell
Michael Sophie, 408/866-3666
